| | | Market Snapshot
| Dow | 44371.51 | -279.13 | (-0.63%) | | Nasdaq | 20585.53 | -45.14 | (-0.22%) | | SP 500 | 6259.75 | -20.71 | (-0.33%) | | 10-yr Note |
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| | NYSE | Adv 786 | Dec 1978 | Vol 1.04 bln | | Nasdaq | Adv 1215 | Dec 3361 | Vol 8.24 bln |
Industry Watch
| Strong: Consumer Discretionary, Energy, |
| | Weak: Materials, Financials, Health Care, Consumer Staples |
Moving the Market
Trade developments, including a 35% tariff on Canada and an expected EU tariff letter
Selling interest following yesterday's record highs
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Softer finish ahead of key catalysts
11-Jul-25 16:40 ET
Dow -279.13 at 44371.51, Nasdaq -45.14 at 20585.53, S&P -20.71 at 6259.75
[BRIEFING.COM] The announcement of a 35% tariff on Canadian imports, the indication that EU will be getting a tariff letter, and the president’s acclamation that most trading partners will face a 15% to 20% tariff rate triggered the market’s worst open this week. The initial selling, however, did not persist. The mega-cap stocks led a rebound from the opening lows and helped the indices settle into a sideways drift below their unchanged lines for the majority of the session.The market has been generally unphased by tariff headlines over the past week; sure, there were days with some early session profit taking, but these were often on the heels of strong closings.
The setback to begin today’s trading reflected the understanding that Canada and the EU are more economically consequential trading partners than many of the countries that have received tariff letters over the past two weeks. That point notwithstanding, the market retained a generally resilient posture, much like it did throughout the week.
The recovery from the opening lows was largely attributed to some mega-caps shaking off a slow start, including a 1.3% intraday climb by NVIDIA (NVDA 164.88, +0.78, +0.5%).
Additionally, mega-cap support from Amazon (AMZN 225.02, +2.76, +1.2%) and Tesla (TSLA 313.51, +3.64, +1.2%) helped the consumer discretionary sector (+0.3%) finish as one of just two sectors that ended the day in positive territory. That's not to say that mega-caps outperformed ubiquitously, as the Vanguard Mega Cap Growth ETF (-0.2) barely outpaced the S&P 500 (-0.3%).
Declines today were spread across stocks of all sizes and nearly all sectors, with the energy sector (+0.4%) being the only sector with a vast majority of its components capturing gains.
The tariff headlines ultimately prompted some broad-based profit taking in front of a week of market-moving information next week that will include the June CPI, PPI, and Retail Sales reports, and earnings results from many of the largest banks.
U.S. Treasuries were under pressure throughout today's trade, as tariff concerns had the market on its heels, beginning in the overnight trade. Today saw the more inflation-sensitive back end of the curve underperform, rounding out a week of curve-steepening action. The front end was undercut by some ruminations that all the announcements of higher tariff rates starting August 1 could leave the Fed in a sticky wait-and-see mode.
Reviewing today's data:
- The Treasury Budget for June showed a surprising surplus of $27.0 billion (Briefing.com consensus: -$257.5B) compared to a deficit of $71.0 billion in the same period a year ago. The June surplus resulted from receipts ($526 billion) exceeding outlays ($499 billion). The Treasury Budget data are not seasonally adjusted, so the June surplus cannot be compared to the May deficit of $315.7 billion.
- The key takeaway from the report is that it showed an actual surplus, with receipts exceeding outlays. The good news is that the deficit over the last 12 months shrunk from $1.994 trillion in May to $1.896 trillion in June. The bad news is that the deficit over the last 12 months is still $1.896 trillion
Treasury yields down
11-Jul-25 15:30 ET
Dow -242.93 at 44023.03, Nasdaq -13.74 at 20616.92, S&P -13.28 at 6232.78
[BRIEFING.COM] The market has a fresh wave of macro-related headlines to digest during the final hour of trading.
Bloomberg reports that the U.S. and India are in talks to strike a trade deal that will lower the tariff on Indian imports below 20%.
Meanwhile, Chicago Fed President Austan Goolsbee (voting FOMC member) says recent tariff threats could delay rate cuts, in an interview with The Wall Street Journal.
Treasury yields were elevated today. The 10-year note yield settled up seven basis points at 4.42% (+8 bps for the week).
The major averages currently trade within a relatively tight range that is above their early lows but still within negative territory for the day.
Consumer discretionary sector gains steam
11-Jul-25 15:00 ET
Dow -247.58 at 44018.38, Nasdaq -9.09 at 20621.57, S&P -13.89 at 6232.17
[BRIEFING.COM] The major averages approach their best levels of the day, with the S&P 500 showing a modest loss of 0.2%.
The consumer discretionary sector (+0.5%) has gained steam, now challenging the energy sector (+0.6%) as the best performer on a day when most sectors are in negative territory.
Mega-cap performance has contributed to the consumer discretionary sector's move this afternoon, with its two largest components, Amazon (AMZN 226.05, +3.79, +1.7%) and Tesla (TSLA 312.24, +2.37, +0.8%), among its best performers.
The Vanguard Mega Cap Growth ETF holds a modest gain of 0.2%.
Separately, Politico is reporting that the EU is abandoning plans to levy a tax on digital companies, a victory for President Trump and U.S. technology firms.
June Treasury Budget swings to $27 bln surplus; 12-month deficit narrows slightly to $1.90 trln
11-Jul-25 14:30 ET
Dow -293.06 at 43972.90, Nasdaq +1.31 at 20631.97, S&P -16.14 at 6229.92
[BRIEFING.COM] The major averages are still mixed following the release of the June Treasury Budget which hit at the bottom of the hour. Currently, the S&P 500 (-0.26%) is in second place, hovering near HoDs, albeit in a losing effort.
The Treasury Budget for June showed a surplus of $27.0 billion compared to a deficit of $71.0 billion in the same period a year ago. The June surplus resulted from receipts ($526.4 billion) exceeding outlays ($499.4 billion). The Treasury Budget data are not seasonally adjusted so the June surplus cannot be compared to the May deficit of $315.7 billion.
The key takeaway from the report is that it showed an actual surplus, with receipts exceeding outlays. The good news is that the deficit over the last 12 months shrunk from $1.994 trillion in May to $1.896 trillion in June. The bad news is that the deficit over the last 12 months is still $1.896 trillion.
Gold jumps 1.1% to $3,364 on tariff jitters, even as dollar strength, jobs data temper rate-cut bets
11-Jul-25 13:55 ET
Dow -261.46 at 44004.50, Nasdaq +4.26 at 20634.92, S&P -14.20 at 6231.86
[BRIEFING.COM] The tech-heavy Nasdaq Composite (+0.02%) has returned to positive territory over the last half hour.
Gold futures settled $38.30 higher (+1.1%) at $3,364/oz, up then about +0.6% on the week; the advance was driven by escalating trade-war sentiment after President Trump unveiled new tariffs, 35% on Canadian imports, widespread 15-20% duties, and a 50% levy on copper and Brazilian goods to kick in August 1, fueling renewed safe-haven demand. Nonetheless, heightened risk aversion was tempered by a firmer dollar (on track for its strongest weekly rally since February) and surprisingly robust U.S. jobless data, which softened expectations for imminent Fed rate cuts.
Meanwhile, the U.S. Dollar Index is now +0.2% to $97.81.
PriceSmart's solid Q3 earnings and potential Chile expansion fuel stock to new peaks (PSMT)
PriceSmart (PSMT), a U.S.-style membership warehouse club operator with stores primarily in Central America, the Caribbean, and Colombia., delivered a solid 3Q25 earnings report, narrowly surpassing EPS expectations while revenue of $1.32 bln aligned with forecasts. The company reported robust comparable net merchandise sales growth of 7.0%, or 8.5% in constant currency, reflecting strong performance across its 55 clubs. Adding to the positive sentiment, PSMT announced it is evaluating Chile as a potential new market, hiring local consultants and scouting sites, which has fueled a surge in its stock price to multi-year highs as investors anticipate further growth in its emerging markets footprint.
- The potential entry into Chile is a significant catalyst for PSMT, as it represents an opportunity to expand its proven warehouse club model into a new South American market with favorable demographics and economic stability. Chile’s GDP per capita, higher than PSMT’s existing South American markets like Colombia and Ecuador, suggests strong potential for membership uptake among middle- and upper-income consumers.
- Based on the company’s measured expansion strategy -- averaging 1-2 new clubs annually in markets like Colombia (population ~52 mln, 10 clubs) and Ecuador (population ~18 mln, 3 clubs) -- Chile’s population of ~20 mln could conservatively support 3-5 clubs over the next decade, assuming suitable site availability and regulatory approvals. Chile’s developed retail infrastructure, urban concentration in cities like Santiago, and consumer preference for value-driven formats align well with PSMT’s low-price, high-quality model, making it a compelling fit, though challenges like site acquisition and permit uncertainties remain.
- Turning to the Q3 performance, PSMT’s comparable net merchandise sales growth was driven by strong demand across key product categories, particularly food and consumables, which benefit from the company’s focus on sourcing 50% of products locally or regionally. The company’s omni-channel strategy also played a pivotal role, with digital sales rising to 6.1% of total net merchandise sales. Membership growth further bolstered results, with total accounts reaching 1.97 mln (up 4.1% yr/yr) and a high 88.0% renewal rate, particularly driven by uptake in the premium Platinum tier.
- Profitability also showed notable improvement, with adjusted EBITDA climbing to $79.0 mln from $71.0 mln in the prior-year quarter, an 11.3% increase. Key drivers included higher membership income, which surged 13.4% to $21.9 mln, reflecting strong member retention and premium tier growth, alongside operational efficiencies from increased sales volumes. Furthermore, investments in technology and digital channels, while increasing expenses, are yielding higher-margin digital sales, positioning the company for sustained profitability gains as it scales.
PSMT’s stock rally to multi-year highs is partly driven by optimism surrounding its potential Chile expansion, which promises to extend its successful emerging markets strategy. The company’s strong Q3 FY25 results, underpinned by robust comparable sales and improving profitability, further reinforce the growth trajectory.
WD-40 higher following Q3 report; investors impressed with top-line and gross margin growth (WDFC)
WD-40 (WDFC +1%) shares are trading higher after reporting Q3 (May) results last night. The reported EPS was a solid beat relative to the single analyst estimate. Given that WDFC was lapping a huge quarter last year, the company deserves credit for posting even modest growth this quarter. Revenue grew 1.2% yr/yr to $156.9 mln. WDFC increased its FY25 EPS guidance to $5.30-5.60 from $5.25-5.45, while slightly lowering the upper end of revenue guidance.
- Sales in its largest segment, the Americas (50%), increased 4% yr/yr to $78.2 mln; however, that lagged the growth of its Asia-Pacific segment, which grew 7% yr/yr to $22 mln. EIMEA sales declined 5% yr/yr to $56.7 mln, which was primarily driven by lower sales volumes to its marketing distributer customers, particularly in Turkey and the Middle East. Importantly, it continues to see strong sales trends in its direct markets within EIMEA.
- Perhaps another cause for the positive reaction is a solid increase in its gross margin. In Q3, gross margin was 56.2%, a 310-bps improvement from 53.1% last year. Notably, gross margin improved across all three of its trade blocks. WDFC is confident that gross margin for the year will be between 55-56%, in line with its target and one year ahead of its original timeline.
- WDFC has four "must-win battles" which focus on geographic expansion, accelerating premiumization, growing WD-40 specialist, and increasing digital commerce. It is making strong progress in all these categories. Global sales of WD-40 multi-use products grew 6% yr/yr, its combined premium products were up 7% yr/yr, specialist products were up 11% yr/yr, and e-commerce sales were up 11% yr/yr.
- WDFC is still looking to divest its household line in the US and the UK. There is no certainty of a deal right now, and if it is unsuccessful, WDFC's guidance would be positively impacted.
Shares are bouncing back nicely today after there was some pressure prior to the release of its Q3 results. Investor sentiment seemed to be fairly low heading into the report, but the continued revenue growth, the ahead of schedule improvement to its gross margin, and the bullish commentary on its must-win battles are soothing investor's nerves.
Toll Brothers names Gregg Ziegler as new CFO, a prudent choice for strategic continuity (TOL)
Toll Brothers (TOL) announced that Gregg Ziegler will succeed Marty Connor as Chief Financial Officer, effective October 31, 2025, marking a significant leadership transition at a challenging juncture for the new home construction market. The industry is grappling with persistent affordability issues, softening consumer confidence, and potential tariff-related cost pressures, which have created headwinds for homebuilders.
While the timing of this transition may spark some investor unease, Ziegler’s 23-year tenure at TOL and Connor’s planned retirement—rather than a departure to a competitor or another industry—suggest a stable and orderly succession, mitigating concerns about strategic disruption.
- Gregg Ziegler’s extensive history with TOL, starting as an Assistant Finance Director in 2002 and progressing through key roles in capital markets, mergers and acquisitions, corporate strategy, and as Treasurer since 2013, positions him as a seasoned insider poised to ensure a seamless transition. His deep understanding of the company’s operations and strong relationships with Wall Street, as highlighted by CEO Douglas Yearley, underscore his readiness to take on the CFO role.
- Ziegler’s internal promotion also signals that TOL intends to maintain its current strategic trajectory, leveraging its diversified luxury home portfolio and disciplined financial management without material shifts in direction.
- TOL’ recent financial performance reinforces its resilience amid this leadership change, as evidenced by its better-than-expected 2Q25 earnings report on May 20, 2025, which drove a stock price increase. The company delivered 2,899 homes, generating $2.71 bln in home sales revenue, up nearly 10% in units and 2.3% in dollars yr/yr, surpassing guidance by approximately 300 homes and $236 mln.
- However, challenges loom as affordability constraints weigh on demand, prompting TOL and peers to increase incentives, which pressured the adjusted home sales gross margin, declining 70 basis points yr/yr to 27.5% in 2Q25. Ziegler will need to navigate these headwinds while maintaining the company’s focus on returns over margins, as emphasized by CEO Yearley.
- TOLs’ diversified price points -- spanning affordable luxury (45%), true luxury (35%), and age-targeted homes (20%) -- and its presence across over 60 markets in 24 states provide a competitive edge that Ziegler is likely to leverage. This diversified portfolio has allowed TOL to adapt to varying regional demand dynamics, though the company adopted a cautious stance in its 3Q25 guidance, projecting 2,800-3,000 home deliveries, below analyst expectations.
Gregg Ziegler’s appointment as CFO appears to be a prudent choice, leveraging his deep institutional knowledge to ensure continuity and minimize disruption. With TOLs’ solid financial footing and diversified portfolio, Ziegler is well-positioned to steer the company through current market challenges, setting the stage for capitalizing on an eventual housing market recovery as interest rates ease.
Levi Strauss is kicking it with robust beat-and-raise; finally turning a corner (LEVI)
Levi Strauss (LEVI +11%) is trading sharply higher after reporting a robust EPS and revenue beat with its Q2 (May) results last night. Probably more impressive was the guidance with upside revs for Q3 (Aug) and a sharp increase in FY25 guidance. Specifically, LEVI upped its FY25 revenue guidance to +1-2% from -2% to -1%, which was well above analyst expectations. LEVI also upped its quarterly dividend slightly to $0.14/sh from $0.13/sh.
- LEVI saw broad-based strength across Direct-To-Consumer (owned stores and online) and Wholesale, international and domestic, women's and men's, tops and bottoms, units and AURs. LEVI was especially pleased to see DTC again lead its growth with comp sales up high-single digits. In addition, its Wholesale channel accelerated to 7+% growth, posting its third consecutive quarter of growth while also experiencing improving margins.
- The company hired a new CEO, Michelle Gass, who took the helm in January 2024. She deserves a lot of credit for turning the brand around. Specifically, LEVI has made significant strides in accelerating its shift toward becoming a DTC-first business across both brick & mortar and e-commerce. DTC now represents over half of sales and it's delivering consistent, healthy comps alongside improving profitability.
- Another change has been to expand beyond its core denim bottoms business. LEVI is becoming a full head-to-toe apparel lifestyle brand with growth in tops, dresses, outerwear, and non-denim bottoms. Importantly, LEVI has been expanding its assortment with greater discipline, rationalizing SKUs, introducing newness and focusing on full-price sell-through. Also, LEVI is selling its Dockers unit and has already exited its Denizen and footwear businesses to focus on its core Levi's brand.
- LEVI has also leaned heavily into marketing using celebrities and it is paying off. In Q2, LEVI launched the third chapter of its REIIMAGINE campaign with Beyoncé. This follows one-of-a-kind looks for her Cowboy Carter Tour. LEVI has been active since the start of the music festival season in 2025, from dressing Shaboozey at Stagecoach to hosting a roster of influencers at Coachella. More recently, it also became a leading sponsor for Primavera Sound in Barcelona, one of Europe's biggest festivals. LEVI has also outfitted influential pop icon Troye Sivan and offered an exclusive product collection.
Overall, this was a great quarter for LEVI. The outsized move appears related to the large EPS upside and especially the decision to boost FY25 revenue guidance. We think that really shows confidence by management in its near term outlook despite macro/tariff pressures. Also, LEVI's price points are on the higher end of the retail apparel spectrum, so it deserves credit for performing well despite lower consumer confidence. More generally, we have been following LEVI for years and have been asking when will results finally turn the corner? It has taken a long time, but we think its Q1 report and now this Q2 report is changing our view that its business is finally turning the corner as we like the changes being made.
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