Mid-Morning Look

Monday, May 05, 2025

Coming off 9-day win streaks for the S&P 500 (longest streak since Nov 2004) and Dow Jones Industrials (while the Nasdaq 100 is up 8 of last 9 says, rising 13% during stretch), U.S. stock markets open Monday lower with a focus on energy stocks as oil prices tumble further (down -20% YTD) on surprise OPEC+ increase production by 411,000 b/d for June, while media/film companies under pressure (NFLX, DIS, WBD, SONY) after President Trump announced plans to impose a 100% tariff on films produced overseas. Stock markets pared losses around 10:00 am after the ISM Services reading was stronger than expected in another sign of an improving economy and lowering recession fears. Weekend news focused on OPEC+ agreeing to boost supply by 400k/bpd and President Trump saying some trade deals may be agreed upon this week while also telling NBC that he’s willing to lower China tariffs “at some point”/has current plans to speak with President Xi. Gold prices gained over 2% on Monday, driven by a weaker dollar and safe-haven demand, while the market awaits a policy decision from the FOMC later in the week.

U.S. stock markets have jumped nicely the last 2-weeks against the backdrop of easing macro headwinds (tariff rate-of-change, solid payrolls data), supportive positioning (as the VIX moved back to 22-handle late last week and bearish sentiment been easing a bit) and better than expected earnings (so far, 1Q earnings season better than feared w/ 1Q growth tracking +12% vs +6% expected). Stock markets accelerated gains last week after moving back above a few key technical resistance levels for major averages. Data Centers and Infrastructure were among the best movers last week as AI trade came back into play while Health Care, and Oil fell the most.

Note this is the last super busy week of earnings quarter coming up with roughly 19% of the S&P 500 expected this week (36% was last week and roughly 24% the week prior), though overall volume this the busiest week while last week was highest by market cap – roughly over 350 S&P companies have reported thus far for Q1, with consensus 1Q EPS (actual &estimates) on pace for a 6% beat.

• U.S. S&P Global April final composite PMI at 50.6 (vs flash 51.2) while U.S. S&P Global April final services PMI at 50.8 (vs flash 51.4).

• In Oil Majors: Bloomberg reported SHEL is evaluating with advisers a potential acquisition of rival BP and has been more seriously studying the feasibility and merits of a takeover in recent weeks. Shell’s deliberations are at an early stage and any decision will likely depend on whether BP’s stock continues to decline, but it might also wait for BP to reach out or for another bidder to emerge. https://tinyurl.com/sz2jmkyy ; energy stocks as a whole weaker with declining oil prices after OPEC+ increases production views at meeting.
• In Crypto: Bitcoin prices pull back off 2025 highs last Friday just shy of $98,000 ahead of the Fed meeting this week. MSTR said purchases 1,895 Bitcoins between Apr 28 – May 04 at an average of $95,167; MARA said April production saw a 15% m/m decrease in blocks won, as global hashrate had its second largest monthly gain on record and mining difficulty grew 8% from March; but energized hashrate grew 5.5% over the prior month; RIOT mined 463 Bitcoins in April.
• In Semiconductors: a U.S. lawmaker plans to introduce legislation in coming weeks to verify the location of artificial-intelligence chips like those made by NVDA after they are sold, Reuters reported. The effort to keep tabs on the chips aims to address reports of widespread smuggling of Nvidia’s chips into China. ON shares fell on results as Q1 EPS/revs beat but offered mixed Q2 guidance.

• BP +1%; Bloomberg reported SHEL is evaluating with advisers a potential acquisition of rival BP and has been more seriously studying the feasibility and merits of a takeover in recent weeks https://tinyurl.com/sz2jmkyy
• BTU +5%; after the co informs Anglo American that it may terminate its $3.78 billion acquisition deal if a Material Adverse Change concerning the Moranbah North Mine is not resolved.
• DAL +3%; outperformance for a second straight day in airlines (UAL, EXPE rising).
• HHH +3%; shares jumped after Pershing Square to invest $900M to acquire nine million newly issued shares of Howard Hughes Holdings and transform HHH into a diversified holding company; Pershing Square’s primary purchase of HHH stock for $100.00 per share and will now own 46.9% of company.
• SKX +24%; shares jumped after it announced that it has agreed to be acquired by 3G Capital for $63 per share in cash or $57.00 per share in cash and one LLC Unit (such consideration, subject to the proration as described below, the “Mixed Election Consideration”).

• BRK -5%; after Warren Buffett said he would be stepping down as CEO of the conglomerate at the end of the year, with his handpicked successor, Greg Abel, taking the helm. Berkshire’s cash pile grew to $348 billion at the end of the first quarter.
• CAPR -8%; after announcing the FDA to hold an advisory committee meeting for the company’s experimental cell therapy.
• IART -24%; shares tumble on results/guidance as Q1 revs $382.7M above est. $381.2M and Ebitda $63.6M vs. est. on earnings miss of $0.41 vs. est. $0.43; lowers adj 2025 EPS view to $2.19-$2.29 from $2.41-$2.51, while maintained its 2025 revenue view of $1.65B-$1.715B.
• MAN -8%; shares fell after cutting its semiannual dividend to $0.72 from $1.54 prior.
• MARA -9%; along with weakness in other Bitcoin miners RIOT, CLSK, HUT, IREN as Bitcoin prices pull back off 2025 highs last Friday just shy of $98,000 ahead of the Fed meeting this week (below $94K this morning)/.
• NFLX -2%; along with weakness in DIS, WBD, PARA, SONY as President Donald Trump said this weekend he was authorizing the Department of Commerce, and the USTR to immediately begin the process of instituting a 100% Tariff on any and all Movies coming into our Country that are produced in Foreign Lands.
• PTCT -19%; after mid-stage study; it said its experimental drug to treat Huntington’s disease met the main goal of a mid-stage study; the drug, PTC518, helped significantly lower levels of mutated protein in blood that causes the disease.
• TSN -9%; as Q2 EPS $0.92 beats the $0.82 estimate but sales of $13.07B missed the $13.14B estimate and reaffirmed their annual revenue forecast; said Q2 sales in its beef segment, the company’s largest, were up 4.9% in the quarter, while prices were up 8.2%, while volume declined -1.4%.
• ZBH -8%; Q1 adj. EPS $1.81 topped estimates of $1.77 on revs $1.91B vs. est. $1.9B; cuts its annual adj profit forecast to a range of $7.9-$8.10 from prior view of $8.15-$8.35 per share but said expects 2025 rev growth to be 5.7% to 8.2% including co’s acquisition of orthopedic surgical devices maker Paragon 28.