Closing Recap

Wednesday, October 01, 2025

U.S. stocks remain strong, undeterred and steadfast as good news, bad news (or no news for that matter) remains a buying opportunity for global stock markets, with today being no different. News that the U.S. government shut down much of its operations at midnight after failing to reach short-term spending gap funding, delaying the release of crucial jobs data on Friday failed to worry markets as the S&P 500 index (SPX) hit record intraday highs above 6,700 after early morning (brief) weakness and just kept going. The path of least resistance for more than 6 months has been up, way up as stocks are coming into October with a 5-month winning streak, including a strong September that saw the SPY +3.6%, the QQQ rise +5.4% and the Small Cap IWM gain +3.2%, in a generally weak seasonal period. Stocks climbed all day, finishing at the highs as we kick off the new trading month.

Helping sentiment today, a poor private payroll reading as ADP showed employment fell by -32K last month, a far cry from the expectations for a +50K gain, added to concerns that the U.S. labor market might be weakening. However, all markets care about are interest rates, and while the slowing economy is a concern, expectations of more aggressive Fed interest rate cuts (now 100% chance baked in of a 25bps cut in October) boosted major averages. In stock news, the big movers today were Healthcare (XLV +3%) led by drug makers while MedTech and Managed care were weak as well as mixed Tech strength (XLK rose while XLC fell) and weakness in Materials (XLB). Philadelphia Semi Index (SOX) new record highs today again +1.18% at 6,444 (topping prior high 6,408) as NVDA, KLAC, LRCX, MU, SNDK, STX, WDC among names hitting 52-week/or all-time highs as AI leads.

There were “zero” market concerns about the shutdown (anything really) as @KobeissiLetter noted on “X”, “Government Shutdown Facts The Media Won’t Cover: 1. The average length of a shutdown is only ~8 days, 2. The S&P 500 has ended higher one year after a shutdown in 86% of cases, 3. The S&P 500 posts an average gain of +13% one year after the shutdown ends, 4. During the 35 day shutdown in 2018, the S&P 500 rallied +11%, 5. While the government is shut down, the US defers ~$400M/day in costs, 6. The Fed generally turns more dovish if government data releases are paused.”

Daniel Niles said on “X” today about the gov’t shutdown: “During the last govt shutdown, on 1st day (12/24/18) S&P -2.7% after 17.5% decline since 9/20/18 on initial China trade war/growth concerns. But S&P +10.3% over entire 35-day shutdown w/ 12/24 the low. Set-up today is very different & riskier w/ mkt near highs vs lows. My belief is this shutdown could last even longer than in 2018 but that other factors will ultimately matter more such as 1) upcoming Q3 earnings being solid, 2) AI euphoria continuing with the Mag7 reporting solid qtrs. and 3) the next Fed mtg on 10/29 where I expect the Fed to stay on its course to cut rates three times this year.

• ISM U.S. manufacturing activity index 49.1 in September (consensus 49.0) vs 48.7 in August; prices paid index 61.9 in September (consensus 63.2) vs 63.7 in August; new orders index 48.9 in September vs 51.4 in August; employment index 45.3 in September vs 43.8 in August
• US mortgage market index -12.7% to 339.1 in week ended Sept 26 as per weekly MBA data; purchase index falls 1.0% to 172.7 in Sept 26 week; refinance index falls 20.6% to 1,278.6 in Sept 26 week as the average 30-year mortgage rate climbs 12 bps to 6.46% in Sept 26 week.

• In commodities, another intraday record high in gold prices of $3,922 an ounce was reached this morning before paring gains and finishing +$24.30 or 0.63% to settle at $3,897.50. U.S. WTI crude oil futures fell -$0.59 or 0.95% to settle at $61.78 per barrel (16-week lows), falling a 3^rd day as investors weighed potential OPEC+ plans for a larger output hike next month.

• In Auto Retail: CVNA was upgraded to Buy from Hold at Jefferies and boosted the price target to $485 from $375 saying the results of its consumer survey, web scape, and capacity analysis suggest Carvana will continue to deliver elevated growth and upside to consensus estimates.
• LI delivered 33,951 vehicles in September, ending a three-month slide with a 19% gain vs. August. But that was down 36.8% vs. a year earlier; For Q3, Li delivered 93,211, down 39% vs. a year earlier and 16.1% vs. a year earlier.
• NIO delivered 34,749 vehicles in September 2025, reaching a new monthly record and representing an increase of 64.1% y/y; delivered 87,071 vehicles in Q3, reaching a new quarterly high and representing an increase of 40.8% y/y. Cumulative deliveries reached 872,785 as of September 30, 2025
• XPEV delivered a record 41,581 Smart EVs, a 95% y/y increase and up 10% over the prior month, exceeding the 40,000 monthly deliveries milestone. For Q3, XPENG delivered 116,007 Smart EVs, a 149% y/y increase. Cumulative deliveries for the first nine months of 2025 reached 313,196 units, representing a 218% increase from the corresponding period in 2024.

• For Grocers: AMZN launched a new private label food brand called Amazon Grocery, consolidating Fresh & Happy Belly under one name. The line includes 1,000+ items across produce, meat, dairy, snacks & pantry staples, mostly priced under $5 & is now available on Amazon & in Fresh stores (shares of ACI, KR, DG, DLTR were among names that declined following the headlines). CALM reported quarterly earnings and sales that missed the average analyst estimate.
• In Food & Beverages: CAG said Q1 net revenue falls 5.8%, but is in line with analyst expectations while adj EPS beats analyst ests and reaffirms FY26 guidance amidst inflationary pressures; GIS said it is closing three manufacturing plants in Missouri as part of a multi-year initiative and expects $82M related to restructuring charges; HSY was added to Goldman Sachs US Conviction List as part of its monthly update as believes Hershey will beat consensus estimates on greater market share gains and better than expected elasticities on planned pricing.

• In Leisure Products: Citigroup upgraded DOOO to Buy from Neutral at Citigroup with a price target of $73, up from $68 and placed a "60-day upside catalyst watch" on the shares while PII was upgraded to Neutral from Sell with a price target of $60, up from $35 and also added a "30-day upside catalyst watch" on the stock as believes the company’s improved retail performance in Q3 outweighs worries over tariffs. The analyst also sees the promotional environment normalizing for Polaris.

• In Solar/Alt Power: RUN was upgraded to Buy from Hold (tgt to $21 from $11) as believes the co is best positioned in the narrowing, competitive residential solar landscape, growing in the HSD% to teens range in ’26 vs rest of the market declining 20-30% Y/Y. Further, it believes the Co. is set to benefit from cash generation execution in 2H25 and strong growth set up into ’26 following 25D expiration. President Donald Trump’s administration is cancelling nearly $8 billion in climate-related funding targeting 16 U.S. states, including California and New York, White House budget director Russ Vought said on Wednesday. Details of the cancellations will come from the U.S. Energy Department, Vought added in his post on X.

• In Closed End/Investing: JP Morgan downgraded shares of PSBD to Neutral (from OW) as believes NAV volatility and earnings headwinds from potentially lower rates and tight spreads limit the potential to narrow the discount to NAV within its investment horizon; downgraded TSLX to Neutral (from OW) after having outperformed peers YTD and upgraded CGBD to Neutral from Underweight saying returns appear to be more in line with the peer group, as CGBD works to optimize the recent merger of portfolios and bolster earnings power (but says CGBD remains a “show me” story).
• In Financial Services: RDDT shares tumbled after ChatGPT massively reduced Reddit citations — traffic is now even close to early-year levels. RBC Capital noted SimilarWeb data showing declining DAU’s on a T30 day average is making the rounds on social media this morning and weighing on the stock along with other 3p’s flagging that RDDT’s citation share on ChatGPT has gone down significantly recently. MCO was upgraded to Buy from Hold at Deutsche Bank with an unchanged price target of $528 citing valuation and the potential for fundamental upside in the company’s ratings division for the upgrade.

• Global drugmakers are scrambling to shore up their U.S. manufacturing capacity and domestic inventory as the Trump administration moves ahead with a 100% tariff on imported branded and patented drugs, starting October 1. The sweeping measure has triggered a flurry of activity across the industry, including fast-tracking U.S. manufacturing projects, price cuts and direct-to-consumer sales.
• AXSM was initiated with a Buy rating and $179 price target at B Riley as believes a window is open for entry ahead of Q3 earnings, a second wave of potential 2026 approvals, and initiation of a third wave of late-stage candidates in Q4.
• BMY said it won FDA fast-track designation for its BMS-986446 drug candidate in Alzheimer’s disease.
• ENTA priced 6.5M share Spot Secondary priced at $10.00; deal size increased to $65M from $50M.
• FBIO shares tumbled after saying the FDA declined to approve its drug CUTX-101, to treat Menkes disease, it is developing with Indian drugmaker Zydus Lifesciences as the "complete response letter" (CRL) pointed to deficiencies at the facility where the drug, is manufactured.
• HALO said it would buy privately held Elektrofi for $750M in cash, to expand its lineup with a technology that can deliver biologic medicines in small, concentrated doses.

• In Managed care: UNH unveiled its 2026 Medicare Advantage plans, expanding HMO offerings but exiting 16 counties, affecting ~180k members. In total, over 100 plans covering ~600k members will be discontinued. Plans remain available to 94% of Medicare eligibles, with most offering $0 premiums, $0 copays for primary care and Tier 1 drugs, plus dental, vision and hearing benefits. HUM shares underperformed in the managed care sector after saying about 83% of stand-alone prescription drug plans for 2026 will offer a premium decrease.
• Healthcare Services: Bank America was cautious on HIMS as reiterated Underperform and $28 tgt, saying, “based on observed sales data trends through August, we saw potential for Hims & Hers to beat 3Q Street estimates, but September sales trends through the first three weeks suggest this is less likely."

• In Truckers/Logistics: XPO was added to Benchmark’s Best Ideas List and removed CHRW following its strong outperformance versus Benchmark’s transport coverage. While CHRW has benefited from being viewed as an “Industrial AI” play, Benchmark sees XPO fitting this profile as well, which underpins its change. Benchmark stills view CHRW as one of its top ideas in the sector.
• In Rails: UNP shares slipped, snapping its 10-day win streak and NSC also fell, snapping its 9-day win streak in railroads as transports lagging today (Dow Transports -0.4%)

• LMT: The US State Department has approved the possible sale of M142 High Mobility Artillery Rocket Systems and related equipment to Canada for an estimated cost of $1.75B, the Pentagon said – principal contractor for the sale is Lockheed Martin
• MRCY was upgraded to Outperform from Sector Perform at RBC Capital and raised tgt to $90 from $55 saying believes MRCY is well positioned as a merchant supplier of defense mission-critical processing systems, which should benefit from the increased focus on greater defense capabilities.
• In Satellite Industry: Barclays downgraded VSAT to Underweight from Equal Weight as sees limited growth in ViaSat’s satellite business as competition continues to increase, while reiterated Overweight on ASTS and IRDM as reviews the growth opportunities in the satellite industry where it sees fast growing verticals such as residential broadband and D2D, yet also surging supply, so not all players will succeed. ASTS price tgt raised to $60 from $37 at Barclays as they reduced short-term estimates due to launch delays but cites an improved medium-term outlook for the target increase. Lowered tgt on IRDM to $25 from $31 as believes Iridium will face increasing long-term competition in its core verticals but sees value at these levels.

• In Lithium: LAC shares jumped after saying the U.S. Department of Energy (DOE) has taken a 5% stake in the company, along with a separate 5% stake in its Thacker Pass lithium project joint venture with General Motors (GM)
• In Steel sector (NUE, STLD, CLF): the WSJ reported the European Union is set to propose 50% tariffs on steel imports above a certain level, in a bid to protect the continent’s struggling industry, people familiar with the matter said. European steelmakers have called for tougher trade measures to deal with what they say is growing pressure from low-cost steel imports from China and other countries

• In Hardware: IBM and AMD struck a multi-year deal with open-source AI firm Zyphra to build AI training infrastructure. IBM Cloud will host a large cluster of AMD Instinct MI300X GPUs, marking the first full-stack AMD training platform scaled on IBM Cloud. Zyphra, valued at $1B, will use it to train multimodal foundation models. Data center names SMCI, VRT, DELL, ETN remain strong on AI hopes.
• In Software: HUBS shares fell over -6% after sliding -10% on Tuesday as Oppenheimer noted weakness in shares and the broader front office marketing segment is likely facing pressure following OpenAI’s announcement of Tailor Assist, a new inbound marketing tool that challenges the core market that HUBS traditionally dominated in. ZETA announced the pending acquisition of Marigold’s enterprise marketing software business for a total purchase price of $325mm or ~1.7x EV/Revenue and <10x EV/Adj. EBITDA.

• INTC shares jumped late Tuesday after a report by Semafor that the chipmaker is in early talks to add AMD as a foundry customer. https://tinyurl.com/3j5zkcx4
• MRVL was downgraded to Hold from Buy at TD Cowen and trim tgt to $85 from $90 saying low custom XPU visibility makes it difficult for them to underwrite Street F2027 datacenter estimates. Combined with growing competition in Marvell’s leading electro-optics franchise, TDCowen lowers its estimates slightly.
• Samsung Electronics (SSNLF) and SK Hynix have signed letters of intent to supply memory chips for OpenAI’s data centers, they said on Wednesday, as South Korean chipmakers join forces with the ChatGPT maker to meet rising demand from its Stargate project.
• QCOM has shifted its flagship chips to the latest generation of ARM computing architecture with new features aimed at better AI performance, sources familiar with the matter said, a move that could boost Arm’s revs and help Qualcomm’s chips compete against offerings from MediaTek and Apple, per Reuters.
• VECO shares rose after agreed to merge with ACLS in an all-stock deal; the combined company to have an enterprise value of $4.4 bln based on the last closing price of both companies; VECO shareholders will receive 0.3575 ACLS shares for each share of VECO they own.