The S&P 500 Index ($SPX) (SPY) Monday closed down -0.61%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.54%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.84%.
Stocks on Monday settled lower, with the Dow Jones Industrials posting a 1-1/2 week low. Long liquidation and profit-taking pressured stocks Monday ahead of all-important US inflation news on Wednesday. Higher T-note yields Monday also weighed on stocks along with heightened geopolitical risks in the Middle East after rebels toppled Bashar Al-Assad’s government in Syria, which could lead to a power vacuum in the country as various militias and factions vie for control.Â
On the positive side for stocks is an increase in M&A Activity after Omnicron Group agreed to buy Interpublic Group in a deal valued at $13.3 billion, excluding debt. Â Also, Bloomberg reported that Mondelez International is exploring an acquisition of Hershey Co.Â
Monday’s US economic news was bearish for stocks after Oct wholesale trade sales unexpectedly fell -0.1% m/m, weaker than expectations of +0.2% m/m and the first decline in four months.Â
The markets are looking toward Wednesday’s US consumer price report for November to see if the pace of consumer prices can allow the Fed to keep easing monetary policy. Nov CPI is expected to tick up slightly to +2.7% y/y from +2.6% y/y in Oct. Meanwhile, Nov CPI ex-food and energy is expected to remain unchanged from Oct at +3.3% y/y.
Global equity markets received support Monday from a shift in Chinese monetary policy.  The Chinese Politburo, the ruling Communist Party’s most senior 24 officials led by President Xi Jinping, announced today that it would embrace a "moderately loose" strategy for monetary policy next year and vowed to be "more proactive" on fiscal policy, a sign of further easing ahead. The Politburo also made direct pledges to "stabilize property and stock markets" and promised "extraordinary" counter-cyclical policy adjustments to boost the economy.
The markets are discounting the chances at 86% for a -25 bp rate cut at the December 17-18 FOMC meeting.
Overseas stock markets on Monday settled mixed. The Euro Stoxx 50 rose to a 1-3/4 month high and closed up +0.15%. China's Shanghai Composite Index fell from a 3-week high and closed down -0.05%. Japan's Nikkei Stock 225 closed up +0.18%.
Interest Rates
March 10-year T-notes (ZNH25) Monday closed down -9 ticks. The 10-year T-note yield rose +4.0 bp to 4.193%. Monday’s +1% jump in WTI crude oil prices boosted inflation expectations and was bearish for T-note prices. Also, supply pressures are weighing on T-note prices as the Treasury will auction $119 billion of reopened T-notes and T-bonds this week, beginning with Tuesday’s $58 billion auction of 3-year T-notes.Â
European government bond yields on Monday were mixed. The 10-year German bund yield rose +1.3 bp to 2.121%. The 10-year UK gilt yield fell -0.5 bp to 4.270%.
The Eurozone Dec Sentix investor confidence index unexpectedly fell -4.7 to a 13-month low of -17.5, weaker than expectations of an increase to -12.3.
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 7% for a -50 bp rate cut at the same meeting.
US Stock Movers
Nvidia (NVDA) is down more than -2% after China Central Television reported that China’s State Administration for Market Regulation opened a probe into the company over suspicions that it has broken anti-monopoly laws.Â
Omicron Group (OMC) closed down more than -9% to lead losers in the S&P 500 after acquiring Interpublic Group in a deal valued at $13.3 billion, excluding debt.
Comcast (CMCSA) closed down more than -9% after CEO Watson projected broadband subscriber losses of more than 100,000 in Q4 due to hurricanes Helene and Milton.
Advanced Micro Devices (AMD) closed down more than -5% after Bank of America Global Research downgraded the stock to neutral from buy, citing downside risks to the company’s 2025 expectations.Â
BioAge Labs (BIOA) closed down more than -76% after it discontinued a Phase-2 trial evaluating its azelaprag drug for treating obesity.Â
Sofi Technologies (SOFI) closed down more than -2% after Bank of America Global Research downgraded the stock to underperform from neutral with a price target of $12.Â
Houlihan Lokey (HLI) closed down more than -2% after Morgan Stanley downgraded the stock to underweight from equal weight.Â
Bank of America (BAC) closed down more than -1% after Morgan Stanley downgraded the stock to equal weight from overweight.Â
Hershey (HSY) closed up more than +11% to lead gainers in the S&P 500 after Bloomberg reported that Mondelez International is exploring an acquisition of the company.
Interpublic Group (IPG) closed up more than +4% after Omnicom Group acquired the company in a deal valued at $13.3 billion, excluding debt.
Workday (WDAY) closed up more than +4% after S&P Dow Jones Indices announced the stock will replace Amentum Holdings in the S&P 500 before trading on December 23.Â
US-listed Chinese stocks rallied Monday after China’s top leaders signaled further stimulus ahead.  As a result, PDD Holdings (PDD) closed up more than +10% to lead gainers in the Nasdaq 100. Also, Alibaba Group Holdings (BABA), Baidu (BIDU), and NetEase (NTES) closed up more than +7%.Â
VeriSign (VRSN) closed up more than +4% after Baird upgraded the stock to outperform from neutral with a price target of $250.
Newell Brands (NWL) closed up more than +11% after Truist Securities upgraded the stock to buy from hold with a price target of $17.Â
Recently beaten-down health insurance stocks moved higher Monday, with Molina Healthcare (MOH), Centene (CNC), and Elevance Health (ELV) closing up more than +3%. Also, UnitedHealth Group (UNH) closed up +2%.
Macy’s (M) closed up more than +1% after the Wall Street Journal reported that activist investor Barington Capital has built a position in the company and plans to push for changes, including establishing a separate real estate unit.
Earnings Reports (12/10/2024)
AutoZone Inc (AZO), Ferguson Enterprises Inc (FERG), GameStop Corp (GME), and Ollie's Bargain Outlet Holdings (OLLI).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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