Closing Recap

Tuesday, March 18, 2025

U.S. stocks slumped on Tuesday, erasing Monday’s advance as investors exhibit caution ahead of tomorrow’s FOMC central bank meeting while market uncertainty remains the biggest concern. Solid economic data (housing starts, import prices, industrial production) was overshadowed by a long list of uncertainties includes the specter of tariffs and their inflationary impact, geopolitical tensions and the wait for the outcome of the U.S. Federal Open Market Committee meeting, which started today (decision and updated economic projections will be tomorrow; no rate change expected). In technology, shares of the Mag7 names extending their 2025 pullback, with big drops again from TSLA, GOOGL, AMZN, META, and NVDA which kicked off its weekly GTC conference event today covering several product announcements, but without any exciting surprise fireworks to get the stock higher. Markets now await tomorrow’s FOMC policy meeting where the Fed will release a new policy statement at 2 p.m. et and though the central bank is expected to leave its benchmark overnight interest rate unchanged in the 4.25%-4.50% range, it will also issue new economic projections from policymakers.

In Europe, Germany’s outgoing parliament passed a record increase in government borrowing, including a sweeping change to the country’s debt rules. Chancellor-in-waiting Friedrich Merz’s conservatives and the centre-left Social Democrats, currently in talks to form a government following last month’s election, had proposed a €500BN fund for infrastructure and changes to borrowing rules to bolster defense and revive growth in Europe’s largest economy.

Still several negative sentiment readings weighing: Fund-manager sentiment fell by the biggest amount in five years, dropping to a seven-month low in March, Bank of America’s latest monthly fund manager survey shows. The survey’s broadest measure of fund manager sentiment–based on cash levels, equity allocation and global growth expectations–fell to 3.8 in March from 6.4 in February. March’s decline is the largest since March 2020. However, sentiment is “nowhere near extreme bear.” Instead, it has retrenched from the “uber-bull” level of December 2024 to a more neutral level,

• Feb import prices +0.4%, above consensus (-0.1%) and vs Jan +0.4% (prev +0.3%), while February export prices rose +0.1% vs. consensus (-0.2%) and vs Jan +1.3% (prev +1.3%); Feb year-over-year import prices +2.0%, export prices +2.1% and Feb non-petroleum import prices +0.4%, year-over-year +2.1%.
• February Industrial production rose +0.7%, topping consensus +0.2% and was above January +0.3%; Feb mining output +2.8%; Feb capacity utilization rate 78.2% above consensus 77.8% and vs Jan 77.7%; Feb manufacturing output +0.9% (consensus +0.3%) vs Jan +0.1% (previous -0.1%); cap use 77.0% vs Jan 76.4%.
• The Atlanta GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is -1.8% on March 18, up from -2.1% on March 17. After this morning’s releases from the US Census Bureau, the US Bureau of Labor Statistics, and the Federal Reserve Board of Governors, the nowcast for first-quarter real gross private domestic investment growth increased from 7.2% to 9.1%.

• Treasury yields sunk this afternoon following strong demand for the $13B, 20-year bond auction at high yield 4.632%, with bid-to-cover ratio 2.78, as primary dealers take 8.81% of U.S. 20-year bond sale, direct 22.35% and indirect 68.84%. The 10-yr yield hit lows below 4.27% off earlier highs 4.34%.

• Electric Vehicle maker LCID was upgraded to Equal Weight at Morgan Stanley with $3 unchanged price target and bull case raised to $10 as believes Lucid can re-rate with new leadership that has the potential to bring forth an executable AI strategy via partnerships
• In Chinese EV’s: NIO announced its partnership with CATL to establish a battery swapping network for cars. CATL will support NIO in developing the battery swapping network while the battery giant’s Choco-Swap technical standards and network will be introduced to Firefly-branded newly developed models. XPEV shares active after mixed quarterly earnings results and guidance.
• Baidu (BIDU) shares looking to extend prior day gains on reports Tesla (TSLA) is planning full roll-out of its Full Self-Driving (FSD) service in China this year and is working with Baidu to improve system’s performance, Chinese tech giant says. Adds free trial of FSD in China scheduled from March 17-April 16.
• Driver Assistance: TSLA’s China rival Zeekr to roll out advanced driver assistance-system for free; Chinese electric car company Zeekr is releasing advanced driver-assistance capabilities to its local customers for free as competition heats up, Zeekr CEO told CNBC ahead of a launch event Tuesday. https://tinyurl.com/y29zcchs
• Xiaomi Corp. (XIACY) hiked its 2025 delivery target for electric vehicles to 350,000 units after posting its fastest revenue growth since 2021, reflecting inroads into the Chinese EV market; reports 48% rise in Q4 revs, which totalled 109 billion yuan ($15.09 billion), beating the 103.94-billion-yuan average.
• GM and NVDA today announced they are collaborating on next-generation vehicles, factories and robots using AI, simulation and accelerated computing.

• In Broadline/Hardline retail: The Financial Times reported COST is reportedly pushing suppliers in mainland China to lower prices in response to higher U.S. tariffs, adding pressure to manufacturers already operating on thin margins. Walmart and other retailers have made similar demands, according to suppliers.
• In Restaurants: SBUX was upgraded to Buy from Hold at Argus with $115 tgt saying the company’s emphasis on digital improvements, brand marketing, and fewer sales promotions offer promise.
• In Casinos & Gaming: Barclay’s said NJ regional GGR -4% y/y, MGM -7%/-6%. February Regional GGR for states reported thus far (MD, IL, OH, MO, IA, NY, MI, IN, NJ) is -5% y/y. Calendar-adjusted Regional GGR for states reported thus far is -2% y/y.

• In Gas & Coal: Stephens upgraded CNX to Overweight from Equal Weight and raised price target to $48, raising its net asset value (NAV) estimate 37% to $48 based on recent 2025-2027 NYMEX strip prices and the company’s year-end 2024 proved reserve report and upgraded EQT to Overweight (tgt to $59 from $41) and raised its NAV estimate 44% to $59 based on recent 2025-2027 NYMEX strip prices. Coal names ARLP, BTU, CNX, HCC shares were active after Trump’s post last night: "I am authorizing my Administration to immediately begin producing Energy with BEAUTIFUL, CLEAN COAL." NEXT shares jumped after an appellate court ruling hailed as an “excellent outcome” by the company, which is developing the Rio Grande liquefied natural gas (LNG) facility near Brownsville, Texas.

• In Crypto & Blockchain: Early weakness in Bitcoin prices weighed on crypto space again, with MSTR, COIN, MARA and others underperforming. BKKT shares tumbled after saying BAC will not renew the commercial agreement with the company as its agreement expires on April 22, 2025, with a 12-month transition period.
• In Insurance: BHF was upgraded to Strong Buy at Raymond James saying it could unlock substantial value via a whole company sale (or carve up) or by using creative options to free up capital. The firm noted in January, the Financial Times reported that BHF “is seeking to sell itself.” WTW was upgraded to Buy from Neutral at UBS and raised tgt to $395 from $344 as sees continued multiple expansion for WTW relative to the insurance brokerage group, saying its operating and free cash flow margins improve faster than peers.

• INCY was downgraded at both William Blair and Guggenheim after Incyte announced Phase III results from the STOP-HS1 and -HS2 studies evaluating the JAK1 inhibitor Povorcitinibi in patients with moderate to severe hidradenitis suppurativa (HS).
• MOH announced that the Company’s subsidiary, Molina Healthcare of Illinois, was one of four managed care organizations awarded a contract by the Illinois Department of Healthcare and Family Services to provide a Fully Integrated Dual Eligible Special Needs Plan or D-SNP.
• SANA was upgraded to Outperform from Market Perform with $5 PT at Citizens after Sana reported Q424 results and provided corporate updates, including longer follow-up from the Upsala IST demonstrating three-month islet cell viability.
• SRPT shares tumbled after death of patient with Duchenne muscular dystrophy (DMD) that passed away following treatment with ELEVIDYS, having suffered acute liver failure.
• STOK CEO Ed Kaye is stepping down, the company said. He will be replaced on an interim basis by Director Ian Smith, a former Vertex Pharmaceuticals executive. A search for a permanent CEO is underway.
• VRAX started enrolling patients into its United Kingdom based, multi-center clinical study.

• In Internet: Citigroup said after aggregating February website traffic from SimilarWeb and app data from SensorTower, in partnership with Citi’s Innovation Lab, they highlight positive trends across META, DASH, UBER, and CVNA, while eCommerce, Online Travel, SMB Servicers, and Online Real Estate trends were mixed. META shares dropped below $580 midday, turning negative on the year now (and a long drop from the $740.91 high on 2/14 which was the last day of its then 20-day win streak).
• Online education: DUOL was upgraded to Outperform from Market Perform with $400 PT at Citizens after the company’s valuation came in following 4Q24 earnings and macro volatility, while also expect Max to be a driver of pricing gains in 2025 and to benefit subscriber conversion in international markets in 2026 and beyond.
• In Hardware/Equipment: AAPL loses its fight at Germany’s top civil court to overturn a regulator’s decision to put it under tighter antitrust scrutiny alongside other US tech giants; GLW guides Q1 core EPS at high end of $0.48-$0.52 range (est. $0.50) and revs to over $3.6B from $3.6B (est. $3.64B) and Corning announced an upgrade to its Springboard plan, along with details on the milestones achieved across the company.
• In Cyber Security: GOOGL announced it has signed a definitive agreement to acquire Wiz, a leading cloud security platform headquartered in New York, for $32B, subject to closing adjustments, in an all-cash transaction (had confirmed prior day media reports). GOOGL shares fell on the pricey deal.
• SMB spending survey: Keybanc surveyed 100 SMBs in March 2025 as part of its semi-annual SMB tech spend survey. The firm said respondents collectively indicated a worsening outlook for tech spend growth, revenue growth, and workforce growth in 2025 as compared to KEYB’s 2H24 survey (results collected September 2024).  A lower level of tech spend growth vs KEYB’s 2H24 survey and relatively slower level of tech spend growth vs total SMB operating cost growth leaves US feeling worse, in broad terms, about SMB tech vendors. Keybanc lowered tgts on XYZ to $85 from $115, BILL to $70 from $85. 1H25 SMB survey respondents expect 4.1% 2025 IT budget growth, a 130-bps downtick from KEYB’s 2H24 survey 1H25/2H24 survey results collected March 2025/September 2024) implying moderating SMB tech spend growth.