Closing Recap

Thursday, May 29, 2025

U.S. stock markets opened at the highs, fading throughout the day, though managed to finish in positive territory heading into key inflation data tomorrow morning with the April Core PCE index. Treasury yields declined, and remained lower following a stellar 7-year bond auction this afternoon with the 10-year more than 11 bps off its morning highs. Three big stories today that impacted markets were: 1) the vast majority of President Donald Trump’s global tariffs were deemed illegal and blocked by the US trade court, dealing a major blow the White House (though an appeals court allowed the tariffs to stay in place during the appeal); 2) NVDA earnings and guidance pleased tech investors, lifting names in the AI space (though saw some pullback on the day); 3) prelim Q1 GDP disappointed, showing a decline ahead of key inflation data tomorrow morning. Bitcoin prices tumbled late day along with weakness in the dollar while gold prices finished higher.

The big news overnight was the unanimous decision by a three-judge panel at the US Court of International Trade (CIT) that threw out all of the tariffs Trump put in place on Liberation Day and the fentanyl tariffs on China, Canada, and Mexico that came before them. The Court blocked the sweeping US tariffs, ruling “the court does not read IEEPA of 1977 to confer such unbounded authority and sets aside the challenged tariffs imposed thereunder.” The court gave the Trump administration 10 days to stop collecting the blocked tariffs. All that remains for now of Trump’s second-term tariffs are those on steel, aluminum, cars, and auto parts. In response today, the White House said trade policy will continue, and President Trump has “other authorities” for tariffs. Trump reserves authorities such as Section 232 to impose the trade war. Note late day, the US appeals court reinstates Trump tariffs during appeal!

In Weekly Sentiment data: 1) The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -9 vs +1 last week. Bulls dropped to 32.9% from 37.7%, Neutrals dropped to 25.2% from 25.6%, Bears rise to 41.9% from 36.7%; 2) This week’s NAAIM Exposure Index reading advanced to 88.41, rising from last week’s 80.87 and highest since March – a recent peak of 99.24 from 12/11 – recent trough from 4-17 of 35.16 – Last Quarter Average (Q1) of 72.50.

In Fed news, Federal Reserve Chair Jerome Powell met with President Donald Trump at the White House on Thursday to discuss the economic outlook, the Fed said in a statement posted on its website. The statement said that Powell did not discuss his expectations for interest-rate policy, “except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook.” Powell also reiterated the Fed is required by law to support stable markets and low unemployment and told Trump that Fed decisions would be made “solely on careful, objective and nonpolitical analysis,” according to the Fed. Fed’s Goolsbee said today if tariffs are avoided by a deal or otherwise, could return to a situation where rates can come down. Meanwhile, the Fed’s Kaplan said it’s possible Fed won’t cut rates at all this year. Lots of mixed messages all day again.

• Weekly Jobless Claims climbed to 240,000 from 226,000 prior week (and est. 230K); the 4-week moving average fell to 230,750 from 231,000 prior week; continued claims climbed to 1.919M from 1.893M the prior week and vs. estimate 1.894M); the US insured unemployment rate climbed to 1.3% from 1.2% prior.
• April Pending Home sales index fell -6.3% (vs. consensus -1.0%) to 71.3 and April Pending Home sales were down -2.5% from April 2024.

• U.S. WTI crude oil futures fell -$0.90 or 1.46% to settle at $60.94 per barrel. In Oil, OPEC+ member countries will decide to increase July oil output when they meet on May 31, but the size of the potential hike remains unclear, Russia’s Interfax news agency cited Kazakhstan’s deputy energy minister Alibek Zhamauov as saying on Thursday. On Wednesday, the OPEC+ group, which includes the Organization of the Petroleum Exporting Countries and allies, agreed to leave its output policy unchanged.

• Treasuries rallied as yields tumbled more than 10-bps for the 10-yr off 4.54% highs following weaker GDP data. A strong auction also helped as the U.S. Treasury sold $44B in 7-year notes at high yield 4.194% vs. the 4.216% when issued as the bid-to-cover ratio 2.69 vs. 2.55 prior; primary dealers take 4.85% of U.S. 7-year notes sale (record low), direct 23.64% and indirect 71.52% in another strong showing by foreigners. @zerohedge noted “7Y high yield 4.194%, WI 4.216%, 2.2bps stop through, biggest stop for 7Y since Dec 2022.”

• In Food & Beverages: HRL Q2 EPS $0.35 vs. est. $0.34 and Q2 sales $2.9B in-line with consensus; narrows FY25 adjusted EPS $1.58-$1.68 from $1.58-$1.72 (est. $1.60) and also narrows FY25 revenue view to $12B-$12.2B from $11.9B-$12.2B (est. $12.11B).

• BBW posted Q1 EPS $1.17 vs. $0.82 y/y on revs rising 12% y/y to $128.4M, above consensus $118.9M; said it still expects revenue to grow on a mid-single-digit percentage basis in fiscal 2026 but now expects pretax income in the range of $61M-$67M vs. prior low-single-digit percentage decline to low-single-digit growth.
• BBWI Q1 sales rose 2.9% to $1.42B vs. est. $1.42B and EPS $0.49 above ests $0.47 and $0.38 y/y; said it still expects sales up 1% to 3% with earnings at $3.25 to $3.60 a share, though guided Q2 results below estimates.
• BBY reduced its FY sales and profit outlook as the electronics retailer grapples with tariffs on imports from China, its top source of goods; now sees FY26 comparable sales to be in the range of down 1% to up 1% vs prior forecast of flat-to-up 2% and adj EPS $6.15-$6.30 vs prior range of $6.20-$6.60.
• BIRK announced the sale of 17.9M shares by affiliates of private equity firm L Catterton at $52.50 for $941.2M gross proceeds in secondary offering.
• BURL shares rose after Q1 EPS $1.67 topped consensus of $1.43 on slightly weaker sales $2.5B (est. $2.53B), which rose 6% y/y (on flat comps) while maintaining its guidance for sales to rise 6% to 8%, comparable sales to be flat to up 2% and for adjusted earnings to hit $8.70 to $9.30 a share.
• CAL posted a Q1 EPS and sales miss and suspended guidance due to an uncertain environment.
• FL Q1 sales miss and comp sales fell -2.6% (reminder FL is in the process of being acquired by DKS)
• JD said it’s expanding a partnership with Xiaohongshu for users to access its shopping site via ads placed on the social media platform.
• KSS maintained its 2025 sales forecast of a -5% to -7% decline and adj EPS of $0.10-$0.60 after slightly better Q1 sales of $3.05B and a smaller-than-expected EPS loss of (-$0.13); Kohl’s said it plans to have a Sephora outlet at all its U.S. stores by the end of the year.
• MOV said it is not providing FY26 guidance due to tariff uncertainty

• In Energy: SHEL said it will buy TTE stake in an oil field offshore Nigeria for $510M, increasing its interest in the country’s deep-water Bonga field. Shell said Thursday that it will buy TotalEnergies’ 12.5% stake in the oil field by purchasing its portion of the production-sharing contract (increases interest in the field to 67.5% from 55%).
• In Construction Supplies/Housing: AMWD reported Q4 adj EPS $1.61 vs. consensus $1.42 and revs $400.4M vs. est. $426.24M; low-single digit declines to low-single digit increases in net sales for FY26; FY26 adj ebitda guided to $175M-$200M vs. est. $200M (other cabinet makers FBIN, MAS shares active).
• In Aerospace & Defense: BA shares jumped following commentary at the Bernstein Strategic Decisions Conference after the CEO said he wants to crank up 737 MAX production from mid-30s a month now to 47 by the end of the year and aims to increase production of its best-selling airplane to 42 a month by mid-year (note 737 production currently is capped at 38/month, a limit imposed by the U.S. FAA in 2024). Shares of aerospace part suppliers like HWM, ATI, CRS saw gains in reaction.
• In Defense IT Services: Goldman Sachs noted the DoD raised thresholds to contract a wide variety of consulting, advisory, IT, and implementation services, and instead prioritize existing internal resources and personnel. They also permit the DOGE team to provide input on all unclassified contracts, thereby raising the scrutiny for cost, efficiency or timeline risk. The firm said they remain cautious on the government IT & services sector – maintains Sell ratings on BAH, CACI, SAIC, VVX.
• In Metals & Mining: CLF was downgraded to Hold from Buy at Jefferies and cut PT to $6 from $10 saying an acquisition of US Steel by Nippon, with $14B of associated investment directed toward the company’s existing operations and the construction of a new steel mill, would be negative for the major US producers over most time horizons. Firm noted Cliffs is most leveraged to changes in steel pricing.

• MRK and Daiichi Sankyo withdrew their FDA marketing application for patritumab deruxtecan seeking accelerated approval as a potential treatment for EGFR-mutated non-small cell lung cancer. The decision to pull the filing was made after the drug failed to prolong survival in a Phase 3 study.
• NTLA shares fell after 8-K filing late yesterday disclosing that a patient in the Phase 3 MAGNITUDE study experienced asymptomatic Grade 4 elevations in liver transaminases.
• ORIC shares rise after saying its experimental prostate cancer drug, ORIC-944, in combination with other treatments reduced prostate-specific antigen levels in 59% of patients in an early-stage trial. Separately, the company announced a $125 mln private placement financing to support development of the drug.
• TSHA reported high- (N=6, new) and low-dose (N=4 update) TSHA-102 data in Rett syndrome with dose-dependent efficacy as multiple measures show positive impact according to analysts. Taysha said it expects to deliver a Rett Data Package to Astellas in mid-2025, where Astellas will have an exclusive option to license certain rights to TSHA-102; also announced 46.9M share Spot Secondary priced at $2.75

• In Hospitals: Wells Fargo upgraded THC to Overweight from EW (tgt to $195 from $150) and HCA to Equal Weight from Underweight (tgt to $385 from $320) saying they are more constructive on the hospital group following the passage of budget reconciliation legislation in the House of Representatives. While the legislation will face changes in the Senate and needs to be passed again by the House, the firm believes healthcare spending cuts are unlikely to worsen and could potentially moderate.
• In Healthcare Technology: CTEV was upgraded to Overweight from Neutral at Piper and raised tgt to $44 from $19 following a Q125 revenue and adjusted EBITDA beat while noting the company’s 3-year renewal with ELV strategic commercialization partnerships, solid bookings bolster their confidence.

• In Ai related names: AI posted mixed results as Q4 total revenue beat modestly, as upside from Services revenue was mostly offset by a miss on Subscription revenue; subscription revenue growth excluding demo licenses declined low-20s% y/y and FY26 revenue guidance of 15-20% y/y met consensus on better margins; sees FY26 revs $447.5M-$484.5M vs. est. $466.1M and op loss ($100M)-($65M) vs. ($324.4) y/y.

• In Electronic Design Automation (EDA) sector: SNPS delivered Q2 above expectations and maintained FY25 revenue guidance of ~10-11% Y/Y growth despite further de-risking China revenue (down to ~10% of total revenue in Q2). The company this afternoon pulled its forward guidance after saying it received a letter from the Bureau of Industry and Security of the U.S. Department of Commerce informing Synopsys of new export restrictions related to China (which followed the FT article yesterday saying Trump orders US chip designers to stop selling to China which sunk shares of CDNS).
• In Software: Dow component CRM reported better-than-expected FQ126 results, with non-GAAP EPS of $2.58 vs. consensus $2.52 and non-GAAP operating margin of 32.3% and revs of $9.75B beating consensus, but growing 8%, down from 9% growth prior; Subscription revenue of $9.30B (consensus $9.22B), up 8% y/y, flat with last quarter; increased its full-year revenue guidance as a result of changes in FX.
• In Hardware & Communications: HPQ shares tumbled as reported FQ2 EPS below expectations and guidance due to a $0.12 or 100 bps impact on OMs due to tariffs; HPQ cut F25 EPS guide by $0.45; now expects 2025 adjusted EPS $3.00-$3.30 a share, below prior estimates of $3.45-$3.75.
• In Storage: NTNX Q3 Sales accelerated again (+22% vs. 16% LQ) to $639M, beating Street by 2% while raised the implied prior FQ4 sales guide by $6M at the midpoint, implying 17% Y/Y revenue growth; billings rose +16% Y/Y, +12% duration adjusted vs. tougher compare (+21%) while implied new-term license held relatively flat Y/Y as Nutanix added another 620 new-customers; PSTG Q1 revs $778M of revenue re-accelerated to 12% Y/Y (vs. 11% LQ), despite the tough 18% Y/Y compare and topped consensus as upside was driven by Product (+1.5% beat), with Subscription Services growing 17% Y/Y again and E//1 TCV of $95M grew 70% Y/Y (though $1.71B ARR continues to decelerate (18% vs. 21% LQ) while leaving year guidance unchanged.

• NVDA implications to other AI related plays: NVDA beats quarterly sales expectations as customers stockpiled its AI chips, but U.S. curbs on China exports are set to slice off $8 billion in sales from the company’s current quarter. Among semiconductor stocks, AVGO, AMD, ARM, MRVL saw early gains as well as AI server makers DELL, SMCI; data center infrastructure names like VRT and power companies, which are expected to see a surge in demand from energy-intensive data centers needed to develop AI technology also gained early with moves in VST, CEG, NRG, OKLO, SMR, others. Overall group faded with broader markets.