Mid-Morning Look

Tuesday, June 17, 2025

U.S. stocks slipped overnight, (but are already paring losses) after President Trump called for the evacuation of Tehran and cut short his G-7 visit last night. His full Truth Social post said:” Iran should have signed the “deal” I told them to sign. What a shame, and waste of human life. Simply stated, Iran CAN NOT HAVE A NUCLEAR WEAPON. I said it over and over again! Everyone should immediately evacuate Tehran!” The headlines pressures US futures overnight and have so far held those losses ahead of the FOMC policy meeting results tomorrow. In data today, consumer spending fell in May, slipping after a surge earlier this year in car buying. Retail sales fell -0.9% in May from a month earlier, the Commerce Department said, worse than the -0.6% decline economists had expected as the decline was partly driven by lower levels of auto purchases. Excluding motor vehicles, retail sales fell just 0.3%, though that was still below consensus expectations for a 0.1% gain. Markets await the Fed tomorrow, and a busy trading day Friday given it is a quadruple witching Friday (simultaneous expiration of index futures, index options, stock futures, and stock options) and 2Q25 rebalance Friday for several major market indexes.

In stock news, Senate Republicans proposed to cut trillions of dollars in taxes for households and businesses in their version of President Donald Trump’s signature economic package, in a bill that had cleared the House of Representatives in May. Among the notable changes shares of nuclear power companies rose after the Senate extended credits for nuclear energy to 2036, the Senate’s draft tax bill proposes increasing the investment credit for semiconductor manufacturers from 25% to 30% of investments in plants. The Senate panel proposed a full phase-out of solar and wind energy tax credits by 2028, which is crushing solar stocks today. Jabil (JBL) shares surge to record highs following earnings results in the EMS Sector, while homebuilder Lennar (LEN) rises after earnings missed but gross margins helped propel sentiment higher.

• U.S. Import prices unchanged for May vs. consensus -0.2% vs April +0.1%; May export prices -0.9% vs. consensus -0.2% and vs April +0.1%; May non-petroleum import prices +0.2%, y/y +1.8%; May year-over-year import prices +0.2%, export prices +1.7%.
• Industrial production for May declined -0.2% vs. consensus +0.1% and compared to April +0.1% (previously unchanged) while May industrial output ex cars/parts -0.5% vs April +0.2%; the May capacity utilization rate declined to 77.4% (consensus 77.7%) vs April 77.7% (previous 77.7%).

• In the AI Sector: OpenAI: secures $200M contract w/ Defense Dept to explore AI applications for administrative and security tasks; WSJ report last night indicates the OpenAI/MSFT partnership is near a breaking point, with OpenAI considering antitrust complaints against its partner; Elon Musk’s AI startup xAI is in talks to raise $4.3 billion through an equity investment on top of its $5 billion debt funding plans, Bloomberg News reported on Tuesday.
• In Autos: NIO was upgraded to Neutral from Sell at Goldman Sachs as believes management’s cost reduction efforts will help improve the company’s profit levels over the next three years by 4%-10% and XPEV was upgraded to Buy from Neutral saying a series of efforts, including organization and supply chain restructuring, technology cost-down, and platformization, have transformed the company’s product and cost structure competitiveness. RACE has delayed plans for its second fully electric model that was due out in 2026 to at least 2028, because of a lack of demand for high-performance luxury EVs, Reuters reported.

• JBL +7%; new all-time highs after reported Q3 revenue of $7.8B vs estimates of $7.06B on better earnings of $2.55 vs estimates of $2.31; lifts 2025 revenue forecast to $29B from $27.9B and raises 2025 adj EPS to $9.33 from $8.95 (shares of FLEX, BHE, CLS among other EMS names up in sympathy).
• LEN +3%; Q2 adj EPS $1.81 missed the $1.94 consensus estimates while Q1 revs of $8.38B beat the $81.6B estimate on better margins which helped shares (GM% at 17.8% matched guide and confirms that LEN sold/closed homes in FQ2 at roughly the same GM% as its backlog said Wells Fargo).
• RDDT +13%; after recently introduced two new AI-powered advertising features designed to help brands increase engagement by leveraging user conversations on the platform. In Cannes Lions 2025, introducing Reddit Community Intelligence.
• ROKU +2%; adding to prior day gains, upgraded to Buy from Hold at Loop Capital based on their expectation that the AMZN advertising partnership announced this morning should begin positively impacting ROKU’s financial results starting next year.
• VERV +73%; after LLY is buying the developer of gene-editing treatments for cardiovascular disease for $1 billion plus a CVR potentially worth another $300 million, paying $10.50 per share; shares of PRME advanced in reaction to the deal news as well.

• FSLY -7%; as ANET appoints Todd Nightingale as President and COO; Nightingale joins from FSLY, where he served as CEO
• FVR -3%; after its board on Sunday terminated CFO and Co-CEO Randall Starr for cause (but said unrelated to previously filed financial statements), and JPMorgan downgraded the stock to neutral from overweight.
• MMYT -8%; after TCOM announced that it has entered into a share repurchase agreement with MakeMyTrip to sell a portion of the Class B ordinary shares that the company holds to MakeMyTrip for cancellation; announced the commencement of a proposed primary offering of 14M shares.
• NVTS -5%; was downgraded to hold from buy at Deutsche Bank noting the share rally that followed news the company will collaborate with Nvidia on data-center power infrastructure.
• OMC -2%; along with other advertising companies IPG, WPP as well as Pharma stocks PFE, BMY, ABBV after RFK Jr. plans crackdown on pharma ads in threat to $10b market
• RDW -18%; after priced an upsized stock offering of 15.525M shares at $16.75 per share.
• RUN -42%; among worst solar stock movers (ENPH, ARRY, SEDG, FTCI), though group was broadly lower after a Senate panel proposed a full phase-out of solar and wind energy tax credits by 2028, as part of changes suggested to President Trump’s sweeping tax-cut and spending bill
• SGRY -13%; after saying they were unable to agree to the terms of Bain Capital’s take-private offer. In January, Bain Capital Private Equity proposed to acquire the remaining shares of SGRY it does not already own for $25.75 apiece (Bain Capital has a 38.97% stake in co, according Reuters).
• TMUS -3%; shares slip following a report that Softbank trimmed its stake in the company to help pay for its AI plans; raised about $4.8B from an overnight unregistered block sale of T-Mobile stock, dumping 21.5Mm shares for $224 each, according to a Bloomberg report.
• WMT -0.5%; on track for its 10^th straight daily decline; longest losing streak since 2011.