Mid-Morning Look

Thursday, October 09, 2025

U.S. stocks are steady/down slightly after continuing to push high day after day to record highs this week for the S&P 500, Nasdaq Comp and Russell 2000. Markets dip, but investors remain complacent with markets at highs, unphased by the potential economic impact of the gov’t shutdown (now in Day 9) or impact of the weakening jobs market on spending. Investors/Wall Street has focused on AI investment and earnings growth for anything related to AI (data center/cooling/Utes/semis) as well as FOMC expected rate cuts in October and December after cutting in September. The Minutes from the prior FOMC meeting were slightly hawkish as Fed officials were more divided than the 11-1 vote suggested, with “a few” would have supported a decision to keep borrowing costs unchanged as inflation was in danger of remaining above the central bank’s goal. Still, that had no impact on markets Wednesday as stocks surged to close at the highs, led by technology. Few notable sector movers this morning with airlines rising behind Delta (DAL) earnings/guide, rare earth stocks rising on China export controls, homebuilders falling for a 4^th day and metals rising as copper this 16-month highs. No major economic data was released again today due to the government shutdown.

• Insurance sector: MMC was upgraded to Overweight from Neutral at JP Morgan and downgraded RNR to Neutral while ALL remains top pick in earnings preview. Margins for re/insurers and growth for brokers have peaked and JPMC projects them to moderate further. Still, fundamentals in the business are healthy. In JPMC’s view, these factors, along with expected strong Q325 results, the group’s underperformance, and current valuations, position P&C stocks to outperform.
• In Casinos & Gaming: RSI was added to best ideas list at Benchmark saying despite strong underlying trends, the stock has corrected more than 16% amid investor anxiety surrounding the expansion of federally regulated prediction markets such as Kalshi and Polymarket. Meanwhile, RSI enters Q3 with accelerating fundamentals and one of the cleanest growth and margin expansion stories in online gaming. After 2 weeks of declines on prediction market competition fears, DKNG was upgraded from Hold to Buy at Berenberg saying while numbers have been adjusted downwards due to sports results, the company has continued to deliver solid levels of growth.

• ALB +5%; after TD Cowen raised its price target to $85 from $70 as it sees the company being free cash flow positive and as shares have risen with peer Lithium Americas.
• COST +2%; reported an 8% year-over-year increase in net sales to $26.58B for the five weeks ended Oct. 5; kept its monthly +MSD% domestic comp growth momentum intact despite tougher comparisons in the prior-year period. U.S. comp sales growth (ex-gas) expanded +5.0% in September.
• DAL +5%; along with gains in other airlines UAL, AAL, ALK after Q3 results beat top and bottom-line expectations and offered improved full-year guidance ahead of Wall Street estimates (now expecting EPS of $6.00 vs. prior range $5.25-$6.25 and ests. $5.80), as the airline said, sales trends have accelerated across all geographies in the past six weeks,
• KLAR +5%; after enter strategic Ai partnership with Google Cloud to bring more creative and engaging shopping experiences to millions of Klarna users worldwide.
• NVDA +2%; The U.S. approved several billion dollars’ worth of NVDA chip exports to the UAE, Bloomberg News reported. Also, Cantor raised NVDA price target to $300 (Street high), reiterating “Top Pick” as it sees $3T-$4T AI infrastructure market by 2030.
• SERV +23%; after saying it is teaming up with DASH in a multiyear deal to roll out sidewalk delivery robots across the US, starting in Los Angeles; the partnership isn’t exclusive, allowing Serve’s fleet to take orders from both DoorDash and UBER to improve utilization.
• USAR +6%; along with gains in CRML, MP, TMQ as China tightened its rare earth export controls on Thursday, as introduced new controls on rare-earth and rare-earth related technologies, requiring foreign entities to obtain government approval before re-exporting products of Chinese origin to other countries.

• AZZ -5%; shares declined following a top and bottom line miss for Q2 results last night.
• DHI -4%; along with KBH, LEN as homebuilders down notably for a 4^th straight day.
• HELE -17%; shares declined after Q2 results topped expectations but provided an annual profit forecast largely below expectations as sees Fy26 EPS $3.75-$4.25 below consensus expectations of $4.58 and said profit margins were hurt by about 200 bps as higher tariffs weigh on cost of goods sold.
• RACE -12%; slightly raised its outlook for 2025 (FY25 EPS view to greater than EUR 8.80 from greater than EUR 8.60 and revs to greater than EUR 7.1B from greater than EUR 7B) – but longer-term guidance looked a little soft as for 2030, is expecting to report revenue of EUR9B vs. est. EUR9.8B and cut its 2030 EV target in half.