Mid-Morning Look

Thursday, July 24, 2025

U.S. stocks off to another strong start to the day, building fresh record highs for the S&P 500 and Nasdaq, while the Dow slips as earnings results from component IBM weigh on the Index. Stock markets yesterday was juiced higher behind positive trade/tariff deal news between the U.S. and counterparts Japan, EU and Philippines, while today, the market is enjoying another generally strong round of corporate earnings. Of the 153 S&P 500 companies that have reported thus far vs 157 LY (fiscal qtr ending May-Jul, per Reuters), 84% have beat vs 84% LY

With the average beat 9% vs 14% LY, and avg miss -10% vs -5% last year. In central bank news today, the European Central Bank keeps interest rates steady at 2.15%, pausing after seven straight cuts. Lots of big movers on earnings today with S&P leaders including WST, LH, URI, TMUS, NDAQ while GOOGL edges higher. On the downside TSLA, IBM big laggards, along with DOW, LKQ, CMG, and LUV.

Following the U.S.-Japan trade deal, a 15% reciprocal U.S. tariff rate appears to be the singular numeric target for ongoing and even concluded trade negotiations. Both the EU and South Korea are reportedly aiming for a 15% tariff rate on most exports to the U.S., including for autos in South Korea’s case. Philippines, after securing 19% tariff rate, indicated that it “likes to see” 15% on our deal. Bloomberg previously reported, quoting senior US administration officials, that the US/Japan trade agreement includes an order of 100 Boeing aircrafts, 75% boost to rice purchases, $8bn worth of agricultural and other products, and a defense spending hike to $17bn annually.

• S&P Global July flash manufacturing PMI at 49.5 (vs 52.9 in June); U.S. S&P Global July flash composite PMI at 54.6 (vs 52.9 in June); U.S. S&P Global July flash services PMI at 55.2 (vs 52.9 in June).
• June single-family home sales rose +0.6% to 627K unit ann. Rate, vs. est. 650K; June home sales Northeast -27.6%, Midwest +6.3%, South +5.1%, West -8.4%; June new home supply 9.8 months’ worth at current pace vs May 9.7 months; median sale price $401,800, -2.9% from June 2024 ($414,000).

• Managed care weak: MOH sees adjusted EPS at least $19.00, saw $21.50 to $22.50. Q2 MLR missed (90.4% vs 89% est.). UNH shares tumble after saying it has begun complying with formal criminal and civil requests from the Department of Justice after reviewing media reports about investigations into certain aspects of its participation in the Medicare program. UNH says independent audits by Centers for Medicare & Medicaid Services confirm that its practices are among the most accurate in the industry.
• In Transports: AAL forecasts bigger Q3 EPS loss as sluggish demand hits fares (guides loss 10c-60c vs. est. 7c loss). CSX Q2 EPS $0.44 vs. est. $0.42; Q2 revs fell -3% y/y to $3.57B vs. est. $3.58B; Q2 total volume of 1.58M units for the quarter was flat compared to second quarter 2024 and up 4% sequentially. LUV board authorizes new $2.0B share repurchase program; sees Q3 outlook RASM down 2% to up 2%, Q3 CASM-x up 3.5% to 5.5% and outlook Q3 ASM about flat. UNP quarterly profit rose to $3.15 per share, from $2.74 per share and above consensus of $2.90.

• ALB +7%; along with early strength in other lithium names after Tesla conf call comments last night that they are on track to start lithium refining and production this year. Also, prices of lithium futures in China rallied to hit a five-month high, driven by expectations of potential reductions in supply.
• BE +21%; announced that it will deploy its fuel cell technology at select Oracle Cloud Infrastructure (OCI) data centers in the U.S.
• GOOGL +2%; after Q2 results beat and said demand for AI products boosted quarterly sales and talked about an extreme increase in capital spending (raised by $10B boosting chip names AVGO, NVDA).
• ICLR +23%; rises on results; adj EPS $3.26 vs. est. $3.18; Q2 revs $2.02B vs. est. $1.98; sees FY25 adjusted EPS $13.00-$14.00 vs. est. $13.25 and sees FY25 revenue $7.85B-$8.15B vs. consensus $7.96B; authorizes $500M expansion to share repurchase program.
• MXL +19%; reported in-line Q2 EPS on better revs, but shares surged as its revenue outlook beat expectations by ~ 8% with new program ramps beginning in 2H, continuing through the next few years.
• NOW +5%; raised its annual subscription revenue forecast; reported a strong Q2, including CC cRPO growth of 21.5% Y/Y that meaningfully exceeded guidance and modestly beat expectations as well.
• TMUS +6%; reported postpaid phone additions a 2Q record of +830K, up 53K from 2Q24 and a turnaround from last quarter; ARPA growth was up 5% as it incentivizes high-priced premium plan sales helped by increased prices for value plans; fixed wireless adds were +451K, a 50K beat.
• WST +23%; reported better-than-expected quarterly earnings and raised its full-year guidance on EPS $6.65-$6.85 from $6.15-$6.35 and revs to $3.4B-43.06B from $2.945B-$2.975B.

• CMG -12%: Q2 results included in-line EPS, as better-than-expected store level margin offset a ~110 bps comp store sales growth shortfall; lowered its annual sales growth target to be about flat y/y, compared with its prior view for growth in the low single-digit range.
• CYH -29%; tumbled on results and CEO departure headlines; Q2 results only topped estimates due to $75M of Medicaid supp-payment program revenues in NM/TN that were not in prior guidance; Management noted the company did not see the seasonal improvement in acuity/mix that was expected.
• DOW -14%; reports a wider-than-expected Q1 EPS loss of (-$0.42) vs. est. loss (-$0.17), hurt by lower prices and weak demand for its products; said it is cutting dividend by 50% in response to prolonged industry downturn; said Q2 volume decreased 1% year over year.
• IBM -8%; reported a mixed quarter in which organic software deceleration was offset by strong contribution from better-than-expected Infrastructure results.
• LKQ -21%; cuts 2025 free cash flow view to $600M-$750M from $750M-$900M; cuts 2025 operating cash flow view to $875M-$1.075B from $1.075B-$1.275B; cuts 2025 EPS to $2.47-EPS $2.77 from $3.40-$3.70.
• MAT -10%; after cutting 2025 net sales to rise 1%-3%, compared with its February target of 2%-3% increase while EPS lowered to $1.54-$1.66 range, below prior estimate of $1.66-$1.72.
• STM -16%; shares fell after reporting an unexpected Q2 loss of $133M, missing the estimate for a $56.2M profit; they said that without the $190M in impairment, restructuring charges and other costs, the company would have registered a quarterly profit of $57M.
• TSLA -8%; reported worst quarterly sales decline in more than a decade and profit that missed Wall Street targets while CEO Musk said that US government cuts in support for electric vehicle makers could lead to a ‘few rough quarters for the company
• UNH -2%; shares tumble after saying it has begun complying with formal criminal and civil requests from the Department of Justice after reviewing media reports about investigations into certain aspects of its participation in the Medicare program.