Closing Recap

Thursday, April 10, 2025

The stock market giveth; and the stock market taketh away! Well, it didn’t give all of yesterday’s gains away, but the S&P fell just shy of -7% by early afternoon (which would have triggered the first intraday market halt since Covid in 2020 if breached the 7% marker), while the Nasdaq 100 did decline more than -7% at its bottom before paring losses as the uncertainty of the global trade and tariffs on global economies keep investors on edge. U.S. futures were lower overnight after a record day Wednesday and never recovered despite a sign of cooling consumer prices (CPI) inflation data (and ahead of PPI data tomorrow morning). Wall Street also braces for the unofficial start of earnings season tomorrow morning with big banks. After rallying this morning, Treasury prices erased gains all day, despite another positive Treasury auction (30-yr after better 10-yr yesterday), as yields finished near the highs of the day around 4.4%. Gold surged over 3% as investors fled to haven assets, while oil, Bitcoin declined, and the dollar plunged vs. most other rival currencies. With today’s losses, major averages have fallen 5 for the last 6 trading days.  

More tariff increases for China as the US gets more aggressive, now totaling 145% after latest hike the White House announced today. Recall on April 9th, President Trump announced a further increase in the tariff rate on imports from China to 125%, following the Chinese government’s increase of tariffs on US goods to 84%. The substantial rise in US tariffs on China is expected to significantly weigh on the Chinese economy and labor market. China did not retaliate last night after the US hike to 125%, markets remain on edge waiting for China’s next move.

Markets leery of this negative stat following a massive surge in past (historically): ZaStocks tweeted yesterday: “Today marked the second largest single day gain in Nasdaq history. The top three spots? 1. 1/3/2001, +14.17%, 2. 4/9/2025, +12%, and 3. 10/13/2008, +11.81%. In both other instances, the Nasdaq ended up making a new low.” Also, @RyanDetrick noted “some weakness the day after, and out to a week after, some of the best days ever is pretty normal.” (attached with chart) https://x.com/RyanDetrick/status/1910342310421799081

Tariff worries and global uncertainty triggered portfolio outflows from emerging market bonds and stocks in March, especially from China, fading out a positive start to the year, the Institute of International Finance (IIF) said on Thursday. Total non-resident flows registered a net outflow of $17.1B dollars across emerging market fixed income and equities – the first-time flows had turned negative since Donald Trump won the U.S. election in November and the biggest monthly outflows since August 2023, the IIF report showed. Equities saw outflows of $12.4B, with almost three-quarters of that coming from Chinese stocks. Losses in bonds were also driven by China fixed income market, which hemorrhaged $6.7B, more than offsetting the $1.9B of inflows into emerging market debt elsewhere – Reuters

• Weekly jobless claims climbed to 223,000 in latest week, staying below 226K for a 6^th straight week and vs. consensus 223,000 (from 219K prior week); the 4-week moving average was unchanged at 223K; continued claims fell to 1.850M from 1.893M prior week and vs. consensus 1.882M.
• For China, March CPI inflation came in at -0.1% yoy (vs. -0.7% in Feb), trailing market consensus (0.0%). Sequentially, CPI inflation dropped by 0.4% mom in March, partly due to seasonality factors. Excluding food and energy, core inflation came in at 0.5% yoy (or 0% mom). Meanwhile, PPI deflation deepened to -2.5% yoy, trailing consensus. Declining coal and oil prices appear to have weighed on PPI.

• In agriculture, the lates WASDE crop report showed that U.S. corn stockpiles for the 2024/25 marketing year totaled 1.46 billion bushels (down 75 million bushels from the agency’s projection last month and down roughly 300 million bushels from this time last year). World stocks also are down for corn, with inventories at 287.7 million metric tons, down from last month’s forecast of 288.9 million tons.

• In Treasury markets, investors breathed a sigh of relief as a $22B 30-year auction was strong, following up on solid 10-yr auction results yesterday (after a poor 3-yr on Tuesday). The U.S. sold $22B 29-year 10-month bond at high yield 4.813% vs 4.839% pre-sale when-issued yield with bid-to-cover ratio 2.43, as Primary dealers take 12.3% of U.S. 29-year 10-month bond sale, direct 25.82% and indirect 61.88%. Treasury yields were as low as 4.26% overnight after jumping more than 60-bps the last 3-days (off lows 3.88%), hit highs of 4.38% this afternoon but dipped following the better auction at 1:00 pm est.

• In Autos: GM was downgraded to Neutral from Buy at UBS and lower PT to $51 from $64 and reduced estimates to consider the impact of tariffs on the cost structure as well as the impact to auto demand. In 2025 UBS now assumes GMNA volumes decline -9% y/y and GMNA volumes will be down an additional -4% in 2026; Ford (F) was downgraded from Buy to Neutral at Goldman Sachs and cut tgt to $9 from $11 saying its cyclical view on the company had been too positive (with Street EPS estimates for 2025 revised down by 32% since it added it to the Buy list on 9/30/2024).
• In Auto Parts: Goldman Sachs lowered its auto industry outlook and estimates, saying it will be hard for the auto industry to fully pass on tariff costs, especially with softening consumer demand more generally. Tariffs will be a source of downside for both auto makers and suppliers, although the car manufacturers can partly mitigate tariffs with pricing. Goldman upgraded upgrades BWA and ST to Buy, AUR to Neutral, and downgrades shares of LEA and VC to Neutral as also reflects on increasing strength of the Chinese auto OEMs, and a slower BEV transition in the US and potentially Europe.
• UBS lowered auto supplier ratings, cutting shares of APTV, BWA and VC to Neutral from Buy (and lowered tgts) saying new trade policies are raising the cost to make a vehicle, leading to increased consumer prices and negatively impacting demand, while production disruptions are likely, financially challenging suppliers.

• In Apparel and Footwear Retail: early give back for retailers after surging yesterday (CROX, DECK, NKE, LULU, PVH, etc.); LEVI was upgraded from Neutral to Buy at Bank America and raised their tgt to $20 noting shares are down 38% from last year’s highs and it thinks the positives outweigh the incremental risks at 6x EV/EBITDA. In luxury retail, Prada struck a deal to buy Versace from CPRI in a move to unite two of the biggest names in Italian fashion. The deal has an enterprise value of $1.375 billion, Prada said. Temu owner PDD shares tumbled as the US raised tariffs on China for a 4^th time today, as aggressive tariffs on China-made clothes, bags and shoes could benefit off-price retailers (TJX ) while impacting the China retailers like Temu – best thought
• In Specialty Retail: FRPT price tgt cut from $135 to $115 at Stifel while reduce Q1 and 2025 Sales and Adj. EBITDA below consensus/guidance reflecting weakening sales and volume trends in scanner data. Notes sales trends have weakened on a y/y and 2-year CAGR basis YTD in 2025; MODG agreed to sell its Jack Wolfskin outdoor apparel and equipment business to China’s Anta Sports Products for $290M.
• In Food & Beverages: BF was upgraded to Buy with $38 PT at Roth saying with the recent volatility and encouraging reports regarding the EU no longer recommending tariffs on American Whiskey, Roth believes the opportunity to own Brown-Forman skews very favorably. STZ reported Q4 EPS of $2.63 topping ests of $2.32and slightly better sales of $2.164B, driven by better sales (wine & spirits), gross margins (beer) and lower tax while Bank America noted mgmt updated perspectives on 1) Beer, lowered medium term (through F28) organic sales growth outlook to +2%-4% (previous 7%-9%), 2) introduced FY26 guidance incorporating the impact of tariffs on beer, assets sales and reflecting current, subdued industry demand.

• In Building Products: VMC was upgraded Vulcan Materials to Outperform from Peer Perform with a $281 price target. Shares "look oversold" after falling about 7% year-to-date, argues the analyst, who is "confident" in sustained pricing power with price hikes already announced and in effect for 2025. The firm expects limited volume downside despite market uncertainty and also sees support from pricing power, "sticky" government spending and pent-up housing demand, the analyst tells investors.

• In Utilities: JP Morgan downgraded ES to Underweight and POR to Neutral in saying raising tariffs on China to 125% still leaves the average effective tariff rate above 25%, and JPMC’s economists continue to expect a recession this year. Given this backdrop, JPMC views recession and tariff risks as incrementally negative risks to ES given the company’s residual OSW exposure and structurally challenged NE bill environment and POR given high profile OR rate pressure and financing/wildfire fund execution risk. AES was downgraded to Hold from Buy at Jefferies and cut tgt to $10 from $15 to reflect a more cautious view on the company’s growth prospects and balance sheet, which it believes it weaker than appreciated.
• In Metals & Mining: US Steel (X) shares fell after U.S. President Donald Trump said that he does not want U.S. Steel Corp to go to Japan. "We don’t want to see it go to Japan. We love Japan, but we, you know, U.S. Steel is very special company. We don’t want it to go to Japan or any other place, and we’re working with them." VALE was upgraded to Buy from Neutral at Bank America on the combination of attractive valuation and an improving bottom-up story and notes Vale has removed almost all of its overhangs and is now in a stronger position to deliver operationally.

• Big banks kick off earnings tomorrow with Dow component JPM among them as its seen reporting adj EPS of $4.61 up from $4.44 in year-ago quarter on rev of $44.11 bln, which would be up 3.7% from $42.55 bln year-ago. In the last 8 quarters JPM revs met or beat Street expectations while EPS beat 7 times with one miss in Q4 2023 (8.5%), according to LSEG. Wel also get earnings from BK, MS and WFC in banking space.
• In Staffing sector: Barclays downgrade FA to Equal Weight, $15 PT (from $20) and upgraded MAN to Equal Weight (from UW), $50 PT (from $55) in global staffing saying they sees Q1/Q2 as still challenging despite more than 2 years of organic declines; said tariffs could further delay a recovery and visibility remains extremely low; the company prefers ADEN over RAND, a function of a more diversified mix and cheaper valuation.
• In Asset Managers: Monthly Assets Under Management (AUM) data out today for March: 1) AB prelim assets under management decreased to $784B during March 2025 from $805B at the end of February. Net inflows across all three channels (Institutional, Retail and Private Wealth); 2) IVZ prelim March AUM of $1,844.8B, a decrease of 2.3% versus the previous month-end. The firm delivered net long-term inflows of $6.5B in the month. Non-management fee earning net outflows were $1.7B and money market net inflows were $5.8B; 3) LAZ prelim AUM as of March 31, 2025, totaled approximately $227.4B. The month’s AUM included market depreciation of $5.4B, net outflows of $3.1B and foreign exchange appreciation of $3.1B; 4) TROW prelim assets under management of $1.57 trillion as of March 31, 2025. Preliminary net outflows were $1.8B for March 2025 and $8.6B for the quarter-ended March 2025; 5) VRTS preliminary AUM of $167.5 billion and other fee earning assets of $2.1 billion for total client assets of $169.6 billion as of March 31, 2025.

• BCLI submitted an Investigational New Drug, or IND, amendment to the FDA for NurOwn, the company’s autologous mesenchymal stem cell therapy for amyotrophic lateral sclerosis, or ALS.
• CRL shares tumbled late day after headlines FDA to replace animal testing with human-relevant methods; to end animal testing rule for monoclonal antibodies.
• DXCM said the FDA cleared its 15-day continuous glucose monitoring (CGM) device called Dexcom G7 15 Day for people over the age of 18 with diabetes in the United States.
• ISRG said the FDA cleared the company’s fully wristed SP SureForm 45 stapler for use with its da VINCI SP surgical system in thoracic, colorectal, and urologic procedures.
• KROS said its board had authorized a stockholder rights plan, also known as a "poison pill", in response to the rapid accumulation of Co’s stock by some investors.
• NVAX shares fell after Health Secretary Robert F. Kennedy Jr. cast doubts about the efficacy of the company’s COVID shot amid a delay for its U.S. approval. During an interview with CBS, RFK Jr. attributed the delay to the vaccine’s single-antigen composition, which he said has never worked against respiratory diseases https://tinyurl.com/2um3vmyy

• ASYS shares tumble after cutting Q2 revenue view to $15M-$16M from $21M-$23M saying its Thermal Processing Solutions Segment experienced a customer dispute during its fiscal second quarter. The dispute involves a previously cancelled order and results in the shipping delay of a separate order.
• TSM said Q1 revs jumped 42% to T$839.3B ($25.6B), slightly above the T$835.7B estimate and in line with company guidance of $25B-$26B; the Co had said in February that revenue was likely to come in at the lower end of that range due to a $161M impact from an earthquake in Taiwan.
• WDC was upgraded to Buy with $55 tgt at Benchmark saying investor’s concern over tariffs have produced compelling valuations for some Tech hardware stocks. Besides valuation there are other reasons why Benchmark finds the shares attractive such as expected double digit y/y growth in data center spending by the major hyperscalers, the AI opportunity, and lower expected interest expense.