S&P futures are up 0.4% Thursday morning after a sharp selloff on Wednesday, with the S&P posting its second-biggest decline of 2024 and the Dow falling for a 10th consecutive session. Asian markets were broadly lower overnight, while European markets are down over 1%. Treasuries are mixed with a steepening curve after Wednesday’s rate surge pushed 10-year yields above 4.5%. The dollar index is down 0.1%, while gold is off 0.7%, Bitcoin futures are up 1%, and WTI crude is down 0.8%.
The selloff was driven by hawkish Fed guidance following its 25 bp rate cut, government shutdown risks, stretched valuations, rising rates, and tariff concerns. Bulls focus on favorable seasonality, strong inflows, and S&P earnings growth expectations.
Key economic data releases today include Q3 GDP (third estimate), December Philly Fed manufacturing, initial jobless claims, and November existing home sales. Global central bank updates include the BoE expected to hold rates, a dovish hold from the BoJ, and rate moves by the Philippines (-25 bp) and Sweden (+25 bp).
Corporate News
- MU-US (Micron): Under pressure following weak February quarter guidance attributed to inventory digestion, NAND oversupply, and slowing data center SSD demand.
- LEN-US (Lennar): Declining after soft Q4 results and guidance, citing affordability issues from higher interest rates.
- LW-US (Lamb Weston): Missed estimates and cut guidance due to higher manufacturing costs and weaker volumes.
- AAPL-US (Apple): Reportedly in talks with Tencent and ByteDance to integrate AI models into iPhones in China.
- SON-US (Sonoco): Announced the sale of its TFP business for $1.8B.
- FDX-US (FedEx) and NKE-US (Nike): Reporting earnings after the close.
US equities closed sharply lower on Wednesday following the Federal Reserve’s hawkish rate cut and disappointing economic data. The S&P 500 fell 2.95%, the Nasdaq 3.56%, the Dow 2.58% (marking its 10th straight decline, the longest since 1974), and the Russell 2000 4.39%. Breadth was weak, with decliners outnumbering advancers on the S&P 500 for the 13th consecutive session, the longest streak since at least 1978. Treasuries sold off with the yield curve bear flattening, sending the 2-year yield above 4.35%, its highest level since late November. The dollar index rose 1.1%, while gold dipped 0.3%, Bitcoin futures fell 5%, and WTI crude edged up 0.1%.
The Federal Reserve cut rates by 25 basis points as expected but delivered hawkish guidance, signaling a slower pace of easing ahead. The updated Summary of Economic Projections (SEP) showed a higher terminal rate for 2025 and 2026, with the median dot for 2025 up 50 basis points. The Fed also raised its 2025 headline inflation forecast to 2.5%. Earlier, November housing starts missed consensus expectations at 1,289K, the lowest since mid-2020, though building permits exceeded forecasts.
Weak breadth, stretched valuations, tariff concerns, and elevated sentiment remained key overhangs. Market participants also noted political uncertainty around tariffs and legislative priorities in 2025 as a potential headwind.
Corporate News by GICS Sectors
Communication Services
- COMM-US (CommScope): +9.3% – Announced a comprehensive refinancing agreement with secured lenders to address 2025 and 2026 debt maturities.
Consumer Discretionary
- BIRK-US (Birkenstock): +2% – Q4 earnings and revenue beat driven by strong B2B demand and category expansion. Direct-to-consumer sales also exceeded expectations.
- RIVN-US (Rivian): -11.2% – Downgraded to neutral at Baird, citing uncertainty over Inflation Reduction Act policies and a challenging environment for EVs with limited 2025 catalysts.
- HMC-US (Honda Motor): -4.9% – Confirmed talks with Nissan (NSANY-US) about a closer collaboration, with media reports suggesting a potential merger.
Consumer Staples
- GIS-US (General Mills): -3.2% – FQ2 earnings and revenue topped estimates; however, FY25 organic net sales guidance was lowered due to increased promotional spending.
Energy
- LW-US (Lamb Weston Holdings): -5.1% – POST-US announced acquisition of Potato Products of Idaho, following reports of a potential merger between POST and LW.
Financials
- MA-US (Mastercard): Announced a $12B share repurchase program and a 15.2% increase in its quarterly dividend.
Health Care
- VKTX-US (Viking Therapeutics): -18% – Declined after MRK-US announced a licensing deal for an oral GLP-1 receptor agonist, raising concerns about competition in the space.
- PFE-US (Pfizer): +2.8% – Reaffirmed FY24 guidance, with FY25 EPS and revenue midpoint guidance slightly ahead of expectations.
Industrials
- HEI-US (HEICO): -8.7% – Fiscal Q4 revenue and EBITDA missed expectations due to decelerating organic revenue growth in both its segments.
- BA-US (Boeing): Resumed full jet production in Seattle following the end of a labor strike.
Information Technology
- JBL-US (Jabil): +7.3% – Reported Q1 earnings and revenue beat, with strength in cloud, datacenter, and digital commerce end markets.
- NTGR-US (Netgear): +4.8% – Gained on reports that the US is considering a ban on WiFi routers made by China-based TP-Link over national security concerns.
Materials
- WOR-US (Worthington Industries): +10.3% – Q2 results exceeded expectations, driven by earnings growth in Consumer Products and Building Products segments.
Real Estate
- REITs: Broad-based declines, reflecting rate sensitivity amid the Fed’s hawkish stance.
Eco Data Releases | Thursday December 19th, 2024
S&P 500 Constituent Earnings Announcements | Thursday December 19th, 2024
Data sourced from FactSet Research Systems Inc.
