Mid-Morning Look

Monday, December 08, 2025

U.S. stocks are mixed early, holding in fairly tight range overnight/this morning as Wall Street awaits the FOMC policy meeting results on Wednesday. Tech continues to be the main driver of the broader market, as the Philadelphia Semiconductor index (SOX) hit record high of 7,400 before paring gains, while shares of AVGO surge above $400 per share ahead of earnings this week. Note the S&P Technology sector (XLK) is looking for its 11^th consecutive day in positive territory as is the Dow Transport Index. Outside of strength in Tech, Biotech seeing a bounce following several drug company updates at industry conferences this weekend (67^th Annual ASH among the biggest), with big moves higher for ACLX, DYN, FULC, GPCR, KYMR, NRIX, OCUL, WVE among others. There are also several notable movers following the S&P index announcement changes late Friday (CVNA, CRH, FIX) and some M&A news in tech as IBM acquired CFLT in a $11B deal. Finally move developments in the WBD/NFLX/PKSY media saga as Paramount launches a hostile bid for all of Warner Brothers a day after NFLX agreed to buy WBD’s film studios and streaming division for $72B on Friday. Gold and silver prices slip after rising last week amid growing confidence that the U.S. Federal Reserve will cut interest rates at its two-day policy meeting this week, while a softer dollar added support. Markets widely expect a 25-basis-point rate cut, with traders seeing a 90% probability, up from about 66% in November. The Fed’s Open Market Committee (FOMC) will conclude its meeting on Wednesday with its final policy decision of the year, followed by remarks from Chair Jerome Powell. U.S. Treasury yields climb after earthquake in Japan; yield on 10-year Treasury notes last up 4.1 bps  at 4.18%, hitting 2-1/2 month highs.

• Auto changes at Morgan Stanley: GM was upgraded to Overweight while downgraded LCID, RIVN to Underweight driven by its negative EV outlook and CAR downgraded to Equal Weight saying they are taking a more cautious view on the Auto Industry heading into 2026 after a surprisingly resilient 2025: 2025 US Auto sales seasonally adjusted annual rate (SAAR) demonstrated greater resiliency than anticipated despite the policy uncertainty and fears around Consumer Confidence, buoyed by two pre-buy Dynamics – autos broadly ahead of tariff implementation and Battery Electric vehicles (BEVs) ahead of consumer tax credit expiry. Top OW ratings are GM, CVNA, while moves all stocks in their US Supplier coverage (ADNT, APTV, AXL, BWA, LEA) to Equal-weight to reflect the mixed outlook and reiterate its generally positive view on US Franchise Dealer stocks driven by insulation from lower-income consumer and more resilient earnings, albeit with more moderate risk-return profiles vs CVNA (favorite idea in Auto retail).
• Homebuilding & Building Products: SKY, COMP, KBH were all upgraded to Overweight at Barclay’s, downgraded MAS to Equal Weight and both LEN, SITE to Underweight saying they expect another year of declines in single-family housing starts, as the housing market remains far from balanced. That leaves homebuilders volatile, with no cycle call to be made. Barclay’s views building products and distributors as more compelling than homebuilders entering 2026. In a separate report, the firm initiated on LPX at Overweight and JHX at Equal Weight as forecast single Family housing starts falling 9%, multifamily starts up 7%, R&R spending up 2%, and Existing Home Sales up 6%.
• In Transports: Morgan Stanley with several changes in sector update as the upgraded ODFL, CP to Overweight from Equal Weight as raised their Freight Transportation industry view to Attractive for 2026 as believes risk-reward is the best it has been since 2020, even if the coast is not entirely clear. The demand side of the Cycle has been in unprecedented territory since the de-stocking downcycle definitively ended in mid-2024, bouncing along the bottom with no sustained recovery. It appears the market was waiting for one specific catalyst after another – first interest rate cuts in 2H24, then the election in Nov 2024 and finally tariff clarity, all through 2025. KNX remains their #1 ranked stock for 2026 overall but is now followed by GXO and Ryder (R) with CNI and CP rounding out the top 5, while EXPD, XPO, FDX, UPS and CHRW continue to bring up the rear.

• CFLT +26%; as IBM confirmed a report in the WSJ overnight, buying Confluent for $31 per share in cash, valuing the data streaming company at about $11B. Confluent has 6,500+ customers and says its TAM has doubled to $100B. IBM says the deal should strengthen its data and automation stack for enterprise AI.
• CVNA +7%; after S&P Dow Jones Indices announced that Carvana will be added to the S&P 500 index as part of the quarterly rebalance (FIX and CRH were also added to the S&P 500 while LKQ, SOLS, MHK were removed.
• FULC +53%; shares jumped after saying that a higher dose of its experimental pill for sickle cell disease was more effective at inducing an alternative form of the oxygen-carrying molecule hemoglobin; in the early stage study, 12 patients saw their levels of fetal hemoglobin rise from 7.1% of the total hemoglobin in their blood to 16.9%.
• GPCR +162%; shares jumped after saying its experimental drug aleniglipron at a dosage of 120mg showed an 11.3% reduction in weight in a mid-stage study, a figure that was statistically significant compared to placebo at 36 weeks; while another study exploring higher doses of aleniglipron showed weight loss of up to 15.3% at 36 weeks.
• KYMR +41%; after saying KT-621 was well-tolerated with no serious adverse events reported; said KT-621 broaden2 phase 2B trial to severe Ad ongoing, data expected by mid-2027; KYT-621 achieves 94% and 98% stat6 degradation in skin and blood.
• NRIX +14%; presented updated safety/efficacy results from P1 trials evaluating Bexobrutideg (Bexdeg) and ONC’s BGB-16673 in heavily pretreated R/R CLL at this weekend’s ASH meeting as Stifel said it further strengthens its confidence in the potentially best-in-class profile of Bexdeg and the selection of 600mg as the go-forward dose.
• WBD +6%; after PSKY launches all-cash tender offer to acquire WBD for $30 per share in proposed deal for $108.4B. Paramount Skydance Corp: Paramount’s proposed transaction is for entirety of WBD, including global networks segment. News comes after Netflix agreed to buy WBD’s film studios and streaming division for $72B on Friday.
• WVE +105%; after saying its experimental obesity drug WVE-007 helped cut deep belly fat and boost muscle mass in an early-stage study; three months after treatment, patients on the drug had 9.4% less visceral fat and 4.5% less total body fat, compared with their own baseline, with no statistically significant changes in the placebo group.

• KMDA -4%; announces discontinuation of its phase 3 inhaled AAT clinical trial; reiterates 2025 full-year guidance and projects double-digit growth in revenues and profitability in 2026; projects double-digit growth in revenues and profitability in 2026.
• LEGN -9%; announced new long-term clinical and translational data for CARVYKTI from the CARTITUDE-1 and CARTITUDE-4 studies in relapsed / refractory multiple myeloma, RRMM, patients. In triple-class-exposed patients who had received three prior lines of therapy, a median progression-free survival, mPFS, of 50.4 months, was observed following a single infusion of CARVYKTI.
• MRVL -9%; shares pressured amid several headlines: 1) was downgraded to Hold from Buy at Benchmark citing the loss of Amazon’s Tranium 3 & 4 Designs to Taiwan’s Alchip. Benchmark expects this is the primary factor in the company’s projected slowing to only 20% XPU growth in CY26. 2) was snubbed by not being added to the S&P 500 index late Friday (Stephens analyst expected MRVL to join S&P 500 index); 3) MSFT is in talks to Design custom chips with AVGO, switching its business from MRVL, the Information reported https://tinyurl.com/yyrmh8n5
• NFLX -4%; to its lowest level since April 2025 after Paramount launches a hostile bid for Warner Brothers.
• TSLA -2%; was assumed coverage at Equal weight (down from Overweight) with a $425 price target at Morgan Stanley noting Tesla is a clear global leader in Electric vehicles, manufacturing, renewable energy, and real world Ai and thus deserving of a premium valuation. However, high expectations on the latter have brought the stock closer to fair valuation and sees downside to estimates.