Mid-Morning Look

Monday, October 13, 2025

U.S. stock market weakness from Friday was quickly bought in Sunday night futures and carried into this morning’s market open with the usual suspects seeing the big buying while defensive sectors (consumer staples and healthcare) are the early laggards. Stocks tumbled on Friday (worst day since April) after President Trump said the US would impose a 100% additional tariff on Chinese goods, as well as export controls on “any and all critical software” beginning Nov. 1. The commentary was in response to China moves late last week after Beijing announced on Thursday and Friday a drastic set of confrontational trade tariff-quota rules on the US and global trade allies. These covered hikes in China port fees, unprecedented tariffs and quotas on technology products and rare earth linked goods, and an anti-trust probe into US chipmaker QCOM to boot. But the weakness and trade war concerns were short lived as stock futures got a bounce Sunday after President Trump said on his Truth Social media platform Sunday, “Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!! President DJT“. The President’s comments came after China clarified earlier this weekend their “export controls” on rare earths. In their response, China said the new controls are NOT a full export ban and applications that “meet regulations” will be approved. So, for the time being, all is well. Treasury Secretary Scott Bessent weighed in today saying, “There was substantial communication over the weekend.” “There will be lots of staff-level meetings. They are neither going to command nor control us…We don’t want to decouple but China is sending a decoupling message. Everything’s on the table, but confident this can be de-escalated If not, we have substantial levers we can pull…. We could move more aggressively than how China has.”

In stocks news, the same drivers of the stock market remain with semis, tech, utilities and momentum names. The Philadelphia Semi Index (SOX) rebounds 4.25% or 275 points to 6,682 after tumbling -6.32% or 432 points on Friday; AVGO giving the sector a boost on OpenAI partnership headlines +9.7% (recent ATH stands at 6,881.91 on 10/6). Momentum names also remain key drives of stock volume with big gains again in quantum compute names (RGTI, IONQ) and rare earth names (CRML, MP, METC, UAMY, USAR) following fresh trade tensions between the US and China after Beijing’s export restrictions on rare earths fueled bets on alternative suppliers. Also, nuclear power related names OKLO, NNE, LEU, SMR and others remain big momentum names higher amid the growing need to power AI as well as data centers and water-cooling names (VRT, CRWV, NBIS, ETN, GEV, etc.). Today is Columbus Day, so the bond market is closed, while stock markets are open. No economic data today, gold and oil prices rebound while Bitcoin remains weak after tumbling on Friday. Also, a busy week for tech with NET Connect and ORCL World starts today with ORCL Financial Analyst Day on Thursday. CRM’s Dreamforce starts tomorrow with their investor Day on Wednesday. HPE Analyst day on Wednesday. ASML and TSM Earnings Wed/Thurs as well.

• In Restaurants: SHAK was upgraded to Hold from Underperform at Jefferies (tgt to $95 from $110) and PTLO was downgraded to Hold from Buy (tgt to $6 from $10) in restaurant preview saying they see moderate downside risk to 3Q comp sales as industry data softened through Sept and expect in-line to moderately lower comp sales across our coverage. That said, they believe investor expectations have moderated, limiting stock downside somewhat. Said they continue to prefer MCD, BROS, CAVA and WING as we expect MCD to benefit from trade down/increased value offerings and BROS, CAVA and WING to remain relative winners in a soft fast causal backdrop.
• In FinTech: PYPL was downgraded to Sell at Goldman Sachs with $70 tgt as believes faces several Transaction Margin headwinds next year, including: 1) continued interest rate headwinds; 2) lapping of the reacceleration of their credit products; and 3) the lapping of targeted repricing benefits in Braintree. Goldman also downgraded MQ to Sell from Neutral (tgt to $5 from $7.50) saying believes the company’s customer concentration issues with XYZ are likely to be back in focus where the company will add a new issuer processing partner, which likely creates a potential long-term headwind to the partnership.
• In REITs: Jefferies downgraded shares of CUZ to Hold saying its outsized geographic concentration in Sunbelt markets (~67% of ABR in Austin and Atlanta) limits exposure to secular AI tailwinds; downgraded HIW to Hold saying while the co continues to lease space across its portfolio, it is missing out on broader secular tailwinds that could accelerate momentum and downgraded DEA to Hold saying a high cost of capital and ~97% leased portfolio limits growth potential. DEA is heavily levered to federal tenants. Jefferies upgraded SLG to Buy saying the company has effectively reinvested in its Midtown core, positioning the portfolio to benefit from strong post-COVID office recovery tailwinds. KRC was also upgraded to Buy at Jefferies saying San Francisco is developing into the epicenter of AI activity and KRC holds ~42% exposure to this market.

• BE +24%; and Brookfield announces $5B partnership to implement AI Infrastructure; Bloom Energy will become preferred onsite power provider for Brookfield’s Global AI factories
• CRML +34%; along with gains in other rare earth related names (MP, METC, UAMY, USAR) following fresh trade tensions between the US and China after Beijing’s export restrictions on rare earths fueled bets on alternative suppliers.
• EL +8%; was upgraded to Buy from Neutral at Goldman Sachs and raised tgt to $115 from $76 saying they see a fundamental inflection for the company with the business potentially returning to sales growth as soon as the September quarter.
• IONQ +10%; amid broad strength in quantum names (RGTI, QBTS, QMCO, QUBT), while also announced a significant advancement in quantum chemistry simulations, demonstrating the accurate computation of atomic-level forces with the quantum-classical auxiliary-field quantum Monte Carlo algorithm.
• WBD +5%; rejected PSKY initial takeover offer of around $20 per share for being too low, Bloomberg reported, citing people familiar with the matter. Paramount has several options to continue pursuing Warner Bros., https://tinyurl.com/ytfk848r  

• FAST -3%; reported Q3 EPS $0.29, just missing the $0.30 consensus estimate on roughly in-line revs of $2.13B citing sluggish industrial production during the quarter.
• SRRK -21%; after late Friday (10/10), NVO received an inspection classification letter from the FDA pertaining to its Bloomington, Indiana fill-finish facility (previously owned by Catalent). Cantor notes that Novo’s fill-finish facility is the sole provider of $SRRK’s apitegromab.
• TVRD -85%; shares tumbled after saying its experimental drug, TTI-101, failed to meet goals in a mid-stage trial on patients with idiopathic pulmonary fibrosis; the trial evaluated TTI-101 as a standalone treatment or in combination with Germany-based Boehringer Ingelheim’s nintedanib in 88 patients.
• WYNN -3%; along with MLCO, LVS weakness after industry sources and checks indicate that Macau’s gaming revenue for the seven days ending October 12, which includes the end of the Golden Week holiday period, was up 3% year-over-year or down 46% week-over-week.