Closing Recap
Wednesday, June 18, 2025
Index | Up/Down | % | Last |
DJ Industrials | -44.14 | 0.10% | 42,171 |
S&P 500 | -1.86 | 0.57% | 5,980 |
Nasdaq | 25.18 | 0.13% | 19,546 |
Russell 2000 | 11.00 | 0.52% | 2,112 |
U.S. stocks held around the break-even level all afternoon, listening closely to Fed Chairman Powell following the FOMC rate policy meeting, where they kept rates steady but made changes on other projections. The Federal Reserve held interest rates steady (as expected) while signaled borrowing costs are still likely to fall this year but slowed the overall pace of expected future rate cuts in the face of estimated higher inflation flowing from the Trump administration's tariff plans. For 2025, projections show two rate cuts still seen in 2025 (as they saw in March) but slightly slowed the pace from there to a single 25bps cut in each of 2026 and 2027 in a protracted fight to return inflation to the central bank's 2% target. Of the 19 Fed officials who participated in the meeting, ten of them expect the central bank to cut rates at least
twice this year, a narrower majority than in March, and two penciled in one cut. Meanwhile, seven penciled in no changes this year, up from just four in March.
In new economic projections, the Fed sketched a modestly stagflationary picture of the U.S. economy, with economic growth slowing to 1.4% this year (down from the 1.7% seen in March), unemployment rising to 4.5% by the end of this year, and inflation finishing 2025 at 3%, well above the current level. Under the new projections, inflation remains elevated at 2.4% through 2026 before falling to 2.1% in 2027 amid largely stable unemployment. Fed policymakers see end-of-2025 PCE inflation at 3.0% versus 2.7% in March; core seen at 3.1% versus 2.8%.
Stocks had started to pullback an hour before the FOMC rate decision and Fed Chairman Powell speech on Iran headlines citing an Israeli official (as per CNN) saying Iran had launched about 400 ballistic missiles and 1,000 drones at Israel so far, only 20 of which fell on civilian areas - Sky News Arabia. Stocks turned lower during Powell’s tap dance press conference, explaining how inflation estimates are higher for this year due to tariffs (despite knowing the impact at this point), and they are happy with current policy…after cutting rates to the tune of 50-bps last September ahead of the Presidential election, when inflation was notably higher than where it is today (despite 3-months of falling inflation readings). Powell notes monetary policy 'has to be forward-looking' (after having said for years that they are data dependent – which appears to not be the case this time around). Overall, markets took the comments and situation in the Middle East in stride heading
into a Wall Street day off tomorrow (June 19th). By days end, the S&P and Nasdaq finished little changed, down slightly.
Economic Data
- Weekly Jobless Claims fell to 245K from 250K last week and were in-line with consensus while the 4-week moving average climbed to 245,500 from 240,750 prior week; continued claims fell to 1.945M from 1.951M prior week; the U.S. insured unemployment rate unchanged at 1.3%.
- May Housing Starts tumbled -9.8% to 1.256M unit rate vs April +2.7% (and below consensus of 1.357M) and well below the April 1.392M units; May single-family starts +0.4% to 924,000-unit rate; multifamily -29.7% to 332,000-unit rate; May Building Permits fell -2.0% to 1.393M unit rate vs April -4.0% and est. 1.428M rate.
Commodities, Currencies & Treasuries
- Gold prices edged higher $1.20, or +0.04% to settle at $3,408.10 ahead of the FOMC rate commentary.
- Crude oil prices settle at $75.14/bbl, up 30 cents, 0.40%, a notable bounce off morning lows as more Israel/Iran headlines hit newswires.
- Treasury yields were steady all morning until the Fed released their outlook of rates, growth and inflation, sending yields lower especially at the short end of the curve. The Fed said they now see growth of 1.4% this year and 1.6% next year, vs. 1.7% and 1.8% projected in March.
- The U.S. dollar was little changed this morning before inching higher during Powell’s press conference, while Bitcoin prices dropped this morning.
Macro | Up/Down | Last |
WTI Crude | 0.30 | 75.14 |
Brent | 0.25 | 76.70 |
Gold | 1.20 | 3,408.10 |
EUR/USD | -0.0014 | 1.1465 |
JPY/USD | -0.08 | 145.17 |
10-Year Note | 0.008 | 4.399% |
Sector News Breakdown
Retail, Consumer Staples & Restaurants:
- In Mattress retail: Keybanc noted ISPA released mattress industry data for 1Q25, which aligns with commentary they heard from PRPL, SNBR, SGI, and during 1Q earnings, which pointed to continued industry softness. Specifically, ISPA data points to 1Q25 total mattress dollars -5.6% (vs. -9.4% in 4Q24), while units were -10.6% (vs. -6.2% in 4Q24). Looking ahead, Keybanc expects industry trends to remain challenging.
- In Beverage sector: Reuters reported U.S. Dietary Guidelines are expected to eliminate the long-standing recommendation that adults limit alcohol consumption to one or two drinks per day. The report notes the guidelines are expected to include a brief statement encouraging Americans to drink in moderation or limit alcohol intake due to associated health risks (beer/spirit names BUD, SAM, TAP, DEO, STZ).
- In Food & Consumer Staples: Reuters reported EU antitrust regulators are set to open a full-scale investigation into the $36B bid by candy company Mars for Pringles maker Kellanova (K). The European Commission is concerned about Mars' high market share in some products in some EU countries.
Homebuilders, Building Products, Home Furnishing:
- In Home Furnishings: LZB reported mixed Q4 results, posting stronger than anticipated sales, but EPS was slightly below the Street. Similar to peers, LZB's written comps decelerated sequentially, with system-wide written same-store sales +3.0% (vs. +5.0% in FQ3).
- In Building Products: GMS posted a smaller profit and lower sales in its latest quarter, but adjusted EPS of $1.29 topped the $1.11 consensus estimate and while sales fell -5.6% y/y to $1.33B it topped the $1.3B estimate; said they are cautiously optimistic that we are nearing the bottom of this cycle and believe pent-up demand will materialize as the macro environment improves," added Turner.
Autos, Leisure, Gaming & Lodging:
- In Cruise Lines: NCLH was downgraded to Hold from Buy at Argus saying believes that given the company's highly leveraged position and vulnerability to weakening consumer spending and slowing economy, the stock's current price is appropriate; cuts its FY25 EPS view by 4c to $2.06 and its FY26 view by 10c to $2.50 based on the reduced fares for Norwegian's Oceania brand and a slowdown in advance bookings.
- In Online Travel: Bernstein said Q2 will be a fairly tough quarter for OTAs (ABNB, EXPE, BKNG, TRIP) given the hangover from the US tariffs continued into May with traffic decelerating YoY over the last two months, and likely to be compounded by increased cancelations connected to LA riots, anti-tourism protests in Europe and escalating Middle Eastern conflict. However, Bernstein expects the OTAs guided conservatively enough, and its read of traffic has small beats at Booking & Airbnb and modest misses at Expedia & Tripadvisor.
- In Ride Hailing/Food Delivery: UBER, LYFT shares slipped after GOOGL’s Waymo noted they applied for a NY City permit “to drive autonomously with a specialist behind the wheel while we’re in the city – a key step to one day serving New Yorkers. We're also advocating for changes to state law to allow them to bring our fully autonomous ride-hailing service to the city one day."
Energy
- In Solar: After posting one of the worst days in its history yesterday, the solar complex saw a small rebound in share prices; ARRY said it would acquire APA Solar for around $179 million, including debt to expand its U.S. manufacturing capabilities. In Research, RBC Capital lowered price tgts in the sector saying they expect residential solar demand to take a big hit from proposed U.S. Senate reconciliation bill, which phases out solar energy tax credits by 2028. Lower ENPH tgt to $28 from $50, FSLR to $188 from $230, SEDG to $12 from $14 and RUN to $5 from $12 (which they downgraded to Sector Perform).
Banks, Brokers, Asset Managers:
- Bloomberg reported that the Federal Reserve, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency are focusing on the enhanced supplementary leverage ratio (eSLR), with plans to reduce it by up to 1.5% for the largest lenders. The proposal would lower the bank’s holding's capital requirement to a range of 3.5% to 4.5%, down from the current ratio of 5%.
- In Banks: JPM announces Chase Sapphire reserve card perks, which includes a new points redemption program for travel and a $500 annual credit toward select hotels and resorts (the card is also getting a new annual fee of $795). UBS was downgraded to Underweight at Morgan Stanley as the firm lowers its buyback assumptions and incorporate recent guidance in its numbers: EPS & PT move down by ~5% on average. Morgan says while thinking the total impact will be lower than 500bps first read, uncertainty will likely continue to hinder share price performance - relative Underweight.
- In Mortgage & Insurance: GNW was upgraded to Outperform at KBW Inc saying the insurer could potentially recover $500M+ or $1.25/share+ related to a European Payment Protection business it previously sold to AXA, and a counter lawsuit between AXA and Santander. GHLD shares jumped as agreed to sell themselves in a $1.3 billion all-cash transaction to a fund managed by Bayview Asset Management; shareholders in the mortgage company will receive $20 in cash for each of their Guild shares. Slide Insurance (SLDE) shares opened at $21 in Nasdaq debut vs $17 IPO price
- In Crypto: CRCL, HOOD, COIN were among big movers to the upside after yesterday, the US Senate passed the GENIUS Act by a vote of 68-30, signaling bipartisan support for stablecoin regulation. Treasury Secretary Bessent comments said late yesterday on stablecoins, stating they could cut federal borrowing costs and slow debt growth if the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act is passed. He highlighted research projecting a $3.7 trillion stablecoin market by 2030, noting that the bill’s reserve, audit, and licensing rules would boost demand for short-dated U.S. Treasuries, benefiting issuers, the Treasury, and consumers. (V, MA shares slipped on headlines).
- In Payments: The WSJ reported an investment arm of insurer PRU will buy up to $500M of consumer loans from technology-backed consumer lender AFRM for a period of three years. Most of the loans come due in six months and Affirm will be able to re-lend the investment throughout the life of the deal, allowing it to finance $3B of buy-now-pay-later loans. https://tinyurl.com/fzf7rhnr . COIN introduced its Coinbase Payments for commerce platforms, knocking shares of BNPL stocks PYPL, XYZ, AFRM down this afternoon.
Biotech & Pharma:
- ABBV topline results from Phase 3 TEMPLE study met the primary endpoint of treatment discontinuation due to adverse events (AEs), demonstrating that atogepant, a calcitonin gene-related peptide receptor antagonist, had fewer discontinuations due to AEs than topiramate.
- ACB shares slumped in the cannabis sector after earning and warned global cannabis should be slightly lower in Q1 vs Q4, expected to improve in later quarters; said found error in inventory and cost of sales from intercompany profit eliminations in financial statements.
- BMEA shares fell after a 19.45M share Spot Secondary priced at $2.00, including accompanying warrants and pre-funded warrants, for $40M gross proceeds.
- GILD said it won US approval for a drug to prevent HIV that only has to be given twice a year, making it a powerful and convenient new way to ward off infection in a wide range of people.
- SRRK said its experimental drug helped overweight patients preserve lean mass in a mid-stage trial when used in combination with LLY’s weight-loss treatment Zepbound.
- ZEAL said its obesity treatment dapiglutide showed positive topline results in its latest trial, demonstrating its further potential for weight loss and to treat obesity-related comorbidities; said that dapiglutide showed body-weight reductions of a mean of 11.6% after 28 weeks in Part 2 of a Phase 1B trial.
- In Medical Technology & Supplies: Stifel downgraded ZTS to Hold from Buy saying believes the Street's 2026/2027 operational revenue growth estimates for Zoetis (+6.7%/+6.0%) may prove aggressive and it lowers its 2026/2027 estimates. Stifel now expects Zoetis' 2024-2027E revenue growth to decelerate further, potentially compressing the stock's multiple.
Materials, Metals & Mining
- In Metals & Mining: In the steel sector, NUE guided Q2 EPS $2.55-$2.65, above the $2.41 a share expected by Wall Street saying earnings are expected to increase across all three of its operating segments, with the largest increase in the steel mills segment primarily due to higher average selling prices at its sheet and plate mills. STLD provided a softer outlook as guided Q2 EPS $2.00-$2.04, up from $1.44 q/q but down from $2.72 y/y and below consensus of $2.73 saying shipments of long product steel shipments are up sequentially, while flat rolled volumes are contracting modestly due mainly to an inventory overhang from coated flat rolled steel.
- In Chemicals: CC guided Q2 sales at the high end of its earlier range, driven by strong demand for its climate-friendly refrigerants, but guided Q2 adj core EPS below; said sees net sales to rise by a mid-teen percentage from the first quarter, compared with an earlier projection of a low to mid-teen increase but sees adj Ebitda in range $215M-$225M below consensus ests $236M.
Technology
- In Media: For streaming (NFLX, GOOGL, AMZN, ROKU, DIS), Nielsen released its monthly The Gauge report, whereby streaming accounted for more U.S. TV watch time in May than broadcast and cable combined (CMCSA, FOX, PARA). CTV viewership crosses a significant milestone, and research shop Citizens said it believes streaming gains likely accelerate from here given the advantages of scale.
- In Software: ADBE launched its Firefly app for iOS and Android, enabling users to create AI-generated images and videos directly on their phones; CRM announced new prices for several products and thinks the upshot is that prices are rising as value-added AI features are bundled into products
- In Quantum sector: QBTS price tgt raised to $20 from $14 at Benchmark and keeps a Buy rating on the shares after D-Wave announced the signing of a memorandum of understanding with South Korea's Yonsei University and Incheon Metropolitan City to accelerate quantum computing adoption.
Semiconductors:
- ADI was upgraded from Neutral to Overweight at Cantor and raised tgt to $270 from $250 calling it a best-in-class Analog company, with outsized Industrial exposure preferential into the upcycle. The firm also initiated NXPI at Overweight ($250 tgt) and Neutral ratings on TXN, ON and MCHP.
- INTC announced a series of leadership appointments aligned with its focus on strengthening customer relationships and becoming a more engineering-focused company.
- MRVL hosted a Virtual AI event yesterday, where the Company highlighted its strong and expanding positioning in the AI custom silicon market. Key takeaways included two new XPU socket wins at emerging hyperscalers in addition to existing wins at Google (Axion), AWS (Trainium), and MSFT (Maia); it increased the AI custom compute TAM to $55B in 2028 (from $43B a year ago).
- TXN said it plans to invest more than $60B to manufacture billions of foundational semiconductors in the U.S.; said investment includes seven U.S. semiconductor fabs, supporting 60,000 new jobs.
