Early Look

Monday, December 23, 2024

U.S. stock index futures are mixed ahead of the holiday shortened week, helped by news of a last-minute government funding bill which averted a shutdown, while investors head into the historically strong period known as the “Santa Claus rally”. On early Saturday, U.S. Congress passed spending legislation minutes after the funding had expired, which could have disrupted several parts of the U.S. government into the Christmas holiday. Trading volumes are expected to be thin, with U.S. stock markets closing early on Tuesday and shut for Christmas on Wednesday. Stock markets closed lower last week, with the S&P 500 falling -1.98%, the Nasdaq declining -1.78%, and the Dow falling -2.25% after the Fed changed its outlook on rate cuts next year to a less aggressive stance. Stock markets have been on a solid run since the presidential election in November, but the rally hit a bump this month after the Federal Reserve forecast just two 25-basis-point cuts for 2025 – down from its September view of four cuts – and raised its annual inflation outlook. Stocks got a bounce however late last week after a cooler-than-expected inflation report eased some worries about interest-rate cuts next year, helping the three main U.S. stock indexes to bounce back. Markets will enter a historically strong period for U.S. stocks next week. Since 1969, the last five trading days of the year, combined with the first two of the following year, have yielded an average S&P 500 gain of 1.3% – a period known as the “Santa Claus Rally”, according to the Stock Trader’s Almanac.  In Asian markets, The Nikkei Index jumped 459 points to 39,161, the Shanghai Index fell -16 points to 3,351, and the Hang Seng Index gained 162 points to 19,883. In Europe, the German DAX is flat at 19,883, while the FTSE 100 edges up a few points to 8,089. Bitcoin prices edge lower trading just under $96,000 after its first weekly decline since Donald Trump’s election victory (Bitcoin was down 9.5% for the seven-day period last week while Ether and meme-crowd favorite Dogecoin, suffered a sharper decline of about 12%.)

• The Dow Jones Industrial Average rose 498.02 points, or 1.18%, to 42,840.26.
• The Nasdaq Composite gained 199.83 points, or 1.03%, to 19,572.60.
• The Russell 2000 Index advanced 20.87 points, or 0.94% to 2,242.37.

• 10:00 AM ET                Consumer Confidence for December
• 1:00 PM ET U.S. Treasury to sell $69B in 2-year notes

• Earnings After the Close: LMNR

• President-elect Donald Trump said that the Panama Canal is charging “exorbitant prices and rates of passage” on US naval and merchant ships, and he demanded that fees be lowered, or else Panama should return the canal to the US.

• Boston Beer (SAM) forecasts FY EPS $3.80 to $5.80, down from prior forecast $5.50 to $7.50; still forecasts FY adj EPS $8.00 to $10.00, vs. est. $8.74 and still forecasts FY gross margin 44% to 45%, est. 44.2%.
• Honda Motor Co. (HMC) 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
• Hyatt Hotels Corporation (H) disclosed it has executed an exclusivity agreement with Playa Hotels & Resorts N.V. (PLYA) under which Playa has agreed to negotiate exclusively with Hyatt regarding potential strategic alternatives, which may include the acquisition of Playa by Hyatt.
• Nio Inc. (NIO) started sales of its most expensive car, priced from 788,000 yuan (of $108,000), as it seeks to double deliveries in 2025 and eventually become profitable. The 10-year-old automaker officially launched the flagship ET9 battery-electric sedan at its annual customer event Saturday in Guangzhou.

• Nippon Steel Corp. (NPSCY) alleges the White House had undue influence over a national security review of the Japanese company’s $14.9 billion bid for United States Steel Corp. (X) and threatened legal action if the deal is blocked, Reuters reported.
• Petrobras (PBR) said it has decided to terminate a contract to sell its stakes in the Urugua and Tambau oilfields to Brava Energia-controlled Enauta. “The closing of the transaction was conditional, among other factors, on the conclusion of the acquisition by Enauta of the FPSO Cidade de Santos, owned and operated by MODEC, which did not materialize.”
• Ring Energy (REI) files $150M mixed securities shelf.

• Bank of America Corp. (BAC), JP Morgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC) and other banks; the Consumer Financial Protection Bureau sued the banks along with the parent company of Zelle alleging the firms rushed a peer-to-peer payment network to market without adequate consumer protections.

• Prosus announces that it has entered into a definitive agreement to acquire Despegar (DESP) a leading Latin American Online Travel Agency, for $19.50 per share, equating to a 33% premium to the closing share price as of December 20.
• Qualcomm (QCOM) prevailed at trial against Arm’s claim that it breached a license for chip technology that the world’s largest maker of mobile-phone processors acquired when it bought a startup in 2021.
• Rumble (RUM) shares rise over 40% pre mkt 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 103.3 mln shares of RUM Class A Common Stock at a price of $7.50/share.
• Xerox Holdings (XRX) said it would buy Lexmark International, the maker of printers and printing software, in a$1.5 billion deal. Lexmark was formed as a spinoff of IBM in March 1991; XRX to cut dividend.