Closing Recap

Thursday, May 08, 2025

U.S. stocks surged on positive trade deal news as President Trump and British Prime Minister Keir Starmer announced a “breakthrough deal” on trade that leaves in place a 10% tariff on goods imported from the UK while Britain agreed to lower its tariffs to 1.8% from 5.1% and provide greater access to U.S. goods (details below). So far, the stock markets move off of the April lows has been astounding in a short period of time (about 30 days), recovering all the losses and major averages pushing back above key technical resistance levels with ease (the Nasdaq 100 QQQ moved above its 200dma of 491.11 today – a 70 point bounce off April lows). Strength was broad based today outside of Healthcare (XLV), with big moves higher fort industrials, materials, energy, and technology. Markets have seen several positive headlines in recent weeks about improved trade talks (deal with UK today, and trade reps meeting with China this weekend) and has lifted stock prices. The US Dollar, Treasury yields, and commodity prices (sans gold) saw big gains today. Big rallies across the board as the Dow Transport index surged over 2.9%, topping 14,150, while the Dow Jones Industrial Average rose more than 500 points above 41,600. Stocks got another late day push higher after the NY Post reported the US weighs plan to slash China tariffs to as low as 50% — down from 145% — as soon as next week. Earnings season is at the tail end with 425 of the 500 S&P companies reported thus far, with a few big retailers and tech names remaining after tonight’s earnings deluge. Stocks markets did pare gains into the bell.

Details from the US/UK trade deal: President Trump noted that the 10% tariff stays on for the UK, and the U.S. will raise $6B in external revenue from 10% tariffs, $5B dollars in new export opportunities. As part of today’s UK trade deal, the UK will announce it will buy $10B worth of Boeing planes; said deal will lead to the creation of an aluminum and steel trading zone, and a secure pharmaceutical supply chain; Quota for 10% auto tariffs for UK is 100k cars; US tariffs on automotive immediately slashed from 27.5%, with steel and aluminium reduced to zero. Also a reminder this weekend, US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer will travel to Switzerland for trade talks with China led by Vice Premier He Lifeng.

In Central Bank news, after the FOMC left rates unchanged yesterday, the Bank of England cut its main interest rate by 25bps to 4.25% (as expected) today, with an unexpected three-way split among policymakers, including two who voted to keep rates unchanged. It had previously been relatively flat against the dollar after U.S. President Donald Trump said the United States and Britain will announce a deal to lower tariffs on some goods later in the day. The BOE’s Monetary Policy Committee voted 5-4 in favor of the decision to cut rates by a quarter point. So, in the last 2 weeks, the European Central Bank (ECB) cut interest rates, the Bank of England (BoE) this morning cut rates, the People’s Bank of China (PBoC) cut rates yesterday and the Swiss National Bank (SNB) recently cut rates. The US Fed, however, held interest rates steady. Powell again suggested the central bank will continue to take a “wait and see” approach to policy, as he underlined the economic uncertainty and market volatility created by Trump’s tariff push.

Weekly sentiment readings showed: 1) This week’s NAAIM Exposure Index reading increased to 81.06, rising from last week’s 59.92 level – recent peak of 99.24 from 12/11 – recent trough from 4-17 of 35.16 – Last Quarter Average (Q1) of 72.50; 2) The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -22.1 vs -38.4 last week. Bulls rose to 29.4% from 20.9%, Neutrals dropped to 19% from 19.8%, Bears fell to 51.5% from 59.3%.

Reasons to worry? Jefferies quant strategy team noted the 1Q25 result season has been poor despite EPS beats of 76%, the same as 4Q24. Stocks that beat saw only marginal upgrades, while misses saw large cuts. Also, beats failed to outperform, indicating weak/uncertain guidance. Tariffs seem to be hurting S&P 493 more than Mag 7, with the former’s revisions turning sharply negative in April, while the latter rebounded. Growth beat value last month.

• U.S. Q1 non-farm unit labor costs +5.7% (consensus +5.1%), vs Q4 +2.0% (prev +2.2%); while U.S. Q1 non-farm productivity -0.8% (vs. consensus -0.7%), vs Q4 +1.7% (prev +1.5%).
• March wholesale inventories revised to +0.4% (vs. consensus +0.5%) and from +0.5%; U.S. March wholesale sales +0.6% (consensus +1.9%) vs Feb +2.0% (prev +2.4%); U.S. March stock/sales ratio 1.30 months’ worth vs Feb 1.30 months.
• NY Fed: April year-ahead expected inflation unchanged at 3.6%; April three-year-ahead expected inflation 3.2% vs. March’s 3%; April five-year-ahead expected inflation 2.7% vs. March’s 2.9%; Fed three-year-ahead expected inflation highest since July 2022; April projected year-ahead climb in home prices at 3.3% vs. March’s 3%.

• June gold prices fell -$85.90 an ounce at $3,306 in another volatile day, pulling back as Treasury yields jumped as did the US dollar on the US/UK tariff trade deal news.
• U.S. dollar climbs vs Japanese Yen after Trump announces US-UK trade deal, last up 1.35% at 145.75 Yen, while the euro dropped to lows around -0.65% to 1.1225. Dollar index (DXY) hits 4-week highs around 100.65.
• Treasury yields jumped all day on both the short and long-end of the curve as the 10-year yield gained 9.6 bps to 4.37% and the 2-yr up 10.6bps to 3.899%.
• Bitcoin climbs to $100,000 for the first time since February, up over 3%, rose more than 5% at peak topping $101,500.

• BUD reported Q1 EPS and Ebitda growth above consensus.
• DNUT Q1 sales fell 15.3% y/y to $375.2M, missing estimates of $384.4M and withdrew their year guidance.
• TAP reported Q1 sales were short of consensus and cut its 2025 guidance to low single-digit decline in annual net sales, compared with previous expectations of low single-digit growth.
• TSN, PPC and other beef/poultry names active following the UK/US trade deal.

• COTY downgraded at Deutsche Bank and Canaccord after recent earnings results that indicated worsening trends for the business despite other beauty brands generally seeing resilient results.
• CROX withdrew its full-year outlook as consumer behavior remains uncertain amid tariff policies after logging higher profit and lower revenue in Q1 (had previously guided for full-year revenue growth between 2% and 2.5% and adjusted earnings per-share of $12.70 to $13.15).
• CVNA Q1 revenue and Adjusted EBITDA of $4.2B/$488MM handily beat consensus of $4.0B/$434MM and put out a new LT target of 3MM units in a wide 5–10-year range at an Adjusted EBITDA margin of 13.5%.
• MELI Q1 results were strong across the board and ahead of consensus on virtually all key metrics. Recovery in Argentina proved even stronger than expected, supporting margin improvement despite increased investment in credit card and logistics expansion in Brazil and Mexico.
• SHOP posted a wider quarterly loss and operating income that was well below the analysts’ estimates; Q1 sales in-line but Q1 operating income of $203M well below the $437M estimate and wider net loss (-$682M).
• SN raises FY2025 adj EPS guidance From $4.80-$4.90 to $4.90-$5.00 above est. of $4.85 and expects net sales to increase 11% to 13% (from prior 10% to 12%).
• TPR raises FY25 EPS view to $5.00 from $4.95-$4.90 (est. $4.92) and boosts FY25 revenue growth view to 4% or approximately $6.95B from previous view of 3% growth (est. $6.87B).

• Solar sector: a good run recently for the solar names and quarter of weakness and lowered guides; RUN the latest to report better results, following likes of SEDG, ARRY and SHLS in the last few days; ENPH and FSLR had both issued disappointing guides a few weeks back.

• ALT announces presentation of new analyses predicting high rates of MASH resolution on biopsy following pemvidutide treatment at EASL International Liver Congress
• ARGX falls after results; Wells Fargo noted Vyvgart revs beat in Q125, but probably a bit short of the buyside bogey; Street/WELLS’s ests were $768MM/$805MM for Vyvgart, so a modest beat vs consensus but slightly below its est. in Q125
• GDRX reported a mixed, but generally good headline quarter, beating both revenue and EBITDA.
• NVAX Q1 net income $519M vs. -$148M loss y/y as revs up to $667M from $94M y/y and above ests $343.8M and said is in discussions with the US FDA regarding its proposed study design for its COVID-19 vaccine.
• VSTM said the FDA approved the combination of avutometinib capsules and defactinib tablets for certain patients with KRAS-mutated recurrent low-grade serous ovarian cancer.
• VTRS announces positive results from phase 3 study of investigational XULANE LO(TM) low dose patch for birth control in women of childbearing potential.
• XRAY rises on results as revs $879M top the $855M estimate on better earnings; maintains guidance.

• BA shares jumped after details of the UK/US trade deal announced this morning indicated that the UK will announce it will buy $10B worth of Boeing planes. Separately, Bloomberg reported British Airways parent IAG is poised to order about 30 Boeing 787 Dreamliner aircraft.
• HI was downgraded to Sector weight from Overweight at Keybanc as feels recent demand uncertainty created by the current tariff regime in APS and the likelihood of sales declines in FY26 create an overhang that is difficult to ignore.
• In Shipping, Maersk (AMKBY) said container volumes plunged 30-40% between the U.S. in China in April as a trade war erupted between the world’s top economies, and warned a protracted dispute could shrink global volumes this year. However, they stuck to their full-year profit guidance, helped by continued disruption on the Red Sea trade route that has pushed up freight rates.

• Metals & Mining: CLF shares tumbled as reported a Q1 EBITDA loss of $174M, which compares to a consensus loss of $106M and JEFF’s estimate of a loss of $113M; provided detail on operational/strategic changes including idling six facilities, suspending CAPEX at the Weirton plant, cutting both near-term and potentially longer-term CAPEX.

• COHR shares rose after results similar to comp LITE this week as robust AI, networking offset other segments; softer Lasers and Materials that faced headwinds from consumer, silicon carbide etc.
• EPAM announces planned leadership succession; Balazs Fejes named CEO and President
• FTNT shares fell following a mixed 1Q as total revenue, product revenue, billings, and margins beat, but services revenue missed. 2Q guided in line. 2025 top-line guide unchanged; EBIT margin raised 50 bps.
• NTDOY projects weaker initial sales of Switch 2, with shipments expected to reach 15M units in the year to March.
• TRMB reported solid 1Q results and posted organic ARR growth acceleration though called out slight softness in U.S. public sector and sales cycle elongation in large enterprise and only maintained guidance for year.
• ZI board authorizes repurchase of additional $1B of its Class A common stock, Class C capital stock or a combination.
• Quantum computer names got a boost early, getting a lift behind earnings from IONQ and QBTS; QBTS revs $15M topped the $10.6M estimate with gross profit $13.87M while IONQ Q1 revs $7.56M vs. est. $7.51M; Q1 EPS loss (-$0.14) and announces acquisition of Lightsynq Technologies.

• MKSI Q1 EPS of $1.71, which beat consensus $1.44 and revenue of $936M was up 8% y/y compared to consensus of $914M while Q2 guide came in below consensus indicating sequential decline.
• NVDA and other chip stocks rallied after reports the Commerce Department said it doesn’t intend to implement artificial-intelligence processor restrictions drawn up under the Biden administration that were set to go into effect on May 15. The Commerce Department plans to replace the rule, which imposed caps on how many chips could go to countries such as India, Switzerland, Mexico, and Israel.
• SWKS posted strong F2Q (Mar) results and F3Q (Jun) guidance, which were slightly above expectations, reflecting stable iPhone demand and likely some pull-ins related to tariffs. SWKS indicated there are no changes to its prior expectations for the iPhone 17.