Mid-Morning Look

Wednesday, December 03, 2025

U.S. stocks are still trying to find footing, choppy the last few days after a nice recovery the end of November as investors digest economic data and its meaning on potential rate cuts by the Fed next week. There are also several Wall Street conferences today and tomorrow, impacting a few names and sectors. Futures slumped this morning (after overnight gains) following a report in The Information saying multiple Microsoft divisions have lowered how much salespeople are supposed to grow their sales of certain Ai products after many of them missed sales-growth goals in the fiscal year that ended in June, according to two salespeople in Microsoft’s Azure Cloud unit. The story weighed on AI related stocks/data centers etc. as demand fears ease. According to the report, “As 2025 comes to a close, Microsoft has lowered expectations for how quickly it can get customers to spend money on these newer products, known as agents.” In data, ADP Private payroll data came in at the worst in over 2-years as U.S. employment decreased by -32,000 private sector jobs in November, adding to bets the Fed will cut rates next week when they meet. U.S. Treasury yields fell after the ADP report adding to worries about labor market weakness and boosting expectations of a rate cut by the Federal Reserve next month. The benchmark 10-year yield slid 3.4 basis points (bps) to 4.0536% and 2-year fell as well. The dollar briefly extends losses, hitting a fresh five-week low. The dollar had been falling ahead of the data after President Trump hinted that he would nominate Kevin Hassett, who is expected to favor rate cuts, as the next Federal Reserve Chair. The Fed is widely expected to cut rates on Dec. 10. Bitcoin rebounds further above $92,000 after lows below $84,000 earlier this week.

• September import prices unchanged vs. consensus +0.1% and vs Aug +0.1% while U.S. export prices unchanged (vs consensus +0.1%) and vs August +0.1%; Sept non-petroleum import prices +0.2%, y/y +0.8%; U.S. Sept Petroleum import prices -1.5% vs Aug -0.3% and U.S. Sept y/y import prices +0.3%, export prices +3.8%.
• September Industrial Production rose +0.1% vs. consensus unchanged and above August (-0.3%), U.S. Sept capacity utilization rate slides to 75.9% below consensus 77.3% and in-line with August. Sept manufacturing output unchanged (consensus +0.1%) vs Aug +0.1% (previous +0.1%); cap use 75.5% vs Aug 75.6%.
• ISM non-manufacturing sector (services) PMI 52.6 in November above consensus 52.1 and vs 52.4 in October; business activity index 54.5 in November vs 54.3 in October, employment index 48.9 in November vs 48.2 in October, prices paid index 65.4 in November vs 70.0 in October and new orders index 52.9 in November vs 56.2 in October.
• U.S. S&P Global November final composite PMI at 54.2 and U.S. S&P Global November final services PMI at 54.1.

• In Airlines, Aerospace & Defense: Airbus (EADSY) cut its 2025 delivery target to around 790 commercial aircraft, 30 fewer than previously expected, but maintained financial goals following a quality issue with fuselage panels on its popular A320 family of jets. DAL said that demand for the December quarter remained “healthy” and that trends were strong for early 2026 and also said it expects a $200 million impact to its fourth quarter pre-tax profit from the government shutdown in the United States which ended last month.
• Morgan Stanley with some Healthcare/Biotech rating changes: REGN was downgraded to Equal Weight from OW at Morgan Stanley noting shares have rebounded off the lows earlier this year following progress with Eylea HD approvals and strong Dupixent sales trends and is trading in-line with their tgt. VRTX was upgraded to Overweight at Morgan Stanley and tgt to $516 from $438 as they take a more positive view of the company’s kidney franchise pipeline ahead of key de-risking Ph3 data it expects in 2026. Lastly, NVS was upgraded to overweight after a recent valuation pullback, supported by an improving portfolio mix and the upcoming Rhapsido launch.

• ALAB +3%; after the sock reacted negatively yesterday (fell -13.47%) to an announced partnership between AMZN and NVDA coming out of AWS Re:Invent on fears that ALAB’s switch opportunity could be crimped in an NVLink environment at AWS. Stifel’s said view is that this reaction is misplaced and the content opportunity remains robust.
• BMY +5%; said it will enroll more patients in a key Ph3 trial studying its drug Cobenfy in psychosis associated with Alzheimer’s, after the company found “irregularities due to clinical trial execution” at a small number of study sites.
• CAPR +300%; said that in a Phase 3 trial, its cell therapy significantly improved muscle and heart function among patients with Duchenne muscular dystrophy (DMD); the FDA had rejected the treatment in July, telling the company that its application, based on mixed results from a prior study, lacked “substantial evidence of effectiveness.”
• DAL +2%; after saying that demand for the December quarter remained “healthy” and that trends were strong for early 2026 and also said it expects a $200 million impact to its fourth quarter pre-tax profit from the government shutdown in the United States which ended last month.
• DLTR +2%; reported a Q3 EPS/sales beat ($1.21/$4.7B vs. est. $1.08/$4.69B) and Q3 same-store net sales were up 4.2% while raises FY25 Adj EPS to $5.60–$5.80 from $5.32-$5.72, while FY25 sales narrowed to $19.35B–$19.45B from $19.3B-$19.5B (vs $19.433B est).
• MCHP +9%; positively preannounced Q3 revs of ~$1.15B (+12% y/y) vs. the prior midpoint of $1.13B and Non-GAAP EPS is now expected to be $0.40, vs. the previous $0.37 midpoint, provided in the guidance on November 6, 2025.
• MRVL +8%; following a slight Oct Q beat with revenue of $2.07B (+3.4% q/q) coming in above $2.06B estimate, driven by continued q/q growth in Data Center (+2% q/q), Enterprise Networking (+23% q/q), and Carrier Infrastructure (+29% q/q); also raised Q4 outlook, with $2.2B revenue midpoint (+6.0% q/q) vs. est. $2.175B and announces acquisition of Celestial Ai, boosting its Ai Infrastructure Opportunities.
• PHVS +16%; after the drug developer said a late-stage trial of its investigative therapy for hereditary angioedema (HAE) met its primary and secondary goals.

• ADCT -29%; reported the death of two patients in a late-stage trial for treating an aggressive cancer that starts in white blood cells; its phase 3 study evaluated the safety and efficacy of Zynlonta in combination with glofitamab, to treat patients with diffuse large B-cell lymphoma that hasn’t responded to treatment or had returned.
• GTLB -15%; shares fell as management called out headwinds in PubSec as a result of the government shutdown, and softness in SMB persisting this quarter, weighing on Q3 growth, driving growth deceleration and soft F4Q guidance though a permanent CFO is announced, removing an overhang.
• MSFT -2%; after a report in The Information said multiple Microsoft divisions have lowered how much salespeople are supposed to grow their sales of certain Ai products after many of them missed sales-growth goals in the fiscal year that ended in June, according to two salespeople in Microsoft’s Azure Cloud unit.
• PSTG -25%; shares tumbled as Q3 results exceeded consensus expectations, driven by strength in enterprise and sustained momentum in Evergreen/One and modern virtualization solutions but mgmt noted it will not be providing specific information on shipments to hyperscaler customers going forward. Cowen noted the company is guiding for a significant increase in OpEx which puts the OM expansion thesis on the sideline.
• W -8%; was downgraded to Hold from Buy at Jefferies with an unchanged price target of $94 saying with web traffic revealing a slow start to the official kick-off for holiday shopping and consumer survey data signaling a downshift in go-forward buying propensity on the marketplace, risk/reward skews more balanced.