Closing Recap

Tuesday, August 05, 2025

US equities added to yesterday’s gains overnight and investors cheered generally solid tech earnings and extended hopes for rate cuts. Unfortunately, a set of mixed comments from Trump on tariffs deflated enthusiasm a bit and markets pared gains, but remained in the green through the open before quickly turning mixed. Early breadth favored advancers by 4:3 as small caps outperformed with IWM (+0.36%) versus SPY (-0.05%) and QQQ (+0.18%). Consumer Discretionary (+0.31%), Materials (+0.19%) and Communications (+0.14%) were early outperformers among S&P sector ETFs, while Financials (-0.56%), Health Care (-0.59%) and Energy (-0.62%) paced the underperformers with only three sectors gaining. On sentiment, today’s Fear and Greed Index registered 56/100 (Greed) versus last week’s 68 (Greed) and last month’s 77 (Extreme Greed). One year ago, the level was 33 (Fear). By mid-morning even the NASDAQ had slipped to red and stocks accelerated to the downside.

In noteworthy data today, @PeterMallouk reminds us of why we need to invest, saying the purchasing power of the US Consumer Dollar has fallen by over 83% over the past 50 years while the S&P500 has risen by over 150x even after accounting for inflation. He also notes that the S&P 500 has never been more concentrated in only three stocks than it is today with AAPL, MSFT and NVDA accounting for almost 21% of the index. On market cap divergence, @DataTrekMB notes US small-caps and mid-caps have gone from matching or beating large-caps in the 2010s to lagging the in 2020s and they don’t see a shift back any time soon. Also on market cap divergence, @KobeissiLetter notes $14B flowed into US large-cap stocks last week compared to small-caps +$4.5B (though small-caps are on pace for $80B in net outflows versus large-caps on pace for $419B annual inflows).

Following a rally off the mid-morning lows, equities remained in the red into the final hour of trading. Breadth shifted slightly in favor of decliners though small caps still outperformed and held onto gains with IWM (+0.36%) versus SPY (-0.39%) and QQQ (-0.59%). Sector performance also shifted a bit with Materials (+0.56%), Real Estate (+0.34%) and Consumer Discretionary (+0.26%) leading in the afternoon, while Communications (-0.70%), Technology (-0.71%) and Utilities (-0.97%) led the underperformers with four sectors gaining versus seven declining. Earnings continue with AMD, UBER, SNAP, MCD and DIS among reporting names tonight and tomorrow morning.

• S&P Global July final services PMI at 55.7 (vs flash 55.2)
• U.S. ISM services sector activity unexpectedly flatlined in July with little change in orders and a further weakening in employment. The Institute for Supply Management (ISM) said its nonmanufacturing purchasing managers index (PMI) slipped to 50.1 last month from 50.8 in June 9vs. est. for 51.5 reading) as new orders measure declined to 50.3 last month from 51.3 in June, with export orders falling back into contraction for the fourth time in five months. The employment index fell to 46.4, the lowest level since March, from 47.2 in June. It has contracted in four of the last five months.

• Oil dipped more than 1% overnight as investors’ concern over slowing economic growth impacted anticipated demand…good news for Fed watchers, but not so much for oil. This came on top of oversupply concerns already in the market following OPEC+ production hikes set for September.  Today’s move marked the fourth consecutive daily decline in WTI crude futures as the September contract settled lower by $1.13/bbl, or -1.70%, at $65.16. Brent also slid, settling -$1.12, or -1.63%, at $67.64/bbl.

• In Consumer Products: EPC reduced its adjusted EPS guidance and tweaked its net sales target for the full year citing anticipated ongoing macroeconomic impacts on the industry, the company’s lower-than-expected US market share performance, and higher-than-expected indirect tariff impacts on the pricing of aluminum. ODD reported a top- and bottom-line beat with total revenue topping consensus by ~1% and adj. EBITDA beating by ~4%. Additionally, ODD issued 3Q guidance of $145M of net revenue (at midpoint), which is slightly above consensus expectations of $143.5M.
• In Restaurants: DENN Q2 results included a -1.3% SSS decline that was in line with Street forecasts. However, EBITDA/EPS fell below expectations and SSS trends remained choppy due to macro volatility/uncertainty; YUM Q2 adj eps $1.44 vs estimate $1.46; Q2 revs $1.93B vs. est. $1.94B; Q2 worldwide same-store sales up 2% vs estimate up 2.37%

• FANG posted in-line Q2 results and updated guidance – total production guidance was increased while CAPEX guidance decreased, but Keybanc said they noticed a lower oil skew in Q2 (54% oil, vs guide of 56%), which is expected to persist, given 2025 production guidance increased by 2.4%, but 2025 oil production guidance increased by only 0.2%.
• OKE Q2 results were in-line & OKE maintained its 2025 financial guidance. The company acquired an additional 30% interest in the BridgeTex pipeline, bringing total ownership to 60%.
• VG received approval from the U.S. Department of Energy (DOE) for an uprate amendment to its Calcasieu Pass LNG project. The uprate approval increases Calcasieu Pass’ permitted peak liquefaction capacity from 12.0M tonnes per annum (MTPA) to 12.4 MTPA.

• Financial Services: FTDR Q2 revenue rises 14% to $617 mln, beating analyst expectations and adjusted EPS for Q2 beats estimates, rising to $1.63; Q2 adjusted EBITDA increases 26% to $199 mln, exceeding analyst projections while raising full-year revenue guidance to $2.055 bln-$2.075B and increases full-year gross profit margin forecast to 55%-56%; AXP and TOST announce strategic partnership to help elevate hospitality experiences.
• FinTech: XYZ Downgraded to Equal Weight in Q2 preview at Morgan Stanley saying they believe valuation is fair at current levels (21x ’26 P/E) and think most of the anticipated acceleration in Square and Cash App growth is widely built into expectations and note that it views XYZ as a crowded long into the Q2 print.
• In Crypto: COIN shares fell after announcing proposed private offering of $2.0B of convertible senior notes. Bitcoin slips around $114,000 as crypto quietly pulls back in recent weeks after hitting record highs of $123,153 on 7/14. CRWV’s $9B acquisition of CORZ faces shareholder backlash over fixed share ratios and potential losses, Financial Times reported.

• NSA reported disappointing 2Q Core FFO of $0.55, which missed consensus by $0.02 (-$0.03). In addition, management lowered its FY25 Core FFO guidance by ~6% at the midpoint. W
• SBRA delivered a 2Q25 NFFO beat, and management bumped up its 2025 NFFO guidance by ~1% at the midpoint (in line with cons.); although to a lesser extent on a Normalized AFFO basis
• SKT reported 2Q25 Core FFO of $0.58, which topped consensus and KBCM by $0.02 and $0.03, respectively. In addition, management raised its FY25 Core FFO midpoint by 0.7% (to $2.275), which is $0.025 above consensus

• CRSP shares fell on disappointing Q2 sales and a larger than expected EPS loss.
• MDGL shares jumped on results; Q2 net sales rise to $212.8M from $14.6M year-ago, driven by demand for NASH treatment Rezdiffra while secures new U.S. patent for Rezdiffra, extending protection to 2045.
• NVO was downgraded to Neutral (from Buy) at UBS saying sees several reasons to no longer be Buyers.
• PFE Q2 EPS $0.78 beats $0.57 estimate on better sales $14.7B (est. $13.4B); raises FY’25 EPS Guidance from $2.80-$3 to $2.90-$3.10 and affirms sales guidance of $61B-$64B.
• TVGN shares jumped after expanding collaboration with DBRK and MSFT.
• VRTX shares tumble after results; said that its next-generation non-opioid pain reliever, VX-993, failed to significantly outperform placebo in a Phase 2 trial.
• YMAB to be acquired by SERB Pharmaceuticals in deal valued at $412M; Y-mAbs shareholders will receive $8.60 a share in cash, equating to a premium value of about 105% to Monday’s closing price of Y-mAbs shares.

• In Healthcare Facilities/Services: AGL shares tumble as announced that Steve Sell has stepped down as President, CEO, and Director, reported Q2 revenue and EBITDA below the low end of Q2 guidance of $1.435B 1.505B and withdrew guidance for the year. EHC shares rose on beat and raise quarter, highlighted by an 8% EBITDA beat driven by strong comp sales revenue growth and good expense management. HIMS shares fell after reporting a mixed quarter with revenue missing and EBITDA exceeding Street expectations; Q2 revenue of $544.8MM missed consensus estimates of $550.8MM; FY25 revenue/ EBITDA guidance reiterated, including ZAVA. HIMS later pressured after NVO expands legal action to protect US patients from unsafe, non-FDA-approved compounded "semaglutide"
• Shares of managed care companies UNH, HUM, CNC an others bounced after Wolfe Research published a note noting that the thresholds for private Medicare Advantage plans to earn bonus payments may get easier next year

• In E&C: PRIM reported a very strong quarter on revenue and margins as revenue grew +20.9% y/y across both segments at rates higher than our model but was most pronounced in the Energy segment (+27% vs. our 9%), EBITDA came in at $155M vs. above estimate, and raised adjusted EPS guidance from $4.20-$4.40 to $4.90-$5.10
• The Baltic Dry freight index extended losses to a near three-week low, pressured by lower rates for Capesize and Panamax vessels. The index fell 49 points, or 2.49%, to 1,921 points, its lowest since July 16. The Capesize index was down 152 points, or 4.8%, at 3,006, a two-week low; the panamax index lost 8 points, or 0.5%, to 1,625, a near four-week low and Supramax index added 9 points, or 0.7%, at 1,279, its highest level since July 2

• LDOS Q2 adj EPS $3.21 tops consensus $2.65 on revs $4.25B vs. est. $4.23B; raises FY25 adjusted EPS view to $11.15-$11.45 from $10.35-$10.75 and boosts FY25 revenue view to $17B-$17.25B from $16.9B-$17.3B, vs. consensus $17.17B.
• PLTR reported its 8th straight quarter of revs growth acceleration, from 13% growth in Q2’23 to a just reported Q2’25 growth rate of 48%, while at a $4B revs scale and raised the full year 2025 total growth guidance to 45% from 36%, without compromising on the non-GAAP margin target, which was inched up to 46%.
• TDG lowered its full-year revenue forecast primarily due to lower-than-expected commercial OEM sales, driven mainly by lower than anticipated OEM build rates and inventory destocking and Q3 revenue rose 9% to $2.24 billion from a year ago, but fell short of analysts’ expectations of $2.29 billion and EPS missed.
• Drone stocks ONDS, RCAT, UMAC among movers higher after U.S. proposing new rules to speed use of drones beyond visual line of sight of operators the transportation department said.

• In Paper, Packaging, Containers: IP was downgraded to Neutral (from OW) at JP Morgan noting its Q2 print was disappointing versus expectations and while they had flagged a likely miss in EMEA, IP was still ~ 4% worse at the EBITDA level. JPM’s revised FY2025 estimate puts them ~1% below the low end of FY guidance of $3.5B (including GCF). BALL raised its annual profit forecast after beating Q2 results, fueled by resilient demand for its aluminum cans in key markets of North America and Europe; Ball witnessed a 4.1% rise in global aluminum packaging shipments during the quarter and also raised comparable 2025 earnings to grow between 12% and 15%, up from a prior range of 11% to 14% growth.

• In Media: FOXA beat estimates for quarterly revenue and profit on Tuesday, driven by a surge in advertising, affiliate fee and continued growth at its free ad-supported streaming service, Tubi, while announcing a $5 billion increase to its share repurchase authorization; Advertising revenues grew 7.1% in the quarter, primarily due to continued digital growth
• In Software: SentinelOne (S) announced it has signed a definitive agreement to acquire Prompt Security, a pioneer in securing AI in runtime, preventing AI-related data leakage and protecting intelligent agents.
• IT Services & Consulting: KD shares fell after reported a 2.6% drop in sales on constant currency terms, missing analyst estimates and marked a slowdown versus the 1% growth that the company reported a quarter earlier; IT shares tumbled after lowers FY total revenue forecast to at least $6.46B vs prior projection of $6.54B and now expects annual adjusted profit of at least $11.75 per share, up 5 cents from its prior forecast, due to favorable foreign exchange rates.

• GFS shares fell as Q2 was in-line but expects Q3 revenue of $1.68B, plus or minus $25M vs expectation for $1.79B.
• ICHR shares fell after a CEO transition was announced to precede the result announcement, and their quarterly execution in the print and guide was a little better and in-line on sales, but gross margin failed to expand
• LSCC reported in-line Q2 results and guided Q3 slightly higher as stronger Comms and Compute (C&C) offset weaker Industrial and Auto (I&A).
• NVTS reported inline results but offered guidance that came in well below the Street’s expectations, sending shares lower; guides Q3 revs $9.5-10.5Mm vs est. $15.67Mm.
• SLAB Q2 revenue grows 33% yr/yr, beating analyst expectations; however, net income and operating income missed analysts’ estimates, while announced new Series 3 devices and upcoming developer conference.
• Two Chinese nationals were arrested in California and charged with illegally shipping tens of millions of dollars’ worth of AI chips to China, including NVDA H100s, the U.S. Justice Department said.