Early Look

Tuesday, December 24, 2024

U.S. are futures are mixed following a “melt up” session on Monday that left major averages at their highs rising about 1% for the tech heavy Nasdaq and +0.7% for the S&P 500, extending their year-to-date returns to +31.67% YTD and +25.25% YTD respectively. The gains helped propel the Nasdaq Composite to its third straight increase, and a second advance in three sessions for the S&P 500, though the Smallcap Russell 2000 index fell amid a spike in Treasury yields as the 10-year neared 4.6%, its highest levels since May. Stock market news very quiet overnight ahead of this holiday shortened trading session as U.S. stock markets close at 1:00 PM today and is closed tomorrow for Christmas Day. Note, markets technically enter a historically strong period for U.S. stocks next week starting today. 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 dropped -124 points to 39,036, the Shanghai Index gained 42 points to 3,393, and the Hang Seng Index advanced 215 points to 20,098. In Europe, the German DAX was closed, while the FTSE 100 rises 49 points to 8,151.

After a solid run since the November presidential election, Wall Street’s rally hit a bump this month, especially after the U.S. Federal Reserve forecast just two 25-basis-point rate reductions for 2025 – down from its September view of four cuts – and raised its annual inflation outlook. This included a selloff last Wednesday triggered by the U.S. Federal Reserve signaling a slower rate-cut pace, lifting the dollar and Treasury yields further which sunk interest rate sensitive sectors. Note stock market strength remains very concentrated as @Barchart tweeted last night “Top 10 stocks now account for an all-time high 39.9% of the S&P 500 $SPX.” The Mag 7 names (AAPL, AMZN, GOOGL, META, MSFT, NVDA, TSLA) and you can throw in NFLX have continued to keep major averages higher the last few months, with many of them hitting all-time highs. The Communications sector (XLC) is +35% YTD followed by Consumer Discretionary (XLY) +28% YTD and Technology (XLK) is up 23.7% YTD. The only non-tech sector also leading is Financials (XLF) +28.75% YTD. Meanwhile Healthcare (XLV) is up only +1.75% YTD, REITs (XLRE) +1.2% YTD, Energy (XLE) flat on year and Materials (XLB) -0.55% YTD).  

• The Dow Jones Industrial Average rose 66.69 points, or 0.16%, to 42,906.95.
• The Nasdaq Composite jumped 192.29 points, or 0.98%, to 19,764.88.
• The Russell 2000 Index declined -4.94 points, or 0.22% to 2,237.43.

• 10:00 AM ET                Richmond Fed Index for December…prior -14
• 1:00 PM ET U.S. Treasury to sell $70B in 5-year notes

• China’s policymakers plan to sell a record 3 trillion yuan ($411 billion) of special treasury bonds in 2025, Reuters reported on Tuesday, a move aimed at bolstering the slowing economy. The plan would be a sharp increase from this year’s 1 trillion yuan.

• Red Robin Gourmet Burgers (RRGB) files for shelf of up to 1.6 mln shares of common stock by selling stockholders.
• Starbucks’ (SBUX) said their strike at U.S. stores will expand to over 300 stores on Tuesday, with more than 5,000 workers expected to walk off the job, before the five-day work stoppage ends later Christmas Eve, the workers’ union said. (note SBUX shares fell for an 8th straight session Monday and dropped below its 2000dma support of $88.18).

• Blue Bird Corp (BLBD) files for mixed shelf; size not disclosed.
• Mercury Systems Inc (MRCY) awarded a two-year, $17M development contract from a U.S. defense prime.

• Banks (BAC, C, JPM, WFC): the Federal Reserve announced changes to bank stress tests saying, in view of the evolving legal landscape, the Federal Reserve Board will soon seek public comment on significant changes to improve the transparency of its bank stress tests and to reduce the volatility of resulting capital buffer requirements. Other changes include public disclosure of models used, feedback on hypothetical scenarios, and averaging results over two years to lessen volatility in capital requirements.

• Avita Medical (RCEL) said the FDA approved its premarket approval supplement for Recell Go mini, an extension of its skin-repair product line for smaller wounds.
• AstraZeneca (AZN) has voluntarily withdrawn its marketing authorization application with the EU’s medicines regulator for its experimental precision drug datopotamab deruxtecan (Dato-DXd) for the treatment of a type of lung cancer, which has been jointly developed with Japan’s Daiichi Sankyo.
• 10x Genomics (TXG) announced it had secured a permanent injunction in the U.S. District Court for the District of Delaware against the GeoMx products sold by Bruker (BRKR), which acquired the product line from NanoString Technologies.
• Viatris (VTRS) said the FDA has restricted imports of 11 products made at the drugmaker’s facility in India after the regulator’s inspection found it had violated federal requirements.