Mid-Morning Look

Monday, December 23, 2024

U.S. stocks are trading mixed to kick off the Christmas holiday shortened week, looking to rebound after falling last week behind a change in the Fed’s interest rate cut outlook (sees two cuts vs. prior view of 4 cuts in 2025) along with a higher inflation outlook. Volumes are expected to dry up this week given the � day trading tomorrow 12/24 (US stock markets close at 1:00 PM) and markets closed 12/25 for Christmas before full days on Thursday and Friday. There are a few economic data points, but the big inflation data and jobs results were out already this month. Risk mood appeared upbeat initially following Friday’s Wall Street rally and a last-minute deal to avert US government shutdown this weekend, but stocks have slipped since the open as 10 of the 11 S&P sectors are trading lower, with tech the best so far behind strength in semis (SOX). Consumer Staples, Utilities, Materials, Financials, Industrials and Energy early decliners on weak market breadth (after we had 13 straight day of negative S&P 500 breadth snapped on Friday where advancers outpaced decliners sharply following the tamer PCE inflation data). There are a few M&A news stories this morning (see below), no earnings and no Fed speakers this week. Treasury yields move to overnight highs with the 10-yr above 4.56%; Bitcoin falls -3% below $94K after first losing week since the election.

• December Consumer Confidence index 104.7 below consensus 113.3. (lightest since September); conference board’s consumer confidence index for November revised to 112.8 (previous 111.7).

• HMC +12%; and Nissan Motor Co. (NSANY) signed a basic agreement for merger talks and held a joint media briefing in Tokyo. Honda also said it will buy back as much as ¥1.1 trillion yen ($7 billion) of its own shares. https://tinyurl.com/yktnz98v
• LLY +1%; after late Friday, the FDA approved Eli Lilly’s Zepbound for moderate-to-severe obstructive sleep apnea in adults with obesity
• LUNR +10%; NASA selected four companies, including LUNR and VSAT to expand its Near Space Network’s commercial direct-to-Earth capabilities services. The cumulative maximum value of the contracts is $4.82 billion.
• NVO +4%; as shares of the obesity drugmaker rebound partially after falling -17.8% on Friday after headline results from REDEFINE 1, a phase 3 trial in the global REDEFINE program disappointed investors.
• PLYA +29%; shares rose after news that Hyatt Hotels (H) is in exclusive talks with the company on strategic options, including a takeover. Exclusivity talks until Feb 3rd, or a deal is struck, but there is no guarantee of any transaction happening (Hyatt has a 9.99% stake in Playa).
• QCOM +2%; after a U.S. federal jury in Delaware on Friday decided that QCOM properly licensed its CPUs, and did not breach Nuvia’s license agreement with ARM. ARM’s lawsuit against QCOM sought to prevent QCOM from paying the lower royalty rates that Nuvia contracted with ARM (QCOM acquired Nuvia in 2021).
• RUM +67%; after saying late Friday it had entered into an agreement with Tether to receive a strategic investment of $775M; Blockchain-enabled platform Tether has agreed to purchase over 103.3M shares of RUM Class A Common Stock at a price of $7.50/share.
• TRAW +200%; after disclosed progress in the development of tivoxavir marboxil as a treatment for HSN1 bird flu.
• XRX +8%; as agreed to buy the laser printer maker Lexmark International Inc. from a consortium of Asian investors in a deal valued at $1.5 billion.

• CCL -4%; seeing pullback in cruise stocks (NCLH, RCL) after jumping Friday on better earnings.
• INSP -3%; along with weakness in RMD -5% in the sleep apnea sector on competition concerns after the FDA approved Eli Lilly’s Zepbound for moderate-to-severe obstructive sleep apnea in adults with obesity
• MSTR -5%; as crypto and Bitcoin related stocks down (IREN, COIN, CLSK, MARA)
• WMT -2%; weighing on the Dow, posting its biggest 1-day drop in over a year as shares down 4-straight days.