Mid-Morning Look

Thursday, December 04, 2025

U.S. stocks are struggling for direction early, as the S&P 500 and Nasdaq have posted gains eight of the last nine trading days coming into today, but the bounces lately have been smaller and smaller as Wall Street awaits key PCE inflation data tomorrow and the FOMC policy meeting next week where a 25ps cut is anticipated. While a weaker ADP private payroll report backed Wall Street calls for a Fed rate cut next week, today’s weekly jobless claims data did not, as jobless claims tumble to lowest level in more than three years. Outside of a handful of notable earnings movers, stock market volumes remain light as investors remain in a “wait and see” mode. No standout sector leaders or laggards early with Utilities, Industrials and Financials higher while Consumer Staples, Materials and Healthcare lead to the downside. Bitcoin has dropped by -1% early under 93K while gold and oil are little changed.

• Sept Factory orders +0.2% below consensus +0.5% and vs Aug +1.3%; Sept Factory orders ex-transportation +0.2% vs Aug -0.1% (prev +0.1%), Sept Factory orders ex-defense unchanged vs Aug +0.7%. September computers/electronics products orders +0.5%, vs Aug -1.1% and nondurables orders -0.1% vs Aug -0.4%; U.S. Sept inventories/shipments ratio 1.56 months’ worth vs Aug 1.56 months.

• In Payments: J.P. Morgan said they prefer shares of payment and fintech companies with pricing power, strong incremental margins, and front book velocity for 2026. The firm upgraded TOST to overweight from Neutral on expectation of strong growth while downgraded PYPL and FISV to Neutral from Overweight saying valuation concerns persist. AI-driven commerce may lift sentiment for payment names; best exposure is through networks like MA, Visa (V) which is top picks 2026, while PYPL has the most to prove. The firm said lending is likely here to stay, and if performance holds, stocks like XYZ, CHYM and KLAR could see meaningful share gains.
• In Homebuilders: CCS (tgt to $56 from $62) and LEN (tgt to $115 from $118) both downgraded to Underweight from Neutral at JP Morgan saying following a challenging 2025, they maintain their more cautious stance on the sector for 2026 as expects an unfavorable demand/supply backdrop to bring additional pressure and downside risk for builder fundamentals. The firm also upgraded TOL to Overweight from Neutral (tgt to $161 from $138) as views Toll’s valuation as attractive given the company’s solidly above average gross and operating margins.
• In REITs: Keybanc made several ratings changes as they upgraded BXP, CURB and EGP to Overweight from Sector Weight in REITs while downgraded shares of BDN, KRC, LXP and REG to Sector Weight saying REITs appear expensive vs the 10-yr Treasury and investment grade bonds; much more favorable vs the S&P 500. AFFO multiples could expand and/or hold steady in 2026; growth may improve, and cap rates may compress if rate cuts materialize and required returns decrease. Defensive growth may benefit given uncertainty around the future path of interest rates, jobs, and credit.

• DG +10%; raises FY sales growth view to 4.7%-4.9% from 4.3%-4.8%; Dollar General 3Q-end total merchandise inventories down 8.2% on avg per-store basis; now sees FY Capital spending toward lower end of $1.3B-$1.4B view; raises FY same-store sales growth view to 2.5%-2.7% from 2.1%-2.6%.
• HRL +3%; posted mixed Q4 with EPS beat but slight sales miss while expects FY2026 adj EPS between $1.43 and $1.51, with the midpoint above analysts’ average estimate of $1.45.
• META +4%; after Bloomberg reported the company is expected to cut its Metaverse budget by as much as 30% next year, a group that includes the company’s virtual worlds product Meta Horizon Worlds and its Quest virtual reality unit. Cost cuts of this size will most likely include layoffs as early as January.
• PATH +17%; reported better FQ3 ARR results and issued slightly higher FQ4 ARR guidance; the Q3 and FQ4 guidance implies net new ARR growth for the first time since FQ324 driven by improved execution; the company also noted customers adopting agentic solutions are creating pull-through of broader platform.

• CURV -15%; shares fell after reported Q3 EPS loss of ($0.06), below consensus of ($0.02) from weaker sales due to an execution miss on tops and Associated markdowns and mgmt lowered F25 guidance to net sales of $995M-$1.002B (from $1.015-1.030B) and $59-62mm adj. EBITDA (from $80-90mm).
• GCO -27%; as Q3 adj EPS $0.79 missed the $0.88 estimate while cutting its FY26 profit and sales outlook on weaker footwear traffic and consumer spending patterns; now sees FY26 sales to grow about 2% (vs. prior view 3%-4%) and comparable sales about 3% (down from prior 4%-5%).
• MBX -4%; shares declined after Goldman Sachs initiated at Sell and $18 PT saying the key issue for MBX will be whether its platform shows validity beyond canvuparatide, with upcoming Ph2a Post-Bariatric Hypoglycemia data in 2Q26 serving as the next major catalyst but likely falling short of meaningful differentiation.
• PHG -5%; shares fell after saying they continue to expect comparable sales growth to accelerate sequentially in 2026 towards a mid-single-digit percentage (in line with the performance for the last four consecutive quarters); CEO said a doubling of the organic sales growth rate was unlikely next year.
• QURE -9%; shares declined after saying the FDA indicated that data from its Phase I/II studies of an investigational gene therapy for Huntington’s disease are unlikely to provide primary evidence to support a biologics license application submission.
• SNOW -10%; delivered solid 3QFY26 results, raised FY26 revenue growth guidance (+28% YoY), and saw an acceleration in RPO growth (+37.5% YoY), but shares slipped after guidance for operating margins came in weaker than expected, implying that the just-reported great operating margins aren’t sustainable.