Mid-Morning Look

Thursday, September 11, 2025

U.S. stocks off to a very strong start as the S&P 500 and Nasdaq each making new all-time highs as another round of mixed/weaker economic data raise expectations of a more aggressive Fed rate cut easing cycle starting next week where a 25bps cut is expected. The Dow Jones Industrial Average rising over 1%, nearly 500-point bounce to start the day as most components were trading higher. Market rally broad based again, as all eleven S&P sectors higher led by Materials, Healthcare, Consumer Discretionary and Industrials. Sentiment remains strong as investors continue to chase markets higher, led higher last 2-weeks on AI trade with names like AVGO, ORCL surging to record highs and taking chip stocks, data centers, power plays higher with them. Just pure upward momentum for U.S./global stocks while bonds rally/yields fall and markets bullish into Fed next week.

Overall US CPI y/y moved up to +2.9% in August, the highest level since January (in-line with consensus and above the prior month of +2.7%, while US Core CPI (ex-Food/Energy) y/y moved up to +3.1%, also in-line with consensus and remains at the highest level since February. However, despite rising inflation, the Fed is expected to cut rates by 25 bps next week and another 25 bps in October & December as the outlook on jobs continues to weaken. Last Friday the nonfarm payroll data was much weaker, this Tuesday the BLS made annual revisions to jobs data showing a miss of -911K jobs and today, and today weekly jobless claims soared to the highest since Oct 2021 at 263k, well above the prior week of 236K and consensus 235K – overshadowing the slightly hotter CPI data. The yield on 10-year treasury note falls below 4% for first time since early April.

European Central Bank (ECB) keeps main rate at 2%: The Governing Council decided to keep the three key ECB interest rates unchanged. Inflation is currently at around the 2% medium-term target and the Governing Council’s assessment of the inflation outlook is broadly unchanged. The new ECB staff projections present a picture of inflation similar to that projected in June. They see headline inflation averaging 2.1% in 2025, 1.7% in 2026 and 1.9% in 2027. For inflation excluding energy and food, they expect an average of 2.4% in 2025, 1.9% in 2026 and 1.8% in 2027. The economy is projected to grow by 1.2% in 2025, revised up from the 0.9% expected in June. The growth projection for 2026 is now slightly lower, at 1.0%, while the projection for 2027 is unchanged at 1.3%.

• Weekly jobless claims stole the show however, soaring to the highest since Oct 2021 at 263k, well above the prior week of 236K and consensus 235K; the 4-week moving average climbed to 240,500 from 230,750 prior week (previous 231,000) and continued claims unchanged at 1.939M from 1.939M prior week.

• In Managed care: CNC shares rallied after the company reiterated its previously issued full year 2025 forecast of approximately $1.75 adj EPS ahead of a conference presentation this am. Recall heightened fear around the Medicaid end market following comments from peer ELV last week. Shares of health insurers bounced (MOH, ELV) after CNC said Medicaid results for July/August support improvement in the 2H’25.
• In Package Delivery: UPS was downgraded to Underperform and FDX downgraded to Neutral at Bank America, cutting tgts on both (to $83 and $240 respectively) accounting for increased pressure on volume and costs following the end of U.S. de minimis exemptions. International Priority & Economy packages represent 17% of FedEx’s revenue and the removal of the de minimis exemption is expected to result in a muted air peak season in 2025.
• In Asset Managers: AB announced that preliminary assets under management increased to $844B during August 2025 from $830B at the end of July. Firmwide net inflows coupled with market appreciation drove the 2% increase in month-end AUM; APAM preliminary assets under management as of August 31 totaled $178.1B. LAZ preliminary AUM as of Aug 31, 2025, totaled about $258.4B as included market appreciation of $2.7B, FX appreciation of $2.2B, and net outflows of $0.2B; TROW preliminary August month-end assets under management of $1.73 trillion while preliminary net outflows for August 2025 were $5.9B; VCTR Total AUM of $303.7Bwith other assets of $2.7B, and total client assets of $306.4B; VRTS prelim AUM of $170.6B and other fee earning assets of $1.8B for total client assets of $172.4B as of August 31, 2025.

• CNC +11%; shares rallied after the company reiterated its previously issued full year 2025 forecast of approximately $1.75 adj EPS ahead of a conference presentation this am. Recall heightened fear around the Medicaid end market following comments from peer ELV last week.
• MAZE +48%; shares surged after saying its experimental oral drug, MZE782, showed strong results in an early-stage trial. The drug, which blocks a protein called SLC6A19, led to a sharp increase in the amounts of phenylalanine and glutamine excreted in urine; plans to begin mid-stage studies in 2026
• MU +7%; In Memory, more 52-week highs for WDC, STX, SNDK rising along with big gain in MU shares; Citigroup raised its MU tgt to $175 from $150 ahead of earnings saying they expect the company to report in-line results and guide well above consensus driven by higher DRAM and NAND sales and pricing.
• OPEN +51%; as announced that Kaz Nejatian, Chief Operating Officer of Shopify, has been appointed Chief Executive Officer and member of the Board of Directors. Co-Founders Keith Rabois and Eric Wu are returning to the Board of Directors, with Rabois taking on the role of Chairman.
• OXM +21%; shares rallied as Q2 revenue came in slightly softer than expectations, but both gross margins and adj. EPS were ahead of OXM’s expectations, and though the FY guidance was reiterated, it accounts for the higher tariff rates.
• RCAT +22%; announced that the Black Widow System, developed by its subsidiary Teal Drones, has been approved and added to the NATO Support and Procurement Agency (NSPA) catalogue.
• RVMD +15%; after the company reported updates from Phase 1 trials of daraxonrasib in pancreatic cancer.

• HOFT -11%; reported a -13.6% fall in net sales to $82.2M while adj EPS loss of (-$0.31) compared to a loss of (-$0.19) y/y saying actions have been obscured by weak demand in the home furnishings industry due to an extremely weak housing environment, and tariff buying hesitancy.
• LOVE -17%; shares stumbled after lowering their FY26 diluted EPS to $0.52-$1.05, down from prior view of $0.80-$1.36; expect FY sales between $710M-$740M vs prior forecast of between $700M-$750M.
• ORCL -4%; giving back some of yesterday’s gains after 36% surge post earnings/contract headlines.
• RNA -21%; shares tumbled after announcing a $500M common stock offering.