July 10th, 2025
Markets Mixed as Oil Slides and Bond Yields Nudge Higher
U.S. equity markets are off to a quiet start Thursday, with the S&P 500 and Nasdaq flat, while the Dow is slightly lower in early trading. In contrast, Canadian stocks are up 0.3% at the open, echoing the more upbeat tone seen in European and Asian markets overnight.
Economic Takeaways:
- U.S. Treasury yields are ticking higher across the curve following a mild unemployment claims report, while the U.S. dollar remains steady against a basket of global currencies.
- WTI crude continues to decline after a stronger-than-expected U.S. inventory report and signs of weakening demand in China.
- Reports indicate that OPEC+ members are considering pausing planned production hikes starting in October.
- President Trump is threatening a 50% tariff on imports from Brazil unless legal action against former President Bolsonaro is stopped.
- Trump confirmed that a proposed 50% tariff on copper—the world’s third most used metal—will also begin then, pushing copper futures higher.
- Initial jobless claims of 227,000 today were 8,000 below the Bloomberg consensus and likely another strike against a July rate cut.
- New unemployment insurance claims dropped again last week, staying near historically low levels as companies remain hesitant to cut staff. Continuing claims—those receiving ongoing benefits—rose to nearly 2 million, the highest since late 2021.
- Minutes from the Fed’s June meeting reveals most members prefer to wait and assess how trade tensions and their effects on the economy unfold before adjusting policy.
United, American, Southwest Rally After Delta’s Strong Outlook Revives Airline Sector
U.S. airline stocks surged Thursday after Delta Air Lines (DAL) delivered better-than-expected earnings and reinstated its full-year forecast, sparking renewed confidence across the sector.
American Airlines (AAL) and United Airlines (UAL) each jumped over 11% by midmorning. Southwest (LUV) gained 5%, and Alaska Air (ALK) climbed more than 8%.
The rally comes as Delta reported stabilized bookings, a 5% year-over-year rise in premium ticket sales, and an 8% jump in loyalty revenue—even as standard cabin fares fell. Fuel costs were also down 11%, giving the airline a much-needed margin boost.
“As we look to the second half of our centennial year, we remain focused on executing our strategic priorities and managing the levers within our control to deliver strong earnings and cash flow,” said Delta CEO Ed Bastian.
Delta posted adjusted revenue of $15.5 billion and EPS of $2.10, narrowly beating expectations. Operating margin came in at 13.2%.
United, American, Southwest, and Alaska are all set to report earnings over the next two weeks, with analysts watching to see if they can match Delta’s momentum. Deutsche Bank sees upside ahead, noting premarket gains for SkyWest (SKYW) and Sun Country (SNCY), both expected to beat forecasts.
Ferrero Scoops Up WK Kellogg in $3.1B Deal, Uniting Nutella with Froot Loops
Ferrero is making a bold move into breakfast, announcing Thursday it will acquire WK Kellogg (KLG) for $3.1 billion, or $23 per share. The deal brings beloved brands like Nutella, Ferrero Rocher, and Tic Tac together with iconic cereals including Frosted Flakes and Froot Loops.
WK Kellogg stock jumped over 30% to $22.85 after the news, following a 50% spike late Wednesday when reports of the acquisition surfaced.
“We believe this proposed transaction maximizes value for our shareowners and enables WK Kellogg Co to write the next chapter of our company’s storied legacy,” said WK Kellogg CEO Gary Pilnick. The acquisition is expected to close in the second half of 2025.
Though Kellogg has faced headwinds—reporting a 6.2% decline in sales and a 45.5% drop in net income last quarter—Ferrero sees the purchase as a strategic leap forward. Executive chairman Giovanni Ferrero called it a “key milestone” in expanding the company’s North American presence.
The deal adds to a wave of consolidation in the food industry. Mars is set to acquire Kellanova for nearly $36 billion, and PepsiCo recently struck billion-dollar deals for Siete Foods and Poppi.
Jamie Dimon Sounds the Alarm: Markets Are Too Complacent on Rate Hikes
JPMorgan Chase CEO Jamie Dimon warned Thursday that markets are underestimating the risk of rising U.S. interest rates — and urged investors to take that threat more seriously.
“I think the possibility of those higher rates (is) higher than anybody else… The market is pricing a 20% chance, I would price in a 40-50% chance,” Dimon said during an event at Ireland’s foreign ministry.
“I would put that as a cause for concern,” he added.
Dimon also cautioned that there’s “complacency in markets” following President Donald Trump’s recent tariff announcements, signaling more volatility may be ahead.
On the Move
- Conagra (CAG) slid about 6% as both earnings and revenue missed expectations, with the company citing inflation pressures, FX headwinds, and supply chain issues.
- WPP PLC (WPP) added 1.5% after dropping 18% yesterday due to a lowered profit forecast. The selloff in ad stocks raised concerns over AI’s impact on traditional agencies, as brands increasingly shift to digital platforms, according to Barron’s.
- PTC (PTC) jumped up to 19% pre-market before easing back, amid reports that Autodesk (ADSK) is considering acquiring the engineering software provider.
- Nvidia gained another 0.9%, building on yesterday’s record close that pushed its market cap above $4 trillion—the largest in history, nearly $1 trillion more than the entire S&P 400 Midcap Index. Competitor AMD rose 2% after HSBC upgraded it to Buy.
- Homebuilders KB Home (KBH), Lennar (LEN), Pulte Group (PHM), and Toll Brothers (TOL) mostly advanced, supported by stronger mortgage demand and lower 10-year Treasury yields following Wednesday’s auction.
- Crypto stocks were mixed: Coinbase (COIN) dipped slightly after a 5% rise yesterday, while Circle Internet Group (CRCL) gained 2.5%. Bitcoin briefly retreated this morning but hit a new high above $112,000 overnight. Coinbase was downgraded to Sell by H.C. Wainwright, citing stretched valuation.
- Oracle (ORCL) rose 1.5% after Piper Sandler upgraded it to Overweight, citing a bullish AI infrastructure spending outlook.
- McDonald’s (MCD) climbed 1% following a Goldman Sachs upgrade to Buy, highlighting the company’s marketing strength to boost traffic and sales.
- Roku (ROKU) advanced nearly 3% after KeyBanc raised its rating to Overweight, noting advertising innovation and budget shifts.
What’s Ahead
No major earnings or data are expected to close the week tomorrow. We can look forward to banks kicking off the new earnings season next week. This includes Wells Fargo (WFC), JPMorgan Chase (JPM), Goldman Sachs (GS), and Morgan Stanley (MS).
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