Mid-Morning Look

Friday, September 05, 2025

Wall Street is back to “bad is good”, at least in regard to this morning’s August payroll data which showed a significant drop in monthly payroll adds (22K vs. 75K est. and 77K July), while the June level was revised to its lowest levels since December 2021, down -13K. While it’s not a positive view in any way for the overall US economic outlook with the jobs market cooling further, investors used it as a green light to buy U.S. stocks as it now likely seals the deal for Fed rate cuts. Traders now see a 100% chance the Fed cuts rate this month, with a 12% chance of a larger 50 bp cut. Before the weak payrolls report, markets expected a cut but not of that size. Stocks opened strong, but have since pared gains, with much of today’s move baked into expectations. Still one more test for markets ahead the mid-September FOMC meeting, with CPI inflation data next week.

The U.S. dollar is down on the report, Treasury yields dropping across the curve, and interest rate sensitive sectors (Smallcaps, housing, solar, etc.) are thriving in early trading. The market is pricing in multiple rate cuts…all as global stock markets are at or near record highs. At what point is all the good news baked in? or is it just the start of another move? Gold prices hit a new record, extending a rally that has boosted them more than 90% since late 2022 as demand is expected to remain robust for some time due to a mix of factors. In tech, the big news was AVGO as shares jumped after earnings and guidance and after the company unveiled a blockbuster $10 billion AI chip order from a new customer, fueling optimism around its ability to benefit from the generative AI race (which sunk shares of NVDA, AMD). TSLA spikes as the company board has proposed a new compensation plan for CEO Elon Musk, valued at about $1 trillion upon achieving certain lofty targets. On a down note, in retail, LULU shares fell as much as 20% before paring losses in a quarterly miss and large cut in annual guidance.

• August average hourly earnings all private workers +0.3% from prior month (cons +0.3%) while August average hourly earnings +3.7% from year earlier (cons +3.7%)
• U.S. August labor force participation rate 62.3%; U-6 underemployment rate just ticked up to 8.1% in August, matching the highest level since Oct 2021; U.S. August unemployment rate 4.3% (in-line with consensus 4.3%). The unemployment rate for 16–24-year-olds is now at 10.5%
• Zerohedge tweets: “It gets worse: all jobs gains were part time: Full-time jobs: -357K; Part-time jobs: +597K”

• In Transports/Trucking: UBS downgraded KNX, SNDR, and JBHT from Buy to Neutral as a pricing inflection in the truckload (TL) market appears less likely in the near term. While capacity continues to gradually exit, UBS cannot identify a clear demand catalyst for the mid-single digit truckload rate increases reflected in 2026 consensus. UBS believes upside in these stocks is limited to 5%-15% looking out one year.
• In Solar: Shares of solar stocks DQ, CSIQ, JKS, SEDG, among others higher as China’s efforts to combat deflation showed signs of success, leading to a gradual price recovery in the solar sector. Solar wafer prices continued to extend their gains, providing a positive backdrop for companies across the solar supply chain.

• BILL +8%; as activist investor Starboard Value owns an 8.5% stake and intends to run a boardroom challenge to push for changes at the financial automation software company.
• BNTX +9%; after breast cancer ADC Phase 3 trial met primary endpoint. BNTX said the study, which compared trastuzumab pamirtecan drug candidate with Roche’s approved antibody drug-conjugate trastuzumab emtansine, reached its primary endpoint of progression-free survival in an interim analysis.
• BRZE +12%; delivered a beat-and-raise FQ2, with topline growth of 23.8% / 22% organic y/y, OPM of 3.4% (+50bps y/y), and EPS of $0.15 (note ~$0.07 from tax-related benefit), all comfortably beat expectations, driven by broad-based demand strength and better-than-expected down-sell moderation.
• GWRE +17%; strong Q4 with broad-based beats and continued cloud execution, closing FY25 with ARR surpassing $1B (+19% YoY cc), subscription revenue up 33% YoY, and subscription GM reaching 70%; FY26E ARR guidance was above consensus (16-17% y/y ex-FX vs Street: ~15%) and investor expectations (~16%).
• IOT +18%; posted Q2 results and guidance that topped expectations; for the period ending Aug. 2, Samsara said it earned an adjusted $0.12 per share as revenue surged 30.4% Y/Y.
• MIR +5%; will replace GMS in the S&P SmallCap 600 effective prior to the opening of trading on Tuesday, September 9. S&P 500 and 100 constituent HD acquired GMS in a deal that was completed today.
• TSLA +2%; its board has proposed a new compensation plan for CEO Elon Musk, valued at about $1 trillion upon achieving certain lofty targets. The plan is expected to be tied to ambitious performance milestones, including growth in AI-driven products and autonomous systems.
• ZUMZ +19%; following earnings results overnight.

• AMD -6%; along with weakness in NVDA as news of AVGO unveiled a blockbuster $10 billion AI chip order from a new customer weighed on sentiment.
• BEN -3%; releases monthly AUM data overnight reported preliminary month-end assets under management (AUM) of $1.64 trillion at August 31, 2025, compared to $1.62 trillion at July 31, 2025. This month’s AUM reflected the positive impact of markets partially offset by preliminary long-term net outflows of $3B, including the funding of a $6B fixed income mandate. Preliminary long-term net outflows also include $7B of long-term net outflows at Western Asset Management.
• CEG -3%; broad weakness in power utilities with GEV, VST, TLN, OKLO, LEU, all lower
• IBKR -5%; broad weakness in exchanges and brokers with SCHW also seeing broad weakness.
• LULU -19%; shares tumbled following mixed results, but a significant reset to annual guidance, prompting several Wall Street downgrades. LULU Q2 revenue of $2.525B (+6.5% y/y, +6% CC) is slightly lower than expectations; lowers year EPS guide to $12.77-$12.97, from $14.58-$14.78 and now expects annual revenue between $10.85B-$11B vs. prior forecast of $11.15B-$11.3B.
• NX -22%; after mixed Q3 results (EPS missed/revs beat) while lowers FY25 revenue view to $1.82B from $1.84B-$1.86B (vs. est. $1.85B) and lowers FY25 adjusted EBITDA view to $235M from $270M-$280M.
• PHR -8%; after Q2 revenue and adjusted EBITDA both came in higher than consensus, however, management reiterated its FY26 revenue guide and only raised the adjusted EBITDA target by the ~$2M beat vs consensus this quarter; also announced it had entered into an agreement to acquire AccessOne.