Mid-Morning Look

Wednesday, June 18, 2025

After ending lower on Tuesday, U.S. stocks are looking strong to kick off the trading day ahead of the Federal Reserve’s monetary policy decision (at 2:00 pm), while the Israel-Iran conflict that entered its sixth day kept investors on edge. Crude oil prices turned negative after U.S. President Trump said Iran has reached out and wants to negotiate as the President talked about several topics this morning in a long speech (about the Fed and rate cuts, geopolitical events, debt issues, the economy among others). Gold prices little changed ahead of the Fed, while the dollar slips and Treasury yields are steady. Overall, a very steady start to the trading day ahead of the Fed, despite the ominous macro headlines. In economic data this morning, both Housing starts and building permits missed expectations this morning, the latest sign of subdued activity in the housing market (follows a weaker outlook and missed earnings from homebuilder LEN yesterday). The CBOE Volatility index (VIX) with a sharp decline to kick off the day, down over 9.5% back below the 20-level. The FOMC is likely to keep things the same with the wait and see approach despite some recent dovish data. If the dot plots show that the Fed only sees one rate cut this year, Chair Powell may need to explain the continued wait-and-see approach in the face of better-than-expected inflation data. Nearly all eleven S&P sectors in positive territory with Energy and Utilities the only laggards.

• May Housing Starts tumbled -9.8% to 1.256M unit rate vs April +2.7% (and below consensus of 1.357M) and well below the April 1.392M units; May single-family starts +0.4% to 924,000-unit rate; multifamily -29.7% to 332,000-unit rate; May Building Permits fell -2.0% to 1.393M unit rate vs April -4.0% and est. 1.428M rate.

• In Solar: After posting one of the worst days in its history yesterday, the solar complex saw a small rebound in share prices; ARRY said it would acquire APA Solar for around $179 million, including debt to expand its U.S. manufacturing capabilities. In Research, RBC Capital lowered price tgts in the sector saying they expect residential solar demand to take a big hit from proposed U.S. Senate reconciliation bill, which phases out solar energy tax credits by 2028. Lower ENPH tgt to $28 from $50, FSLR to $188 from $230, SEDG to $12 from $14 and RUN to $5 from $12 (which they downgraded to Sector Perform).
• In Semiconductors: ADI was upgraded from Neutral to Overweight at Cantor and raised tgt to $270 from $250 calling it a best-in-class Analog company, with outsized Industrial exposure preferential into the upcycle. The firm also initiated NXPI at Overweight ($250 tgt) and Neutral ratings on TXN, ON and MCHP. INTC announced a series of leadership appointments aligned with its focus on strengthening customer relationships and becoming a more engineering-focused company. MRVL hosted a Virtual AI event yesterday, where the Company highlighted its strong and expanding positioning in the AI custom silicon market. TXN said it plans to invest more than $60B to manufacture billions of foundational semiconductors in the U.S.; said investment includes seven U.S. semiconductor fabs, supporting 60,000 new jobs.

• FSLR +4%; after posting one of the worst days in its history yesterday, the solar complex saw a small rebound in share prices. yesterday prices fell as residential solar demand to take a big hit from proposed U.S. Senate reconciliation bill, which phases out solar energy tax credits by 2028.
• GHLD +25%; as agreed to sell itself in a $1.3 billion all-cash transaction to a fund managed by Bayview Asset Management; shareholders in the mortgage company will receive $20 in cash for each of their Guild shares.
• GMS +12%; posted a smaller profit and lower sales in its latest quarter, but adjusted EPS of $1.29 topped the $1.11 consensus estimate and while sales fell -5.6% y/y to $1.33B it topped the $1.3B estimate; said they are cautiously optimistic that we are nearing the bottom of this cycle
• GNW +10%; after being upgraded to Outperform at KBW Inc saying the insurer could potentially recover $500M+ or $1.25/share+ related to a European Payment Protection business it previously sold to AXA, and a counter lawsuit between AXA and Santander.
• MRVL +9%; following highlights at Virtual AI event yesterday, where the Company highlighted its strong and expanding positioning in the AI custom silicon market. Key takeaways included two new XPU socket wins at emerging hyperscalers in addition to existing wins at Google (Axion), AWS (Trainium), and MSFT.
• SRRK +17%; said its experimental drug helped overweight patients preserve lean mass in a mid-stage trial when used in combination with LLY’s weight-loss treatment Zepbound.

• BMEA -27%; after a 19.45M share Spot Secondary priced at $2.00, including accompanying warrants and pre-funded warrants, for $40M gross proceeds.
• BTDR -10%; trading after the Bitcoin miner announced pricing of its upsized $330 million 4.875% convertible senior notes due in 2031.
• CC -2%; guided Q2 sales at the high end of its earlier range, but guided Q2 adj core EPS below; said sees net sales to rise by a mid-teen percentage from the first quarter, compared with an earlier projection of a low to mid-teen increase but sees adj Ebitda in range $215M-$225M below consensus ests $236M.
• ZTS -4%; Stifel downgraded ZTS to Hold from Buy saying believes the Street’s 2026/2027 operational revenue growth estimates for Zoetis (+6.7%/+6.0%) may prove aggressive and it lowers its 2026/2027 estimates.