Mid-Morning Look

Friday, December 12, 2025

The S&P 500 and Nasdaq move lower on the open but remain on track for a third straight weekly advance, while the Dow Jones Industrial Average, Russell 2000 Smallcaps, Midcaps, the S&P 500, S&P 500 equal-weight, NYSE Composite, and Dow Transports all closed at record highs on Thursday in what has been a real push into year end. After a 13-day winning streak for the S&P technology sector (XLK) was snapped yesterday amid weakness from ORCL revs/guidance hitting the AI complex; guidance, backlog, and margin concerns from chip giant AVGO last night is now weighing on tech. In commodity prices, another very strong day for gold and silver given a fresh record high for silver prices (on track for its 13^th record close this year around $65 an ounce) and gold surging to 7-week highs (nearing its previous all-time highs) on lower rate cut outlook, weaker dollar and more upside momentum. Oil prices extend declines while nat gas prices have tumbled in 4 days after hitting 3-year highs above $5.00 mln btus just a week ago. Treasury yields edge higher in choppy week post FOMC rate cut. Stocks pulling back to lows an hour after the open, as Tech really weighing here – as the sector most heavily weighted in SPX and QQQ and follows ORCL, AVGO pullbacks hitting Ai space.

• In Brokers & Exchanges: CBOE was upgraded to Overweight from Equal Weight at Barclays and raise PT to $302 from $273 while downgraded TW to EW from Overweight and lower PT to $121 from $132 in sector outlook saying market conditions look constructive going into 2026, particularly for the alts and Wealth Brokers, where BARC is most positive. Barclays said TW shares as more fairly valued at current level while for CBOE, its index options franchise has seen healthy growth over the past several years. SCHW reports monthly activity highlights as Nov core net new assets increase 40% to $40.4B, Nov total client assets $11.83 trillion, up 15% from Nov 2024 and Nov new Brokerage accounts opened 365,000.
• In Transports: UBS assumed Buy rating son AAL (upgraded), ALK, DAL, UAL and a sell on JBLU as the firm has a favorable view on Airlines for 2026 and believe some airline stocks should generate strong returns. RASM compares are easy, supply discipline is persisting, & cost pressures are set to moderate for several Airlines. UBS believes the stocks are also under-owned compared to this time last year; yet uncertain macro uncertainty & consumer resilience are risk. UBS sees continuing tailwinds for network players (DAL, UAL, AAL) and potential for upside to consensus RASM estimates (UBSe 3%+ RASM vs VA cons 2.5-3.0%).
• In Utilities: FRMI shares tumbled after the electric-grid company announced that an agreement with its first tenant at its Texas Matador project had been terminated. In Research, Keybanc provided 2026 outlook for the sector as they upgraded CNP to Overweight and downgraded both AEE & PNW to Sector Weight from Overweight while cutting tgts in the rest of the sector saying they remain positive on the space: The sector continued to enjoy broad tailwinds in 2025 as data center buildout continued to drive RB and EPS upside across the space, particularly for names with power exposure. While talk of the “AI bubble” periodically enters the conversation, the firm sees no bubble here. Keybanc likes its overall positioning: it continues to like its positioning, which favors mid-range VI Utilities and IPPs over wires-only names.
• In Chemicals: APD was downgraded to Neutral from Buy at UBS saying they think the reaction to APD’s Louisiana and NEOM project updates could be overdone (has fallen -9% since). However, now believes medium term adj EPS growth could be lower than its prior estimates, and improvement in FCF/project de-risking could take longer than it initially expected. In Fertilizers (MOS, NTR, CF) shares extending yesterday gains following recent reports that Ukraine hits Russian fertilizer plants; explosions near Veliky Novgorod chemical plant as Russia reports mass drone attack. Also notable, MOS saying at the conference that China announced it was limiting exports through August 2026. LIN shares rise early post Investor Day event.

• GE +3%; outperforms in A&D sector after Citigroup initiated with Buy and $386 price target in large industry initiation note saying A&D is at the center of a number of megatrends – secular, multi-year growth drivers largely not dependent on the economy.
• LIN +2%; after a positive investor meeting, as Wall Street analysts came away from this meeting confident on the ability for LIN to deliver 10%+ EPS growth over time, and more positive on the potential backlog and growth opportunities.
• LULU +12%; after company’s Q3 results beat consensus on sales and earnings on strong international growth and better-than-feared margins, while also announced its CEO Calvin McDonald will step down after a seven-year stint, signaling a potential strategy change; company boosted its full-year EPS guidance on the back of strong sales outside of the US.
• MOS +2%; Fertilizer shares extending yesterday gains following recent reports that Ukraine hits Russian fertilizer plants; explosions near Veliky Novgorod chemical plant as Russia reports mass drone attack
• NX +16%; shares surged more than 30% overnight following earnings results before paring gains; Operating income swelled to $42.9 million from $2.8 million a year earlier. However, sales dipped to $489.8 million from $492.2 million last year.
• RH +9%; despite being downgraded to Hold at Stifel post earnings as the company reported Q3 EPS that fell short of Street expectations, and guided Q4 sales and implied EPS below consensus, despite strong revenue growth and share gains.

• FRMI -36%; after the electric-grid company announced that an agreement with its first tenant at its Texas Matador project had been terminated.
• NTSK -11%; shares fell despite reporting a smaller-than-expected Q3 loss while ARR accelerated 1pt to 34% y/y (to $754M vs. est. $728M), NNARR again grew >45% y/y, and margins beat on higher revs, while 4Q revs were guided solidly above; also guided FY revs $701M-$703M vs. est. $689.8M
• RBLX -4%; downgraded to Neutral from Overweight at JP Morgan, cutting tgt to $100 from $145 saying think shares could take a breather in 2026 due to engagement headwinds, bookings growth slowing, and margins compressing.
• RCUS -4%;  after saying it will stop a late-stage study testing its experimental cancer drug combination in patients with advanced stomach and esophageal cancers after it failed to improve the survival rate; note GILD last year invested $320M in Arcus at $21 per share.
• SNDK -12%; weakness in memory space after massive outperformance from MU, WDC, STX and SNDK; semis in general seeing weakness post AVGO guidance.
• VEEV -3%; was downgraded to Sector Weight at Keybanc saying round of channel checks indicates large Pharma clients in the middle of software evaluations are leaning toward CRM’s offering, suggesting more losses than outlined; and a healthy number of SMB customers have already migrated to CRM from VEEV.