Closing Recap

Tuesday, July 08, 2025

US equity futures gained slightly overnight after more late tariff headlines took market lower yesterday. Of course, there was something for everyone: more tariff threats from the US but a later deadline to negotiate agreeable trade deals. Overall, stocks did a whole lot of nothing today, trading sideways.  With no earnings and nothing major on the economic calendar today, there were few other catalysts to steer the market. Early trading saw breadth favoring advancers by 3:2 as small caps outperformed with IWM (+0.51%) versus SPY (-0.06%) and QQQ (+0.00%), though early sector performance saw only four gainers versus seven decliners. Energy (+1.35%), Health Care (+0.83%) and Technology (+0.34%) were early outperformers among S&P sector ETFs, while Financials (-0.47%), Consumer Staples (-0.74%) and Utilities (-1.63%) paced the underperformers. That said, today’s Fear & Greed Index still registered 77/100, or Extreme Greed versus last week’s 61 (Greed) and last month’s 60 (Greed).

In noteworthy data today, Goldman raised its 3-month, 6-month and 12-month S&P 500 return targets to +3% (6,400), +6% (6,600) and +11% (6,900) on, “earlier and deeper Fed easing and lower bond yields” than previously anticipated as well as ongoing fundamental strength in the largest stocks. There was no change in EPS growth forecasts of +7% each in 2025 and 2026. On volatility, TSLA has become easily the most volatile mega cap. Per @bespokeinvest, TSLA has had a 5%+ move (up or down) on 23% of the all trading days over the past six months. On investment returns, @PeterMallouk noted, since 1989, money invested when the market is at all-time highs has outperformed money invested on any given day. We haven’t fact-checked that one, but definitely among things that make you go, “hmmm.” Lastly, on earnings, per @DataTrekMB, over the past three months, sell-side analysts have cut their aggregate Q2 S&P 500 earnings estimate by 4.2%, in line with historical norms and creating a nice set-up for the, “usual 6-7% beats when companies report results.”

After spending much of the morning flattish and experiencing limited volatility through the afternoon despite more Trump tariff commentary, US equities entered the final hour of trading still hovering near unchanged. Breadth continued to favor advancers by a little better than 3:2 with small caps continuing to outperform. Sector performance had tilted slightly in favor of gainers with six sectors now in the green. Energy (+2.6%), Materials (+0.85%) and Health Care (+0.44%) were outperformers, while Consumer Staples (-0.87%), Financials (-0.9%) and Utilities (-1%) led the underperformers.

• The National Federation of Independent Business (NFIB) said its Small Business Optimism Index fell two tenths of a point last month to 98.6. A substantial increase in respondents reporting excess inventories contributed the most to the decline, the NFIB said, with nearly one in eight businesses reporting inventories were "too high" in June, almost double that in May. At the same time, the survey showed a drop in the share of those expecting improved sales in the next three months, to a net 7% from 10% in May.

• WTI August crude futures slipped slightly overnight but rebounded with trade optimism following morning headlines and deadline extensions for deals to be made. Recent July 4th travel and gasoline demand also may be lending some demand support. While not going out at the high, futures gained $0.40/bbl, or +0.59%, to settle at $68.33. Brent also gained, settling up $0.57/bbl, or $0.82%, at $70.15

• Nissan (NSANY) is scaling back production plans for its new Leaf electric vehicle model because China’s rare earth export restrictions have led to a shortage of parts, Kyodo News reported on Tuesday. The revised production of the new model, which is set to launch later this year, could complicate the Japanese carmaker’s restructuring plans that include closing seven factories and reducing its workforce by 15%.
• Porsche (POAHY) reported H1 global sales down 6% at 146,391 units; said H1 China sales down 28% at 21,302 units, North America sales up 10% at 43,577 units and H1 Germany sales down 23% at 15,973 units; H1 overseas and emerging markets sales up 10% at 30,158 units; expect environment to remain challenging.

• In Food & Beverages: Piper previews food & beverages for Q2 saying KDP, CELH, and MNST look well positioned coming into the C2Q25 earnings, while they see the most risk for SAM, TAP, and PEP. KDP has a strong top-line momentum; so does MNST. CELH’s trends are improving and remain strong for Alani Nu. European spirit makers (REMYY, PRNDY, DVCMY) rise on report of possible US tariff exclusion.
• In Restaurants: SHAK was downgraded to Hold from Buy at Loop Capital with a $127 price target noting the stock recently surpassed the firm’s price target after surging approximately 60% over just the last couple of months, and while Loop remains positive on Shake Shack’s near and long-term story, its current valuation accurately reflects the company’s attractive fundamentals. WEN appoints Ken Cook as interim CEO after Kirk tanner is leaving to become President and CEO of HSY Bradley Peltz has been elected to serve as a director and will replace Matthew Peltz who has resigned.

• In Building Products and Tools: BLD has entered into an agreement to acquire Progressive Roofing, a portfolio company of Bow River Capital, for $810M in cash; SWK was upgraded from Underperform to Peer Perform at Wolfe Research saying the CEO transition set for 1 October, sees COO Chris Nelson replace Don Allan. Wolfe views this appointment as strategic continuity, but one that could give more confidence in commercial execution and production innovation and the firm no longer sees downside risk to estimates.

• Utilities: SWX upgraded from Hold to Buy at Jefferies and raise tgt to $82 from $74 citing a compelling and increasingly clear path to value as regulatory improves and CTRI sell-down progresses. Arizona SIM approval and Nevada formula rates contribute to 11.8% EPS CAGR (vs 6.8% consensus) through FY29. VST announced that it has received approval from the Nuclear Regulatory Commission to extend the operation of its 1,268-megawatt Perry Nuclear Power Plant through 2046, an additional 20 years beyond its original license

• 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 saying they are more cautious on universal banks and brokers after big rally; staying more constructive on super-regionals Operating fundamentals remain positive, but downside risks associated with macro uncertainty are not priced in.
• Handful of firms with research: Raymond James with several bank rating changes ahead of earnings season: the firm upgraded OZK, CFR, PNC and TFC while they downgraded CMA, THFF and UCB. Barclay’s downgraded FHB to Underweight from Equal Weight as part of a Q2 earnings preview for the mid-cap banks and upgraded FIBK to Equal Weight from Underweight as believes valuations in the group still largely underappreciate an improving operating and regulatory backdrop. KEY was upgraded to Buy from Neutral at UBS and raised tgt to $22 from $16. CADE upgraded to Overweight at Piper and raise PT to $42 from $36 as sees 25%+ in total potential return in 12-months.

• HOOD CEO Vlad Tenev said tokenization could solve the issue of liquidity "by tapping into a global network of hundreds of millions of crypto market participants." Robinhood is launching their own crypto tokens, including tokens linked to OpenAI and SpaceX, hoping to give retail investors more access to private companies.

• In Financial Services: FHFA Director Bill Pulte posted: Effective today, to increase competition to the Credit Score Ecosystem and consistent with President Trump’s landslide mandate to lower costs, Fannie and Freddie will ALLOW lenders to use Vantage 4.0 Score with no current requirement to build new infrastructure; shares of FICO traded lower on the news.

• CRGX 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.
• MMSI 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.
• NVS said that Swiss regulators have approved its malaria medicine Coartem for newborns and young infants, extending a long-standing treatment to the smallest babies
• RLYB sells interest in REV102 Program to RXRX and is eligible to receive up to $25M, including an upfront equity payment of $7.5M; expects its cash runway to continue into mid-2027.

• 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

• 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 Gov’t Defense Services: Raymond James downgraded CACI to Market Perform from Outperform saying its national security mix (~94% of sales) & crisp execution has pushed the stock up ~25% since its January upgrade and believes shares are due for a pause; the firm upgraded PSN to Strong Buy from Market Perform noting shares are down ~20% YTD vs the S&P 500 up 6% and with multiple compression of ~1x turn YTD. BKSY said it signed a Gen-3 early-access agreement for its satellites with a current international Gen-2 customer in support of Ukraine.
• In Industrials: HON announced plans to evaluate strategic alternatives for its Productivity Solutions and Services and Warehouse and Workflow Solutions businesses, which serve the transportation, warehouse and logistics markets. This enables Honeywell to further simplify its portfolio in order to accelerate value creation ahead of its planned separation into three independent, industry-leading companies.

• In Software & Communications: DDOG 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. CIEN was downgraded to Underweight from Equal Weight at Morgan Stanley, given it sees limited potential for positive EPS revisions given pluggables mix, when the multiple has expanded ~7x over 3 year average, with base case now $70.

• Semiconductor price tgts raised at Keybanc saying their quarterly supply chain findings were mixed. In analog, tariff-related pull-ins are driving NT upside but are resulting in concerns regarding 2H being sub-seasonal. China remains the most resilient geographically but is slowing. AI demand remains robust; however, NVDA is still struggling to ramp GB200 and has trimmed its CoWoS supply for the second time this year. AVGO tgt from $315 to $330, MPWR from $820 to $940, ADI from $285 to $300), MCHP from $70 to $85, NXPI from $240 to $275, ON from $50 to $65, SLAB from $160 to $180 and TXN from $215 to $240)].
• Mizuho also making tgt changes in semis with ALGM raised to $37 from $31, MCHP to $85 from $78, MBLY to $18 from $15, NXPI to $265 from $240, TXN to $205 from $170 in Analog/EV Preview saying key highlights: 1) JunQ bottom for Auto-Industrial, with ests inline, while 2H25E could see stronger top-line, 2) JunQ pricing stable with Improving SepQ analog pricing, point to better 2H Revs and 3) China EV strong with ~$42B CY25E subsidies, though EV ex-China growth mixed into 2H25E with US rolling back subsidies.