Mid-Morning Look

Thursday, June 05, 2025

U.S. stocks once again very choppy, with major averages bouncing back and forth between gains and losses as investors digest more trade headlines with President Trump talking to China Leader Xi this morning and more economic data. It was the second consecutive day of ugly economic data as nonfarm productivity fell more than expected and weakest since 2022 while labor costs rose and jobless claims rose (follows a decline in ISM Services data yesterday and a big miss in ADP private payrolls data – ahead of the nonfarm payroll report tomorrow morning). In Central Bank news, as expected the European Central Bank (ECB) cut its interest rate 25 bps to 2% as they now see inflation falling further below the ECB’s 2% target next year as lower energy costs, a stronger euro and weak economic growth all weigh on prices. The euro has risen against the dollar at $1.147, above where it was trading before the announcement. U.S. Treasury notes rally initially, sending their yields lower, after a second straight week of rising initial jobless claims hinted at a weaker U.S. labor market. Jobless claims hit their highest level since last fall in the week through May 31. However, the benchmark 10-year Treasury yield has bounced back to 4.37% off lows of 4.32%. Earnings tonight in focus with chip giant AVGO after the bell.

• 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) 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 Utilities: OGE was upgraded to Overweight from Equal Weight at Barclays following positive data-points that have transpired since the Q1 report. SO was upgraded to Buy at Jefferies saying its imminent RFP wins unlock superior rate base growth vs peers. Georgia Power’s likely 70%+ win of an 8.5 GW opportunity equals ~$12.9B of incremental CAPEX, driving EPS growth to a 7.2% CAGR through ’29, accelerating to 7.9% thru ’35; WEC announced a $700 mln convertible debt deal.
• 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’s guidance and Q1 guidance was well below.

• FIVE +10%; 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
• MDB +17%; jumped on results as Atlas growth re-accelerated for the first time in many years (+26% y/y). Mongo posted a solid quarter, headlined by ~4% revenue and >500bps OM beats and the company’s best new customer acquisition quarter in six years (+2,600) while management raised the FY26 guide by $10M
• NBIS +5%; 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.
• PL +42%; 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.
• VRNT +13%; 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.

• BF -15%; 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.
• CHWY -3%; 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.
• CIEN -14%; 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.
• PVH -16%; cut its profit outlook for the year and issued lower-than-expected guidance for the current quarter, hurt by higher costs stemming from tariffs and an uncertain macroeconomic environment; said sees 2Q EPS below at $1.85-$2.00 vs consensus $2.47 and is reducing the FY EPS guide.
• TSLA -5%; has been losing steam the last couple of days after a strong run in May.
• WGO -9%; updated Q3 guidance as sees Q3 adj EPS $0.75-$0.85 below the consensus $1.37 and sees Q3 revs about $775M vs. est. $811.6M.