Mid-Morning Look

Wednesday, June 11, 2025

All the news overnight and this morning were stock market positive but only seeing a modest reaction thus far on Wall Street following a 3-day rally. The S&P remains about 2% from all-time highs of 6,147, while the Nasdaq has powered back from April lows led by mega cap tech, AI plays and semiconductors (SOX +23% QTD). U.S. stocks got back-to-back positive headlines this morning, starting with China trade deal headlines by the President (details below), followed up by an across-the-board cooler-than-expected May consumer price index (CPI) report. The combo effect pushed Treasury yields and the dollar lower, while gold and stock prices rallied. No notable sector mover outside of weaker Materials (XLB) given weakness in steel stocks after Bloomberg reported the US and Mexico are close to finalizing a deal that would lift 50% steel tariffs on Mexican imports up to a certain volume.

President Trump tweeted this morning: “Our deal with China is done, subject to final approval with President Xi and me. Full magnets, and any necessary rare earths, will be supplied, up front, by China. Likewise, we will provide to China what was agreed to, including Chinese students using our colleges and universities (which has always been good with me!). We are getting a total of 55% tariffs; China is getting 10%. Relationship is excellent! Thank you for your attention to this matter!” (Note 55% is comprised of retaining 30% new tariffs plus 25% pre-existing).

Overnight, reports indicated both U.S. and China trade negotiators reached a preliminary agreement to ease tensions and revive stalled trade in key goods, including rare earth minerals. Both delegations agreed on a framework and will seek final approval from their leaders. While full terms remain undisclosed, US Commerce Secretary Lutnick and US Trade Representative Greer expressed optimism about implementation. The two countries are currently in a 90-day tariff truce, following a partial settlement in Geneva last month.

Gold prices jumped over 1% initially (has since pared gains to +0.2%) and Treasury yields slipped following the “cooler” May consumer prices (CPI) data (hit lows 4.42% before paring back to 4.45%), while the U.S. dollar fell against the yen and euro after the data showed underlying inflation rose less than expected last month, suggesting the Federal Reserve could cut interest rates sooner than later. The core consumer price index – a gauge of underlying inflation – rose just 0.1% in May after a 0.2% rise in April.

• In Hospital operators (ARDT, THC, UHS, HCA), Mizuho noted the hospital group is down -7.6% from June 6th versus the S&P 500 up +0.3% after the White House released a memorandum signaling President Trump’s administration’s plans to target waste, fraud, and abuse in Medicaid State Directed Payments (SDPs). This was followed by a preliminary regulation submission on SDP programs to the Office of Management and Budget (OMB) last night. The firm said the hospital selloff appears overdone on SDP fears. Separately, Short Seller “Fuzzy Panda” announced that it is short THC saying the firm’s analysis shows Tenet is “back at it again,” appearing to be “doing the same things https://tinyurl.com/yyj42z2t
• In Software: ORCL is expected to report earnings after the close tonight; GTLB shares fell after reporting their thinnest beat on record according to Needham, outperforming the high-end of revs guidance by 0.7% (compared to an average of 3.2% over the past 4 quarters) citing headwinds from greater SaaS mix and linearity, while mgmt reiterated its FY26 revenue guidance and raised EPS. SAIL shares rally on results as Q1 revenue of $230M beat by $5M, a slightly larger beat than last Q with the FY’26 revenue guide bumped by ~$9M at the midpoint and raises Fy26 ARR y/y growth to 25%-26% from 23%-24% prior. Citigroup opened an upside 90-day catalyst watch call on MSFT with view that Street Azure estimates are too low for FY26.

• MSFT +0.5%; above $473, making a new all-time high today after Citigroup opened an upside 90-day catalyst watch call on MSFT with view that Street Azure estimates are too low for FY26.
• OKLO +19%; a U.S. company hoping to build micro nuclear power plants, said on Wednesday the energy logistics agency of the Defense Department has issued a notice of intent to award a power purchase agreement for a pilot reactor.
• OUST +21%; shares jumped after its OS1 digital lidar has been vetted and approved by the Department of Defense (DOD) for use in unmanned aerial systems (UAS).
• PLAY +16%; reported Q1 comp sales of -8.3% missed the consensus of -6.9% on weaker EPS, revs and adj Ebitda, but shares bounced following disclosures that the same-store sales progression over the last several months has been down -11.9% in February, down -8.4% in March, down -4.3% in April.
• QUBT +28%; along with gains in IONQ, RGTI, QMCO after NVDA CEO Huang said during an appearance at Nvidia GTC Paris that quantum was reaching a so-called inflection point. “We are within reach of being able to apply quantum computing in areas that can solve some interesting problems in the coming years,” he added.
• SAIL +18%; as Q1 revenue of $230M beat by $5M, a slightly larger beat than last Q with the FY’26 revenue guide bumped by ~$9M at the midpoint and raises Fy26 ARR y/y growth to 25%-26% from 23%-24% prior.
• TLN +7%; after saying it has expanded its existing nuclear energy relationship with AMZN to provide carbon-free energy from its Susquehanna nuclear power plant to Amazon Web Services data centers in the region.

• CHWY -9%; shares give back some recent gains (shares +110% over last year) as Q1 EPS/revs were slightly above estimates, but margins fell to 29.6% from 29.7% in the same period a year ago.
• CLF -9%; along with weakness in other steel producers (NUE, STLD) after Bloomberg reported the US and Mexico are closing in on a deal that would remove 50% tariffs on steel imports up to a certain volume
• GTLB -7%; reported their thinnest beat on record according to Needham, outperforming the high-end of revs guidance by 0.7% (compared to an average of 3.2% over the past 4 quarters) citing headwinds from greater SaaS mix and linearity, while mgmt reiterated its FY26 revenue guidance and raised EPS.
• IREN -2%; after the Bitcoin miner announces pricing offering of $500M 3.50% convertible notes due Dec 2029 as offering size boosted from $450M; initial conversion price of $13.64 represents 30% premium to close.
• JILL -12%; shares tumbled early as Q1 sales fell -4.9% y/y to $153.6M, missing the $156.8M estimate while comp sales fell -5.7% y/y and said it would temporarily suspend its outlook.
• LMT -6%; after the Pentagon is scaling back by half its request to Congress for the U.S. Air Force’s Lockheed MartinF-35 jets, Bloomberg News reported. A U.S. Defense Department procurement request document sent to Capitol Hill this week asked for 24 of the planes, down from 48 y/y.
• MP -8%; after President Trump notes rare earths will be supplied up front by China.
• SMMT -2%; was Initiated at Underperform and $12 price tgt at Leerink saying consensus estimates for Ivonescimab assume an unrealistic share of the current anti-PD(L)1 total addressable market, given the intense and heterogenous competitive landscape, and compared to the PD-(L)1 era.
• VSCO -1%; reported Q1 adj EPS $0.09, topping the $0.04 ests as sales edged lower -0.5% y/y to $1.35B but topped the $1.33B est. Guided Q1 EPS and sales below consensus ($0.00-$0.15 vs. est. $0.30 and sales $1.38B-$1.41B vs. est. $1.42B) and lowered its adj operating income to $270M-$320M from $300M-$350M.