Market Overview

The stock market opened the week with mixed results. The Nasdaq Composite declined by 0.4% due to losses in the mega-cap sector. In contrast, the S&P 500 increased by 0.2%, the Russell 2000 by 0.2%, and the Dow Jones Industrial Average by 0.9%. Despite a pickup in buying activity in the afternoon, the market sentiment was initially negative, influenced by rising market rates and persistent inflation concerns.

Market Rates and Inflation Concerns

- The 10-year Treasury yield rose by three basis points to 4.80%. - The 2-year Treasury yield remained unchanged at 4.40%. - The 30-year bond yield increased by two basis points, settling just below 5.00% at 4.99%.Rising oil prices, which reached $78.99 per barrel (+3.6%), and the New York Fed's Survey of Consumer Expectations heightened fears of prolonged inflation. The expectations remained at 3.0% for the one-year horizon and increased to 3.0% from 2.6% for the three-year horizon. The five-year horizon expectations decreased to 2.7% from 2.9%.

Market Breadth and Individual Stock Movements

Initially, market breadth favored decliners, with a 3-to-2 margin at the NYSE and a 2-to-1 margin at the Nasdaq. By the close, advancers led decliners by an 11-to-10 margin at the NYSE, while decliners led advancers by a 4-to-3 margin at the Nasdaq. Significant movements were noted in stocks with specific news:- UnitedHealth (UNH) surged 3.9% to $541.14 after news of a proposed 4.3% increase in Medicare Advantage plan payments. - Moderna (MRNA) fell 16.8% to $35.15 after reducing its FY25 revenue outlook.

Sector Performance

Bank stocks performed well ahead of earnings reports from major sector players, with the SPDR S&P Bank ETF (KBE) rising by 1.2%.

Economic Data and Market Performance

There was no significant U.S. economic data released today. Year-to-date performance for major indices is as follows: - S&P Midcap 400: +0.1% - Nasdaq Composite: -1.2% - S&P 500: -0.8% - Russell 2000: -1.6% - Dow Jones Industrial Average: -0.6%

Upcoming Economic Events

Tuesday's economic schedule includes: - 6:00 ET: December NFIB Small Business Optimism (previous: 101.7) - 8:30 ET: December PPI (expected: 0.3%; previous: 0.4%) and Core PPI (expected: 0.2%; previous: 0.2%)

Overseas Markets

- Europe: DAX -0.4%, FTSE and CAC markets closed - Asia: Nikkei market closed, Hang Seng -1.0%, Shanghai -0.2%

Commodities

- Crude Oil: +2.67 at $78.99 - Natural Gas: +0.03 at $3.43 - Gold: -33.60 at $2,680.10 - Silver: -0.91 at $30.33 - Copper: +0.03 at $4.33

UNH,MRNA,KBE

Today's News

Nvidia (NVDA, Financial) shares fell 3% after reports surfaced about delays in equipping data centers with its latest AI chip racks. The issues, primarily overheating and connectivity problems with the Blackwell chips, have reportedly led major clients like Microsoft (MSFT, Financial), Amazon (AMZN, Financial), and Google (GOOGL, Financial) to reduce their orders. Despite these challenges, a source close to Google mentioned that their data center plans are proceeding without delays.

Honeywell (HON, Financial) saw a 1.8% rise in shares following news of a potential company breakup. Under pressure from activist investor Elliott Investment Management, Honeywell is considering splitting into two separate entities focusing on automation and aerospace/defense. This move, expected to be announced with its Q4 earnings, could significantly boost the company's valuation.

D-Wave Quantum (QBTS, Financial) experienced a 19% drop in premarket trading after announcing a $150M stock offering. The company also disclosed a significant share sale by its stockholder, Public Sector Pension Investment Board, as part of a previous SPAC merger. These developments have raised concerns among investors about the company's financial strategy.

Morgan Stanley increased its price target for Tesla (TSLA, Financial), citing the potential of its robotaxi business as a transformative force. Analysts believe Tesla's unique capabilities in AI and autonomous ridesharing can offset challenges in the EV market, projecting significant growth in its global vehicle fleet by 2030.

Starbucks (SBUX, Financial) is implementing new store policies requiring customers to make a purchase to use the facilities. This change aims to improve store operations and customer experience by reducing congestion and ensuring a welcoming atmosphere. The company is also introducing measures to prevent harassment and other disruptive behaviors.

Arm Holdings (ARM, Financial) shares dipped 2.6% amid reports of a potential price hike of up to 300% for its chip designs. This strategy, proposed by CEO Masayoshi Son, aims to significantly boost Arm's revenue over the next decade. The company licenses its technology to major players like Apple (AAPL, Financial) and Qualcomm (QCOM).

Edison International (EIX, Financial) shares dropped 13.2% as investigations continue into whether its infrastructure contributed to a wildfire in Los Angeles. The company reported a downed conductor near the fire's origin, but the cause of the damage remains unclear. This development has heightened scrutiny on the utility's operations.

Civitas Resources (CIVI, Financial) gained 2.7% after Morgan Stanley initiated coverage with an Overweight rating. The firm highlighted Civitas' strong free cash flow and recent regulatory agreements as key factors supporting its high shareholder return potential. The company's expansion into the Permian Basin has enhanced its operational flexibility.

Lululemon (LULU) is receiving positive attention following strong holiday sales performance, driven by successful product categories and collaborations. Analysts expect continued growth, particularly in China, where new store openings and strategic initiatives are boosting sales. The company is also benefiting from favorable markdowns compared to last year.

Tempus AI (TEM) reported a 35% increase in Q4 revenue, though shares fell 14% as the figures slightly missed Wall Street estimates. The company remains optimistic about its growth prospects, citing strong demand for its AI solutions and strategic initiatives to enhance its market position.

Aehr Test Systems (AEHR) shares plummeted 21.8% after missing earnings and revenue estimates for Q2. Despite the setback, the company reaffirmed its revenue guidance for the fiscal year, highlighting its commitment to achieving long-term growth targets and maintaining a strong backlog of orders.

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