February 19, 2025
S&P futures are down 0.1% in early Wednesday trading after US equities closed higher on Tuesday, with the S&P reaching a new all-time high. Market breadth was strong, with 70% of the index advancing, though gains were capped by underperformance in big tech. Cyclicals outperformed defensives, with commodity stocks leading. Most-shorted names were standouts. Treasuries were little changed, while the dollar index rose 0.1%. Gold edged up 0.2%, Bitcoin futures gained 2.7%, and WTI crude rose 0.9%.
Trump signaled potential 25% tariffs on autos, chips, and pharmaceuticals, though markets may be cushioned by the lack of details and possible negotiation room. GOP struggles continue on key legislative priorities, particularly the TCJA extension. US-Russia talks yielded no major developments, though Trump’s remarks blaming Kyiv and calling for elections drew attention. Earnings reports have been mixed, with focus now on Walmart (Thursday) and Nvidia (next week). UK inflation data showed hotter food prices but softer services inflation. The RBNZ cut rates by 50 bps and guided for further easing this year.
On the economic calendar, January housing starts and building permits are due this morning, with weather noted as a potential headwind. The afternoon brings minutes from the January FOMC meeting, where the Fed removed language about inflation progress and reiterated a cautious approach to rate changes. Fed Vice Chair Jefferson speaks after the close.
In corporate news, Arista Networks (ANET) fell on a modest FY25 outlook and concerns over Meta exposure. Analog Devices (ADI) highlighted sequential growth in industrial and auto markets. Cadence Design (CDNS) reported a strong backlog but weaker FY25 guidance. Occidental (OXY) posted solid Q4 results but issued soft Q1 oil guidance. HP (HPQ) acquired AI startup Humane’s assets for ~$116M. Costar Group (CSGP) provided a light 2025 guide, citing increased investment. Devon Energy (DVN) guided higher on volumes with lower capex. Wix (WIX) beat expectations, driven by strong Creative Subscriptions. Toll Brothers (TOL) missed on Q1 closings and flagged a mixed spring selling season. Shift4 (FOUR) announced a $2.9B all-cash deal to acquire GB Group (GB), alongside softer 2025 guidance. Flowserve (FLS) posted mixed results, with revenue and EPS light but strong bookings and margin improvement. Celanese (CE) was hit by a weak Q1 outlook.
U.S. equities closed higher on Tuesday, though trading remained largely flat for most of the session before a late-session push. Treasury yields climbed, with the 10-year yield moving above 4.50%, contributing to a steeper yield curve. The U.S. Dollar Index rose 0.4%, while gold surged 1.7%. Bitcoin futures fell 3.7%, while WTI crude oil settled up 1.6%.
In economic data, the Empire State Manufacturing Index for February beat expectations, with new orders increasing, though employment declined and input costs rose at the fastest pace in nearly two years. However, the NAHB Housing Market Index declined month-over-month, reflecting homebuilder concerns over potential tariff impacts.
On the Federal Reserve front, weekend comments from Fed Governor Christopher Waller leaned dovish, suggesting disinflationary progress may resume, opening the door for future rate cuts. However, SF Fed President Mary Daly stated that policy needs to remain restrictive until inflation shows further improvement. Minutes from the January FOMC meeting will be released Wednesday, with markets watching for insights into policymakers’ views on inflation and potential rate cuts.
Geopolitical developments included the first U.S.-Russia meeting in Saudi Arabia on Ukraine peace talks, though skepticism remains high as neither Ukraine nor European officials participated. Additionally, Israel and Hamas are set to begin indirect negotiations on a second stage of the Gaza ceasefire deal.
Corporate & Sector News
Information Technology (Tech -1.26%)
- Intel (INTC) +16.1% – Reports surfaced that TSMC and Broadcom (AVGO) are exploring potential deals that could split Intel’s business into two units.
- Baidu (BIDU) -7.5% – Despite Q4 results beating expectations, concerns arose over weak online advertising revenue, which fell 7% YoY. However, AI Cloud remains a bright spot.
- Former OpenAI CTO Mira Murati is reportedly launching a new AI startup, according to Bloomberg.
Consumer Discretionary (XLY -0.52%)
- Nike (NKE) +6.2% – Announced a new women’s fitness brand, NikeSKIMS, in partnership with Kim Kardashian’s SKIMS.
- Tri Pointe Homes (TPH) -10.9% – Q4 EPS beat expectations, but analysts flagged lower-than-expected backlog and declining order volumes.
- Leslie’s (LESL) -6.7% – Downgraded to underperform by BofA, citing market share losses and weak guidance.
Consumer Staples (XLP +0.12%)
- Walgreens Boots Alliance (WBA) +13.9% – Reports indicate that a potential Sycamore Partners buyout is still a possibility, reviving investor interest.
- Conagra Brands (CAG) -5.5% – Cut FY25 guidance due to customer service disruptions and FX headwinds.
- General Mills (GIS) -2.2% – Cautious comments at CAGNY noted slower-than-expected progress in improving competitiveness.
Energy (XLE +1.37%)
- Diamondback Energy (FANG) announced a $4B+ cash-and-stock acquisition of Midland Basin assets, expanding its footprint in the Permian.
- WTI crude oil prices rose 1.6%, supporting broad energy sector gains.
Industrials (XLI +0.77%)
- Valmont Industries (VMI) +17.5% – Q4 earnings, revenue, and FY25 guidance exceeded expectations; announced a $700M buyback and a 13.3% dividend increase.
- Fluor (FLR) -8.4% – Reported weak Q4 earnings with revenue and backlog below consensus; FY25 guidance also disappointed.
Financials (XLF +0.77%)
- JPMorgan Chase (JPM) removed nearly all DEI (Diversity, Equity, and Inclusion) references from its annual report.
- Amentum Holdings (AMTM) +9.8% – Chairman Steven Demetriou disclosed the purchase of 100K shares, raising his beneficial ownership to ~644K shares.
Materials (XLB +1.23%)
- Chemours (CC) +3.9% – Q4 revenue and EBITDA exceeded expectations; FY25 guidance hit the high end of forecasts.
- Sherwin-Williams (SHW) announced a $1.15B acquisition of BASF’s Brazilian architectural paints business.
Healthcare (XLV -0.26%)
- Medtronic (MDT) -7.3% – Q3 earnings were better than expected, but organic growth and MedSurg portfolio sales disappointed.
- Teva Pharmaceuticals (TEVA) +2.0% – Announced acceptance of US BLA filing for AVT06, a proposed biosimilar to Eylea, with regulatory approval expected in Q4 2025.
Real Estate (XLRE +0.40%)
- Empire State Manufacturing Index beat expectations, though housing market sentiment remains weak amid tariff concerns.
- NAHB Housing Market Index declined, signaling caution among homebuilders.
Communication Services (XLC -1.26%)
- Meta (META) ended its 20-session winning streak, weighing on the sector.
- Robinhood (HOOD) -7.4% – Downgraded to peer perform at Wolfe Research due to competitive pressures.
Eco Data Releases | Wednesday February 19th, 2025
S&P 500 Constituent Earnings Announcements | Wednesday February 19th, 2025
Data sourced from FactSet Research Systems Inc.
