Closing Recap

Friday, April 25, 2025

The S&P closes out the week with a 4-day win streak, longest streak since mid-January. U.S. equity futures eased a bit overnight following several nice rebound days and stayed modestly in the red into early trading with no economic news to sway direction and ongoing tariff headlines not adding to market clarity. The week’s sell-side upgrade/downgrade ratio finished at 53.4%, so it was a bit more optimistic than last week’s 42.1%. It will be interesting to monitor as we progress through earnings and company guidance amid the tariff uncertainty. That said, today’s Fear & Greed Index remained depressed at 34/100 (Fear) but continued to improve versus yesterday’s 31 (Fear) and last week’s 19 (Extreme Fear). It bottomed out at about 4/100 in the initial tariff tantrum. The 10am University of Michigan Sentiment reading came in slightly above expectations though inflation expectations rose sequentially from last month but were in-line with forecasts and futures recovered back to small gains. Mid-morning breadth favored decliners by 2:1 as stocks slipped back in the red with small caps underperforming; IWM (-1.12%) versus SPY (-0.37%) and QQQ (-0.20%). Consumer Discretionary (+0.38%), Communications (+0.10%) and Technology (+0.00%) were early outperformers among S&P sector ETFs, while Health Care (-0.95%), Consumer Staples (-1.04%) and Materials (-1.20%) led the underperformers with only two sectors gaining versus nine declining.

In data of note today, @bespokeinvest reminds us history suggests following three consecutive days of 1.5%+ gains the rally may have further to go (though history may not have had tariff headlines). On housing, @KobeissiLetter notes US home prices rose 4.5% yr/yr in Q1, the smallest gain since Q323 and Moody’s expects prices will increase just 3.6% in Q2 and 2.5% in Q3. Lastly, @RBAdvisors highlights the relevance of inflation expectations (U Mich out this morning), noting inflation expectations set wage expectations which can promote an “inflation spiral.”

Heading into the final hour of trading, equities were holding afternoon gains and looked too finish the week on a high note. Breadth was slightly in favor of advancers by 1.1:1 as small caps continued to underperform with IWM (-0.20%) versus SPY (+0.68%) and QQQ (+0.9%). Consumer Discretionary (+1.66%), Technology (+1.33%) and Communications (+0.59%) remained outperformers among S&P sector ETFs, while Energy (-0.30%), Financials (-0.4%) and Materials (-0.9%) paced the underperformers with a fairly even split of five sectors gaining versus six declining. Value and growth also were split with growth the outperformer as the Russell 1000 Growth gained by 1.4% while its Value counterpart slipped by 0.25%. We will see another big week of earnings next week, but thus far (with only 180 S&P 500 names having reported) 77% of names have beaten expectations. Guidance is sure to be key amid the tariff backdrop.

• University of Michigan surveys of consumers 1-year inflation outlook final April 6.5% vs prelim 6.7% and final March 5.0% and University of Michigan surveys of consumers 5-year inflation outlook final April 4.4% vs prelim 4.4% and final March 4.1%.

• June gold futures took a step back from their tremendous run as investors saw signs of easing in US-China tariff tensions. Though nothing is set yet, investors faded the safe-haven asset in a round of profit taking. The June contract settled lower by $50.20/oz, or -1.5%, to $3,298.40 (off weekly and record highs of $3,509.90 earlier in week) but remains primed for further gains if tangible progress does not emerge from recent trade discussions. The gold Fear and Greed Index remained elevated at 78/100 (Greed).
• June WTI crude futures gained to finish the week, settling with a rise of $0.23/bbl, or +0.37%, to $63.02 as tariff rhetoric cooled a bit and optimism re-entered the discussion. Also perhaps lending some price support came from Schlumberger noting a subdued start to the year and the potential for an industry shift away from upstream investment as managements deal with the uncertainties of the tariff situation. Such a shift away from the “drill, baby, drill” mentality offers price support to the supply side even as demand remains in question.

• Consumer Staples: CL reported Q1 adj EPS $0.91 vs. est. $0.86 on sales $4.91B vs. est. $4.86B; provides outlook FY organic growth 2-4% and now expects net sales to be up low single digits for FY 2025 (had seen net sales to be up low single digits). In tobacco, PM was upgraded to Neutral (raise tgt to $170) at UBS after another strong quarter (Q125 EPS was +6% ahead of expectations) and FY25 EPS guidance raise.
• In Food & Beverages: SAM posted Q1 EPS beat on better Sales and Margins while the guide reiterated (guide doesn’t include tariffs but mgmt suggested tariffs could hit EPS by $1.25-$1.90 (off a base of $9.50)).
• In Home Improvement/Retail: Keybanc upgraded shares of LOW, LZB, WSM to Overweight from Sector Weight on pullbacks in Hardlines/Broadlines citing the notable pullback in stocks saying they see buying opportunities for patient investors for these high-quality businesses. These upgrades are done in the context of still-conservative stance on a three- to six-month time horizon.

• In Solar: week started promising for likes of FSLR after U.S. trade officials finalized steep tariff levels on most solar cells from Southeast Asia, but then weaker quarterly results and guidance from ENPH the following day highlighted the ongoing weakness in the solar space; CSIQ was downgraded from Buy to Neutral w/ $9 PT (from $15) at Roth noting the recent 145% China tariffs, however, result in uncertainty and risk around the company’s storage economics. SEDG was upgraded to Market Perform from Underperform at Northland, though cut its tgt to $12.50 from $15 noting shares have declined significantly since the firm cut the stock to Underperform late in February, who estimates will exit calendar year 2025 with about $350M in net cash and doesn’t expect the company to file for bankruptcy.
• In Trucking/Freight/LTL: Sector pressured this morning after SAIA Q1 EPS of $1.86 was well below consensus of $2.76 and revs rose 4.3% y/y to $787.6M but below the $812.8M saying March shipments were flat to February, causing revenues to fall well below expectations (ODFL, XPO shares fell in reaction).
• In the E&C sector: FIX reported Q1 adj. EBITDA of $243M, which exceeded consensus of $206M and EPS beat was primarily driven by adj. EBITDA margin of 13.3% (+220 bps y/y) that came in 160 bps above its forecast; Organic revenue growth of 15% was in line.
• In Chemicals: EMN withdrew its 2025 EPS guidance owing to elevated market uncertainty in the face of tariffs while reporting Q1 EPS of $1.91, compared to consensus of $1.89 and on an EBITDA basis, the Company reported $457M compared to consensus of $439M. FMC was upgraded to Outperform at Mizuho noting the company trades at ~8.5x consensus NTM EBITDA, near the lowest multiple since the company’s current incarnation/transformation in 2017 and given valuation, see risk/reward as attractive.

• In Insurance: PFG reported mostly in-line Q1 EPS but helped by the benefit of a low tax rate (17-20% FY guide) and weaker flows; HIG Q1 core EPS $2.20 vs est. $2.15; Q1 adj net income $639M vs. est. $629.1M along with solid core commercial P&C loss ratio, and P&C NWP growth; RNR was upgraded to Overweight, raise tgt to $275 from $235 saying sees several positives that set up with a very favorable risk/reward skew; AON shares slumped early on EPS miss on weaker revs including organic revs (Q1 +5% vs. est. +6%).

• GLPI reported 1Q25 AFFO of $0.96, which was in line with consensus at the midpoint (+$0.02 ahead of KBCM), and management maintained its FY25 AFFO guidance midpoint by narrowing the range at the high and low end by $0.01/sh. The new range of $3.84-$3.87 is compared to a consensus of $3.87.
• PECO reported a $0.02 1Q25 Core FFO beat vs. consensus. Included in this quarter’s result was ~ $0.01 of unexpected lease termination fee income, though results on a comparable basis still topped expectations. Management reaffirmed its FY25 Core FFO guidance of $2.52-$2.59, which is relatively in line with consensus of $2.56 at the midpoint.

• In Managed Care: CNC said Q1 total Medicaid membership fell to 12.9M from 13.3M y/y, while Medicare membership, which includes Medicare Advantage and Medicare Supplement, fell to 1.04M from 1.15M y/y; said premium and services revenues increased 17% to $42.49B; Q1 EPS and revs topped consensus.
• In Facilities/Hospital Operators: HCA reiterated its annual profit forecast of $24.05 to $25.85; for Q1, EPS $6.45 topped the $5.76 estimate on better revs $18.32B (est. $18.26B; said same-facility admissions rose 2.6%, while same-facility emergency room visits increased 4%. EHC Q1 EBITDA beat Street by 8% and grew 15% y/y, despite difficult comps as EBITDA upside looks broad-based, driven by better SS volume and strong expense mgmt.
• In Medical Equipment/Supplies: MMSI Q1 revenue and EPS beat consensus, management maintained its 2025 revenue guidance but lowered its 2025 EPS guidance due to tariffs; reiterated its guidance for $7-9M of WRAPSODY sales in 2025.
• In Life Sciences: AVTR lowered its revenue outlook for the year to come in either +1%, down -1% or somewhere in between vs. prior guide of 1%-to-3% gain after waning demand in the government- and education-related end markets; posted Q1 revs fell -6% y/y to $1.58B below ests $1.61B.

• In Cable/Telecom: TMUS shares fell as reported better Q1 Ebitda and free cash flow, but Post-paid phone net adds of 495k were marginally below consensus of 500k and contrasted with recent large net add beats and also slightly increased its 2025 guidance ranges by $100mn for Core adjusted EBITDA. CHTR posted mixed Q1 results, beating on revs but missing EPS and said it lost 60,000 internet customers over the quarter, but added 514,000 mobile lines (ests were for them to add 448,000 mobile lines).

• In Software: SPSC Q1 results came in nicely ahead of expectations and management largely maintained its full year revenue outlook (more mixed Q2 relative to expectations).
• In the EMS Sector: CLS shares fell after posting quarterly beat, but a guide that failed to breach the higher end of the previous range as sees Q2 revenue $2.58B-$2.73B vs. est. $2.61B; says raising its 2025 revenue outlook.
• In Semiconductors: INTC posted strong 1Q results, which were above expectations as pull-in demand ahead of anticipated tariffs drove strong results in CCG and DCAI, but lowered guidance reflects cautiousness regarding the negative end-demand impacts of tariffs; also cut its Opex outlook for 2025 to $17B from $17.5B.