Mid-Morning Look

Friday, September 12, 2025

U.S. stocks open slightly higher, adding to record gains for the S&P 500 and Nasdaq while the Dow tries to hold above 46,000 after closing above for the first time ever. After outperformance on Thursday, Smallcaps are leading the declines with overall negative market breadth. The S&P 500 is looking to close at a record high for 5 straight days. What a run it has been for major averages, with no pullback deeper than 3% since the rally began in April following the “Liberation Day” tariff headlines, with every shallow dip bought for 5 straight months. While inflation has been mixed, edging lower for a few months before perking up the last 2-months, the focus has been the weakness in the labor market after jobless claims hit 4-year highs, BLS revised annual jobs down -911K and the nonfarm payroll report showed weakness as well. The fear of a slowing economy has boosted bets that the Fed will begin a rate cut easing cycle next Wednesday, where a 25-bps rate cut is widely expected, followed by two additional cuts to end 2025 and more cuts in 2026. So now all eyes on the FOMC next Wednesday as major averages hold near record highs. S&P strength has been broad based for 2025 with Industrials, Financials and Utilities all up over 10% YTD, but it has been the surge in heavily market weighted tech stocks over the last month that has pushed major averages to record highs daily, led by names like ORCL surging 36% the other day on strong RPO backlog and AVGO earnings the week prior and news of a large $10B AI order. OpenAI plans to spend $350 billion on server rentals this year through 2030. The AI investment headlines are daily, and raises the euphoric sentiment by Wall Street, lifting other chip players, data centers, Ai leaders and power/nuclear plays. Note the Tech sector (XLK is +16% YTD and Communications +20%. Markets holding gains into weekend so far.

• University of Michigan surveys of consumers 1-year inflation outlook prelim Sept 4.8% vs final Aug 4.8% and University of Michigan surveys of consumers 5-year inflation outlook prelim Sept 3.9% vs final Aug 3.5%.

• In Chemicals: Mizuho downgraded three specialty chemical names, cutting TROX to Underperform from Neutral as believes the recent ~55% increase in the stock price since reporting last quarter and cutting dividend is unwarranted, and stock could retest prior downside. The firm downgraded HUN to Underperform from Neutral and cut PT to $9 from $11 noting it could retest lows, or lower given fundamentals have not improved. Lastly, Mizuho cut OEC to Underperform as believes the stock bounce reflects hope that U.S. tire imports would decline, but they rose again in recently reported July data. Separately, APD was upgraded to Buy from Hold at Argus saying the n-t environment has been challenging with industrial demand weakness and high input costs, but conditions are beginning to change.
• In Semi-equipment: Mizuho downgraded AMAT to Neutral (PT to $175 from $200) while raised LRCX ests and PT to $130 from $120 as see share shifts within the WFE industry as China competition and technology transitions drive increased competition. Mizuho believes LRCX is better positioned to gain share with critical layer steps, driving >50% of new design wins with Moly ALD, GAA and TSV etch; AMAT could see share loss, with PVD/legacy node exposure, Chinese competition as ~$8-9B/yr China exposed revs could see downside in 2026E/27E. Separately, CAMT announced a pricing private offering of $425M 0% 5-yr convertible bonds.

• FUN +6%; reports strong attendance growth and season pass unit sales through labor day weekend; reaffirms 2025 guidance; said revenues for nine-week period ended Aug. 31, 2025, totaled approximately $1.1B; said demand is accelerating, with strong momentum heading into popular holiday seasons.
• IONQ +15%; shares jumped after hosting their analyst day in New York, expected to discuss strategy and vision, recent milestones/progress; earlier announced that it has secured UK Investment Security Unit regulatory clearance for the acquisition of Oxford Ionics.
• SMCI +3%; after beginning shipments of its artificial-intelligence Blackwell Ultra solutions powered by Nvidia chips to customers worldwide. The systems include Nvidia’s plug-and-play HGX B300 system and GB300 NVL72, which are used for training AI models.
• TSLA +5%; adding to prior day gains in breakout of shares and helping major averages.
• WBD +9%; after The Wall Street Journal reported Paramount Skydance was preparing a takeover bid that would be backed by the Ellison family. Paramount’s majority cash bid would be for the entire company, including its cable networks and movie studio, the Journal reported, citing people familiar with the matter.

• ARRY -5%; was downgraded to Underperform from Neutral at Bank America and lower tgt to $7 from $8 as sees further risk to the company’s fiscal 2025 outlook from tariffs.
• HOOD -2%; provided monthly August totals as net deposits declined sequentially, and volumes lagged the overall market; margin balances rose 10% m/m, and securities lending revenues of $53M fell 13% m/m; weaker than expected crypto volumes (down 18% vs. July), while options volumes were flat M/M.
• ORCL -3%; extends pullback following 36% surge mid-week post earnings results.
• RH -1%; shares slipped after lowering their FY25 revenue growth target between 9% and 11% from prior forecast of 10% to 13% and said it expects $30M in additional tariff costs after mitigation efforts in second half of year; sees annual adj EBITDA margin of 19%-20% from prior target of 20%-21%.
• TROX -5%; downgraded to Underperform at Mizuho along with other chemical stocks OEC and HUN on expectations of declines after shares rallied given fundamentals have not improved.