| | | Market Snapshot
| Dow | 40813.26 | -537.36 | (-1.30%) | | Nasdaq | 17303.01 | -345.44 | (-1.96%) | | SP 500 | 5521.52 | -77.78 | (-1.39%) | | 10-yr Note | +4/32 | 4.273 |
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| | NYSE | Adv 749 | Dec 1929 | Vol 1.1 bln | | Nasdaq | Adv 1202 | Dec 3134 | Vol 7.1 bln |
Industry Watch
| Strong: Utilities |
| | Weak: Consumer Discretionary, Communication Services, Technology, Industrials, Real Estate |
Moving the Market
-- Digesting the cooler-than-expected February Producer Price Index and the relatively low level of weekly jobless claims
-- Relatively disappointing earnings and guidance from Adobe (ADBE), SentinelOne (S), and UiPath (PATH)
-- Uncertainty around US trade policy fueling fears about negative impacts to growth and inflation
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Closing Summary:
13-Mar-25 16:30 ET
Dow -537.36 at 40813.26, Nasdaq -345.44 at 17303.01, S&P -77.78 at 5521.52
[BRIEFING.COM] The stock market continued its downtrend today after yesterday's brief reprieve for the S&P 500 (-1.4%) and Nasdaq Composite (-2.0%). The indices gave up yesterday's gains and then some, leading the S&P 500 to close in correction territory (i.e. 10% below its all-time high on February 19). The Nasdaq Composite moved further into correction territory.
There were positive-looking economic reports this morning, but stocks didn't respond in kind. The February Producer Price Index contained some lower-than-expected headline prints and weekly jobless claims remained relatively low. The understanding that US trade policy may negatively impact inflation in the future overshadowed the positive reports.
President Donald Trump announced a potential 200% tariff on European beverage imports, including wines and spirits. This move was in response to the European Union's recent tariffs on American whiskey, intensifying fears of a prolonged trade war that could hinder global economic growth.
The negative disposition in equities was also related to some corporate news. The relatively disappointing in-line guidance from Adobe (ADBE 377.84, -60.76, -13.9%), along with disappointing guidance from SentinelOne (S 18.23, -1.07, -5.5%) and UiPath (PATH 9.97, -1.86, -15.7%) weighed on growth stocks. The Russell 3000 Growth Index declined 2.2%.
Treasuries settled with gains in response to this morning's data. The 10-yr yield settled four basis points lower at 4.27% and the 2-yr yield settled four basis points lower at 3.95%. On a related note, the U.S. Treasury completed this week's mediocre note and bond auction slate with a weak 30-yr bond reopening.
- Dow Jones Industrial Average: -4.1% YTD
- S&P 500: -6.1% YTD
- S&P Midcap 400: -8.4% YTD
- Nasdaq Composite: -10.4%
- Russell 2000: -10.6% YTD
Reviewing today's economic data:
- February PPI 0.0% (Briefing.com consensus 0.3%); Prior was revised to 0.6% from 0.4%, February Core PPI -0.1% (Briefing.com consensus 0.3%); Prior was revised to 0.5% from 0.3%
- The key takeaway from the report is comparable to the key takeaway from the CPI report: inflation at the wholesale level, while improving, is still too high, and with the tariff battles heating up, there is concern that the disinflation isn't going to persist.
- Weekly Initial Claims 220K (Briefing.com consensus 228K); Prior was revised to 222K from 221K, Weekly Continuing Claims 1.870 mln; Prior 1.897 mln
- The key takeaway from the report is that initial jobless claims -- a leading indicator -- held steady at relatively low levels that are consistent with an otherwise sound labor market.
Friday's economic data includes:
- 10:00 ET: Preliminary March University of Michigan Consumer Sentiment (Briefing.com consensus 65.6; prior 64.7)
Treasuries settle with gains
13-Mar-25 15:25 ET
Dow -483.63 at 40866.99, Nasdaq -289.53 at 17358.91, S&P -67.47 at 5531.83
[BRIEFING.COM] The S&P 500 (-1.2%) and the Nasdaq Composite (-1.6%) moved mostly sideways heading into the close.
The 10-yr yield settled four basis points lower at 4.27% and the 2-yr yield settled four basis points lower at 3.95%. On a related note, the U.S. Treasury completed this week's mediocre note and bond auction slate with a weak 30-yr bond reopening.
Friday's economic lineup features the preliminary March University of Michigan Consumer Sentiment survey at 10:00 ET.
ULTA, DOCU, SMTC trade down in front of earnings
13-Mar-25 15:00 ET
Dow -434.94 at 40915.68, Nasdaq -251.33 at 17397.11, S&P -55.79 at 5543.51
[BRIEFING.COM] The major indices have slowly moved off session lows, but still show solid losses. The S&P 500 is about 50 points below its prior close.
Ulta Beauty (ULTA 313.86, -15.35, -4.7%), DocuSign (DOCU 75.67, -4.46, -5.6%), and Semtech (SMTC 32.94, -0.91, -2.7%) show sharp declines ahead of their earnings reports this afternoon.
Li Auto (LI 28.88, -0.86, -2.9%) and Buckle (BKE 35.04, -1.09, -3.0%) also trade down in front of their earnings reports tomorrow morning.
S&P 500 drops 1.16% as market slumps; Live Nation, Airbnb among biggest laggards
13-Mar-25 14:30 ET
Dow -495.85 at 40854.77, Nasdaq -280.55 at 17367.89, S&P -65.14 at 5534.16
[BRIEFING.COM] The S&P 500 (-1.16%) is down about 65 points on Thursday afternoon, down now about -4.09% week-to-date.
Briefly, S&P 500 constituents Live Nation (LYV 114.73, -8.19, -6.66%), Super Micro Computer (SMCI 40.06, -2.41, -5.67%), and Airbnb (ABNB 119.85, -6.70, -5.29%) pepper the bottom of the standings despite a dearth of corporate news.
Meanwhile, Dollar Tree (DLTR 64.99, +3.07, +4.96%) is one of today's better performers, higher following peer Dollar General's (DG 77.68, +2.83, +3.78%) earnings report.
Gold surges to near-record highs as inflation data fuels Fed easing bets
13-Mar-25 14:00 ET
Dow -657.15 at 40693.47, Nasdaq -379.78 at 17268.66, S&P -89.65 at 5509.65
[BRIEFING.COM] With about two hours to go on the penultimate session of the week the tech-heavy Nasdaq Composite (-2.15%) is in a world of hurt, down more than 375 points.
Gold futures settled $44.50 higher (+1.5%) to $2,991.30/oz, near record highs as weak U.S. inflation data fueled Fed easing bets and uncertainty around tariffs swells.
Currently, the U.S. Dollar Index is up about +0.2% to $103.81.
UiPath issues gloomy FY26 guidance following recent significant shift in economic landscape (PATH)
UiPath (PATH -14%) is forecasting a bumpy road ahead, to say the least, creating anxiety and spurring all-time lows today. The robotic process automation software developer warned of a significant uptick in volatility across the macroeconomic landscape in recent weeks. When speaking with customers, PATH has found that the external environment has generated outsized uncertainty around budgeting plans. To add to this headache, FX rates have fluctuated wildly over the past week. PATH also expects growth in its SaaS offerings to act as a 2 pt headwind to FY26 (Jan) sales growth as customers move more workloads to the cloud and adopt AI products.
Incorporating these events, PATH found it necessary to inject prudence into its guidance, believing it appropriately factored in all current macro trends. As a result, PATH projected Q1 (Apr) and FY26 revs markedly below consensus, estimating $330-335 mln and 1.525-1.530 bln, respectively, while targeting annualized recurring revenue (ARR) of $1.816-1.821 bln for the year, a disappointing 9% yr/yr increase at the midpoint.
- Given PATH's outlook, little attention was paid to the few silver linings from Q4 results. PATH registered adjusted EPS of $0.26, its best quarter as a public company, supported by a 400 bp jump in non-GAAP operating margins yr/yr to 32%. Additionally, PATH achieved GAAP profitability for the second straight year in FY25.
- PATH also announced the acquisition of Peak, an AI firm that optimizes product inventory and pricing for businesses. Given that PATH's software suite looks to automate processes for companies, from aligning resumes with current job openings to sending emails and building spreadsheets based on incoming data, Peak's AI platform is a good fit. By leveraging Peak's technology, the acquisition should also help enhance PATH's current AI-powered offerings. No financial details were disclosed, however.
- Unfortunately for PATH, the upsides stopped there. Revenue growth continued to slow in Q4, edging just 4.6% higher yr/yr to $424 mln following an +8.8% increase last quarter. Even worse, ARR grew by just 14% to $1.666 bln, under the company's $1.669-1.674 bln forecast. Management attributed the miss to the government transition beginning in January, which affected deal closures. CEO Daniel Dines acknowledged that as the government works through priorities, it can impact performance in the short term, hindering ARR growth in 1H26.
- Still, management remains optimistic about the foundation it is constructing to realize long-term gains. For the year, PATH is focused on three primary initiatives: accelerating its agentic (AI agents) roadmap, bolstering adoption, and extracting further organizational efficiencies.
PATH's Q4 report highlighted how quick the macroeconomic picture can change. Its software can still be a game-changer for organizations seeking ways to trim costs without losing productivity. However, elevated volatility may keep investors away from the stock over the near term as they digest continuously impactful headlines and the potential effects administrative policies, like tariffs, could have on the spending environment.
Intels CEO appointment renews turnaround hopes, sparking huge rally for shares (INTC)
For beleaguered chip maker Intel (INTC), hope and optimism has been hard to come by as NVIDIA (NVDA) and Advanced Micro Devices (AMD) have left it in the dust in the AI race, but there is finally good reason for INTC shareholders to feel more upbeat about the company's future. After yesterday's close, INTC announced that Lip-Bu Tan, the former CEO of Cadence Design Systems (CDNS), has been appointed as its new CEO, effective March 18. Mr. Tan succeeds David Zinsner and Michelle Johnston Holthhaus, both of whom stepped into co-CEO roles after the company ousted former CEO Pat Gelsinger last December.
Mr. Tan certainly has his work cut out for him. At the top of the list will be charting out a new path for the loss-generating Foundry business which was at the center of Mr. Gelsinger's IDM 2.0 strategy. Last September, INTC announced plans to spin-off the Foundry segment into an independent subsidiary. However, Mr. Tan, who served on INTC's Board in 2022-2024, has previously discussed the importance of strengthening the company's manufacturing capabilities, suggesting that he may be committed to building Foundry just as Gelsinger was.
- The good news is that Tan has a strong track record of using innovation and new technology to create competitive advantages and drive strong growth, building substantial shareholder value in the process. At CDNS, he pushed for AI/ML technologies to be integrated across the product line, positioning the company as a leader in applying next generation technologies for chip design. Under Tan's leadership, CDNS also shifted to a high-performance product portfolio, catering to advanced node semiconductor designs.
- These strategies resulted in robust growth and improving margins for CDNS. Over Tan's 12-year tenure as CEO there, revenue nearly doubled to $2.8 bln, and CDNS's operating margin improved from roughly flat to consistently above 20%.
- Tan also has experience implementing and executing streamlining initiatives, which will continue to play a major role in INTC's turnaround. In 2012, he implemented a major organizational restructuring at CDNS, leading to better alignment of resources and higher operational efficiency.
- Perhaps Tan's success at CDNS is best illustrated by the stock's performance. When he took the helm at CDNS in 2009, the stock was trading at about $10-$12. By the time he stepped down in 2021, shares of CDNS were trading at around $150-$170, reflecting an approximate 15-fold increase.
There is no guarantee that Tan will enjoy the same level of success as INTC's CEO as he did as CDNS's CEO. However, given his impressive performance at CDNS, it's easy to see why the market is viewing his appointment so bullishly.
Adobe falls below $400 level for first time since May 2023 following earnings last night (ADBE)
Adobe (ADBE -12%) is heading a good bit lower following its Q1 (Feb) earnings report last night. This digital document giant reported its third consecutive double-digit EPS beat, although it was a bit smaller than the prior two quarters. Revenue rose 10.3% yr/yr to $5.71 bln, which was a bit better than expected. The guidance was decent with an in-line Q2 (May) outlook and it reaffirmed full year guidance.
- Its Digital Media segment performed well with revenue rising 11% yr/yr (+12% CC) to $4.23 bln, which was above prior guidance of $4.17-4.20 bln. DM is by far Adobe's larger segment, so people watch it closely. Adobe's other major segment is Digital Experience, which allows businesses to manage/track customer experiences using analytics. DE segment revenue grew 10% yr/yr (+10% CC) to $1.41 bln, which was above its $1.38-1.40 bln prior guidance, with strong subscription revenue growth.
- Adobe exited the quarter with $17.63 bln of Digital Media ARR, up 12.6% yr/yr. Adobe continues to see healthy performance in both Creative Cloud and Document Cloud. Creative growth was driven by broad-based adoption with particular strength in new offerings like Firefly Services (AI) and an increasing number of One Adobe deals coupled with a growing base of web and mobile users. Document Cloud continues to see strong organic demand and free-to-paid conversions.
- Adobe explained that we live in a visual-first world where creative expression has become pervasive in every facet of life, which includes both business professionals and consumers. Going forward, Adobe sees an incredible opportunity to serve customers with audience-specific offerings fueled by AI technology. Adobe says features like AI Assistant in Acrobat and Reader have been game-changers for everyone from sales teams to students.
- Adobe addressed the difficult macro environment in the Q&A. Adobe explained that it has a diverse business and a seasoned management team that will navigate it. Also, things like tariffs do not really impact Adobe the way they impact other businesses. In terms of advertising activity and consumer spending trends in the wake of some choppy results from multiple airlines and retailers, Adobe believes that digital is going to continue to be a fundamental part of the economy.
Overall, this was a decent quarter for Adobe. However, perhaps investors are disappointed that Adobe only reaffirmed its full year outlook despite Q1 upside. Also, we would like to see more in terms of AI monetization. Adobe has built AI features into different parts of its offering, but investors want to see it move the needle in terms of the financials. An analyst asked about this directly on the call. Finally, this is the second earnings report in a row where the stock gapped lower, which is a troubling trend for what was once a powerhouse growth story a few years ago. There just does not seem to be a lot of excitement for the stock right now, plus the AI landscape is getting very competitive.
Dollar General sees buying interest on Q4 results, additional store optimization plans (DG)
Dollar General (DG +5%) is beginning to see investors allocate dollars back to its stock today after the discount chain announced it would close nearly 100 Dollar General locations (mostly in urban and metro areas) and 45 pOpshelf sites while converting six pOpshelf stores to Dollar General stores. The review cost DG significantly in Q4 (Jan), clipping approximately $0.81 off EPS. However, when excluding this charge, DG surpassed its previously lowered FY25 outlook. Meanwhile, revenue and same-store sales growth tracked in-line with DG's reduced projections in the quarter, potentially aided by the company's comprehensive store remodeling initiative.
The retailer has been revamping thousands of stores, aiming to make them cleaner and more convenient. Alongside plans to fully remodel around 2,000 additional stores this year, CEO Todd Vasos, who stepped into the role in late 2023, announced last quarter that around 2,250 additional locations would undergo a lighter remodeling, including adding produce and updating assortments. The move has not been without its costs; DG plans to maintain spending at a similar rate over the next five years as it did in FY25 at roughly 3% of net sales.
- Mr. Vasos believes the refreshes are already positively impacting sales growth. In Q4, DG again exceeded revenue estimates, delivering a 4.5% increase yr/yr to $10.3 bln, supported by a +1.2% bump in comps. Comps were entirely driven by a 2.3% increase in average transactions, partially offset by a 1.1% dip in traffic, reflecting the ongoing pressures placed on DG's lower-income consumer base, which is disproportionately affected by elevated living costs.
- DG noted that their shoppers' financial situations deteriorated over the past year, dragged down by the cumulative effects of inflation. DG remarked that many of its customers have only enough funds for basic essentials, with some sacrificing spending on these necessities. DG does not anticipate improvement in the grim situation this year.
- Surrounding tariffs, Mr. Vasos mentioned that the company can mitigate the impact this year, pointing to the success seen during 2018 and 2019 as validation. However, uncertainty remains regarding changes to government entitlement programs.
- As a result, DG's FY26 outlook rings similar to its financial performance in FY25. The company anticipates EPS of $5.10-5.80, revenue growth of +3.4-4.4%, and comps of +1.2-2.2%. Alongside its annual forecast, DG outlined its targets for the next five years, expecting revenue growth of +3.5-4.0%, comps of +2-3% starting this year, and EPS growth reaching +6-7% beginning next year. New stores are also slated over that timeframe, targeting new unit growth of 2% annually beginning this year.
A barrage of stubborn economic headwinds has kept DG down over the past several months but not entirely out. The company's store refresh plans may keep a lid on medium-term profitability, especially if tariffs present outsized challenges. However, DG is worth keeping on the radar as a turnaround candidate. Given its business model of targeting underserved communities, it possesses a decent economic moat. Stepping up its store quality should lift its foundation, spurring a quick reacceleration of growth once economic conditions improve.
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.
  
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