Mid-Morning Look

Thursday, July 17, 2025

U.S. stock markets are off to another good start Thursday, a day ahead of monthly option expiration as major averages continue to push higher with the S&P 500 and Nasdaq at or near all-time highs as investors remain bullish. A very strong round of economic data today (while inflation data earlier this week was mixed, lower than estimates but slightly above prior month levels), raises hopes the Fed may look to cut rates sooner than later despite Powell & Co remaining on hold this year after several cuts last year. Gold prices erase yesterday gains, falling nearly 1% after upbeat U.S. economic data aided the Federal Reserve’s cautious stance on resuming monetary easing this year (see rundown of this morning economic reports with stronger jobless claims, Philly Fed, Retail Sales and Import prices). Treasury yields and the dollar rise after the round of data. In trade news overnight, President Trump said we could make a deal possibly with Europe; too soon to say on Canada tariffs; very close to an Indian tariff deal; will probably put 10-15% tariffs on 150 smaller countries; will put one number on 150 countries; tariffs will take effect on Aug 1st and will be very substantial. Earnings season kicking into gear with big moves higher for PEP, TSM TRV on earnings results while ABT, ELV, NVS slide on results. Rails higher on M&A hopes per media reports (see below), semis rebound behind TSM results and managed care down on ELV results.

• Import Prices for June rose +0.1% (below est. +0.3%) and vs May -0.4%, while June export prices +0.5% (vs. consensus unchanged) and vs May -0.6%; U.S. June year-over-year import prices -0.2%, export prices +2.8%.
• Weekly Jobless Claims fell to 221,000 from 228,000 prior and well below consensus 235,000; the 4-week moving average fell to 229,500 from 235,750 prior week while continued claims climbed to 1.956M from 1.954M prior week vs. est. 1.965: and the US insured unemployment rate unchanged at 1.3%.
• Philadelphia Fed business conditions for July a strong reding at 15.9, well above consensus (-1.0) and vs June -4.0 as new orders jumped to 18.4 vs June 2.3 and employment index July 10.3 (best sequential change since April 2022) vs June (-9.8) and six-month business conditions July 21.5 vs June 18.3. Prices paid also jumped in July to 58.8 vs June 41.4.
• July NAHB Housing market index 33, in-line with consensus 33 and versus 32 in June; July index of current single-family home sales 36 versus 35 in June; July index of home sales over next six months 43 versus 40 in June and index of prospective buyers 20 versus 21 in June (previous 21), lowest since December 2022.
• May business inventories unchanged (consensus unchanged) vs April unchanged; inventory/sales ratio 1.39 months’ worth vs April 1.38 months; May business sales -0.4% vs April -0.2% (prev -0.1%); and May retail inventories ex-autos unrevised at +0.2% (prev +0.2%).

• In Utility: nuclear names strong initially; OKLO rises after the company advances licensing for its Aurora powerhouse at Idaho National Laboratory (INL) with the completion of U.S. Nuclear Regulatory Commission’s (NRC) pre-application readiness assessment. Other nuclear names VST, NRG, CEG, TLN active after Seaport Global said they are optimistic about the 2026/27 PJM capacity auction results to be released July 22. Aggressive bidding of generation capacity and just a moderate increase in demand response should deliver pricing of $300+/MW-day.
• In Managed Care: more pain for the sector after ELV Q2 adj EPS $8.84 misses the consensus $9.19; Q2 revs $49.4B vs. est. $48.26B; cuts FY25 adjusted EPS view to ~$30.00 from $34.15-$34.85 (est. $34.48) given the ongoing and industry-wide impact of elevated cost trends in ACA and Medicaid; saw membership losses in both Medicaid and ACA which resulted in higher acuity; said benefit expense ratio was 88.9% up 260 basis points y/y (shares of UNH, HUM, CI, MOH were weak early in reaction as bad news continues to plague sector).
• In the E&C Sector: PWR was downgraded to Market Perform from Outperform at BMO Capital but raise tgt to $400 (from $352) saying to be clear, this is strictly a valuation call. BMO believes scale, breadth, and high voltage expertise sets PWR apart from typical E&C peers and warrants a substantial premium. ABB posted its highest-ever quarterly order intake, rising 37% in Q2, helped by surging demand from the United States and for products used in data centers being built to support artificial intelligence (comp ETN, ROK, EMR shares rise on results).

• ALB +6%; along with strength in SQM in lithium space after China’s Zangge Mining halted lithium production at a unit in Qinghai province on orders from local officials, sending lithium prices higher.
• CSX +3%; along with gains in NSC after Semafor reported, UNP is working with investment bankers at Morgan Stanley to explore an acquisition of a rival, according to people familiar with the matter (though report notes the target competitor could not be learned). https://tinyurl.com/mrxm75z2
• LCID +30%; as UBER said to invest $300 million in EV maker Lucid as part of robotaxi deal.
• PEP +6%; reported better results as Q2 core EPS $2.12 vs. est. $2.03 and revs $22.73B vs. est. $22.32B; said expects full-year core earnings per share to fall 1.5% vs 3% decline projected previously; still sees FY core constant FX EPS about even.
• SRPT +19%; after announces strategic restructuring and pipeline prioritization plan to maintain long-term, sustainable growth and provides update on ELEVIDYS label.
• TSM +2%; posted record, forecast-beating quarterly profit but warned that future income might be hit by U.S. tariffs, though perhaps not until Q4; Q2 net profit hit a historic high of T$398.3 billion ($13.5 billion), up 60.7% y/y and above the T$377.9 billion est.; sees Q4 revenue of up to 40%.

• ADM -2% and INGR shares fall as well; after President Trump said Coca-Cola (KO) agreed to use real cane sugar in the U.S. ADM is a maker of high fructose corn syrup that is used in certain Coke products. Ingredion, which also is a supplier of high-fructose corn syrup.
• CRWV -3%; after HSBC initiated coverage with a Reduce rating and Street-low PT $32.
• ELV -11%; Q2 adj EPS $8.84 misses the consensus $9.19; Q2 revs $49.4B vs. est. $48.26B; cuts FY25 adjusted EPS view to ~$30.00 from $34.15-$34.85 (est. $34.48) given the ongoing and industry-wide impact of elevated cost trends in ACA and Medicaid; saw membership losses in both Medicaid and ACA (the news/guide weighs on UNH, HUM, MOH, CNC).
• MP -2%; after 11.8M share Spot Secondary, priced at $55.00.
• MU -3%; falls after SK Hynix (HXSCL) was downgraded to Neutral from Buy at Goldman Sachs in memory space saying believes HBM pricing could decline for the first time in 2026.
• NEM -2%; as gold miners fall with price of gold.