| | | Market Snapshot
| Dow | 41350.62 | -82.55 | (-0.20%) | | Nasdaq | 17648.44 | +212.35 | (1.22%) | | SP 500 | 5599.30 | +27.23 | (0.49%) | | 10-yr Note | -3/32 | 4.32 |
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| | NYSE | Adv 1436 | Dec 1187 | Vol 122 mln | | Nasdaq | Adv 2547 | Dec 1773 | Vol 7.7 bln |
Industry Watch
| Strong: Technology, Discretionary, Communication Services |
| | Weak: Consumer Staples, Health Care, Industrials, Energy, Financials |
Moving the Market
-- Reacting to the February Consumer Price Index (CPI), which showed inflation moving in the right direction
-- Expectations for a bounce after big losses, yet not of lot of conviction from buyers or sellers
-- Gains in mega caps boosting S&P 500, Nasdaq Composite
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Closing Summary
12-Mar-25 16:20 ET
Dow -82.55 at 41350.62, Nasdaq +212.35 at 17648.44, S&P +27.23 at 5599.30
[BRIEFING.COM] The S&P 500 (+0.5%) and Nasdaq Composite (+1.2%) closed higher, propelled by buy-the-dip interest in the mega cap space. The gain in NVIDIA (NVDA 115.74, +6.99, +6.4%) was a big help in that regard.
Buyers were cautious elsewhere, however. The Invesco S&P 500 Equal Weight ETF (RSP) closed 0.5% lower and five S&P 500 sectors closed in the red.
Market participants were digesting the Consumer Price Index (CPI) report for February, which showed inflation rising at a slower-than-expected pace, providing a measure of relief to markets after last month's hotter-than-expected reading. On a year-over-year basis, total CPI was up 2.8% versus 3.0% in January and core-CPI was up 3.1% versus 3.2% in January.
Inflation is still sticking above the Fed's 2.0% target and the uncertainty around US trade policy potentially pressuring prices higher tempered some enthusiasm about the report. The tariffs on steel and aluminum imports imposed by the US has caused a ripple effect, leading Canada and the EU to announce retaliatory measures.
The market's expectations for rate cuts by the Fed were little changed by the data. There is a 80.0% probability of at least a 25 basis points rate cut to 4.00-4.25% at the June FOMC meeting versus a 84.2% likelihood a day ago and a 78.7% probability a week ago, according to the CME FedWatch Tool.
The Treasury market also had a muted response to the data. The 10-yr yield rose three basis points to 4.32% and the 2-yr yield rose five basis points to 3.99%. On a related note, today's $39 billion 10-yr note reopening received solid demand.
- Dow Jones Industrial Average: -1.5% YTD
- S&P 500: -4.5% YTD
- S&P Midcap 400: -6.4% YTD
- Nasdaq Composite: -9.5%
- Russell 2000: -9.5% YTD
Reviewing today's economic data:
- Weekly MBA Mortgage Applications Index 11.2%; Prior 20.4%
- February CPI 0.2% (Briefing.com consensus 0.3%); Prior 0.5%, February Core CPI 0.2% (Briefing.com consensus 0.3%); Prior 0.4%
- The key takeaway from the report is that inflation overall is still sticking comfortably above the Fed's 2.0% target, and now with tariff actions ramping up -- and "reciprocal tariffs" coming April 2 -- confidence has been shaken that future inflation reports will convey undeniably pleasing inflation data.
- The Treasury Budget for February showed a deficit of $307.0 billion compared to a deficit of $296.3 billion in the same period a year ago. The February deficit resulted from outlays ($603.4 billion) exceeding receipts ($296.4 billion). The Treasury Budget data are not seasonally adjusted so the February deficit cannot be compared to the January deficit of $128.6 billion.
- The key takeaway from the report is that the deficit now stands at a record $1.15 trln through the first five months of the fiscal year, driven in part by rising Medicare costs and increasing interest payments on government debt.
Looking ahead, market participants receive the following economic data on Thursday:
- 8:30 ET: February PPI (Briefing.com consensus 0.3%; prior 0.4%), Core PPI (Briefing.com consensus 0.3%; prior 0.3%), weekly Initial Claims (Briefing.com consensus 228,000; prior 221,000), and Continuing Claims (prior 1.897 mln)
- 10:30 ET: Weekly natural gas inventories (prior -80 bcf)
Treasuries settle with losses
12-Mar-25 15:35 ET
Dow -25.90 at 41407.27, Nasdaq +216.26 at 17652.35, S&P +32.61 at 5604.68
[BRIEFING.COM] The major indices all trade near their best levels of the session heading into the close.
Treasuries settled with losses. The 10-yr yield rose three basis points to 4.32% and the 2-yr yield rose five basis points to 3.99%. On a related note, today's $39 billion 10-yr note reopening received solid demand.
Looking ahead, market participants receive the following economic data on Thursday:
- 8:30 ET: February PPI (Briefing.com consensus 0.3%; prior 0.4%), Core PPI (Briefing.com consensus 0.3%; prior 0.3%), weekly Initial Claims (Briefing.com consensus 228,000; prior 221,000), and Continuing Claims (prior 1.897 mln)
- 10:30 ET: Weekly natural gas inventories (prior -80 bcf)
Treasury budget showed increased deficit year-over-year
12-Mar-25 15:00 ET
Dow +38.02 at 41471.19, Nasdaq +240.91 at 17677.00, S&P +39.77 at 5611.84
[BRIEFING.COM] The Treasury Budget for February showed a deficit of $307.0 billion compared to a deficit of $296.3 billion in the same period a year ago. The February deficit resulted from outlays ($603.4 billion) exceeding receipts ($296.4 billion). The Treasury Budget data are not seasonally adjusted so the February deficit cannot be compared to the January deficit of $128.6 billion.
The key takeaway from the report is that the deficit in early fiscal 2025 is 38.5% greater than the deficit for the same period in fiscal 2024 with net interest outlays ($396 billion) nearly equal to outlays for national defense ($399 billion) and health ($399 billion).
Stocks and bonds had a muted response to the release. The S&P 500 is about 45 points higher and the 10-yr yield sits at 4.31%.
February treasury deficit reaches $307 billion, pushing year-to-date total to record $1.15 trillion
12-Mar-25 14:25 ET
Dow -31.99 at 41401.18, Nasdaq +195.95 at 17632.04, S&P +29.93 at 5602.00
[BRIEFING.COM] The S&P 500 (+0.54%) is firmly in second place on Wednesday afternoon, showing a muted reaction to the February Treasury Budget which hit at the bottom of the hour.
The Treasury Budget for February showed a deficit of $307.0 billion compared to a deficit of $296.3 billion in the same period a year ago. The February deficit resulted from outlays ($603.4 billion) exceeding receipts ($296.4 billion). The Treasury Budget data are not seasonally adjusted so the February deficit cannot be compared to the January deficit of $128.6 billion.
The key takeaway from the report is that the deficit now stands at a record $1.15 trln through the first five months of the fiscal year, driven in part by rising Medicare costs and increasing interest payments on government debt.
Gold prices rise as safe-haven demand rises amid tariff uncertainty
12-Mar-25 14:00 ET
Dow -77.75 at 41355.42, Nasdaq +147.61 at 17583.70, S&P +19.16 at 5591.23
[BRIEFING.COM] The tech-heavy Nasdaq Composite (+0.85%) is atop the major averages, which have took a dip lower in recent trading.
Gold futures settled $25.90 higher (+0.9%) to $2,946.80/oz, as tariff tit-for-tat continued today allowing for a renewed vigor in safe-haven demand for the precious metal.
Currently, the U.S. Dollar Index is up about +0.1% to $103.47.
Sprinklr raining down some big gains after Q4 report, but turnaround still a work-in-progress (CXM)
Customer experience management company Sprinklr (CXM) is raining down some big gains today after delivering a surprise beat-and-raise Q4 earnings report as it navigates through a transition year in FY26. Sentiment has been decisively bearish on CXM, as illustrated by the stock's 30% yr/yr decline, primarily as a result of the company's slowing revenue growth, cautious guidance, and expensive valuation. However, the better-than-expected Q4 earnings report is creating some hope that the worst is now in the rearview mirror and that new CEO Rory Read will spearhead a significant turnaround.
- Mr. Read took the helm as President and CEO last November, replacing co-CEOs Trac Pham and Ragy Thomas, who transitioned to Advisor to the CEO and remains as Chairman of the Board. A few months later, CXM announced a global workforce reduction of approximately 15% in an effort to realign its costs with current business trends. The CEO shakeup and restructuring actions, which will free up capital to be invested in CXM's go-to-market resources, did little to help the stock's cause.
- Facing muted Q4 expectations, CXM cleared a low bar, potentially paving the way for improved results in the quarters ahead. On an absolute basis, though, CXM's results reflect a company that's far from firing on all cylinders. For instance, RPO and Current RPO (cRPO) growth slowed to just 2% and 4%, respectively, compared to 10% and 9% in the preceding quarter. In addition to macroeconomic headwinds that have impacted subscription renewals, the company's shift in sales to focus on scaling its Contact Center as a Service (CCaaS) offering led to an over-rotation of sales efforts in that area.
- The company also isn't anticipating an upswing in revenue growth for FY26. The company's revenue guidance of $821.5-$823.5 mln suggests yr/yr growth of approximately 3% compared to 9% growth in FY25. However, CXM's EPS outlook of $0.38-$0.39 indicates stronger growth of about 10%, bolstered by the restructuring efforts and AI-based enhancements to its platform. These AI improvements are expected to continue driving healthy growth in the $1.0+ mln customer cohort, which grew by 18% in Q4 to 149 customers.
- Sprinklr AI+ is one such enhancement that's currently available to customers. This tool enables features such as content summarization and automated call notes, improving agent productivity and ensuring consistent customer interactions. The company is also developing a comprehensive CCaaS product that aims to replace multiple point solutions with a unified platform, featuring workforce management, quality management, and conversational AI.
CXM delivered a better-than-expected Q4 performance, buoyed by subscription revenue growth of 7%, while new CEO Rory Read expressed optimism about the company's transformation, emphasizing efforts to optimize expenses, enhance production innovation through AI, and redefining the go-to-market coverage model.
Casey's General drives past Q3 expectations, fueled by key acquisition and brand strength (CASY)
Gas station and convenience store operator Casey's General (CASY) continued its impressive streak of crushing EPS expectations in 3Q25, bolstered by higher inside and fuel gross profits. CASY has now cruised past EPS estimates in each of the past seven quarters, but it also topped revenue expectations in Q3 -- a feat that's considerably rarer for CASY. In fact, the company had missed top-line expectations in three of the past four quarters heading into last night's Q3 print. This unpredictability and volatility are mainly due to fluctuations in fuel prices and the corresponding movements in fuel margins.
- Economic growth concerns tied to tariffs have weighed on shares of CASY, which were down by about 15% since mid-February prior to today's gains. A slowing economy would pressure fuel demand as people travel and drive less, while customers also cut back on discretionary spending, impacting sales of non-essential items like snacks and prepared foods. CASY's upside results and slightly improved FY25 EBITDA guidance, which now calls for growth of approximately 11% compared to its prior forecast of 10%, are easing those macro-related worries.
- Business was solid on the fuel side of the business. Same-store fuel gallons increased by 1.8% and total fuel gross profit increased by over 17% to $302.1 mln. While retail fuel prices edged lower during the quarter, fuel margin per gallon remained stable on a yr/yr basis at $0.364 per gallon. The primary growth driver, though, is tied to CASY's acquisition of Fikes Wholesale last November. With that $1.145 bln acquisition, CASY added 198 more stores across Texas, Alabama, Florida, and Mississippi, expanding its total footprint to nearly 2,900 stores.
- Turning to the convenience store business, CASY generated healthy inside same-store sales of +3.7%, reflecting its brand power and competitive advantages for its prepared food offerings, such as made-from-scratch pizzas and breakfast menu items. In addition to strength in prepared food, the company saw notable strength in dispensed beverage categories.
- If there is a blemish, it's that CASY once again chose to keep its FY25 guidance for same-store inside sales and inside margin the same, despite the better-than-expected Q3 performance, Specifically, the company still expects to generate same-store inside sales growth of 3-5% with inside margin comparable to the prior year's 41-42% level.
CASY delivered solid Q3 results with EPS of $2.33 matching the prior year's figure, highlighted by a 17% jump in revenue that was driven by a combination of healthy same-store inside sales growth and the impact of the Fikes Wholesale acquisition. Risks do remain, though, especially around softening travel demand, which was on display yesterday when the major airlines lowered their Q1 outlooks.
ABM Industries pulls back despite solid upside in Q1; continuation of 2H24 trends (ABM)
ABM Industries (ABM -9%) has gotten the new fiscal year off to a good start with upside Q1 (Jan) results. It reported its largest EPS beat since Q1 of last year. Revenue rose a modest 2.2% yr/yr to $2.11 bln, but that was slightly better than expected. ABM also raised the bottom end of its FY25 adjusted EPS guidance to $3.65-3.80 from $3.60-3.80, not a huge amount but it could have been worse given the macro headwinds.
- As a major provider of facility services (primarily janitorial and engineering but also parking, electrical, HVAC, landscaping), we like to keep an eye on ABM as a gauge on the industrial economy. ABM has been navigating through some macro turbulence over the last couple of years with remote work and slowing manufacturing.
- ABM said it was pleased with how it performed in Q1. Results reflected a continuation of the same trends it saw in 2H24 with strong momentum in technical solutions and aviation (airport ops), stability in education, and some lingering challenges in business and industry (B&I). ABM was also confident that commercial real estate will allow its B&I segment to return to growth in 2025 while its other end markets continue to remain constructive.
- ABM provided some good color on the outlook for each segment. In B&I, a recent CBRE report showed that leasing activity for high quality commercial office buildings in the US increased 24% in Q4 vs Q3. Also, ABM is seeing employers push for greater office attendance, which should drive more work order volume for ABM. The company feels confident that B&I will return to growth in the latter half of FY25.
- ABM said that its M&D (manufacturing & distribution) segment remains on solid ground thanks to a strong US industrial economy and continued growth in the semiconductor and data center markets. ABM continues to win new business, including new work for a major eCommerce company. ABM continues to expect mid-single digit organic growth in 2H25 for M&D as these new deals take effect in May.
- The company is excited about its ERP implementation. Last year, its education segment fully transitioned to its new cloud-based system. ABM took those learnings and applied them as it rolled out the system to B&I and M&D at the start of Q1. Once fully implemented, ABM expects this new ERP system will drive cost efficiencies, improve synergy capture and provide real time analytics to uncover commercial growth opportunities.
Overall, this was a solid but not spectacular quarter. The stock initially traded higher following results, but pulled back during the call. We have followed ABM for a long time and it has been hurt by macro pressures. Remote work has hurt its B&I segment, but that sounds like it's finally starting to recover. Its M&D segment had struggled, but is now benefitting from new data centers and Aviation has bounced back nicely. Perhaps investors wanted to see a full year EPS guidance given the upside in Q1.
Dick's Sporting Goods' soft guidance ripples across sports and athletic footwear stocks (DKS)
Dick's Sporting Goods (DKS) continued to distance itself from the field in 4Q25, delivering strong results and showing that it was once again a winning retailer during the holiday shopping season. The company's downside FY26 guidance, on the other hand, has the stock sporting some sizable losses, sparking concerns that demand for athletic footwear, equipment, and athleisurewear will soften as macroeconomic uncertainties rise.
In a show of confidence, DKS announced a new five-year share repurchase program for up to $3.0 bln and it increased its quarterly dividend by 10%. Indeed, the company remains quite bullish about its longer-term prospects, stating that its business has incredible momentum and that it sees tremendous strength in the U.S. sports industry. However, the shareholder-friendly capital allocation plans, and upbeat commentary aren't enough to take the focus off DKS's soft guidance amid a very skittish market.
- In terms of the Q4 results, there is very little to complain about. In fact, comps of +6.4% supported the company's largest sales quarter in its history and reflected an acceleration in growth from last quarter's +4.2% mark. The strong comps were driven by a 4.4% increase in average ticket and a 2% increase in transactions.
- Despite operating in a highly promotional retail environment, gross margin remained firm, expanding by 39 bps yr/yr to 34.96%. The solid margin performance is a testament to DKS's high-quality product assortment -- one of its key competitive advantages.
- Another competitive advantage rests in the company's real estate and store portfolio. In particular, DKS's large format "House of Sport" stores are providing a differentiated shopping experience that's enabling it to gain market share. Over the past year, DKS estimates that it picked up about 50 bps in market share to command total market share of just under 9%. After opening seven House of Sport locations in 2024, which offer batting cages, climbing walls, ice rinks, and other experiences, DKS is planning to open 16 more in 2025.
- Expanding its real estate footprint is only one piece of the investment puzzle. DKS also intends to focus on its footwear business by investing in new marketing initiatives and leaning on a dedicated focus on footwear across its in-store and digital channels.
The main takeaway is that DKS's downside FY26 guidance is signaling that demand for sporting goods is poised to slow, which is not only weighing on shares of DKS, but it's also hitting shares of Foot Locker (FL), Academy Sports + Outdoors (ASO), NIKE (NKE), and Adidas (ADDYY),
Asana loses its CEO and issues weak revenue guidance, prompting a sharp pullback today (ASAN)
Asana (ASAN -24%) is losing its CEO and past four months of gains today as shares tumble following Q4 (Jan) results and news that its co-founder, CEO, and Chairman Dustin Moskovitz will be transitioning to the sole position of Chairman upon hiring a replacement CEO. At the same time, the workforce management software developer issued mixed guidance for the upcoming quarter and FY26, projecting earnings above consensus in both instances -- likely reflecting its recent decision to trim its workforce by around 5% -- but predicting revenue that missed the mark.
- ASAN's Q4 numbers were still decent. Revenue of $188.3 mln, a 10.1% increase yr/yr, met the high end of the company's prior $187.5-188.5 mln forecast. Meanwhile, ASAN's adjusted earnings broke even in the quarter, better than its $(0.02)-$(0.01) prediction. Non-GAAP operating margins jumped by over 800 bps yr/yr to an operating loss margin of just 1%. Mr. Moskovitz expects the company to reach non-GAAP profitability in Q1 (Apr), projecting adjusted EPS of $0.02.
- Non-tech verticals underpinned revenue growth in Q4 as they continued to outpace overall growth, climbing by 15% yr/yr. Some of ASAN's fastest-growing verticals included manufacturing, energy, consumer retail, and media. Also supporting sales growth in the quarter was ASAN's ongoing progress in its enterprise customer acquisition, with its $100,000 cohort expanding by 20% yr/yr, an acceleration from last quarter.
- Like many tech firms, AI remains pivotal to current and future growth. The outgoing CEO mentioned that momentum surrounding AI exceeded expectations, with hundreds of its largest customers actively running workflows powered by AI Studio. Notably, Mr. Moskovitz was struck by the breadth of AI demand across all segments. Looking ahead, ASAN is forming a dedicated sales team for AI Studio to pounce on the outsized opportunity, especially as the general availability of AI Studio launches later in Q1.
- Given the incredible AI demand, ASAN's revenue outlook is discouraging, anticipating Q1 revs of $184-186.5 mln, a slight sequential dip, and FY26 revs of $782-790 mln, an 8.6% increase yr/yr at the midpoint, down slightly from an 11.0% jump in FY25. Underlying the guidance is no material change to the current macroeconomic or spending climate, which is somewhat worrisome, given the increasing risks of a macroeconomic slowdown. Also, ASAN is optimizing its go-to-market by reallocating some resources, which can take several quarters before benefits are realized.
Today's disappointment centers on guidance and Dustin Moskovitz's departure as CEO. The co-founder has been at ASAN through it all, supporting the company's 2020 IPO and its struggles during the rising interest rate environment that followed. As the market shifts away from riskier assets, ASAN has been getting punished, down considerably from levels before its +40% surge following Q3 (Oct) results in December. Investors are not only concerned about the growing risks of a deteriorating macroeconomic picture but also about the direction ASAN will take without its co-founder at the helm, potentially keeping a lid on near-term appreciation.
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