Mid-Morning Look

Wednesday, October 01, 2025

U.S. stocks seeing only modest weakness after the U.S. government shutdown (first time since 2018 and its 15th time since 1981) midnight last night after Congress failed to pass a stopgap funding bill that would have avoided the shutdown. Federal agencies will now implement their contingency plans and send hundreds of thousands of government workers home to wait out a stalemate. U.S. ADP private-sector employment unexpectedly fell in September, according to a monthly report, fueling greater concerns about a weaker labor market. Private employers shed -32,000 jobs last month, ADP said, a sharp contrast to the expected +45,000 job gains expected. August’s data was also downwardly revised to a loss of -3,000 jobs, having previously been reported as a +54,000 increase. The data raised expectations for additional rate cuts by the Fed in coming months…but also raised concerns the economy is weaker than feared. The federal government shutdown puts in doubt the publication of the official monthly jobs report by the Bureau of Labor Statistics due this Friday. Bitcoin hit a two-week high above $117,000 after ADP reported a 32,000-job loss in September (vs. +45,000 expected), fueling expectations of a Fed rate cut on Oct. 29. Lower rates support risk assets.  Stocks are lower, but by a very modest amount early. Meanwhile markets will also be digesting new tariffs, as promised duties of 100% on a slice of pharmaceutical products and 25% duties on heavy-duty trucks are scheduled to go into effect. Gold prices hit fresh highs, topping $3,900 an ounce, while Treasury yields dip along with the US dollar. In stocks news, NKE rises on earnings, Healthcare (XLV) outperforms along with crypto while Energy (XLE), Communications (XLC) and Consumer Staples (XLP) fall the most.

• ISM U.S. manufacturing activity index 49.1 in September (consensus 49.0) vs 48.7 in August; prices paid index 61.9 in September (consensus 63.2) vs 63.7 in August; new orders index 48.9 in September vs 51.4 in August; employment index 45.3 in September vs 43.8 in August

• European Pharma names big moves higher (AZN, GSK, SNY, NVO, RHHBY) as well as US drug co’s (BIIB, MRNA, REGN) as global drugmakers are scrambling to shore up their U.S. manufacturing capacity and domestic inventory as the Trump administration moves ahead with a 100% tariff on imported branded and patented drugs, starting October 1. The sweeping measure has triggered a flurry of activity across the industry, including fast-tracking U.S. manufacturing projects, price cuts and direct-to-consumer sales.
• In Satellite Industry: Barclays downgraded VSAT to Underweight as sees limited growth in ViaSat’s satellite business as competition continues to increase, while reiterated Overweight on ASTS and IRDM as reviews the growth opportunities in the satellite industry where it sees fast growing verticals such as residential broadband and D2D, yet also surging supply, so not all players will succeed. ASTS price tgt raised to $60 from $37 at Barclays as they reduced short-term estimates due to launch delays but cites an improved medium-term outlook for the target increase. Lowered tgt on IRDM to $25 as believes Iridium will face increasing long-term competition in its core verticals but sees value at these levels.
• Digital gaming/online sports betting stocks remain pressured (DKNG, FLUT, SRAD, GENI, MGM, PENN as Kalshi & the CFTC-regulated prediction markets exchange vertical has grown rapidly through early NFL season, quickly propelling prediction markets from a mostly theoretically emerging competitive threat to a meaningful overhang. Stifel defended DKNG, FLUT but noted Kalshi’s parlay builder tool, which temporarily launched last night for MNF, saw DKNG/FLUT trade off -12%/-10% today given fears around parlay handle share loss and/or competitive pressure to SGP hold. Deutsche Bank noted the potential addition of a formidable parlay product by prediction markets, provided it achieves ample liquidity, would directly compete with the ~60% GGR OSB operators realize from high-margin parlays.

• AZN +6%; along with other European pharma names
• CVNA +3%; was upgraded to Buy from Hold at Jefferies and boosted the price target to $485 from $375 saying the results of its consumer survey, web scape, and capacity analysis suggest Carvana will continue to deliver elevated growth and upside to consensus estimates.
• LAC +18%; after saying the U.S. Department of Energy (DOE) has taken a 5% stake in the company, along with a separate 5% stake in its Thacker Pass lithium project joint venture with General Motors (GM)
• NKE +4%; reported better top and bottom line Q1 results (EPS $0.49/revs $11.72B vs est. $0.27/$10.998B, while signals 20% running business growth and outlines ongoing China, digital, and gross margin headwinds through fiscal 2026.
• PGY +6%; along with UPST, SOFI, DAVE after BTIG issued a change to prior data. BTIG had noted on 9/28 flagging concerning delinquency trends in Upstart’s ABS securitizations…but today amends its data saying they originally overstated August delinquency levels due to a calculation error.
• RUN +11%; was upgraded to Buy from Hold (tgt to $21 from $11) as believes the co is best positioned in the narrowing, competitive residential solar landscape, growing in the HSD% to teens range in ’26 vs rest of the market declining 20-30% Y/Y.

• ENTA -13%; priced 6.5M share Spot Secondary priced at $10.00; deal size increased to $65M from $50M.
• FBIO -30%; shares tumbled after saying the FDA declined to approve its drug CUTX-101, to treat Menkes disease, it is developing with Indian drugmaker Zydus Lifesciences as the “complete response letter” (CRL) pointed to deficiencies at the facility where the drug, is manufactured.
• RDDT -6%; as SimilarWeb data showing declining DAU’s on a T30 day average is making the rounds on social media this morning and weighing on the stock along with other 3p’s flagging that RDDT’s citation share on ChatGPT has gone down significantly recently (as per RBC Capital)
• VSAT -4%; Barclays downgraded VSAT to Underweight as sees limited growth in ViaSat’s satellite business as competition continues to increase.