Mid-Morning Look

Tuesday, March 11, 2025

After posting one of the biggest one day % declines in over 2-years for the S&P and Nasdaq on Monday, stocks open Tuesday mixed, failing to rebound as disappointing forecasts from retailers (Kohl’s) and airlines (Delta, American) stoked more worries about a slowing economy. Shares of casinos, cruise stocks, retailers, and lodging names see weakness following the softer airline outlooks. Coming into the day, the S&P 500 index is now down -8.6% from its February record closing high, while the Dow is off -7.5% from its December 4 record close and the Nasdaq is trading down -12.9% from its December 16 record closing high. Stocks got a little bump after the January JOLTS job openings data showed a reading of 7.74M, above the expectation of 7.63M and vs last month’s read of 7.60M last month, giving hopes for the jobs market. However, the bounce was short lived following more tariff headlines from Trump. So far, every mkt bounce has been met with aggressive selling pressure for almost three weeks now, as major averages continue to hold below key technical levels as mounting concerns of an economic downturn dominate tariff-linked inflation fears. Will markets hold steady heading into key inflation data tomorrow (CPI) and Thursday (PPI)? So far, major averages holding in negative territory while the dollar slides, Treasuries are flat, and oil rises.

Markets rolled lower at 10:00 after President Trump tweeted about tariffs saying, “Based on Ontario, Canada, placing a 25% Tariff on “Electricity” coming into the United States, I have instructed my Secretary of Commerce to add an ADDITIONAL 25% Tariff, to 50%, on all STEEL and ALUMINUM COMING INTO THE United States FROM Canada, ONE OF THE HIGHEST TARIFFING NATIONS ANYWHERE IN THE WORLD. This will go into effect TOMORROW MORNING, March 12th. Also, Canada must immediately drop their Anti-American Farmer Tariff of 250% to 390% on various U.S. dairy products, which has long been considered outrageous. I will shortly be declaring a National Emergency on Electricity within the threatened area. This will allow the U.S to quickly do what has to be done to alleviate this abusive threat from Canada. If other egregious, long time Tariffs are not likewise dropped by Canada, I will substantially increase, on April 2nd, the Tariffs on Cars coming into the U.S. which will, essentially, permanently shut down the automobile manufacturing business in Canada. Those cars can easily be made in the USA!

• In Semiconductors: Citigroup said following a recent pick-up in Feb DDR5 PC DRAM contract price, the firm is seeing multiple signals indicating foreseeable memory market bottoming (MU, WDC, STX, SNDK); said with the market now reflecting the upward industry trajectory, spring is on its way for 2Q25E. For AMD Oracle said it signed a multi-billion-dollar contract to build a cluster based on 30k of AMD’s latest MI355X GPUs; TER shares slumped after saying at investor Day that FY26′ rev & EPS trending toward low end of prior model and forecasts Q2 revenue flat to down 10% vs Q1.

• LUV +8%; cuts 1Q RASM to up 2%-4% from prior view up 5%-7%, primarily due to increased capacity and lower than expected salary, wages, and benefits, maintenance, and other expenses; says accelerating $2.5B share buyback program; will charge to check bags for the first time, launch basic economy tickets.
• STLD +2%; along with moves in X, CLF, NUE after President Trump announced addition steel tariffs on Canada.
• TSLA +3%; positive comments from President Trump and positive analyst comments (Morgan Stanley auto analyst out this morning saying sees the pullback as a buying opportunity for an embodied AI compounder.
• TSVT +76%; announced a definitive merger agreement under which BMY will acquire all of the outstanding shares at a price of $5.00 per share in an all-cash transaction for a total equity value of approximately $286M.
• TXNM +7%; is exploring the sale of its operations after receiving interest from a potential suitor, Bloomberg News reported on Monday, citing people familiar with the matter. TXNM provides electricity to approximately 800,000 homes and businesses in New Mexico and Texas through its two regulated utilities.
• UNFI +2%; reported Q2 adj EPS of $0.22 on sales $8.15B, topping the $0.19/$7.95B estimates on better Ebitda of $145M; boosted its FY25 EPS view to $0.70-$0.90 from $0.40-$0.80 prior and revs to $31.3B-$31.7B from $30.6B-$31B prior.

• ASAN -26%; Asana’s Co-founder and CEO, Dustin Moskovitz, will be stepping back to the board and will hand over the CEO role to a successor; reported better-than-expected FQ425 results but a weak FY26 outlook; guided FY26 non-GAAP EPS of $0.19-$0.20 (consensus ($0.01)) on revenue of $782M-$790M (consensus $804M).
• CIEN -5%; reported aQ1 EPS $0.64 above ests $0.41 and revs rose to $1.07B from $1.04B y/y and above ests $1.05B; guides Q2 revs $1.05B-$1.13B vs. est. $1.07B; sees FY25 revenue growth toward high end of 8%-11%.
• DKS -3%; Q4 adj EPS $3.62 vs. est. $3.54 on better sales $3.89B vs. est. $3.78B and margins 35% (est. 34.6%); said its business looks strong for 2025 but its profit outlook of $13.80-$14.40 was below consensus est. $14.82; said it will increase its gross margins in 2025 and grow its comparable store sales.
• KSS -20%; as posted Q4 sales fell -9.4% y/y to $51.8B, which was in-line with consensus but EPS of $0.43 missed the $0.72 estimate; guided 2025 comparable sales to decline (-4%-6%) vs. ests. for (-0.9%) after Q4 comps fell (-6.7%); also guided 2025 adj EPS $0.10-$0.60, well below the consensus estimate of $1.23.
• NPWR -36%; extended recent losses as investors continued to sell the clean energy technology company after it announced higher than anticipated costs for its Project Permian project.
• ORCL -4%; reported Q3 results that missed analysts’ expectations as EPS of $1.47 missed the $1.49 estimate and revs of $14.13B rose 6% y/y vs. +9% y/y last quarter which missed the $14.39B but said cloud infrastructure unit revs increased 49% from a year earlier to $2.7B; guided next quarter lower.
• RDW -8%; shares fell after the space infrastructure company reported revenue for Q4 that trailed Wall Street’s expectations.
• TER -16%; after saying at investor Day that FY26′ rev & EPS trending toward low end of prior model and forecasts Q2 revenue flat to down 10% vs Q1.
• VKTX -9%; announced that it has signed a broad, multi-year manufacturing agreement with CordenPharma, an industry-leading contract development and manufacturing organization.
• VZ -7%; as the CEO said the company has seen an elevated level of competition in Q1 and growth will be “probably soft” in an industry conference call; expects middle-single-digit growth y/y with slow start in Q1.