Overheated Market Simmers Over
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NEWS
Overheated Market Simmers Over
Source: Tenor.com
All four major U.S. indices ended the day in the red for the first time in weeks. Asian markets gained on China’s pledge for more stimulus, but Nvidia shares dropped as China opened an anti-monopoly probe. Extremes in speculative behavior mixed with a cocktail of bad news and geopolitical escalation may make for a shaky year-end. 👀
Today’s issue covers China jumping with tech stocks dumping, a recap of Monday’s M&A activity, and other noteworthy pops and drops. 📰
Here’s the S&P 500 heatmap. 2 of 11 sectors closed green, with healthcare (+0.29%) leading and communications (-2.13%) lagging.
Source: Finviz.com
And here are the closing prices:
|
S&P 500 |
6,053 |
-0.61% |
|
Nasdaq |
19,737 |
-0.62% |
|
Russell 2000 |
2,393 |
-0.67% |
|
Dow Jones |
44,402 |
-0.54% |
Most bullish/bearish symbols on Stocktwits at the close: 📈 $HUIZ, $OLLI, $CMRX, $DUO, $SONN 📉 $HSY, $RTX, $TMUS, $CRSP, $PARA*
*If you’re a business and want to access this data via our API, email us.
STOCKS
Chinese Stocks Pop While U.S. Tech Flops 📊
We spoke about this months ago after the initial efforts, but if China’s government has shown anything over the years, it’s that it won’t let its economy be left behind (or at least will fight against the appearance of it being left behind). 😡
Overnight markets surged after China vowed “more proactive” fiscal measures and “moderately” looser monetary policy next year to boost domestic consumption. While policymakers had used policy to prop up a vulnerable property market and manufacturing sector, the consumer side of the coin remained weak.
Now, it’s stepping up efforts to help its consumers play catchup with its first monetary policy easing in 14 years. 💸
Chinese stocks soared, causing U.S. stocks and other risk assets to jump too. Popular ETFs like $MCHI and individual stocks like Alibaba, JD.com, PDD Holdings, Baidu, and more all caught a major bid, reversing their recent decline.
Source: Stocktwits.com
Strength overseas helped drive gaps higher in several popular U.S. stocks and indexes, but those quickly reversed. There’s no better example of this than Palantir Technologies, which has risen over 400% in one year and 120% in the last 3 months.
The stock gapped to new highs above $80 at the open but quickly faded as investors took profits or attempted to short the extended stock. That set the tone for the day, with many winners experiencing similar action, dragging the major indexes lower. 🙃
Source: Stocktwits.com
In addition, semiconductor stocks came under pressure after China opened an antitrust investigation into Nvidia. China’s State Administration for Market Regulation (SAMR) reportedly focuses on Nvidia’s compliance with the terms of its $6.9 billion acquisition of Mellanox Technologies in 2019. Also, Bank of America downgraded AMD to “‘Neutral,’ citing increased competition and delayed AI offerings. 👎️
Overall, the market is taking a breather after weeks and weeks of ramping to the upside. Tops are generally processes, not points, so we’ll see how things develop in the coming days and weeks as investors prepare their portfolios for 2025.
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STOCKS
Other Noteworthy Pops & Drops 📰
M&A activity: A Monday mashup of deals. 🤝
Omnicon Group (-10): The advertising company announced the acquisition of Interpublic Group of Companies ($IPG) via a stock-for-stock deal.
BP (+5%): The oil and gas giant announced a joint venture with Japan’s biggest power producer to invest 4.5 billion pounds in offshore wind farms, allowing it to gain some access to zero-carbon wind energy as it focuses on fossil fuels.
Hershey (+11%): Confectionary company Mondelez International is reportedly exploring an acquisition of the company in a deal that would create a combined company with nearly $50 billion in annual sales.
Arthur J Gallagher (-2%): The insurance brokerage, risk management, and consulting services firm will purchase insurance broker AssuredPartners in a $13.45 billion deal. It will expand its retail middle-market property and casualty focus.
Boliden (+3%): The Swedish miner will pay up to $1.45 billion for two mines from Lundin Mining in a deal to boost its copper and zinc production.
Macy’s (+2%): Barington Capital has partnered with private equity firm Thor Equities to mount an activist push. The group wants Macy’s to cut capital expenditures, raise its buybacks, and “take a hard look at options” for its luxury brands and real estate.
Pactiv Evergreen (+18%): Apollo Global Management’s Novolex will buy publicly traded packaging giant Pactiv Evergreen for around $3.22 billion.
Earnings: A mixed bag of results. 😐️
Oracle (-6%): The computer technology company’s earnings and revenues slightly missed expectations. Like its peers, the stock is struggling to keep up with its own success, rising 80% YTD amid growing competition in its cloud infrastructure unit.
C3.ai (+15%): The small-cap artificial intelligence (AI) company posted its seventh consecutive quarter of accelerating revenue growth, and its loss narrowed. Its fiscal 2025 revenue forecast also topped estimates.
Rent The Runway (-24%): Shares popped then dropped after revenue rose 4.7% YoY and cash flow moved closer to breakeven. Weak average and total active subscribers, paired with modest revenue growth guidance offset the positives.
Telecom stocks tank: “Competition remains competitively intense.” 😬
Comcast Cable CEO Dave Watson said the company expects to lose more than 100,000 broadband customers during the fourth quarter, calling the broadband environment “competitively intense,” especially for price-conscious customers. Comcast fell 10%, dragging AT&T, Verizon, and others lower.
Crypto-linked stocks crack: Last week’s big winners become losers. 🙃
MicroStrategy made another large Bitcoin purchase for $2.1 billion. Apparently, issuing debt to buy Bitcoin at higher and higher prices makes the downside moves in crypto a lot harder to handle. Stocktwits sentiment is ‘bullish’ despite an 8% drop.
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WHAT’S ON DECK
Tomorrow’s Top Things 📋
Economic data: Nonfarm Productivity (8:30 am ET), WASDE Report (12:00 pm ET). 📊
Pre-Market Earnings: MoneyHero ($MNY), AutoZone ($AZO), United Foods ($UNFI), Ollie’s Bargain Outlet ($OLLI). 🛏️
After-Hour Earnings: GameStop Earnings ($GME), Dave & Buster’s ($PLAY), StitchFix ($SFIX), MIND Technology ($MIND). 🎧
P.S. You can listen to all of these earnings calls and more straight from the Stocktwits app or website. You’ll find them on the calendar page and individual symbol pages once they’re set to begin! We’ll see you there. 👍
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🧑💼 McKinsey promotes its smallest group of Partners in years
🤷 Trump says he doesn’t plan to remove Fed chairman Jerome Powell
📺️ Comcast gets Max U.S. bundling rights under Warner Bros. Discovery renewal deal
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Author Disclosure: The author of this newsletter holds positions in $PARA. 📋
