Closing Recap

Tuesday, May 20, 2025

U.S. stocks slipped in one of the quietest, lowest volume total days in months (for SPY) as the S&P 500 snapped its 6-day losing streak in a sign of stalling out a bit after a tremendous run (SPX has gained 18 of the last 23 days). Stocks were slightly lower until selling picked up late afternoon, led by a decline in the Mag 7 names with more than 1% declines for NVDA, GOOGL, AMZN, AAPL and META (but that was quickly erased with a solid bounce off the low). TSLA shares also pared gains after a strong surge following CEO Elon Musk interview on CNBC. Nine of the eleven S&P sectors finished lower, with only small gains in defensive utilities and consumer staples. There was no significant news item pushing stock markets lower late day other than waiting on details of the tax bill out of DC, and markets not breaking out, causing a little buyer’s exhaustion. U.S. stocks have had a solid month so far, with the S&P 500 now more than 20% higher than its April lows, when U.S. President Donald Trump’s reciprocal tariffs roiled global markets. A pause in the tariffs, a temporary trade truce between the U.S. and China and tame inflation data pushed equities higher, although the S&P 500 is still about 3% from its record highs. Earnings coming up tonight for PANW in tech and TOL in homebuilding and then tomorrow for TGT, LOW, and TJX in retail.

• U.S. WTI crude oil futures slipped -$0.13 or 0.21% to settle at $62.56 per barrel while Brent Crude futures settle at $65.38/bbl, down -$0.16 or 0.24%. Natural gas prices rebounded, rising 31.40 cents per million British thermal units, or 10.09% to $3.4270 per million British thermal units today, snapping a 4-day losing streak and a day after the contract closed at its lowest since April 25. Natural gas prices rose on a decline in daily output and forecasts for more demand next week than previously expected
• Treasury yields were little changed after swinging higher and lower this morning. No major US economic data to move markets today, but the recent Moody’s credit downgrade of the USA led to a spike in U.S. Treasury yields Monday, with the 30-year Treasury yield briefly surpassing 5% and the 10-year yield rising to 4.56% before settling lower (10-yr yield at 4.48% today). Higher yields reflect increased perceived risk, potentially raising borrowing costs for the U.S. government and consumers.

• In Footwear & Apparel: LEVI said it will sell Dockers to Authentic Brands Group for $311 million as the purchase price could reach up to $391 million, the result of a potential $80 million earnout opportunity tied to Dockers’ performance under Authentic’s ownership, Levi said.
• In Online Retail: The Financial Times reported the EU to impose flat tax on small items ordered online. The EU plans to levy a flat fee on billions of small packages entering the bloc, mainly from China, in a fresh blow to online retailers such as Temu (PDD) and Shein.
• In Beauty and Personal Products: ULTA price tgt raised to $465 from $435 at Oppenheimer ahead of earnings on (5/29) saying believes management is still well positioned to deliver on FY25 targets. WRBY shares jumped after saying it partners with GOOGL to develop intelligent eyewear as Google commits up to $150M, including equity investment; Google has committed up to $75M for product development and commercialization costs.

• In Housing/Building Products: EXP shares slipped initially after Q4 adj EPS $2.08 misses the consensus $2.48; Q4 revs $470.2B misses consensus $482.1M; Q4 adj Ebitda $141.2M vs. est. $156.4M. In Homebuilders: TOL is expected to report earnings after the close tonight; HOV reported earnings this morning

• In Online Travel/Lodging: TCOM delivered Q1 revs growth of 16% y/y and better-than-expected profitability while reaffirming its Q2 and FY25 guidance, targeting mid-teens growth, with international travel continuing to outperform as a core driver.
• In Autos: Alphabet’s (GOOGL) self-driving unit Waymo said it received approval from California to expand its robotaxi operations in more areas of the San Francisco Peninsula and further south, including San Jose. TSLA CEO in interview on CNBC noted sticks to launch timeline by end of June for robotaxi in Austin, Texas; Tesla currently testing ‘thousands’ of autonomous cars ahead of launch next month, and CEO Musk said he expects to have hundreds of thousands of self-driving Tesla’s by end of next year.

• In Utilities: AES was downgraded to Underperform from Hold at Jefferies following the stock’s rerating up +15% in the past week post recent tax bill proposal. ED, ES and Dominion (D) among utilities benefitting on news the Trump administration has lifted a month-old stop-work order on Empire Wind, a $5B wind farm project off the coast of New York, in a compromise with the state that could also see cancelled plans for a gas pipeline revived, officials said. SO announced a $1.25B convertible bond deal.

• In Insurance: CB was downgraded to Hold from Buy at Deutsche Bank saying its year-to-date outperformance versus the S&P 500 Index is unlikely to continue, as a calmer equity market shifts its focus back to underlying fundamentals and believe signs of deterioration in fundamentals are becoming evident.
• In GSE’s: FNMA and FMCC both advanced on the day after comments from FHFA Director Pulte article earlier on the GSEs – talked about cost cutting for them. “Our first mission is how do we get this from being a bloated enterprise? Get it on the treadmill, get it running efficiently,” he said. “Because an efficient, well-run Fannie and Freddie is a safe and sound mortgage market, and that includes making sure that people can afford it.”
• Credit rating agencies/service stocks FICO, EFC, TRU tumbled midday with some noting an article noting FHFA Director Bill Pulte said the administration will be working on how to better support manufactured housing in America. He also noted that the FHFA will be looking at title insurance and mortgage insurance to achieve greater cost savings for borrowers. Asked by an audience member about his predecessor’s push to change from a tri-merge credit score to a bi-merge credit score in the underwriting process, Pulte said they’re actively looking at getting it done. “I think FICO should make sure they’re being as economical as possible. We’re actively looking at getting it done. I don’t like some things I’ve heard in terms of the cost,” he said.

• CRSP and Sirius Therapeutics announce multi-target collaboration to develop novel siRNA Therapies; CRSP will make an upfront payment of $25M in cash and $70M in equity to Sirius Therapeutics.
• EKSO announced a 1-for-15 reverse stock split effective May 27th.
• IBRX was upgraded to Overweight from Neutral at Piper saying Anktiva is off to a strong launch in non-muscle invasive bladder cancer, with sales forecast of $83.5M in 2025.
• PFE said it would license an experimental cancer treatment from China’s 3SBio Inc, paying $1.25B upfront and up to another $4.8B if developmental milestones are met; PFE also plans to make a $100M equity investment in the Chinese biotechnology company after the transaction closes.
• RGNX announced the closure of a non-dilutive, limited recourse royalty bond agreement of up to $250M with Healthcare Royalty.
• TRML said its experimental antibody treatment demonstrated deep reductions in a measure of inflammation often tied to heart disease. When adjusted for placebo, Tourmaline’s drug cut hs-CRP levels by less than a similar antibody being developed by NVO.
• VRTX authorizes a $4B stock repurchase program.
• VVOS downgraded to Neutral from Buy at Alliance Global partners and cut tgt to $2.25 from $5.50 as views the company’s visibility as low pending signs of execution for its new business model, which it says is unlikely before the second half of 2025.
• In Medical Equipment: MTD was upgraded to Buy from Neutral at UBS but lower PT to $1,350 from $1,53 as rating change supported by a constructive view of: 1) incremental opportunities for service sales, 2) industry leading pricing power, 3) beneficial portfolio exposure, and 4) a medium-term tailwind from reshoring.

• In Aerospace & Defense: ACHR mentioned a new short call at Cupler Research; AL was upgraded to Buy at Citigroup saying after pivoting away from what seem to have been a long-held strategy of growing organically via direct purchases from aero OEMs, Air Lease now seems to be pursuing an AerCap-style capital allocation strategy; ATI was downgraded to Sector Weight from OW at Keybanc saying following Q1 results, discussion with management, and analysis, its estimates are raised for 2025 to reflect stronger aero engine and defense demand, but notes positive near-term catalysts have quickly played out since its April upgrade.
• In Chemicals: CE was upgraded to Market Perform from Underperform at BMO Capital and raised PT to $55 saying while the co still has a reasonable amount of risk owing to macro/ end-market uncertainty, amplified by CE’s significant debt, both of these risks are a bit more muted. WLK downgraded to EW from Overweight at Wells Fargo, reducing its earnings outlook given industry operating rates for PVC and PE started Q225 lower than expected and cut tgt to $76 from $95.

• In Telecom: VOD FY ADJ ebitda EU10.932B vs. est. EU11.499B; FY revs EU37.448B vs. est. EU38.090B; Expect to see broad-based momentum across Europe and Africa, and for Germany to return to top-line growth during this year; New EUR 2.0B buyback program launched with initial tranche of EUR 0.5B; in towers, SBAC was downgraded to Hold from Buy at Deutsche Bank saying though they remain constructive on SBA’s longer-term growth prospects and recent efforts to enhance its portfolio mix/balance sheet position, its downgrade reflects: Limited prospects for near-term AFFO/share growth.

• ASAN was downgraded to Underweight at Morgan Stanley saying share rally post Q4 earnings likely driven by insider buying but sees little support from improvement in demand or fundamentals over this time.
• HPE was upgraded to Outperform from In Line at Evercore and raise tgt to $22 from $17 saying the current risk/reward is fairly attractive, especially for investors that have some duration.
• MDB was downgraded to Hold from Buy at Loop Capital and cut tgt to $190 from $350 saying recent industry checks indicate that MongoDB’s Atlas platform continues to show lackluster market adoption.
• MSFT tgt raised from $480 to $550 at Goldman Sachs and reiterates Buy saying they leave Microsoft Build with stronger conviction in Microsoft’s AI investments, reinforcing visibility into $300B+ in Microsoft Cloud revenue by FY29, along with a more efficient CAPEX profile.
• NBIS Q1 sales were $55M vs. est. $58M on EPS loss (-$0.39) vs. est. (-$0.45) and EBITDA (-$63M) vs. est. (-$94M) with ARR $249M vs. est. $220M; said adjusted EBITDA is expected to turn positive by 2H FY25.
• NTNX was downgraded to Market Perform from Outperform at Raymond James following a well deserving run-up, but one that likely sees the shares appropriately valued now (Nutanix’s stock is up 36% YTD and +25% from a year ago). As a software supplier, Nutanix likely benefits from a lack of direct tariff exposure.
• PEGA will replace JWN in the S&P MidCap 400 effective prior to the opening of trading on Thursday, May 22. The Nordstrom family and El Puerto de Liverpool S.A.B. de C.V. are acquiring Nordstrom in a deal expected to be completed on May 20.
• QBTS announced the general availability of its Advantage2(TM) quantum computing system, a powerful and energy-efficient annealing quantum computer capable of solving computationally complex problems beyond the reach of classical computers.

• In Semiconductors: INTC has considered divesting its network and edge businesses as the chipmaker looks to shave off parts of the company its new chief executive does not see as crucial, Reuters reported citing sources.