Morning Preview: December 17, 2024

Early Look

Tuesday, December 17, 2024

Futures

Up/Down

%

Last

Dow

-151.00

0.34%

44,109

S&P 500

-16.25

0.26%

6,137

Nasdaq

-10.50

0.05%

22,397

 

 

U.S. futures are looking slightly lower as Dow futures are pointing to a 9th consecutive daily decline, while S&P futures dip as well ahead of the FOMC central bank meeting tomorrow and key inflation data (PCE) on Friday. Broader averages continue to make new highs as the Nasdaq surged to a record on Monday and the S&P 500 within a few points as well, but the gains remain very concentrated in a handful of names, mostly large cap tech (AAPL, AMZN, GOOGL, META, NFLX, TSLA which have all hit record highs in the last week). Zerohedge tweeted last night: “This is crazy: 11 consecutive days of more decliners than advancers in the S&P500. First time since Sept 11, 2001,” showing broader stocks remain weak. Risk assets continue to get scooped up as Bitcoin held yesterday’s record highs, staying above $107,000. In Asian markets, The Nikkei Index fell -92 points to 39,364, the Shanghai Index fell -24 points to 3,361, and the Hang Seng Index dropped -95 points to 19,700. In Europe, the German DAX is up 37 points to 20,351, while the FTSE 100 loses -57 points to 8,204. The Federal Reserve kicks off its two-day rate-setting meeting today as Wall Street overwhelmingly expects them to opt for another 25-bps cut…but the bigger question is whether the resilience of the economy will lead the central bank to take a more cautious approach to policy easing going forward. Benchmark Treasury yields rose above 4.42%, having settled at 4.397% Monday.

 

In a strategy call on Wall Street, Bank America strategist Michael Hartnett said cash as a percentage of total assets under management dropped to 3.9% in December, a move that in the past has been followed by losses on the MSCI All-Country World Index. Allocation to US equities surged to a record high of a net of 36% overweight, according to the BofA survey. Since 2011, every time the BofA sell signal was triggered, the MSCI All-Country World Index handed investors losses of 2.4% in the following month. Exposure to cash fell to a net 14% underweight in December, a record low, from 4% overweight last month. Investors are the most overweight in the US relative to eurozone equities since June 2012.

 

Market Closing Prices Yesterday

  • The S&P 500 Index climbed 22.99 points, or 0.38%, to 6,074.08.
  • The Dow Jones Industrial Average fell -110.58 points, or 0.25%, to 43,717.48.
  • The Nasdaq Composite jumped 247.17 points, or 1.24%, to 20,173.89.
  • The Russell 2000 Index advanced 15.10 points, or 0.64% to 2,361.99.

Economic Calendar for Today

  • 7:45 AM ET ICSC Weekly Retail Sales
  • 8:30 AM ET                  Retail Sales M/M for November…est. +0.5% (est. +0.4%)
  • 8:30 AM ET                  Retail Sales – Less Autos M/M for November…est. +0.4%
  • 8:55 AM ET                  Johnson/Redbook Weekly Sales
  • 9:15 AM ET                  Industrial Production M/M for November…est. +0.3% (prior -0.3%)
  • 9:15 AM ET                  Capacity Utilization for November…est. 77.3% (prior 77.1%)
  • 10:00 AM ET                Business Inventory M/M for October…est. +0.1%
  • 10:00 AM ET NAHB Housing Market Index M/M for December…est. 47 (prior 46)
  • 1:00 PM ET U.S. Treasury to sell $16B in 20-year notes
  • 4:30 PM ET API Weekly Inventory Data

Earnings Calendar:

  • Earnings Before the Open: AMTM NMTC
  • Earnings After the Close: ARKR HEI WOR

 

 

Macro

Up/Down

Last

Nymex

-0.68

70.03

Brent

-0.58

73.33

Gold

-16.20

2,653.80

EUR/USD

-0.0019

1.0491

JPY/USD

-0.35

153.79

10-Year Note

+0.023

4.420%

 

World News

  • China suffered the biggest outflow on record from its financial markets last month as domestic banks wired a net $45.7 billion of funds overseas on behalf of their clients for securities investment, according to data released by the State Administration of Foreign Exchange on Monday.
  • UK wage growth accelerated for the first time in more than a year, sending UK 10-year yields higher by 6 bps to 4.50% although the pound has given back its earlier advance versus the dollar.

Sector News Breakdown

Consumer

  • EVgo Inc (EVGO) announces secondary offering of 23 mln class a share.
  • Mama’s Creations (MAMA) Q3 EPS $0.01 vs est. $0.04, adj EBITDA $1.7Mm vs est. $3.229Mm on revs $31.5Mm vs est. $30.05Mm.
  • McCormick (MKC) is said to be in talks to buy Sauer brands at $1 bln valuation, as per Bloomberg.
  • RCI Hospitality (RICK) Q4 adj EPS $1.63 vs est. $0.37, adj EBITDA $17.9Mm vs est. $13.92Mm on revs $73.2Mm vs est. $72.98Mm; sees FY29 revs $400Mm with FCF $75Mm and 7.5Mm shares outstanding.
  • Tesla (TSLA) was upgraded to Overweight from Neutral at Mizuho and raised tgt to $515.
  • Online sports betting (DKNG, CZR, FLUT, CZR, PENN): The New Jersey Division of Gaming Enforcement reported more than $1.2B in sports betting handle for the month of November. The DGE reported $119M in sports betting revenue for November 2024, a 24.1% increase when compared to $95.9M reported in November 2023.”

Energy, Industrials and Materials

  • Compass Minerals (CMP) Q4 adj EPS loss (-$0.77) vs. est. loss (-$0.44) on revs $208.8M vs. est. $213.5M; Q4 adj Ebitda $15.6M; said alt sales volumes for 2025 at midpoint of guidance are expected to increase about 9% over 2024; said annual Plant Nutrition sales volumes increased 25% in 2024 to 273 thousand tons.
  • Kosmos Energy (KOS) walked away from its plan to buy West Africa-focused Tullow Oil saying it does not intend to make a firm offer for Tullow at this time. The announcement comes less than a week after KOS revealed it was in early talks for an all-share acquisition of Tullow.
  • Joby Aviation, Inc. (JOBY) announced it has completed a landmark series of major aerostructure tests for certification credit with the Federal Aviation Administration (FAA).
  • Nucor corp. (NUE) guides lower, as see Q4 EPS of $0.55-$0.65 below consensus of $0.87 (follows lower guidance from comp STLD the day prior in steel sector).
  • Owens Corning (OC) upgraded to Overweight from Equal Weight at Wells Fargo.
  • The Biden administration will provide a $15B low-interest loan commitment to PG&E (PCG) to support hundreds of projects aimed at fighting the effects of climate change and improving the electrical grid – WSJ.

Financials

  • Affirm Holdings, Inc. (AFRM) announced $750M aggregate principal amount of Convertible Senior Notes due 2029 and expects to use the net proceeds to repurchase up to $300M of shares of its Class A common stock.
  • Marqeta (MQ) downgraded to Equal Weight from Overweight at Barclays.

Healthcare

  • Jazz Pharmaceuticals (JAZZ) announced that Bruce Cozadd, Co-Founder, Chairperson and Chief Executive Officer (CEO), has informed the Board of Directors of his intent to retire from his role as CEO upon appointment of the Company’s next leader, expected by the end of 2025.
  • Rockwell Medical (RMTI) enters into a multi-year product purchase agreement with the world’s leading provider of dialysis products and services. Partnership is expected to generate upwards of $10 million in net sales for the Company in 2025, with incremental price increases each subsequent year and an effective term of up to five years

Technology, Media & Telecom

  • eBay Inc (EBAY) said on Dec 12, board authorized additional $3B for stock repurchase program
  • Mitek Systems (MITK) Q4 adj EPS $0.33 vs est. $0.17, adj EBITDA $15.4Mm vs est. $8.314Mm on revs $43.222Mm vs est. $41.31Mm; guides FY25 revs $170-180Mm vs est. $179.52Mm and adj EBITDA mgn 24-28%.

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Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.