Mid-Morning Look

Tuesday, December 16, 2025

U.S. stocks open mixed to slightly lower following a fairly muted reaction to better-than-expected (delayed) November jobs growth as the economy added 64,000 Nonfarm payrolls last month, topping estimates for a 50K advance, though the unemployment rate last month rose unexpectedly to 4.6% from 4.4%. A lower close for the S&P 500 today would make it three down sessions in a row while the Nasdaq 100 (QQQ) looks to avoid its first 4-day losing streak since the middle of August as losses in Ai names were again the culprit for yesterday’s market decline (and again carrying over today with semis, data center and power names extending losses) Today, early leaders are hard to fins with Communications higher while Energy, Healthcare and Consumer Staples lead the declines. US Fed funds futures slightly raise odds of rate cut in January after jobs data to 31% vs 22% just before. Major averages having trouble gaining momentum with the S&P 500 (SPX) battling around 6,800 and Nasdaq 23,000. Oil prices falling over -2% to lowest levels since before summer a real drag on energy stocks. Stocks now accelerating to downside, currently at lows of session.

• U.S. November average hourly earnings all private workers +0.1% from prior month. U.S. November U-6 underemployment rate 8.7% (highest since July 2021 as well)
• ADP reported that U.S. private employers added an average of 16,250 jobs per week over the four weeks ended November 29. The firm noted that continued strengthening in the second half of November points to a potential rebound in hiring momentum heading into year-end.
• Oct retail sales were unchanged below consensus +0.1% and vs Sept +0.1% (prev +0.2%); Oct gasoline sales -0.8% vs Sept +1.9% and Oct cars/parts sales -1.6% vs Sept -0.1%
• US Oct Retail Sales Ex-autos/gasoline +0.5% vs Sept unchanged (prev +0.1%); Oct Retail Sales Ex-autos/gas/building Materials/food services +0.8% (cons +0.4%) vs Sept -0.1% (prev -0.1%).
• U.S. S&P Global December flash composite PMI at 53.0 (vs 54.2 in November), U.S. S&P Global December flash services PMI at 52.9 (forecast 54.0) and S&P Global December flash manufacturing PMI at 51.8 (forecast 52.0).

• In Vertical Software: Keybanc upgraded TRMB to Overweight from Sector Weight on renewed confidence in ARR & EPS growth framework, downgraded GTLB to Sector Weight on incremental execution risk, and have highest conviction ideas TTAN, ADSK, APPF in Vertical Software 2026 outlook. The firm said looking back, 2025 will be remembered as the year of “AI (trying) to eat software,” as investor sentiment soured on software broadly. That said, the firm enters 2026 expecting a continuation of many similar Ai themes and a similar macro.
• In Defense: In Research, GD and LHX were both upgraded to Overweight at Morgan Stanley, downgrade LMT to Equal Weight in A&D 2026 outlook as sees Aerospace as Attractive in 2026. Global air traffic trends positively and new Aircraft production from Boeing, Airbus, and Embraer improve. Morgan sees Defense as Attractive in 2026. The sector provides good value as stocks are not reflecting the growth in US Defense budget. The firm introduces an In-Line view for Government Services and keeps its ratings unchanged with EW-rated AMTM and relative UW-rated VVX.
• In Multi industry: ITW was downgraded from Neutral to Sell at Goldman Sachs with $230 tgt as they believe the company’s organic/EPS growth will continue to underpace Large Cap Cyclical peers. Going forward, while they are sanguine on industrial activity inflecting, across large cap cyclicals, ITW has significant consumer leverage. The firm also upgraded ROK from Sell to Neutral and raise tgt to $448 from $329 as believes the company is in the early stages of structurally improving pricing across the organization, which could provide significant operating leverage going forward. Goldman double upgraded CGNX to Buy from Sell and PH remains their preferred name within short-cycle industrials.

• KHC +1%; as food stocks bounce, said that Steve Cahillane, a veteran industry executive and former Kellanova CEO, will take over the top role at Kraft Heinz, on Jan. 1.
• LUV +2%; Barclays upgraded LUV to Overweight from Equal Weight (tgt to $56 from $34) saying they are positive on the company’s new commercial strategy, which includes assigned seating and bag fees.
• ROKU +1%; was double upgraded to Overweight from Underweight at Morgan Stanley ($135 tgt) and upgraded OUT to Overweight as the firm raises US advertising 150bp to +10.5% growth in ’26 on digital strength, with connected TV expected to be the fastest area of growth in a healthy Ad market.
• ZG +4%; shares rebound after several Brokers defend post GOOGL news on Monday that the company is testing for-sale real estate listings, which weighed on Zillow shares.

• HUM -2%; shares slipped after saying Insurance segment President George Renaudin will retire by Q3 2026 after a 29-year tenure; Aaron Martin, former VP of Healthcare at Amazon, to join in Jan 2026; company also reaffirms FY 2025 GAAP EPS guidance at about $12.26 and adjusted EPS at about $17.00.
• INSP 4%; down a 6th straight day (-20% in that span) as Oppenheimer noted a third-party INSP note garnered significant attention Monday with the insinuation that Medicare administrative contractors (MACs) are undergoing a multi-jurisdictional review on the coding discrepancy in HGNS current facility rates.
• NAVN -13%; announced quarterly beat for Q3 and better Q4 revs, while CFO departs.
• NKTR -5%; reported results from a mid-stage study of its drug in alopecia areata; said rezpegaldesleukin, narrowly missed the main goal of achieving statistically significant reduction in severity in a mid-stage study; says both treatment arms met statistical significance on the main goal when excluding four patients with major study eligibility violations.
• PFE -3%; guides FY26 revs to $59B-$62.5B vs $61.6B est, FY26 EPS guide $2.80-$3.00 vs $3.05 est. and reaffirms FY25 EPS guide, sees FY25 rev guide $62B vs $61B-$64B – came at investor/analyst day.
• RDNT -5%; following negative piece at Hunterbrook: “RadNet’s much-hyped AI business is a sideshow. Less than 5% of the medical imaging company’s revenue — about $65 million out of $1.5 billion in the first nine months of 2025 — comes from its newfangled Digital Health division.
• STUB -8%; downgraded to Market Perform from Outperform at Citizens as now expect competition to be more robust in 2026, limiting share gains and increasing marketing spend as the firm reduces its estimates materially.
• VITL -9%; after the egg producer cut its annual net revenue forecast to $755M-$765M from at least $775M prior to reflect a temporary disruption in returning to regular order patterns following the company’s ERP system transition at the beginning of the fourth quarter/ issues long-term financial targets.