Closing Recap

Tuesday, July 01, 2025

U.S. stocks finished mixed as today’s broad-based rally was dominated by Smallcaps with the Russell 2000 surging while the tech heavy Nasdaq lagged. NYSE breadth was strong, with a more than 3:1 margin lead for advancers over decliners with Materials (XLB), Healthcare (XLV), Consumer Staples (XLP) the notable leaders all up over 1% while Technology (XLK) and Communications (XLC) were the only sectors in the red. Mega cap tech (Mag7 names) like NVDA, TSLA, META, MSFT, GOOGL saw weakness in a rotation out of large cap tech and into just about everything else it felt like (defensive sectors like foods, REITS moved higher as well as transports, homebuilders, and drug stocks). Lot of big sector movers today, and mixed economic data (see below) ahead of key jobs data in coming days (ADP private payrolls tomorrow and the nonfarm payroll data on Thursday, pushed up a day as markets are closed Friday for the 4^th of July). Stocks dipped late day as President Trump, who had comments throughout the entire day, said he doubts we’ll have deal with Japan and suggests Japan could pay 30% or 35% tariff; though noted he expected a deal with India and said he is not thinking about extending tariff pause past July 9^th.

The Senate passed the Trump tax/spending bill by 51-50 vote, teeing up final passage in House as VP Vance breaks the tie. The legislation that passed on Tuesday includes major federal funding cuts to Medicaid that were opposed by hospitals and doctors while also included less painful news in the solar sector. The U.S. House of Representatives set debate and a vote for Wednesday for President Donald Trump’s sweeping tax-cut and spending bill. Some standout sectors today included; 1) homebuilders (LEN, KBH, DHI) with a massive move higher, 2) solar stocks squeezed (SEDG, FSLR, ARRY) after reports the Senate intends to drop wind, solar excise tax from budget bill, and intends to allow renewable energy projects to earn tax credit; 3) casinos (WYNN, LVS, MLCO) surged after monthly GGR Macau revenue data came in strong; 4) autos (GM, F) saw strength behind monthly June auto sales figures; 5) Home health and hospice providers (EHAB) as well as insulin names (DXCM, PODD) declined after CMS proposes a 6.4% reduction cut in 2026 Medicare payments and competitive price changes for diabetes; 6) Dow Transports rose over 3% on no specific news either led by truckers and freight names (R, JBHT, ODFL); overall saw momentum selling in recent winners (AI names, aviation names, nuclear stocks and tech).

• S&P Manufacturing PMI Final Actual 52.9 (best all year and highest since May 2022 as per CNBC) above forecast and prior reading of 52.0)
• Construction spending for Mat declines -0.3% vs. consensus -0.2% while May private construction spending -0.5%, public spending +0.1%.
• ISM U.S. manufacturing activity index 49.0 in June above consensus 48.8 vs 48.5 in May; prices paid index 69.7 in June (consensus 69.0) vs 69.4 in May; new orders index 46.4 in June vs 47.6 in May and employment index 45.0 in June (consensus 47.0) vs 46.8 in May.
• Dallas Fed Texas service sector revenue index -4.1 in June vs -4.7 in May; Dallas Fed Texas service sector index of general business activity outlook -4.4 in June vs -10.1 in May.
• The Atlanta GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 2.5% on July 1, down from 2.9% on June 27. After this morning’s releases from the US Census Bureau and the Institute for Supply Management, the nowcasts of second quarter real personal consumption expenditures growth and real gross private domestic investment growth decreased from 1.7% and -11.1%, respectively, to 1.5% and -11.9%.

• Commodity prices were generally higher, helped by better PMI data in China overnight and early weakness in the dollar (before it rebounded and finished higher). August gold prices rose $42.10 or 1.27% to settle at $3,349.80 an ounce (off earlier highs $3,370.50). U.S. WTI crude oil futures settle at $65.45/bbl, up 34 cents, 0.52% while Brent crude settle at $67.11/bbl, up 37 cents, 0.55%.

• BYDDF said it delivered 377,628 passenger vehicles in June vs. a year ago, BYD delivered 340,211 vehicles, including 145,179 all-electric cars; For the quarter, BYD delivered around 1.13 million cars, including more than 606,000 all-electric vehicles.
• Ford (F) Q2 U.S. truck sales 342,761 vehicles, up 11% and Q2 U.S. sales 612,095 vehicles, up 14.2%; June U.S. total vehicle sales 612,095 units and Q2 electrified vehicles sales of 82,886 units
• GM said U.S. sales increased 7% in second quarter as U.S. deliveries 746,588 units in second quarter and U.S. EV sales 46,280 units in Q2.
• LI announced that it delivered 36,279 vehicles in June 2025. This brought the Company’s second-quarter deliveries to 111,074. As of June 30, 2025, Li Auto’s cumulative deliveries reached 1,337,810.
• NIO delivered 24,925 vehicles in June 2025, representing an increase of 17.5% y/y. The Company delivered 72,056 vehicles in the second quarter of 2025, representing an increase of 25.6% year-over-year.
• TM reports June U.S. sales up 0.1% to 193,248 vehicles, with electrified vehicle sales rising 6.7% to 90,426 units, making up 46.8% of total sales.
• TSLA sales decline for sixth straight month in Sweden and Denmark in June y/y. Denmark Tesla sales down 61.6%, Model Y sales slump 31.2% y/y; Sweden registrations fall 64.4%. However, Norway Tesla registrations surge 53.8% during the same period. Spain new Tesla registrations climb 60.7% y/y in June to 2,632 cars.
• XPEV delivered 34,611 Smart EVs, representing a y/y increase of 224% and marking the eighth consecutive month that deliveries exceeded 30,000 units. In Q2, XPENG delivered 103,181 Smart EVs, setting a new quarterly record. This brings XPENG’s total deliveries for the first half of 2025 to 197,189 Smart EVs.

• In Food & Restaurants: CMG adds to recent gains, rising 8 of the last 9 days after topping and holding its 200dma yesterday $55.39; SG was downgraded to Hold from Buy at TD Cowen and lowered its price tgt to $15 from $25 saying they are concerned on same-store sales misses began in Q2, though it extends to the optimistic 2H’25 acceleration embedded in consensus, while there is risk of not returning to normalized same store sales in 2026. Defensive food stocks outperformed with solid early gains in HSY, KLG, CAG, MDLZ, GIS, CPB among many others and beverages KO, PEP.

• In Lodging and Travel: Hyatt (H) was upgraded to Strong Buy at Raymond James after reaching an agreement to sell the entirety of its Playa owned real estate which RAJA believes removes a significant overhang on the stock. The firm believes management’s execution was particularly strong given all the macro volatility/uncertainty since the deal was announced in February.

• Solar stocks a healthy rebound led by ARRY, SHLS, ENPH, NXT, SEDG, RUN after another big change in latest version of Senate GOP bill. Reuters noted US Senate intends to drop wind, solar excise tax from budget bill, and intends to allow renewable energy projects to earn tax credit based on construction start one year after bill enactment. Wells Fargo noted the removal of the excise tax is a positive for entire solar coverage, but negative for FSLR. Utilities were mixed as nuclear names VST, CEG, OKLO, SMR, LEU, NNE were lower.

• In Banks and Brokers: US bank stocks rose to their highest level in three years as investors continued to pile into the group on buyback/dividend hopes after the lenders comfortably cleared the Federal Reserve’s stress test. RILY announced it has entered into a privately negotiated exchange agreement with an institutional investor, which will reduce the Company’s total outstanding debt by approximately $15 million
• In Crypto: CLSK was initiated at Buy and $16 tgt at B Riley saying with more than 30 sites across Georgia, Mississippi, Tennessee, and Wyoming, CLSK has secured 987 MW of contracted power, all of which is fully owned and operated by the company. Bitcoin prices slumped over 1% most of the day under $106,000 but a handful of miners have outperformed recently IREN, HIVE, WULF.

• DYN 24.2M share Spot Secondary priced at $8.25.
• IONS was upgraded to Overweight from Equal Weight at Barclays saying its deep dive on CORE/CORE2 supported >90% prob of positive study in primary endpoint of triglyceride.
• NKTR sold 4.255M shares at $23.50 per share in offering.

• Insulin/diabetes stocks (DXCM, TNDM, PODD) shares fall after the U.S. government proposed a payment scheduling change as well as a competitive bidding program for the diabetes treatment devices. On June 30, the Centers for Medicare & Medicaid Services issued a proposed rule that proposes updates to Medicare payment policies and rates for home health agencies under the Home Health Prospective Payment System Proposed Rule for calendar year 2026.

• Homebuilders were a standout to the upside all day despite any meaningful move in Treasury yields to the downside; shares of BZH, DHI, KNH, LEN, MTH, PHM, TOL all moving between 5% and 10% on day. Axios noted some homeowners could see tax breaks if Trump’s bill passes – Real estate brokers are cheering a provision in President Trump’s "big, beautiful bill." Why it matters: Expanding the state and local tax (SALT) deduction could be boon for homebuyers in expensive areas where taxes run high.
• In Logistics and Trucking: Ryder (R) was upgraded from Peer Perform to Outperform at Wolfe Research noting shares are flattish YTD (+1%), modestly lagging the S&P 500 but relatively outperforming Wolfe’s broader Transport Index. Wolfe upgraded CHRW to Outperform noting the stock is down 7% YTD, underperforming the S&P (+5%) but relatively outperforming Wolfe’s Transport Index (-12%). While Wolfe sees EPS risk in Q2 with weaker Forwarding results, CHRW is one of just a handful of stocks where it is now above Consensus in C26.

• AVAV shares fell after announced proposed underwritten public offerings of $750M of shares of its common stock and $600M aggregate principal amount of its convertible senior notes due 2030.
• PL shares rise after it announced it has secured four major awards for its new AI-enabled solutions with customers in the Defense & Intelligence sector.
• RKLB said it will deliver a constellation of 18 spacecraft for the Space Development Agency’s Tranche 2 Transport Layer-Beta program, a foundational component of the Proliferated Warfighter Space Architecture.
• TXT was downgraded to Neutral from Buy at Goldman Sachs and cut PT to $85 from $95 as leading indicators in the business jet end market have slowed their rate of improvement or plateaued, and it appears to be losing share in business jet, with limited growth at Systems and Industrial.

• In Paper & Packaging: PKG announced that it has entered into a definitive agreement to purchase the containerboard business of GEF for $1.8B in cash. The transaction is expected to close by the end of PCA’s third quarter, subject to certain customary conditions and regulatory approvals. The Greif containerboard business includes two containerboard mills with approximately 800,000 tons of production capacity and eight sheet feeder and corrugated plants located across the United States. The business generated approximately $1.2B in sales and $212M of earnings before interest, taxes, depreciation and amortization (EBITDA).

• In Media: WBD 100M share Block, priced at $10.97; separately WBD was added to Benchmark’s Best Ideas List while reiterating its Buy rating and $18 PT saying as expects the Superman reimagination film to achieve the ~$700M global box office and likely requisite to achieve profitability – while critically attesting to the continued vitality of DC Studios. AMC said it will cut its debt by converting at least $143 million in exchangeable bonds into shares, with the potential to swap up to $337 million of debt into equity

• PRGS shares slumped following quarterly results and guidance overnight.
• SNDK was added to Benchmark’s Best Ideas List and raised its tgt to $62 from $58 saying the NAND business is entering a cyclical upturn driven by AI opportunities and double-digit data center spending growth which is expected to raise NAND demand and prices.
• WOLF shares surged after the chipmaker said it would file for bankruptcy to enact a creditor-backed plan to slash $4.6 billion in debt. The company filed for reorganization under Chapter 11 and expects to emerge out of bankruptcy by the end of the third quarter.