Mid-Morning Look

Thursday, April 10, 2025

U.S. stocks slumped overnight following the biggest one-day gain since 2008 for the S&P on Wednesday (rising over 9% while the Nasdaq surged over 12%) after U.S. President Donald Trump’s move to temporarily lower the heavy tariffs on dozens of countries (excluding China which he raised tariffs to +125%). In a positive, China did not retaliate overnight as it had done the last 2x the US implemented tariffs on them but still markets remained weaker initially. Energy stocks tumbling with WTI crude tumbling around 5% to $59 per barrel, pressuring APA, EOG, DVN and others. Also seeing a pullback in semis (SOX) -6% after jumping 17% Wednesday, airlines and retailers also big reversals after monstrous rallies the prior session. Gold prices rose more than 2.5%, extending previous session’s sharp rise, as a drop in the dollar and an escalating trade war between the U.S. and China drove investors towards safe havens. The European Union said this morning it had agreed on a 90-day pause on counter tariffs on U.S. goods, which were due on April 15. Futures came off their session lows around 8:30 AM after data showed the consumer price index unexpectedly dipped 0.1% in March and advanced 2.4% in the 12 months through March, both below the prior month and economist expectations (more below). More inflation data tomorrow with PPI and the start of earnings season with large cap banks reporting (JPM, WFC, BK, MS).

In tariff news today, the European Union (EU) said it will pause its first countermeasures against U.S. tariffs after President Donald Trump temporarily lowered the hefty duties he had just imposed on dozens of countries. The EU was due to launch counter-tariffs on about $23.25B of U.S. imports from next Tuesday in response to Trump’s 25% tariffs on steel and aluminium while still assessing how to respond to U.S. car tariffs and the broader 10% levies. Also, the Fed not helping markets again despite the collar CPI inflation reading this morning as Kansas City Fed President Jeff Schmid says he’s “not willing to take any chances” on inflation. Full quote: “So far, through the spike and subsequent decline in inflation over the past few years, the Fed’s actions have been effective in keeping longer-term inflation expectations well anchored. Now, with renewed price pressures likely, I am not willing to take any chances when it comes to maintaining the Fed’s credibility on inflation.”

• Weekly jobless claims climbed to 223,000 in latest week, staying below 226K for a 6^th straight week and vs. consensus 223,000 (from 219K prior week); the 4-week moving average was unchanged at 223K; continued claims fell to 1.850M from 1.893M prior week and vs. consensus 1.882M.

• In Life Sciences & CRO sector: Barclays upgraded DHR to Overweight on the pullback ahead of earnings saying Tools are still defensive, but less so than in the past given the threat of the pharma-specific tariffs potentially causing another round of budget cuts/restructurings. The firm downgraded CROs based on lower visibility; but hopes this is a short-term call on the space, but tough to see any data coming out. The firm favors bioprocessing and clinically positioned businesses and upgrade DHR to Overweight as a defensive position. Barclays downgraded shares of ICLR, IQV to Equal Weight from OW and FTRE to Underweight.
• In Video Game Software: RBLX was upgraded to Outperform at Oppenheimer with a $70 tgt saying believes the recent pullback in the stock has created an excellent entry point for long-term investors after checks suggest that revenue contribution from programmatic video ads will materialize in 2025; APP was upgraded to Overweight at Morgan Stanley but lower tgt to $350 from $470 saying the company has consistently gained share in gaming advertising and has built scale in non-gaming advertising far faster than previously expected. Bank America said March mobile gaming IAP spend appears to have notably weakened following a fairly robust February: daily average run rate likely fell MSD M/M in March based on 28 days of US mobile gaming IAP data (3/2 – 3/29) from Data.ai. Across their coverage, 1CQ expectations appear aligned with 3P estimates, with the exception of EA which tracked below Street.
• In Asset Managers: Monthly Assets Under Management (AUM) data out today for March: 1) AB prelim assets under management decreased to $784B during March 2025 from $805B at the end of February. Net inflows across all three channels (Institutional, Retail and Private Wealth); 2) IVZ prelim March AUM of $1,844.8B, a decrease of 2.3% versus the previous month-end. The firm delivered net long-term inflows of $6.5B in the month. Non-management fee earning net outflows were $1.7B and money market net inflows were $5.8B; 3) LAZ prelim AUM as of March 31, 2025, totaled approximately $227.4B. The month’s AUM included market depreciation of $5.4B, net outflows of $3.1B and foreign exchange appreciation of $3.1B; 4) TROW prelim assets under management of $1.57 trillion as of March 31, 2025. Preliminary net outflows were $1.8B for March 2025 and $8.6B for the quarter-ended March 2025; 5) VRTS preliminary AUM of $167.5 billion and other fee earning assets of $2.1 billion for total client assets of $169.6 billion as of March 31, 2025.

• KROS +15%; after announcing review of strategic alternatives and adopting a Limited-Duration Stockholder Rights Plan.
• LOVE +9%; after results and guided Q1 adj. EBITDA loss to ($8M-$12M) vs. est. loss (-$10.4M) and guides outlook Q1 net sales in range of $136M-$142M vs. est. $138.6M.
• NEM +3%; along with gains of AEM, GOLD and other gold miners with gold prices which are up 2.7% at $3,162 an ounce.
• UNH +2%; as defensive healthcare/managed care names bounce with sell-off in broad market.

• ASYS -10%; after cutting Q2 revenue view to $15M-$16M from $21M-$23M, saying its Thermal Processing Solutions Segment experienced a customer dispute during its fiscal second quarter. The dispute involves a previously cancelled order and results in the shipping delay of a separate order.
• BWA -5%; auto suppliers weak; UBS lowered auto supplier ratings, cutting APTV, BWA and VC to Neutral from Buy saying new trade policies are raising the cost to make a vehicle, leading to increased consumer prices and negatively impacting demand, while production disruptions are likely; financially challenging suppliers.
• KMX -17%; after Q4 results as Q4 EPS of $0.58 missed the $0.66 consensus while revs grew 6.7% y/y to $6B, in-line with estimates while used vehicle sales increased 7.5% to $4.84B, just missing ests of $4.87B and Q4 comp sales rose 5.1% but missed expectations of 6.4% growth.
• NKE -8%; as many retailers giving back a good chunk of yesterday’s gains with pullbacks in DECK, LEVI, PVH
• X -8%; after U.S. President Donald Trump said that he does not want U.S. Steel Corp to go to Japan. “We don’t want to see it go to Japan. We love Japan, but we, you know, U.S. Steel is very special company. We don’t want it to go to Japan or any other place, and we’re working with them”