Mid-Morning Look

Tuesday, July 08, 2025

U.S. stocks moving sideways after falling on Monday while global bonds retreated as the 10-year US Treasury yield advanced three basis points to 4.41% (5^th straight day of rising yields) as investors await key Treasury auctions. Wall Street is still digesting yesterday’s tariff increases by the U.S. on 13 global trading partners, though the U.S. pushed the implementation of such increases out to August 1^st from July 9^th. The Treasury is scheduled to offer $58 billion in three-year notes at 1:00 pm before a 10-yr and 30yr auction in coming days. In trade news today after the U.S. raised tariffs for Japan, South Korea, South Africa and several other Southeast Asian countries on Monday, reports indicate the EU is seeking to conclude a preliminary trade deal with the U.S. this week that would allow it to lock in a 10% tariff rate beyond an Aug. 1 deadline. Also, Treasury Secretary Scott Bessent expects to meet with his Chinese counterpart in the coming weeks to discuss trade and other issues. Goldman Sachs raised its target for the S&P 500 by 11% to 6,900. In stock news, lots of Wall Street earnings previews and rating/model changes ahead of the start of earnings season next week with big banks on Monday; solar stocks fall on news out of DC, semiconductors rebound after leading the Nasdaq lower on Monday; crypto names rising behind bounce in Bitcoin; energy prices among early leaders along with healthcare while utilities, consumer staples fall the most and Smallcaps lead higher.

• In Defense: Deutsche Bank upgraded GD to Buy from Hold and raise tgt to $342 from $298, while downgraded BWXT to Hold from Buy but raises tgt to $150 from $119 and downgraded NOC to Hold from Buy (cut tgt to $542 from $580) in Defense Q2 preview saying they think NOC misses slightly and cuts its guide on sales and EBIT; think RTX beats, but may cut its EPS guide to formalize tariff impacts; think GD can beat by 6% on EPS and raise its guide; think CW beats and raises again and also think LHX can beat and raise. Overall, then, we think U.S. Defense will again be a mixed bag this earnings season.
• In Transports: Bernstein lifts price target on rail operators CSX (to $36 from $30), NSC (to $295 from $258) and UNP (to $271 from $267) driven by better-than-expected carload volumes, improved market sentiment and attractive stock valuations. Bernstein said carload volumes came in slightly above expectations for the quarter, helping rail stocks recover after a broader market dip earlier in Q2 caused by U.S. trade policy concerns. In Logistics: JP Morgan updated their transportation, and logistics estimates and price targets as part of a Q2 earnings preview, reducing estimates across the board (ODFL, RXO, EXPD, GXO, JBHT, R, SAIA, TFII, XPO, LSTR), saying tariffs and trade policy uncertainty has persisted while spot truckload rates went down before bouncing back around the July 4 holiday.

• CRGX +6%; enters into agreement to be acquired by Concentra Biosciences for $4.379 in cash per share plus a contingent value right (CVR); Concentra to commence tender offer for cargo by July 21.
• INTC +4%; early outperformance in the generally strong semiconductor sector.
• MMSI +5%; announced that Martha Aronson will be succeeding CEO Fred Lampropoulos effective October 3 and guided Q2 revenue $380M-$384M vs. consensus $372.47M, a projected increase of approximately 12% to 14% compared to revenue reported for the quarter ended June 30, 2024.
• VRT +1%; was upgraded from Hold to Buy w/ $165 PT at Melius saying the race to spend on AI seems back on track, arguably has even accelerated. Vertiv is a critical picks/shovels supplier to the ecosystem, in an industry that will remain short on supply for some time.

• CRCL -1%; was initiated Underperform and $85 tgt at Mizuho saying they are bearish on shares as it sees 25-30% potential downside to FY27E consensus revenue of $4.5B. Mizuho believes consensus does not fully account for looming interest rate cuts and also overstates USDC’s medium-term growth potential.
• DDOG -3%; was downgraded to Sell from Neutral at Guggenheim, concerned that OpenAI, which they believe is Datadog’s largest customer, is working toward in-house observability software
• ENPH -4%; along with other solar names after President Donald Trump directed federal agencies to strengthen provisions in the One Big Beautiful Bill Act that repeal or modify tax credits for solar and wind energy projects.
• JPM -1%; along with weakness in GS, BAC and others after hitting recent all-time highs as HSBC Holdings downgraded big banks, adopting a more cautious stance after rally in shares. BAC downgraded to Hold from Buy and downgraded both JPM and GS to Reduce from Hold.