Mid-Morning Look

Tuesday, October 07, 2025

U.S. stocks open little changed in what appears to be one of the quieter weeks in recent memory with barely any economic data given the U.S. government shutdown and earnings season kicking off next week. The S&P 500 index (SPX) did hit a new intraday record high, looking to make it an 8^th straight day of gains while Smallcaps opened strong, as the IWM looks to make it 8-straight winning days as well (its longest win streak since Oct 2022), but gives up early gains from record highs. Nasdaq strength remains buoyed, day after day, on AI optimism, semiconductor strength and large cap winners (helped today by solid DELL guidance and capex comments for AI). Nasdaq Comp topped 25,000 for the first time. The US shutdown drags on (now Day 7 of the gov’t closure) as the situation remains in a political stalemate after the Senate again failed to pass rival funding bills, while the House remains out of session. Democrats insist any deal must include an extension of Affordable Care Act (ACA) subsidies; a demand Republicans reject while the government is closed. President Trump has floated linking the subsidies to reopening but offered no details. With both sides entrenched and Senate votes falling short of the 60-vote threshold, the standoff threatens to extend well into next week. Gold futures hit $4,000 an ounce for the first time and is now up over 51% this year alone while Bitcoin prices hit record highs yesterday around $126,000 and are up 34% YTD – two of the stronger asset classes this year.

• In Consumer Finance: JP Morgan with several ratings changes as they OPRT to Underweight from Neutral saying it could face incremental headwinds as balance sheets for low-income consumers deteriorate; downgraded SYF to Neutral as prefers the relative defensiveness of GPCC issuers given SYF’s potentially lower position in the consumer payment hierarchy and higher DQ/NCO rates; cut SLM to Neutral from Overweight as remains bullish on the company’s long-term earnings potential but acknowledges its upgrade in July was too early given potential credit headwinds; downgraded ESNT and OMF to Neutral.
• In Autos: LCID Q3 deliveries missed expectations even as the EV maker posted 47% growth y/y; said it delivered 4,078 vehicles in the quarter, produced 3,891 vehicles in the period, with more than 1,000 additional vehicles built for Saudi Arabia for final assembly. Auto suppliers LEA, VC, AXL, others weak after a late-night fire at a Novelis aluminum plant in New York are going to disrupt business at Ford (F) and other car makers for months to come. Novelis supplies roughly 40% of the aluminum sheet used by the car industry in the U.S., with Ford the biggest user of the Oswego aluminum plant.
• In MedTech: Citigroup said BSX, EW, IRTC remain as top picks into earnings; EW, PEN add positive catalyst watches and downgraded GEHC to Neutral from Buy; said MedTech tends to underperform starting in August, into September and October, before recovering in November, and this season has proven no different, exacerbated by investors pivoting out of healthcare and into technology, reflecting significant sector rotation. To add insult to injury, just when tariff concerns were hitting the back burner, the administration announced a Section 232 investigation into medical equipment and devices.

• APP +6%; rebounds after falling -14% late Monday following press reports of an SEC probe into the firm’s data collection practices.
• DELL +4%; provided outlook long-term annual rev growth of 7% to 9% (up from prior 3%-4%) and outlook long-term annual adj diluted EPS growth of 15% or better (vs. 8% prior); said they reaffirms financial outlook for Q3 2026 & FY and projects AI CAPEX investment in 2025 of $400B plus.
• IBM +3%; after the company agreed to a partnership with Anthropic that will first integrate Anthropic’s Claude AI models in its integrated developer environment for software engineers.
• ICE +2%; announced a strategic investment in Polymarket, the prediction market and information platform tracking event probabilities across markets, politics, sport and culture. ICE will invest up to $2 billion in Polymarket, reflecting a valuation of approximately $8 billion pre-investment.
• IREN +2%; after saying it has signed additional multi-year cloud services contracts with leading AI companies for NVDA Blackwell GPU deployments.
• JHX +11%; shares rose after guidance as sees Q2 adjusted EPS $0.27-$0.27 vs. est. $0.15 and sales $1.29B-$1.3B above consensus $1.19B and Q2 adjusted EBITDA $326M-$331M.
• LXEO +30%; after saying the FDA is open to letting the company combine results from its ongoing studies and a planned trial to seek accelerated approval for its experimental gene therapy, LX2006, for Friedreich’s ataxia cardiomyopathy.
• PYPL +5%; after PayPal unveiled PayPal Ads Manager, allowing the tens of millions of small businesses that use PayPal to become their own retail media networks and generate new revenue streams.
• TMQ +211%; as the White House said US will take a 10% stake in the small-cap mineral exploration company.

• ASTS -2%; was downgraded to Underperform from Sector Perform at Scotia saying the shares have formed a “valuation bubble” after doubling over the past month and says the stock could undergo painful corrections as AST faces significant competitive and operating risks.
• DLTR -3%; was downgraded to Underperform from Hold at Jefferies (tgt to $70 from $110) saying pricing analyses and channel checks indicate mounting execution risk and margin pressure for Dollar Tree.
• F -4%; after a late-night fire at a Novelis aluminum plant in New York are going to disrupt business at Ford (F) and other car makers for months to come. Novelis supplies roughly 40% of the aluminum sheet used by the car industry in the U.S., with Ford the biggest user of the Oswego aluminum plant.
• PHM -2%; after being downgrade along with other homebuilders at Evercore as believes margins must bottom before homebuilder stocks can rerate and it does not believe that this will happen in the next several months.
• SEI -4%; shares fell after saying they would offer $650M of 0.25% convertible senior notes due 2031, up from the $600M in notes it previously said would offer.