Closing Recap

Monday, March 24, 2025

U.S. stocks kicked off the trading week with solid gains, as the S&P 500 (SPX) climbed around 100 points, moving back above its 200-day moving average resistance (5,750) while the Nasdaq Composite gained over 2.25%, led by gains in tech after President Trump took a more measured approach on tariffs against U.S. trading partners ahead of the April 2^nd “reciprocal tariff” deadline announced weeks ago. Overnight, US stock markets got a bounce on reports that Trump announcement today of universal, reciprocal trade tariffs on April 2 will be narrower and more targeted than initially expected, both the WSJ and Bloomberg reported. This afternoon, President Trump confirmed those reports while saying there will be tariffs on autos, aluminum, and pharmaceuticals in the “very near future.” The commentary helped push the US dollar and Treasury yields higher while Bitcoin jumped, and gold slipped. Stocks market strength broad-based with all eleven S&P sectors higher as Technology (XLY) rose over 1.8% and Consumer Discretionary (XLY) +3.75% the top gainers, though Financials Materials, Industrials, Energy all rose over 1%.

In economic data, S&P Global March flash composite PMI at 53.5 (vs 51.6 in February); U.S. S&P Global March flash services PMI at 54.3 (vs 51.0 in February); S&P Global March flash manufacturing PMI at 49.8 (vs 52.7 in February). The CBOE Volatility index (VIX) slumped over -9% to 17.50 after breaking back below 20 last Friday. Attention this week will be on tariffs and upcoming inflation (PCE) and GDP data. In stock news, Tesla (TSLA) shares rose as much as 11.9% after falling 9-straght weeks, helping lead the Nasdaq along with other Mag 7 names and semis (SOX). Defensive utilities and consumer staples have lagged. In Market history: Bespoke Invest noted “25 years ago today, after rallying 14.6% in the prior month, the S&P 500 hit its ‘Dot Com Bubble’ peak. The index would fall 25% over the next year and 49% by the October 2022 low.”

• April gold prices slipped -$5.80 to settle at $3,015.60 an ounce. Meanwhile the U.S. dollar and Treasury yields climbed as investors digested news that President Donald Trump could soften the hit from a tranche of tariffs expected in April, adding to gains seen on Friday. Trump had anticipated applying reciprocal levies starting on April 2 but sector-specific tariffs are now not likely to be announced that day, according to media reports over the weekend citing administration officials. Trump on Friday also said there would be some flexibility regarding reciprocal tariffs, which pushed stocks and Treasury yields higher. U.S. Treasury benchmark 10-year yield rose 7-bps to 4.32% while the two-year yield rose 8 basis points to 4.03%. Stronger economic data also helped lift yields and the dollar.

• In Autos: TSLA looks to rebound after falling 9-straight weeks, getting a boost today, rising as much as 10% following reports the Trump administration is likely to exclude a set of sector-specific tariffs while applying reciprocal levies on April 2. Trump announces Hyundai will build a new $5.8 billion steel plant in Louisiana, creating nearly 1,500 new jobs, as part of the co.’s $20+ billion U.S. investment.

• Home Improvement retail: Piper lowered price tgts for HD to $418 from $435, LOW to $269 from $296 and FND to $90 from $103 saying the backdrop for large-ticket remodel projects continues to point to stability in 2025 following two highly challenged years. To the positive, cash-out refis have stabilized Y/Y- Q4 2024 accelerated to +$4.5B Y/Y – following 2023 down -$100B. However, upper income consumer sentiment has fallen significantly in Feb/MAR which appears to be pressuring big ticket spending for homeowners (furniture, appliances, mowers, etc.). All in, Piper sees potential for comp weakness in 1H for the sector.

• In Utilities: OKLO shares jumped after saying it is initiating a Pre-Application Readiness Assessment with U.S. Nuclear Regulatory Commission (NRC) for its Aurora Powerhouse reactors. The assessment will begin in late March and is designed to address the content of the first phase of Oklo’s combined license application submission (COLA) for the reactors.

• In Financial Services: DNB enters into a definitive agreement to be acquired by Clearlake Capital Group in transaction valued at $7.7B with Dun & Bradstreet shareholders to receive $9.15 per share in cash
• In Crypto: Strong day for Bitcoin and related Bitcoin miners/investors. Bitcoin rose over 3% early, topping $88,000 for first time in a few weeks and boosted other related miner names (MARA, CLSK, CORZ, RIOT, HUT, WULF) among other names (COIN, MSTR, HOOD). Friday evening (3/21), RIOT announced it has entered into a non-binding term sheet to acquire certain assets of Rhodium, in addition to it entering into a settlement agreement related to ongoing litigation.

• ME shares tumbled after the genetic testing firm said on Sunday it filed for filed for Chapter 11 bankruptcy protection in the U.S. to help the $50 million company sell itself and that co-founder and CEO Anne Wojcicki had resigned after multiple failed takeover bids
• UBX shares tumbled after saying UBX1325 was non-inferior to Aflibercept at week 24; UBX1325 did not meet statistical non-inferiority on avg of weeks 20 and 24, the primary analysis endpoint.
• In Medical Devices: ALC announced the acquisition of LNSR for $14.00 per share in cash, with an additional CVR of up to $2.75 per share tied to procedure-based milestones, bringing the total potential deal value to ~$430M. The acquisition is expected to close in mid to late 2025.

• In Gov’t IT defense services: Cantor said sentiment remains cautious on the sector with all eyes on US federal spending impacting names recently such as PLTR, NOW, INFA, CVLT, among others SAIC, CACI, LDOS, BAH. In addition to worries about macro pressuring momentum-driven shares lower in recent months, investors have been increasingly questioning impacts from DOGE. Cantor notes Accenture’s report this past week calling out U.S. Federal weakness and shares down 5% this week (-22% since 2.18.25 and -13% YTD).
• In Aerospace stocks: LUNR reported Q4 revenue of $54.6M compared with $30.7M y/y and said IM-3, its third moon lander mission, remains on track, which is expected roughly one year from now; VSAT was upgraded to Buy from Hold at Deutsche Bank with a $15 price target saying while they still have concerns about its core comm services business l-t in the context of pressure from Starlink, it sees multiple paths for the company to create equity value by materially deleveraging its balance sheet through asset monetization.

• In the Steel sector: STLD was upgraded Steel Dynamics to Buy from Neutral at UBS with a $149 price target and upgraded NUE to Buy from neutral (tgt to $160 from $156) saying tariff protection for U.S. steel and aluminum has exceeded the firm’s expectations since the election, resulting in a significant rally in hot-rolled coil steel prices. The firm sees a good entry point for Steel Dynamics with earnings momentum from Q2, and for NUE, sees a good entry point that should be a net beneficiary of the tariffs enacted so far; CMC tgt lowered to $49 from $54 at UBS and keeps a Neutral rating on the shares.

• In Telecom & Media sector: VZ files for issue of notes due 2035, size not disclosed, in part to help finance the redemption of close to $1 billion of notes due next year; TMUS announces proposed public offering of senior notes; VOD was downgraded to Neutral from Buy at Bank America saying the UK deal is conceptually good for Vodafone, but the upcoming impact on financials and valuation is increasingly heavy as numbers slip elsewhere, notably in Germany. DIS’ “Snow White” remake performed poorly at the domestic box office, grossing only ~$45M.

• In Hardware: IBM was added to Wedbush "best ideas" list saying the company is well positioned to capitalize on the current demand shift for hybrid and AI applications as more enterprises look to implement AI to drive efficiencies across operations.
• In Software: LSPD is revising its FY25 revenue outlook lower to reflect year-over-year growth of 18%, down from the previously expected 20%, primarily due to these impacts on transaction-based revenue. Despite the macroeconomic headwinds, the Company remains focused on profitable growth and is proactively managing costs. Lightspeed continues to expect Fiscal 2025 Adjusted EBITDA of over $53M.

• In China AI, Jack Ma’s Ant Group says it has developed techniques for training AI models with NVDA alternatives — potentially lowering costs by 20%. While Ant is still using Nvidia for AI development, it is now relying mostly on tech from other companies, including AMD, Alibaba and Huawei, for its latest models, according to people familiar with the matter. https://tinyurl.com/5n8k4wcz
• SMCI was downgraded to Sell from Neutral at Goldman Sachs and cut tgt to $32 from $40 noting shares are up 38% year-to-date, making it the best performing stock in Goldman’s hardware coverage, and now views Super Micro’s risk/reward as unfavorable, seeing downside risks on valuation, competition, and margins.