Mid-Morning Look

Friday, July 18, 2025

Stocks slip after the S&P 500 and Nasdaq opened the day at new record highs on this expected high volume option expiration day. Note today is options expiration where roughly over $2.8 trillion of notional options exposure will expire including $1.5 trillion of SPX options and $660B notional of single stock options. The notional open interest for this expiration is similar to that of last July (as per Goldman). Treasuries got a little boost from Fed Governor Waller’s comments where he continued to argue in favor of a rate cut at the end of the month. The policy sensitive short end of the curve is leading the rally. In stock news, Netflix, and Dow components AXP, MMM all reported better results and solid guidance, but all have reversed lower in a bout of profit taking. Healthcare stocks extend declines with ELV adding to yesterday losses post earnings/guide HUM falls after failing in bid to reverse cuts to Medicare bonus payment. Utilities are big winners today behind TLN 20% jump after announcing an accretive acquisition. Communications (XLC) the early decliner. Housing data and confidence data both came in better today, adding to the influx of positive economic data this week.

The crypto upward momentum showing no signs of slowing following the House passage of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. The GENIUS Act provides a framework for the issuance of payment stablecoins, reserve requirements, and regulatory oversight. Bitcoin hit record highs above $123K on Monday of this week (but back down at $118K) while Ethereum has soared in recent days, up another 6% today to $3,650 while names like HOOD, COIN hit all-time highs along with strength in stablecoin CRCL and Bitcoin miners like CLSK, IREN, MARA, RIOT and others.

• University of Michigan surveys of consumers sentiment prelim July 61.8 vs. consensus 61.5 and vs final June 60.7; current conditions index prelim July 66.8 (consensus 63.9) vs final June 64.8 and expectations index prelim July 58.6 (consensus 55.0) vs final June 58.1.
• University of Michigan surveys of consumers 1-year inflation outlook prelim July 4.4% vs final June 5.0% and the 5-year inflation outlook prelim July 3.6% vs final June 4.0%.

• In Luxury Retail: Burberry (BURBY) shares rise as comp sales fell by a less-than-expected -1% in the first quarter, which beat analysts’ forecasts for a -3% decline in a company-compiled consensus, and improved on a 6% fall in the previous quarter; Burberry said it was seeing reduced activity from tourists, but stronger demand from new and existing customers helped offset the impact. Other luxury names CFRUY, RL, TPR, CPRI, PPRUY, LVMUY were active as well in sympathy.
• In Energy: CVX will be allowed to proceed with its $53 billion purchase of HES after winning arbitration with rival XOM The Wall Street Journal reported. That means Chevron will assume Hess’s stake in a project in Guyana that’s operated with Exxon (where it owns a 45% stake and produces 650,000 barrels of oil a day while Cnooc has a 25% stake). In Oil & Equipment/Services: SLB reported Q2 EPS $0.74 vs. est. $0.73 and revs $8.54B vs. est. $8.47B as Q2 international revs $6.84B and North America $1.65B; said commodity prices stay range bound, we remain constructive for second half of year.
• In Industrials: Dow component MMM reported better-than-expected Q2 earnings and raised the midpoint of its 2025 per-share guidance to $7.87 from $7.75; sees FY adj. total sales +2.5%, up from prior +0.5% to 1.5%; sees FY adj. organic sales +2%, vs. prior view 2%-3%. Atlas Copco (ATLKY) shares slide after Q2 adjusted EBIT fell to 8.41B Swedish crowns ($870.30M) against the 8.66B estimate; Q2 order intake fell yoy to 40.1B crowns, mainly due to a negative currency effect, the company said.

• CRCL +11%; after the House passage of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act; general upward momentum in crypto (COIN, HOOD, etc.)
• CRSP +13%; after an SEC filing showed insider Director George buys 989,812 shares of stock on 7/16 at $52.03 in purchase valued at $51,499,918.
• IBKR +8%; Q2 adj EPS $0.51 vs est. $0.45; Q2 revs $1.48B vs. est. $1.37B; Q2 Commission revenue increased 27% to 516M on higher customer trading volumes; Q2 customer trading volume in stocks, options and futures increased 31%, 24% and 18%, respectively; Q2 Net interest income +9% to $860M.
• IVZ +10%; after the company aims to unlock hundreds of millions in profit from QQQ by filing proxy with SEC asking owners of the Invesco QQQ Trust Series 1 for their blessing to convert it into an open-ended fund from a unit investment trust. https://tinyurl.com/4n89n7r5
• NSC +3%; after the WSJ reported last night that UNP is holding talks to acquire its smaller rival Norfolk Southern in what would be a mega-merger in the railroad industry, according to people familiar with the matter. The talks are at an early stage https://tinyurl.com/5f5b255d
• RF +5%; Q2 adj EPS $0.60 vs. est. $0.56 and revs $1.905B vs. est. $1.858B; Q2 net interest income $1.259B and Q2 net interest margin 3.65%; raised its FY25 interest income to grow between 3% and 5%, up from its prior view of 1% to 4% growth.
• SCHW +3%; Q2 EPS $1.14/$5.9B in revs topped the $1.10/$5.7B consensus while bringing in core net new assets of $80.3 billion, a 31% y/y increase; for Q1, brought in core net new assets of $137.7B, representing a 5.5% annualized growth rate that set the company on pace to reach its target of 5% to 7% annual growth.
• TLN +19%; shares jump after saying it would acquire Caithness Energy’s Moxie Freedom Energy Center in Pennsylvania and Caithness and BlackRock’s Guernsey Power Station in Ohio for $3.5B.

• ELV -5%; adds to yesterday’s sharp declines after results and guidance were well below consensus as managed care continues to see weak outlooks (follows recent soft guides from UNH, HUM, CNC); Wall Street analysts lower price targets on name.
• HUM -4%; after Bloomberg reported the company lost its lawsuit seeking to reverse cuts to its Medicare bonus payments. A Texas district court ruled in favor of the government’s motion to dismiss the case.
• MMM -2%; reverses earlier gains after c/c; earlier reported better-than-expected Q2 earnings and raised the midpoint of its 2025 per-share guidance to $7.87 from $7.75; sees FY adj. total sales +2.5%, up from the prior +0.5%-1.5%; sees FY adj. organic sales +2%, vs. prior view 2%-3%.
• NFLX -5%; reported Q2 revenue relatively in line with the Street while operating income came in 2% above the consensus and the firm raised its 2025 outlook, which on a mid-point basis is 1% above consensus; the firm’s Q325 outlook also came in above Street estimates – shares pullback after stock rally.
• SRPT -18%; shares tumble after the company told Bloomberg that a patient died from acute liver failure after receiving its gene therapy in an early-stage study. A company spokesperson said the patient died of acute liver failure last month in an early-stage trial to treat limb-girdle muscular dystrophy.
• VTRS -3%; after saying its ointment did not meet the main goal of a late-stage study in patients with an eye condition called blepharitis; Pimecrolimus 0.3% did not completely remove debris in the eyes after six weeks of twice-daily dosing.