Closing Recap

Thursday, June 05, 2025

U.S. stocks were holding steady, inching higher most of the afternoon before a sharp pullback in the shares of Tesla (TSLA) weighed heavily on the S&P 500 and Nasdaq, sliding as much as -18% this afternoon to lows around $275, before paring losses. The decline followed a very public (and ugly) dispute with the President over the tax spending bill. The comments on social media (via “X” for Musk and Truth Social for President Trump) kinda overshadowed a day that focused on trade talk with China headlines and a second day of weaker economic data, ahead of the key monthly nonfarm payrolls report tomorrow morning which could certainly move the needle for major averages. Another top story was cryptocurrency company Circle Internet (CRCL) after it priced its IPO above the expected range and shares nearly tripled after the stablecoin issuer’s initial public offering. Also in focus are earnings from AI chip maker AVGO after the bell last week (follows better NVDA results last week).

There was some dissension in Washington DC (which is an understatement) as President Trump weighed in after Elon Musk began bashing of the GOP’s ‘Big Beautiful Bill,’ telling reporters on Thursday that he’s ‘very disappointed in Elon,’ and that Musk only opposes the bill because they eliminated electric vehicle tax credits from it. They’re having a hard time the electric vehicles, and they want us to pay billions of dollars in subsidy. Musk replied back as well saying via X, “Without me, Trump would have lost the election, Dems would control the House, and the Republicans would be 51-49 in the Senate.” It continued to get uglier between the President and the TSLA CEO, with accusations against the President and threats of lost contracts for Tesla and Musk, with posts back and forth all afternoon that took the attention off everything else.

Earlier this morning, Donald Trump tweeted details from his call with China President Xi on Truth Social: “I just concluded a very good phone call with President Xi, of China, discussing some of the intricacies of our recently made, and agreed to, Trade Deal. The call lasted approximately one and a half hours, and resulted in a very positive conclusion for both Countries. There should no longer be any questions respecting the complexity of Rare Earth products. Our respective teams will be meeting shortly at a location to be determined. We will be represented by Secretary of the Treasury Scott Bessent, Secretary of Commerce Howard Lutnick, and United States Trade Representative, Ambassador Jamieson Greer. During the conversation, President Xi graciously invited the First Lady and me to visit China, and I reciprocated. As Presidents of two Great Nations, this is something that we both look forward to doing. The conversation was focused almost entirely on TRADE. Nothing was discussed concerning Russia/Ukraine, or Iran. We will inform the Media as to scheduling and location of the soon to be meeting. Thank you for your attention to this matter!”

Weekly sentiment readings: 1) The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -8.7 vs -9 last week. Bulls fall to 32.7% from 32.9%, Neutrals rise to 25.9% from 25.2% and Bears fall to 41.4% from 41.9%; 2) This week’s NAAIM Exposure Index reading declined to 81.62, falling from last week’s 88.41 (which was highest since March) – recent peak of 99.24 from 12/11 – recent trough from 4-17 of 35.16 – Last Quarter Average (Q1) of 72.50.

• U.S. Q1 non-farm unit labor costs revised to +6.6% (consensus +5.7%), and above the previous +5.7% while Q1 non-farm productivity revised to -1.5% (vs. consensus -0.8%), vs. previous -0.8% marking the worst productivity readings since Q2’22 when it was (-3.3%)
• U.S. April trade deficit (-$61.6B), its lowest level since Sept 2023 and vs. consensus (-$70.0B) vs March deficit (-$138.3B); U.S. April goods deficit (-$87.41B), services surplus $25.80B; April exports +3.0% vs March +0.9%, imports (-16.3%) vs March +4.7%; U.S. April exports $289.37B vs March $281.07B, imports $350.99B vs March $419.39B; U.S. April imports from China at lowest since March 2020 as fall to $28.3B from $34.9B. In dollars, the drop was the largest monthly change in the goods and services deficit in data back to 1992. By percentage, the 55% drop was second only to a 59% decrease recorded in February 1992.

• Bitcoin has fallen sharply since hitting an all-time high last week, down 7% despite the U.S. vice president JD Vance issuing a huge bitcoin prediction. Today it slid 2.5% below $102,000 late in the day.
• The U.S. dollar was sharply lower to start the day, but pared losses throughout ending near the best levels around 98.80 (off lows 98.35 for DXY). Canadian dollar strengthens to near eight-month high at 1.3649 per U.S. dollar while the euro neared $1.15 before paring gains.
• Oil prices edged higher with WTI crude rising $0.52 or 0.83% to settle at $63.37 per barrel and Brent Crude futures settle at $65.34/bbl, rising $0.48 or 0.74%, recovering from the previous day’s drop, on news that the U.S. and China agreed to more trade talks, following a phone call between U.S. President Donald Trump and Chinese leader Xi Jinping.

• In Online Retail: MELI was downgraded to Hold from Buy following strong performance while raising their DCF-driven price target to $2,800 from $2,450, largely driven by higher levels of profitability and cashflow in 2029E and beyond. CHWY was downgraded to Hold from Buy at Jefferies (raise tgt to $43) after a strong run-in share, rising 41% this year and trade at 24-times estimated 2026 EBITDA.
• In Consumer Products: KMB is close to selling its Kleenex and tissue businesses outside North America for approximately $3.5B to Brazilian pulp maker Suzano as per the WSJ. PG plans to cut 7,000 jobs over the next two years as the maker of Gillette razors and Tide detergent looks to streamline its business. BARK shares fell after reporting mixed results with revenue below expectations and EBITDA ahead, while they did not provide full year guidance and Q1 guidance was well below.
• In Discount Retailers: FIVE Q1 results in line with previous preannouncement, while guided guides Q2 revs $975-995Mm vs est. $958.31Mm and adj EPS $0.50-0.62 vs est. $0.56 and guided 2Q comps +7-9% (consensus +5.4%) while noted the CFO is stepping down for personal reasons; DLTR was upgraded to Overweight and raised estimates after results on Wednesday.
• In Food & Beverages: BF shares tumbled after the Jack Daniel’s owner Q1 EPS/sales missed consensus at $0.31 vs. est. $0.34 and sales fell -7% y/y to $894M missing the $967M consensus while forecasting both organic net sales and organic operating income for fiscal 2026 to decline in the low single-digit range. LWAY announced April/May revenue up 11% and introduced a Q2’25 revenue guide of $52M-$56M (6%-14% growth) versus our prior $50M estimate. In addition, the company announced a wide-ranging distribution expansion characterized as "thousands" of new placements

• In the Auto/EV sector: TSLA shares are pulling back the last few days, down more than 12% after a strong surge in the month of May, losing ground midday as President Trump responded to Elon Musk’s recent bashing of his tax bill, attacking each other verbally; CHPT shares fell after results disappointed Wall Street estimates, missing on earnings and revenues; BLNK announced their CFO stepped down.

• In Industrials: in distributors, FAST reported May 2025 sales, showing a positive performance compared to the previous year. The company achieved net sales of $687.3M, reflecting a 4.3% increase from $658.7M in May 2024. The daily sales also saw a substantial rise of 9.3%, reaching $32,731 compared to $29,942 y/y.
• In Transports: In the LTL space, XPO said LTL May tonnage per day decreased 5.7%, as compared with May 2024, attributable to a year-over-year decrease of 5.0% in shipments per day and a decrease of 0.7% in weight per shipment. Also, SAIA said in May 2025, LTL shipments per workday declined 3.2%, LTL tonnage per workday declined 0.4% and LTL weight per shipment increased 3.0% to 1,385 pounds compared to 1,345 pounds in May 2024.
• In Aerospace & Defense: satellite imagery company PL shares surged after Q1 revs of $66.27M topped the $62.3M estimate and guided annual revenue in the range of $265M-$280M with its midpoint above analysts’ estimate of $270.6M and above prior range $260M-$280M.
• In Metals & Mining: Precious metals saw more gains but focus today was more on silver miners (SLV) as silver prices topped 13-year highs, playing some catch up to the recent surge this past year for gold prices; shares of AG, PAAS, HL, CDE, SVM saw big gains. MP was upgraded to Overweight with a $34 price target at Morgan Stanley noting the co is developing a fully domestic rare earth mine-to-magnet supply chain in the US with plans to begin commercial production of permanent magnets used in the majority of EV motors, a growing number of offshore wind turbines and the long-term attractive humanoids market, by the end of 2025.

• In Payments: Visa (V) was upgraded to Outperform from Neutral at Mizuho and raised tgt to $425 from $359 saying their in-depth category analysis shows that V’s subdued excess growth vs US PCE post-COVID has largely been the result of vertical mix shift, as less-card-based categories have outgrown more-card-based categories post-pandemic. FOUR announced Taylor Lauber will assume CEO position and Jared Isaacman will become Executive Chairman, effective 6/5/25
• In Crypto: Stablecoin issuer Circle (CRCL) shares opened at $69.00 after pricing its 34M share IPO at $31 per, above expected range, raising $1.05B. Circle and its shareholders sold 34M shares at $31 apiece, valuing the company, which issues the USDC stablecoin, at roughly $8B on a fully diluted basis (stocks briefly topped the $100 level before paring gains).

• RGNX reported an update this morning from an ongoing clinical trial of RGX-202, its experimental gene therapy for Duchenne muscular dystrophy. Five boys, ages 6-12, showed an average 4.8-point improvement on the North Star Ambulatory Assessment, a composite measure of muscle function, compared to a natural history control matched for age and baseline muscle function.
• In Life Sciences: Deutsche Bank lowered its 2026 estimates across a few companies with exposure to the U.S Academic and Government end market following discussions and is now (-4%) below 2026 consensus EPS on average for TXG, AVTR, TECH, DHR, TMO, and WAT with the greatest variance for AVTR (7%) and TMO (5%). Also lowered tgts for names: DHR to $235 (from $240); TECH to $66 (from $70); TMO to $515 (from $565) based on 22x 2026E EPS (from 23.5x); and WAT to $375 (from $395) based on 27x 2026E EPS (from 28x).
• Managed care stocks slipped this afternoon (UNH, CVS, ELV, HUM) after Politico reported Senate Republicans are considering cuts to Medicare spending to help pay for Donald Trump’s legislative package. The idea came up in closed-door meetings this week and, crucially, some Republicans believe President Donald Trump is on board with touching the program as long as it’s limited to “waste, fraud and abuse.”

• In AI/Data Center sector: NBIS was initiated Buy and $94 PT and CRWV with Neutral and $130 PT at Arete as the firm said they prefer Nebius to CoreWeave saying the stock’s embedded neo-cloud valuation is low. The direction of the stocks will depend on whether or not investors think there’s a shortage of graphics processing units. Arete says CoreWeave is a purer play on artificial intelligence, with its thin float possibly exaggerating the bullish consensus around AI.
• In Education Software: UDMY was upgraded to EW from UW at Morgan Stanley and the firm downgraded COUR to EW from Overweight saying relative valuation has flipped: COUR trades at a ~43% premium EV/CY26 GP, a meaningful difference from the 10% discount at the time of MSCO’s UDMY downgrade to UW. MSCO is not confident this valuation Gap would meaningfully increase, leading them to move both to Equal Weight.
• In Gaming Software: last night, AAPL lost its bid to pause app store reform order in Epic Games case. The 9th U.S. Circuit Court of Appeals on Wednesday rejected Apple’s request to put the provisions on hold as the tech giant appeals the judge’s order. JP Morgan noted the Apple stay being denied is a big deal for app developers, many of whom have already updated their apps to allow for credit card payments. For apps that previously paid fees to Apple, JPMC estimate a potential annual margin uplift of: MTCH 2-4%, TTWO 1- 2%, EA 0.2-0.5%, & MYPS 2-5%. RBLX generates 30% of revenue from the app store, but the margin uplift will depend on how much savings are passed on to developers.
• In Optical & Networking: CIEN shares tumbled after Q2 adj EPS $0.42 missed consensus of $0.52 though revs of $1.13B topped consensus of $1.09B saying revenue from cloud providers was a key driver of Q2 results and sees Q3 revenue $1.13B-$1.21B below consensus $1.11B.
• In IT Services & Consulting: VRNT reported a 7% revenue beat and material earnings upside due to a pull forward of unbundled software-as-a-service deals, while its FY26 revenue and earnings guides were unchanged, and Q1 was guided below consensus.
• In Semiconductors: more sustained strength in chip players with the Philly semiconductor index (SOXrising more than 1% this morning to 5,090, blowing further past its 200dma resistance of 4,865 this week and is up over 7% this month – though pared gains as stock markets faded; AVGO is expected to report earnings after the close tonight. TXN was upgraded to Market Perform from Underperform at Bernstein noting the shares have underperformed substantially over the last several years since Sept 2023 (-27% vs SOX, -21% vs S&P). MU shares outperformed rising over +5%, rising for 4th straight day (up about 15% this month already).