Closing Recap

Monday, May 19, 2025

Following a big rally off morning lows, the S&P 500 extended its recent winning streak to 6-days, good for a more than 70-point bounce as investors took advantage of a rare notable market dip (at least in the last 4-5 weeks), adding to their positions. US futures declined overnight following news late Friday that the United States credit rating late Friday to AA1 from AAA due to concerns about the nation’s growing, $36 trillion debt pile. Moody’s was the last of the major credit-rating firms to strip the U.S. of a triple-A rating. The dollar tumbled, Treasury yields popped (as bonds rolled) and stocks were all pointing lower following the announcement…but investors were quick to pounce on the beaten up names as after all eleven S&P sectors that opened in the “red”, by days end, seven of those eleven ended up in positive territory. Energy (XLE) was the biggest drag in S&P as overall market breadth was negative by about 1.5:1 margin decliners leading, while Healthcare (XLV) was the best performer as UNH shares rallied for a second day after falling over 45% YTD late last week. A very quiet, low volume day after last Friday’s option expiration, ahead of earnings from Dow component HD tomorrow morning. In an interesting stat, Bespoke Invest tweets: “The S&P 500 $SPY has already had 7 Monday morning 1%+ gaps down this year. It had 3 across all of 2023 and 2024. The record since SPY began trading was 11 in 2009. We’re on pace for 18 in 2025.”

• June gold rises $46.30, or 1.45% to settle at $3,233.50 an ounce, helped by a weaker dollar and safe-haven demand after Moody’s downgraded the U.S. government’s credit rating amid lingering trade concerns. Rising risk aversion and a weakening U.S. dollar helped gold recover from its worst week of the year. The U.S. dollar slipped -0.6% against a basket of other major currencies. U.S. Treasury Secretary Scott Bessent said in television interviews on Sunday that President Donald Trump will impose tariffs at the rate he threatened last month on trading partners that do not negotiate in "good faith".
• Treasury yields rose, especially longer-dated maturities and the dollar eased amid concerns about a U.S. tax bill and the U.S. debt load following Moody’s downgrade of the U.S. sovereign credit rating. The news pushed the 30-yr yield above 5% for the first time since November 2023 and the 10-yr scaled highs above 4.56% (rising 11bps) before both paring advance midday. The U.S. dollar weakened broadly, hitting a more than one-week low against the safe-haven yen, Swiss franc and euro.

• In Food & Beverages: DEO posted $4.38B in reported net sales for Q1, a 2.9% increase compared with a year prior as positive organic growth was partly offset by unfavorable foreign exchange and disposals; expects U.S. trade tariffs to result in an unmitigated $150M hit on its profit and reiterated its guidance for the year; said it plans $500M in cost savings by 2028, lowers tariff impact. BRFS downgraded to EW from Overweight and upgraded Marfrig (MRRTY) to Overweight from EW at Barclays saying Brazil protein companies posted another strong quarter of profits as global demand remains strong and input costs remain favorable.
• In Food Processing: ADM was upgraded to Buy at UBS with $60 PT based on underappreciated policy tailwinds and as they see better Nutrition results in the future. The Budget Reconciliation bill drafted by the House Ways and Means Committee, makes it clear that no production tax credit will be given to renewable diesel made from imported feedstocks. If the Bill passes, it eliminates credit for imported UCO and Tallow and could create incremental demand for domestic soybean oil.

• In Home Furnishing: WSM was upgraded to Equal Weight from Underweight at Barclay’s and raised its tgt to $166 from $131saying they are still concerned about the macro environment for big ticket items but now sees less risk to Williams-Sonoma’s fiscal 2025 earnings and does not expect the company’s fundamentals to meaningfully underperform other discretionary names.

• In Autos: Wells Fargo noted sticking with defensive auto suppliers such as BWA, VC and APTV after looking at likely tariff outcomes, analyzing the impact to production, & updates its ests. The tariff outlook improved w/ auto concessions and UK & China deals. However, autos are still likely to face at least 10% tariffs, a material burden given peak OEM margins are ~9%.
• In Casinos & Gaming: IGT said an IGT-led consortium will be proposed to be awarded the Italy Lotto License Through November 2034. IGT expects award notice within the next 35 days.

• Solar sector: shares slipped (ENPH, FSLR, RUN, SEDG) after conservative Republican lawmakers said they had secured a commitment from leadership to end key clean-energy tax credits earlier than planned as part of a deal aimed at allowing President Donald Trump’s tax and spending package to advance. Also, the US Department of Energy plans to cancel seven major loans and loan guarantees that had been conditionally approved under the Biden administration. The list, shared with Semafor by a former DOE official close to the process, includes three projects that were still scheduled for completion by their sponsors, including a transmission project by a New Jersey utility, a loan program for low-income homeowners to install rooftop solar panels by Sunnova, and a factory to produce low-carbon ammonia by Monolith Nebraska.
• In Utility/Nuclear: TLN said it is pushing outage timeline from mid-May to first week of June for its Susquehanna nuclear facility unit 2 to account for remaining tasks; the co expects outage extension to increase expenses by about $35 million. TXNM enters into an agreement to be acquired by Blackstone infrastructure for $61.25 per share as acquisition reflects total enterprise value of $11.5B

• In Payments: MQ was upgraded Marqeta to Overweight from Neutral at JP Morgan and raised tgt to $6 from $5 saying the company has managed through the majority of its largest customer renewals, most notably Block, as well as regulatory related customer onboarding delays which slowed 2024 and 2025 growth. Visa (V) and MA both advanced today and both touched fresh 52-week highs.
• In Financial Services: RDDT was downgraded to Equal Weight from Overweight at Wells Fargo (tgt to $115 from $168) saying Reddit user issues are now likely more permanent; prepare for logged-out user declines as Google more aggressively implements AI features in search. Expect stock multiple to remain under pressure from user disruption, followed by lagged financial impact.
• In Mortgage Sector/REITs: RDFN reports spring homebuying season sputters as supply jumps to 5-year high, existing-home sales drop to 6-month low. Housing demand is sluggish because the cost of buying a home is climbing, and economic uncertainty is making many Americans press pause on big purchases. The median home sale price rose 1.4% year over year to $438,466 in April. PGRE shares jumped after saying they are exploring strategic alternatives for their business, which could entail an outright sale for the company. The company said that it has enlisted Bank of America as financial adviser.

• ITRM announces extension of term of promissory note; said PFE continues $20M milestone payment term to October 2029.
• LQDA downgraded from Perform to Underperform at Oppenheimer saying with no anticipated legal/regulatory barriers blocking YUTREPIA, OPCO sees a clear path to approval in PAH and PH-ILD on the 5/24/2025 PDUFA; that said, OPCO thinks the launch is going to underperform.
• NTLA reported positive two-year follow-up data from ongoing phase 1 study of nexiguran ziclumeran for its experimental drug for the potential treatment of hereditary transthyretin amyloidosis with polyneuropathy, a genetic disease associated with the liver on Sunday at the 2025 Peripheral Nerve Society (PNS) Annual Meeting
• NVAX shares rose after disclosing the FDA approved the biologics license application for Nuvaxovid to prevent Covid-19 in adults ages 65 and up and individuals ages 12 through 64 who have at least one underlying condition that puts them at high risk for severe outcomes from the coronavirus.
• REGN said it would buy bankrupt genetic testing firm 23andMe for $256 million
• UBX was downgraded to Neutral from Outperform and cut PT to $1 from $6 at Mizuho, lowering the PoS for UBX1325 on technical trial failure. Mizuho is watching for updates on strategic plans and a clear path forward.
• In Medical Equipment/Supplies: SOLV was upgraded to Overweight and raised PT to $87 at Piper saying they had been warming to the stock in recent months and are turning more constructive with its rating as it got increasingly confident in management’s ability to execute against a steady top-line and margin turnaround.
• In Managed care: UNH shares extended Friday’s bounce after five UnitedHealth Group insiders including new CEO Stephen Hemsley scooped up the health insurer’s beaten-down stock in recent sessions late last week according to form 4 SEC filings – shares rose 6.4% on Friday and snapped an eight-session losing streak.

• In Aerospace & Defense: TDG agreed to acquire all the outstanding shares of SVT for $38.50 per share in cash, in a transaction valued at approximately $110M, including certain tax benefits. The cash consideration represents a premium of approximately 274% to Servotronics’ closing share price on May 16, 2025.
• In Chemicals: MEOH was upgraded to overweight at Piper based on recently updated fundamental and company data and some positive results from the last quarter; ASIX was also upgraded to overweight at Piper to reflect the earnings benefit of the ammonium sulfate business as well as the relatively small impact of tariffs on the nylon, nylon intermediate and chemical intermediate businesses.
• In Containerboard/Paper sector (IP, PKG, SW, GEF): Truist noted on Friday, Fastmarkets RISI (RISI) released its weekly Pulp & Paper Week (PPW) publication that included May containerboard and boxboard pricing and relevant commentary. Pricing for domestic containerboards remained unchanged from April while URB increased $30/ton and other boxboard grades were flat.

• In Semis: NVDA CEO Jensen Huang announced at the Computex trade show in Taiwan that the company would be opening its artificial-intelligence server platform to rival chip makers such as QCOM and MRVL. Nvidia also said it would be working with iPhone manufacturer Foxconn to build an AI factory supercomputer in Taiwan.
• In the EMS Sector: SANM shares slipped after agreed to acquire ZT Systems’ data center-infrastructure manufacturing business from AMD for up to $3B; SANM will provide $2.25B of cash, $300M consisting of an even split in cash and equity, and a $450 million contingent consideration based on financial performance.