Early Look

Monday, December 4, 2023

Futures	Up/Down	%	Last
Dow	-27.00	0.21%	36,228
S&P 500	-14.25	0.32%	4,586
Nasdaq	-68.50	0.43%	15,955

 

 

U.S. futures are slipping to start the week after a massive run, seeing some profit taking as Treasury yields and the dollar hold steady. U.S. stocks extended their gains Friday off their October lows, with the S&P 500 and Nasdaq Composite each posting a 5^th straight week of gains (longest streak since June), and the S&P closing at new 52-week highs. Momentum has remained clearly to the upside on bets for no more Fed rate hikes and hopes for rate cuts starting in early 2024 given inflation/jobs data. The Smallcap Russell 2000 Index closed at its best level since September and pushed well above its 200-day moving average on Friday. Overall, for the week, the Dow rose 2.42% (highest close in 2-years and up a 5^th week), the S&P 500 added 0.77%, and the Nasdaq climbed 0.38%. Not only are stock prices making new 52-week highs, but gold prices hitting all-time highs above $2,150 overnight (has since declined back to flat at $2,090) and Bitcoin prices topped $41,500 this morning, its highest since April 2022 on broad enthusiasm about U.S. interest rate cuts. In Asian markets, The Nikkei Index fell -200 points to 33,231, the Shanghai Index fell -8 points to 3,022, and the Hang Seng Index dropped -184 points to 16,646. In Europe, the German DAX is up 20 points to 16,417, while the FTSE 100 is down -30 points just below 7,500. A busy week of investor conferences this week and big economic data points including the ADP private payroll (12/6) and nonfarm payrolls reports Friday (12/8).

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 26.83 points, or 0.59%, to 4,594.63.

·     The Dow Jones Industrial Average rose 294.61 points, or 0.82%, to 36,245,50.

·     The Nasdaq Composite gained 78.81 points, or 0.55%, to 14,305.03.

·     The Russell 2000 Index advanced 53.62 points, or 2.96% to 1,862.24.

 

Economic Calendar for Today

·     10:00 AM ET                Durable Goods Orders M/M for October

·     10:00 AM ET                Factory Orders M/M for October

 

Earnings Calendar:

·     Earnings Before the Open: SAIC

·     Earnings After the Close: CULP GTLB IDT JOAN

 

Other Key Events:

·     Goldman Sachs 15th Annual Industrials Week, 12/4-12/7, in London

·     Goldman Sachs First Annual “Year-Ahead” Catalyst Clinic, 12/4-12/8 (virtual)

·     Goldman Sachs Aircraft Leasing Conference, 12/4 in London

·     Mizuho Power, Energy & Infrastructure Conference, 12/4-12/5 in New York

·     Mizuho Medical Device and Healthcare Services Conference, 12/4-12/5, in New York

·     Raymond James TMT Conference, 12/4-12/6, in New York

·     UBS Global Technology, Media and Telecom Conference, 12/4-12/5, in New York

·     China Caixin Services PMI for November

 

 

Macro	Up/Down	Last
Nymex	-0.55	73.52
Brent	-0.69	78.19
Gold	-0.00	2,089.7
EUR/USD	-0.0008	1.0873
JPY/USD	-0.29	146.52
10-Year Note	+0.019	4.241%

 

 

S&P Index Changes announced Friday – takes effect 12/18

·     S&P Dow Jones Indices announced several changes to the S&P 500, S&P MidCap 400, and S&P SmallCap 600 indices on Friday effective prior to the open of trading on Monday, December 18, to coincide with the quarterly rebalance.

·     Uber Technologies Inc. (UBER), S&P MidCap 400 constituents Jabil Inc (JBL) and Builders FirstSource Inc. (BLDR) will replace Sealed Air Corp. (SEE), Alaska Air Group Inc. (ALK) and SolarEdge Technologies Inc. (SEDG) in the S&P 500 respectively,

·     S&P SmallCap 600 constituents Rambus Inc. (RMBS) and Comfort Systems USA Inc. (FIX) will replace Jabil and Builders FirstSource in the S&P MidCap 400, and Sealed Air, Alaska Air Group, and SolarEdge Technologies will replace Orthofix Medical (OFIX), Rambus, and Comfort Systems USA respectively in the S&P SmallCap 600.

·     Houlihan Lokey Inc. (HLI) and Equitable Holdings Inc. (EQH) will replace Topgolf Callaway Brands Corp. (MODG) and Vestis Corp. (VSTS) in the S&P MidCap 400, and Topgolf Callaway Brands and Vestis will replace Clearfield Inc. (CLFD) and OneSpan Inc. (OSPN) in the SmallCap 600 Index.

·     Alkermes plc (ALKS), Armstrong World Industries Inc. (AWI), National HealthCare Corp. (NHC), and PJT Partners Inc. (PJT) will replace Community Health Systems Inc. (CYH), Invesco Mortgage Capital Inc (IVR), Avid BioServices Inc. (CDMO) and James River Group Holdings Ltd (JRVR) respectively in the S&P SmallCap 600.

 

Sector News Breakdown

Consumer

·     Alaska Air (ALK) reached roughly $1.9 billion deal (includes debt) to buy Hawaiian Airlines (HA) with Hawaiian shareholders to receive $18 a share in cash under the deal after closing under $5 a share on Friday. https://tinyurl.com/4zuu23xm

·     Carvana (CVNA) upgraded from Underweight to Neutral at JP Morgan and raised tgt to $40 from $25 as believes Carvana’s approach to retailing used vehicles had given it a multi-year head start in the online-only space of a fragmented used vehicle industry.

·     MGM Resorts (MGM): Casino workers for MGM Grand Detroit have voted to ratify a new contract, ending a 47-day strike. MGM Grand Detroit workers are union members of the Detroit Casino Council, which represents nearly 4,000 employees of the city’s three casinos.

·     Tesla’s (TSLA) China-made electric vehicles (EVs) sales skidded 17.8% in November y/y to 82,432 cars, China Passenger Car Association (CPCA) data showed on Monday; the biggest fall since December 2022 when Tesla’s sales of China-made EVs fell 21% on the year; deliveries of China-made Model 3 and Model Y cars were however 14.3% higher than in October.

 

Energy, Industrial and Materials

·     CNX Resources (CNX) upgraded to Buy from Hold at Truist and raise tgt to $27 from $20.

·     RPM International (RPM) mentioned positively in Barron’s saying the company is making a name for itself among investors as a dividend champion, with 50 consecutive years of higher payouts. But it should also be known for something else: a decades-long record of growth, fueled by acquisitions and a steady march to higher profits.

·     South Korea agreed to buy an undisclosed number of Embraer’s (ERJ) C-390 Millennium cargo aircraft, the Brazilian aerospace company said.

·     Virgin Galactic (SPCE) shares fell after Richard Branson told the Financial Times that he doesn’t plan further investments in the space tourism startup he founded.

 

Financials

·     Charles Schwab (SCHW) files automatic mixed securities shelf.

·     Citizens Financial (CFG) downgraded to Equal Weight from Overweight at Morgan Stanley.

 

Healthcare

·     Cigna (CI) said it expects to reaffirm projected full year 2023 consolidated adjusted income from operations on a per share basis of at least $24.75 per share.

·     Incyte (INCY) upgraded to Buy from Neutral at Guggenheim.

·     Eli Lilly’s (LLY) said Jaypirca was approved by the FDA to treat adults with chronic lymphocytic leukemia or small lymphocytic lymphoma who have received at least two prior lines of therapy.

·     Roche (RHHBY) announced the entry into a definitive merger agreement to acquire Carmot Therapeutics, Inc., a privately owned U.S. company for $3.1B ($2.7B upfront and $400M in milestones); Carmot R&D portfolio includes clinical stage subcutaneous and oral incretins with best-in-class potential to treat obesity in patients with and without diabetes.

·     Trupanion (TRUP) files to sell 3.64M shares of common stock for holders.

 

Technology, Media & Telecom

·     Corning (GLW) files mixed securities shelf.

·     SE (SE) downgraded from Overweight to Equal Weight and lowered tgt to $47 from $55 saying its competitive intensity in ASEAN e-commerce (EC) has increased since the summer.

·     Spotify (SPOT) announced a reduction in the company’s employee base by approximately 17% and estimates that it will incur approximately EUR 130M- EUR 145M in charges.

·     Super Micro Computer (SMCI) and Vertiv Holdings (VRT) mentioned positively in Barron’s noting Nvidia (NVDA) is the clear—and most obvious—beneficiary from the AI buildout but says both companies are less well known to investors that should equally benefit in the year ahead. https://tinyurl.com/bdnc7tjw