Mid-Morning Look

Monday, September 29, 2025

U.S. markets are looking to close out September with solid gains these last two trading days of the month, rebounding after ending last week’s modest losses for the S&P 500, Nasdaq and Dow Industrials as stocks markets back to basics, with Technology (XLK), Communications (XLC) driving markets higher to kick off the week. Semiconductors (SOX) surge again (another record high +1.4% at 6,400) as the appetite for anything AI related remains insatiable! While nine of eleven S&P sectors are higher this year, it has been the surge over the last 2 months in XLK (+21% YTD) and XLC (+22.8% YTD), led behind semis and large cap tech that have pushed major averages to record highs. Goldman Sachs strategists this morning turned more bullish on stocks as recession risk low saying global equities are likely to extend a rally into the year-end given a resilient US economy, supportive valuations and a dovish pivot from the Fed. The firm raised its global equities to overweight from neutral rating over the 3-month horizon while cutting its global credit to underweight from neutral rating over the 3-month horizon as Wall Street brokerage houses and investors continue to chase the market/FOMO higher. No fear heading into a potential government shutdown this week either or ahead of jobs data this week. Data today showed lower mortgage rates spark surge in pending home sales in August. Sentiment remains bullish as stocks extend gains.

• In Aerospace & Defense: Shares of RTX, LMT, NOC, LHX, GD advanced early after the WSJ reported the Pentagon is urging missile suppliers to double or even quadruple production rates to address low weapons stockpiles for a potential conflict with China. Deputy Defense Secretary Steve Feinberg is taking a hands-on role in the Munitions Acceleration Council, which aims to boost output of 12 critical weapons, including Patriot interceptors. ACHR announced that its partner, Soracle, a joint venture between Japan Airlines and Sumitomo Corp., has been named to lead the establishment of air taxi services in the Osaka Prefecture. JOBY partners with RAKTA and Skyports to launch air taxi service in Ras Al Khaimah by 2027.
• In Semiconductor Equipment: Deutsche Bank updated its WFE outlook and raised its 2025/2026 estimates to +6% y/y and +5% y/y, up from +3% y/y and +4% y/y prior, respectively for AMAT, LRCX, KLAC saying commentary on the WFE environment has largely improved since their last update and now sees a solid path towards ~MSD (%) growth in both 2025 and 2026. The form also upgraded LRCX to Buy from Hold (tgt to $150 from $110) with a more constructive view of the wafer fab equipment group citing more favorable memory supply/demand conditions and momentum at second-tier foundries. Also, Mizuho upgraded shares of ASML from Neutral to Buy as it now expects ASML’s EPS to grow 6% YoY in 2026 and 21% YoY in 2027 and forecast EUV demand growth into 2026 and 2027 due to better-than-expected demand outlook from Samsung and Intel.
• In Nuclear/Power names: VST reaches final investment decision to build two new advanced natural gas power units, totaling 860 megawatts, on-site at its Permian Basin Power Plant; expansion triples the site’s capacity from 325 megawatts to 1,185 MW. In Research, OKLO initiated new Overweight w/ $146 PT at Barclays calling it a levered way to invest in the SMR theme. SMR was initiated at Equal Weight and $46 tgt saying its role will be more as an OEM and it technically will only have on customer, ENTRA1, who will serve as the exclusive developer who will be commercializing the NuScale SMR Technology.

• COIN +4%; as Bitcoin and Ethereum rebound, lifting the crypto related complex across the board (IREN, MARA, RIOT, MSTR, WULF, CLSK, etc.)
• CSX +3%; Steve Angel as new CEO who succeeds Joe Hinrichs, who will work closely with the board and management to help with the transition. Angel’s appointment comes after CSX faced activist pressure from Ancora Holdings to pursue merger options to replace Hinrichs.
• EA +5%; entered into a definitive agreement to be acquired by an investor consortium comprised of PIF, Silver Lake and Affinity Partners in an all-cash transaction that values EA at an enterprise value of approximately $55 billion, or $210 per share.
• ENTA +18%; after saying its experimental RSV treatment fails to meet the main goal of shortening the time taken to reduce the severity of some symptoms. However, the trial meets multiple secondary goals, including faster improvement on a patient‑reported severity measure.
• MRUS +37%; after the biotechnology company agreed to be acquired by Danish biotech GMAB for about $8 billion; Genmab said it will pay $97 a share in cash for Merus, a roughly 41% premium to Friday’s closing price of $68.89.
• MSOS +24%; as cannabis stocks rally (CGC, CRLBF, CRON, CURLF, GRWG, TCNNF, TLRY) after a social media post by U.S. President Donald Trump over the weekend that suggested potential health benefits from the use of cannabidiol. Trump’s post on Sunday said cannabidiol (CBD) could “revolutionize senior healthcare” by helping reduce disease progression and was shown as an alternative to prescription drugs.
• WDC +9%; along with strength in other memory/HDD/flash names (SNDK, STX) on several positive analyst comments; Morgan Stanley raised tgt on WDC to $171 from $99 and STX to $265 from $168 as materially raising forecasts saying HDD demand is inflecting higher.

• IOBT -60%; shares tumble after provides update following pre-BLA meeting with FDA where the agency recommends not submitting BLA based on the data from the IOB-013 clinical trial; plans to design new registrational study for Cylembio; announces 50% workforce reduction.
• LRMR -29%; after reported that seven participants in the study of its treatment of Friedreich’s ataxia suffered from anaphylaxis. Larimar modified its starting dose regimen after the two most recent cases of anaphylaxis; said the study showed positive biological responses to the drug.
• MLTX -86%; shares tumbled over -80% after mixed results from two late-stage trials of its experimental drug, Sonelokimab, in patients a chronic inflammatory skin condition; downgraded by a few firms with RBC saying Placebo-adjusted results from both trials are “well into our worst-case scenario”
• WSM -4%; and RH decline after President Trump said on “Truth Social”, In order to make North Carolina, which has completely lost its furniture business to China, and other Countries, GREAT again, I will be imposing substantial Tariffs on any Country that does not make its furniture in the United States.”