Sector Snapshot
Sector Synopsis
Markets cooled Thursday as tariff fears reasserted themselves. Autos and energy bore the brunt, while retail and select tech names treaded water. Macro volatility remains high, and while Costco offered a strong consumer read, caution is creeping back into high-beta and cyclical areas.
Autos
Auto stocks came under renewed pressure as earnings and fresh downgrades weighed on sentiment. KMX fell after a Q4 earnings miss despite growing used car sales. GM and Ford were both downgraded by major firms on concerns tariffs will increase vehicle costs and soften demand. Auto parts suppliers also saw widespread downgrades, with analysts citing reduced production visibility and mounting price pressures.
Retail, Consumer Staples & Restaurants
Costco delivered a strong March with 9.1% U.S. core comp growth, well ahead of consensus, helped by Easter timing. Apparel and footwear retailers saw partial profit-taking after Wednesday's surge, though LEVI was upgraded at BofA. The U.S. raised tariffs again on China, rattling China-linked names like PDD while potentially benefiting off-price players like TJX. STZ beat Q4 earnings estimates but guided more cautiously on beer sales amid subdued demand and tariff impacts.
Homebuilders, Building Products, Home Furnishing
LOVE issued weaker Q1 EBITDA guidance, while VMC was upgraded on confidence in pricing power, government infrastructure spending, and a still-resilient housing backdrop. The firm sees volume downside as limited despite market uncertainty.
Leisure, Gaming & Lodging
Morgan Stanley upgraded CCL to Equal Weight but remains cautious on the cruise sector as a whole, citing historical drawdowns in recessions and noting stocks still carry substantial downside risk in bear-case scenarios.
Energy, Industrials and Materials
Oil and gas names slid sharply as U.S. tariff hikes on China fueled fears of weaker global demand. Utilities saw downgrades from JP Morgan and Jefferies on regional risks and macro headwinds. In metals, US Steel dipped following Trump’s comments opposing its sale to Japan. VALE was upgraded at BofA on valuation and operational improvements.
Financials
Fintech and payment stocks rebounded on easing recession fears, with TOST receiving a double upgrade on underappreciated growth drivers and macro defensiveness. Big banks report Friday, with JPM, MS, WFC and BK in focus. Staffing names saw mixed calls, while asset managers posted mostly declining AUM for March due to market depreciation and outflows.
Biotech & Pharma
Drugmakers fell after further tariff escalation threats, with sector sentiment hurt by growing policy uncertainty. DXCM and ISRG both announced new FDA device clearances. NVAX slipped following critical public remarks from Health Secretary RFK Jr. about its COVID vaccine. CRL dropped sharply on FDA plans to phase out animal testing in certain biologic approvals.
Healthcare Services & MedTech
Barclays upgraded DHR to Overweight for defensive exposure and bioprocessing strength but downgraded major CROs on visibility concerns and pharma budget uncertainty linked to tariff risks. Life sciences stocks moved cautiously amid restructuring chatter.
Technology
Semiconductors reversed sharply after Wednesday’s historic rally, with the SOX index down more than 8%. TSM beat Q1 expectations despite earthquake disruptions. ASYS cut its Q2 outlook on a customer dispute. WDC was upgraded on valuation and anticipated growth in data center spending and AI demand.
Featured Articles
America’s Financial System Narrowly Averted Crisis
The Economist reports that recent volatility nearly triggered a systemic disruption in U.S. financial markets.
Regulatory gaps and fragile institutional liquidity were key vulnerabilities exposed by the turmoil.
Full article
High Mortgage Rates Stall Home Selling Season
WSJ highlights how persistently elevated mortgage rates are dampening housing turnover.
Sellers are reluctant to give up locked-in low rates, curbing supply even as buyer interest returns.
Full article
Stocks Look Cheap, But Earnings Will Decide
MarketWatch notes U.S. equities are trading at their most attractive multiples in nearly 18 months.
Strategists warn, however, that earnings season must deliver to justify the discount.
Full article
Nvidia Slips, but Analysts Shrug Off Tariff Fears
Despite a pullback in Nvidia shares, analysts remain bullish and view the dip as a buying opportunity.
Tariffs are seen as a headline risk, not a fundamental threat—at least for now.
Full article
Are Bank Earnings Flashing a Recession Signal?
Big banks report Friday, and analysts say early signs of financial strain may show up in their results.
Credit quality, deposit outflows, and capital market activity will be closely scrutinized.
Full article
Friday’s Stock Movers to Watch
CNBC previews key stocks likely to make headlines at the end of the week.
Earnings, tariff updates, and macro surprises remain the top drivers of market action.
Full article
Inside the Earnings Call - CarMax (KMX)
Summary Table
Theme | Q4 FY2025 | Q1–Q3 FY2025 |
|---|---|---|
Used Vehicle Demand | Gradual recovery, but softer than expected | Sequential improvement through Q2, then flat in Q3 |
Gross Margins | Pressured by SG&A and higher reconditioning | Saw gains from mix optimization, then flatlined |
Inventory Strategy | Focused on rightsizing and balancing digital/in-store | Optimization in early quarters, shifted to in-store focus by Q3 |
Affordability & Credit | Macro pressures persist; financing margins tightened | Demand impacted by rates; margin pressure easing slightly |
Online & Omnichannel | Digital share remains stable | Incremental gains, but plateaued late in year |
Guidance & Tone | Cautiously optimistic; investing in long-term gains | Mixed — cautious outlook on affordability and macro |
Tariffs & Macro | Highlighted as headwind, especially on sourcing cost | Minimal mention until Q4 |
Takeaway for Investors
CarMax ended FY2025 with results that showed stabilization, not acceleration. After a year of navigating macroeconomic headwinds and affordability constraints, management acknowledged Q4 missed expectations on comps and margins. Yet the tone of the call focused on laying groundwork — including omnichannel infrastructure, inventory discipline, and reconditioning capacity.
Key points:
Used vehicle sales grew, but missed Street targets
Reconditioning and SG&A expenses weighed on profitability
Digital channel contribution flat y/y, indicating maturity of model
Tariffs and macro cost inflation flagged for the first time as real headwinds
Looking ahead, CarMax is not forecasting a major rebound but sees ongoing traction from strategic investments. If rates ease and tariffs stabilize, FY2026 could offer a cleaner growth setup — but for now, investors will need to be patient.