Closing Recap

Friday, January 03, 2025

After 5 days of declines for the S&P and Nasdaq, stocks were in rally mode all afternoon, pushing new highs late day as the biggest technology stocks led the gains (TSLA, NVDA, AMZN, GOOGL), though it was still a broad market bounce with all eleven S&P sectors finishing higher and mkt breadth around 3:1 advancers leading decliners. There were very few pockets of weakness today, with investors taking advantage of the 5-day pullback in stocks to load up on beaten names as the final day of the unofficial “Santa Claus” rally was a good one but still finished down over the last 7-days. Some of the biggest sector movers on news included: 1) nuclear power stocks (VST, OKLO, CEG, SMR) surging after President Joe Biden loosened some safeguards on a tax credit worth billions of dollars for hydrogen production. 2) US and European brewers and spirits makers (BUD, SAM, TAP, STZ) declined after the U.S. surgeon general called for Cancer warnings on alcohol labels. 3) semiconductors jumped with the SOX +2.9% led by NVDA, ARM ahead of CES trade show next week. 4) Crypto names outperformed as Bitcoin advanced above $98,000 lifting shares of MSTR, MARA, RIOT and others.

Next week gets a little busier when CES kicks off and believe it or not earnings season kicks off the following week 1/13 (banks) and Tech begins 1/21. For the Week of 1/6 NVDA CEO will give his Keynote address on 1/6. On Wednesday, we will hear the FOMC Minutes then wait on the jobs data on Friday as well as the Supreme Court oral arguments on the Tik-Tok ban case. Other notable macro events include Eurozone & US Final Composite & Services PMIs on Monday, U.S. ISM Services PMI and JOLTS job data on Tuesday, ADP private payrolls Wednesday and Nonfarm Friday.

Interesting stats of the day: @bespokeinvest noted “52 years ago, George Steinbrenner bought the @Yankees for $10 million. That $10 million is supposedly worth $7.55 billion today according to @Forbes. $10 million into the S&P instead would now be worth $2.15 billion.” Also, @bespokeinvest noted “Only 5 trading days in December ‘24 (or 23.8% of trading days) in which there were more daily advancers than decliners in the S&P 500 … single lowest share of days with positive breadth for any month going back to 1990.”

• In Autos: After a few days of weakness, TSLA helped push major averages higher, rising as much as over 5% late day to around $400. RIVN said it delivered 14,183 vehicles in Q4, beating estimates of 13,472, and produced 12,727 vehicles in Q4, compared with estimates of 11,398 vehicles. STLA and Volkswagen (VWAGY) shares fell as some EV models that had previously received US tax credits for electric vehicles were excluded under tougher rules. TSLA said its China sales rose 8.8% to a record high of more than 657,000 cars in 2024; Tesla’s sales in China also increased 12.8% in December from a month earlier to a record high of 83,000 units. GM reported a 4.3% rise in annual U.S. auto sales, supported by higher demand for its pickup trucks and SUVs; posted sales of about 2.7M units in 2024, compared with the 2.59M units it sold a year ago. TM reported a 3.7% rise in annual U.S. auto sales, selling 2.33 million vehicles in 2024, higher than the 2.25 million units it sold a year ago.

• Aerospace, Drones sector strong day for the space, adding to late 2024 advances with big gains from ACHR, ASTS, JOBY, LUNR, RCAT, RKLB
• In Metals & Mining: U.S. Steel (X) shares dropped after President Biden decides to officially block Japan’s Nippon Steel’s proposed $14.9B purchase, citing concerns the deal could hurt national security; gold miners slip following a pullback in gold prices off 3-week highs (NEM, AEM, AUY).
• In Energy: Wolfe Research with 2025 year ahead sector call as they added RRC to favored gas picks; upgrade FANG, DVN, CHRD, MTDR to Outperform in E&P; among majors upgraded SHEL to Outperform and upgrade EOG to Outperform; IMO downgraded to PP from Outperform as SU remains favored Canadian major; in refiners upgrade PSX to Outperform and DK to Peer Perform.
• In Truckers: Susquehanna upgraded KNX, CHRW, HUBG, and JBHT to Positive and WERN to Neutral saying 2025 won’t be a banner year for truckload-related transports but should deliver enough progress to keep the hope for real recovery in 2026 alive. The firm’s more bullish stance on truckload-related shares ultimately hinges on hope for a 2026 price-driven earnings recovery being solidified by incremental progress in the 2025 bid season.

• In Financial Services: In staffing, RHI was upgraded to Equal Weight from Underweight at Barclays and raise PT to $80 from $60 saying in the US (FA, RHI) looks stronger over EU (MAN) and while the firm upgrades RHI it prefers FA (OW; same macro trends + ‘self-help’ in the form of deal synergies & continued share gains).
• In Crypto: MSTR shares surge more than 10% and crypto/Bitcoin miners outperform with CLSK, MARA, RIOT, and WULF among leaders; MARA announced it produced 890 Bitcoin in December as surpassed their year-end hash rate target of 50 EH/s while improving our fleet efficiency to 20 J/TH. Energized hash rate increased to 53.2 EH/s, a 15% improvement m/m, while BTC production declined 2% to 890 BTC. BlackRock’s Bitcoin ETF (IBIT) saw a withdrawal of $333 million on Thursday, its largest outflow in history.
• In FinTech: SQ was upgraded from Market Perform to Outperform at Raymond James with $115 PT saying in their view, seller GPV is the most important metric for the stock, and believes growth can accelerate back into the double-digits in ’25 (from ~8% in ’24) given the combination of easing comps (SSS likely down LSD in ’24), new sales momentum driven by improving distribution, international expansion, and product innovation.
• In Insurance: JP Morgan with P&C Insurance 2025 preview saying ALL is their top pick and remains bullish on AON and PGR. Among Neutral-rated stocks, prefer ACGL. Conversely, remain Underweight on TRV and RYAN. In the midcap space, favor BWIN (Overweight) and are downgrading TWFG from Overweight to Neutral. Overall, JP Morgan said they remain upbeat on business trends in the P&C sector and feel that ongoing firm pricing and the group’s defensive risk profile position it to outperform.

• Heading into Consumer Electronic Show (CES) 2025 next week, Citigroup said they are more bullish on AI-driven data center infrastructure and smartphone demand trends vs PCs. The firm model’s global smartphone shipments of 4.6% in 2025 above IDC’s LSD growth expectations driven by broader availability of Apple Intelligence, new Android AI launches, and potential China subsidy on handsets. On PCs, Citi models units 4% y/y modestly below IDC’s 4.3% y/y on lack of killer AI application. Citi expects recovery in general purpose networking, investments in ASIC-driven AI training, and intra/inter server and optical DCI to layer in higher data center CAPEX spend in 2025.
• In Application Software: Raymond James downgraded INTA from Outperform to Market Perform, RNG from Strong Buy to Outperform, VERX from Outperform to Market Perform and upgraded WK from Market Perform to Outperform with a $135 PT. The firm said while AI has dominated the tech narrative over the last 18-24 months, the impact on app software has admittedly been more questions than answers. Raymond James thinks that narrative has changed in 2024 with front-end software vendors such as CRM, HUBS, ZI, FRSH, and INTA all in the market with monetizable GenAI products (including others like Onestream).
• AI sector: CRNC shares rose safter expands collaboration with NVDA to advance its CaLLM family of language models as the company will leverage the NVIDIA AI Enterprise software platform, including the NVIDIA TensorRT-LLM open-source library and the NVIDIA NeMo framework, to optimize performance. CNBC reported midday that MSFT plans to spend $80B on AI-enabled data centers, colling (boosted shares of VRT, DELL, etc.)
• In Semiconductors: The Philadelphia Semi Index (SOX) rises more than +2.9% to 5,165 late day, moving back above its 200dma of 5,070 and 100dma of 5,065 with today’s action; the move helped by strength in NVDA, ARM, AMD ahead of the CES trade show next week.
• In Media/3D sector: DM shares rallied after being granted earlier an expedited trial date for its lawsuit against NNDM and said it has filed a second suit against the company. GETY shares surged after Bloomberg reported late Friday afternoon that the co was exploring a merger with SSTK, sending shares of both higher. https://tinyurl.com/2e7d6jpx
• Hardware: Shipments to China of foreign-branded smartphones, including AAPL’s iPhone, fell by 47.4% in November from a year earlier, according to data released on Friday. Calculations based on the data from the China Academy of Information and Communications Technology showed that foreign brand shipments decreased to 3.04 million units from 5.769 million units a year earlier.