Mid-Morning Look

Wednesday, December 10, 2025

As expected, stock markets in the US are quiet, with no big bets made after a healthy run the prior 2 weeks as Wall Street awaits the Fed. All eyes are on the FOMC at 2:00 pm et with a 25bps cut almost fully priced in by the markets, investors will be looking for any clues to justify their expectations for the overall scale of easing next year. Earlier this morning, the Bank of Canada holds interest rates steady at 2.25% (widely expected) as reiterates that current rate is at about the right level to keep inflation close to 2% as long as economy and inflation evolve in line with projections. BOC reiterates that if outlook changes, it is prepared to respond. BoC notes underlying inflation is still around 2.5%. Treasuries are mixed after a run in yields the last few days as the 10-yr hits 4.2% before paring back to 4.17%, the dollar slipped and crypto Bitcoin gives back some of prior day gains below $92K. Gold and silver prices have rallied this year with silver to all-time highs above $61 an ounce yesterday, playing catchup with gold, but lower today. In Sector news, the technology sector (XLK) is lower, on track to snap its 12-day winning streak if it holds up along with weakness in Utilities (XLU) as nuclear names are weak. The other nine S&P sectors are currently higher into the Fed meeting later. Earnings tonight from ORCL, ADBE and SNPS in the tech space will also garner attention.

FOMC preview: Current market expectations is that the Fed cuts 25 bps, leaves forward guidance unchanged, and the 2026 median dot still shows one cut. The key is likely that the Fed doesn’t hint at a pause in the rate-cut cycle to keep stock markets rising through the end of the year. Dovish Scenario is that the Fed cuts 25 bps, keeps guidance unchanged, and the dot plot shows more than one cut in 2026 signaling a stronger commitment to easing and extends the rate-cut cycle into next year. A hawkish scenario is where there is either no cut (low probability at this point), or forward guidance shifts toward a pause, or the dots show zero cuts in 2026.

• HSBC provides 2026 Pharma update, saying it is well set to outperform in 2026, even more so if Ai panic kicks in. As the market climbs the wall of worry on MFN/tariffs, HSBC thinks quality/growth stocks, especially those with earnings upgrade cycles, might offer an attractive risk-reward balance as sector multiples expand in 2026. HSBC upgrades ABBV to Buy and downgrade BIIB to Reduce (from Hold), says Preferred Buy-rated plays for 2026 are ABBV, RHHBY, JNJ and AZN and least Preferred Reduce-rated ideas are NVS, BIIB and GSK.
• Energy Equipment/Drilling: JP Morgan adjusted ratings in the oilfield services and equipment outlook as part of its 2026 outlook as they retain a cautious sector stance citing upstream spending headwinds but sees some idiosyncratic growth opportunities. The firm expects oilfield service stocks to play second fiddle to upstream companies and other energy sub-sectors due to a weakening spending picture. Shares of HP, LBRT, PUMP were upgraded to Overweight, downgraded NE to Neutral and PTEN, RIG to Underweight.
• In Multi Industry: Jefferies with 2026 playbook and several ratings changes seeing a power, margin and cyclical recover; upgraded shares of PNR, JBTM, and MIDD to Buy, while downgrading EMR, RRX, and VLTO to Hold and said their top pick entering ’26 is PNR. Their 2026 sector positioning is anchored on three themes: (1) exposure to power and data centers; (2) margin expansion through internal productivity and 80/20 initiatives; (3) a cyclical recovery after two years of subdued volumes.
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• CHWY +1%; posted a top and bottom line beat for Q3, but shares slumped on guidance as sees FY25 net sales in the range of $12.58B-$12.6B, below analysts’ estimate of $12.65B and forecast Q4 sales between $3.24B-$3.26B, also below estimates of $3.27B.
• GEV +12%; after boosting its buyback to $10B, doubled its dividend to 50c, affirmed some aspects of its 2025 guidance and presented its 2026 financial guidance; shares upgraded at both RBC Capital and Oppenheimer.
• JMIA +4%; shares rose as releases preliminary KPIs for the two months ended November 30, 2025, showing physical goods orders increased by 30% y/y in that stretch, physical goods GMV increased by 35% y/y.
• OMC +3%; as Citi opened a positive Catalyst Watch ahead of an Omnicom Investor Day expected to occur in the mid-to-late Q126 time frame.
• PLAB +44%; shares surged on results after reported Q4 EPS $1.07 above prior year $0.54 result on better revs of $215.8M vs. est. $205.2M.
• SATS +6%; added to yesterday’s advance after Bloomberg reported that SpaceX might be headed for a 2026 initial public offering. EchoStar stock tracks SpaceX’s valuation because, in September, EchoStar announced a deal to sell its AWS-4 and H-block spectrum licenses to SpaceX (was also upgraded at Morgan Stanley).
• WRBY +10%; extending recent run following the Hedgeye long call, up 37% now in the last 4 days

• BIIB -3%; downgraded to Reduce (from Hold) at HSBC Holdings saying the company’s ailing multiple sclerosis franchise is outweighing its growth elsewhere and expects margin pressure from lower royalties.
• CART -6%; along with weakness in DASH, UBER after AMZN notes delivery now spans 2,300+ cities and towns; expands same-day perishable grocery delivery
• CBRL -4%; shares declined after Q1 comp store sales and adj. EBITDA missed while lowered FY26 guidance/ Q1 comp sales fell (-4.7%) vs. est. (-4%) and comparable store retail sales decreased (-8.5%) vs. est. (-6.5%) decline; cuts FY revs view to $3.2B-$3.3B from prior $3.35B-$3.45; traffic declined -7.3% in the quarter
• LAKE -23%; shares tumble following Q3 EPS loss (-$1.64) as missed FQ3 expectations substantially; withdrew guidance; suspended the dividend; terminated its CFO; and noted significant end-market uncertainties ahead.
• MSFT -2%; after 3^rd party research as Cleveland Research said inline QTD with PC upside offset by disappointing M365 Co-pilot sales and only in line Azure; also, M-Science said Azure slightly muted on lower growth.