Mid-Morning Look

Thursday, March 27, 2025

U.S. stocks weakened overnight and extended losses this morning after President Trump’s overnight permanent tariffs on autos that are not made in the US, effective April 2 starting at 2.5% and scaling to 25% with no exceptions. The headlines (which had been widely telegraphed) weighed heavily on shares of global auto stocks with likes of GM, STLA and foreign autos falling. Meanwhile the EU is preparing retaliatory tariffs (~20%), amplifying fears of a tit-for-tat spiral while on the flip side of tariffs, Trump ‘willing’ to lower tariffs on China to do TikTok deal, Reuters reported. This morning also saw the final read of Q4 GDP, which issued few surprises, and included in-line to slightly better Q4 PCE data (ahead of more updated March PCE data tomorrow morning). Treasury yields hit monthly highs with the 10-yr topping at 4.4% before pulling back, while gold prices made new all-time highs above $3,060 an ounce. Stocks opened weak, fell on the open, but have since pared gains with the S&P (SPX) back above 5,700.

Technology stocks are lagging again (XLK) amid weakness in semis and data center names after multiple reports that CoreWeave (CRWV) is planning to downsize its IPO and cut the price closer to the $23B valuation it had in the private market a year ago than the ~$30B it wanted. Reports indicated pricing closer to $40 per share, down from the prior $47-$55 range (on 49M shares). News of lower demand for the company, which was expected to be one of the biggest IPOs of the year (set to price Friday), weighed heavily on the tech sector Wednesday and again so far today ahead of tonight’s pricing (NVDA, AMD, ARM, SMCI, VRT, etc. been weak). CNBC Leslie Picker noted this morning that NVDA was forced to step in and “anchor” the IPO with a $250MM order at $40 per CNBC (not necessarily the pricing of it and no confirm if deal range was cut. (NVDA already owns 5% of CRWV).

• Weekly Jobless Claims fell to 224,000 in the latest week from 225,000 prior (and consensus 225,000); the 4-week moving average fell to 224,000 from 228,750 prior week; continued claims fell to 1.856M from 1.881M prior week (previous 1.892M).
• February pending home sales index up 2.0% vs. last month, consensus 2.9%
• U.S. advance Feb goods trade balance was (-$147.91B); advance Feb wholesale inventories +0.3% and U.S. advance Feb retail inventories excluding autos +0.1%.

• In Chemicals: FUL reported better Q1 EPS, revs and Ebitda and guided FY revs down 2-4% vs est. -3.29%, adj EBITDA $600-625Mm vs est. $602.35Mm and adj EPS $3.90-4.20 vs est. $3.97; CC was upgraded to Outperform at Mizuho noting freon-related inventories normalizing, specialty plastics stabilizing, PFAS expected below threshold, new CEO & CFO settled in.
• In Mortgage Services (RDFN, ZG): The average U.S. homebuyer’s monthly payment reached a record $2,807 in late March, up 5.3% from last year, Redfin says. Rising sale prices–up 3% annually–and mortgage rates averaging 6.67%–double pandemic lows–are driving the surge. Though rates fell from January’s 7.04%, high costs still stifle sales, with Pending Home sales down 4.6%. But spring seems to be sparking activity: mortgage applications hit a seasonal peak since February, home tours outpace last year, and “homes for sale” searches have soared. New listings jumped 7.5%, the biggest rise in 2025.
• In Refiners: PARR was upgraded from Neutral to Buy at Goldman Sachs and raised its price target from $18 to $19, implying 34% upside saying at current levels, sees a compelling risk/reward set-up and while it is mindful of macro uncertainty and tougher Asia demand dynamics, it sees potential for Singapore margins to bottom. PSX was downgraded from Goldman to Neutral from Buy as see limited upside to its SOTP valuation of $135, following YTD outperformance where they note shares have outperformed its Refining coverage by ~14%.

• CAR +23%; along with gains in HTZ with strength possibly attributed to the tariff on autos; makes their car fleets more valuable is thought (CVNA and KMX also have used car supply).
• CNXC +29%; following outperformance in FQ1 results, especially on the EPS line but Canaccord noted FCF yield is where things really shine; also reiterated guidance.
• DLTR +6%; for top gainer in the S&P 500, adding to prior day gains after Family Dollar asset sale.
• FUL +8%; as reported better Q1 EPS, revs and Ebitda and guided FY revs down 2-4% vs est. -3.29%, adj EBITDA $600-625Mm vs est. $602.35Mm and adj EPS $3.90-4.20 vs est. $3.97.
• NEM +1%; as gold miners extend gains following gold prices hitting fresh all-time highs above $3,060.
• SLNO +38%; won FDA approval of its treatment for a genetic disorder that can lead to obesity, diabetes and cardiovascular disease; said the FDA approved its Vykat XR extended-release tablets for the treatment of hyperphagia, a chronic and life-threatening feeling of intense, persistent hunger.
• WOOF +8%; shares got a boost on earnings and guidance saying expects to improve their bottom line through its efforts to clamp down on underperforming stores and products.

• GM -7%; along with weakness in other global autos after President Donald Trump hit auto imports with a 25% tariff starting next week, with peers in Europe/Asia also declining (POAHY, BMWYY, MBGYY, NSANY, TM)
• GME -11%; shares fell after saying it was planning a private offering of $1.3 billion in convertible senior notes, aiming to use the proceeds for general corporate purposes, including investing in Bitcoin.
• JEF -8%; shares slipped after Q1 earnings declined amid a drop in investment-banking and capital-markets revenue, with activity hurt by uncertainty around US policy.
• NVO -2%; shares slide again, adding to recent weakness in the obesity sector and extending its losing streak to 7-days, to lowest levels since March 2023.
• SNX -17%; shares fall on weaker guidance as sees Q2 adj EPS $2.45-$2.95 below consensus $3.03 and sees revs $13.9B-$14.7B below est. $14.73B; followed weaker Q1 results (EPS/revs/Ebitda miss).
• VRNT -10%; shares slipped after reported Q4 earnings that missed estimates and guidance due to a few large, unbundled deals slipping into FY26. Needham said they believed one deal in particular caused approximately $18mm of the $24mm miss and that is not a competitive loss, but rather timing