2023 Dec 13, US Market
With dovish signals from the Federal Reserve, Wall Street's massive cross-asset surge gained momentum, pushing the stock market closer to all-time highs and Treasury yields lower.
Swap contracts show bets on 140 basis points of easing in the next 12 months. The Dow Jones Industrial Average closed at a record. Two-year yields dropped the most since March, down 29 basis points to around 4.44%. The dollar fell to its lowest since August. Traders cheered a tweak to the Fed's dot plot, with officials expecting to lower rates by 75 basis points next year - a sharper pace of cuts than indicated in September's projections.
Following what was arguably the most significant Fed decision of 2023, Fed Chair Jerome Powell reiterated that policy has moved well into restrictive territory and said officials are proceeding cautiously because, while inflation may have eased, it is still too high. Powell said that inflation easing without an increase in unemployment is good news.
Consumer prices on Tuesday highlighted a decline in the annual rate of inflation - even as monthly gains stepped up. Taken together, the results support the idea that inflation is heading back towards the Fed's objective. Data before to the decision showed producer-price growth slowed as energy costs plummeted.
In an effort to maintain stability in the economy, Treasury Secretary Janet Yellen stated earlier on Wednesday that it would make sense for the Fed to think about cutting interest rates when inflation declines.
Pfizer (PFE) shares are falling after the drugmaker gave disappointing FY24 sales and profit guidance
Tesla (TSLA) is recalling over 2M vehicles to fix a defective system meant to ensure drivers are paying attention to the road when using Autopilot, AP reports
Take-Two Interactive (TTWO) rises after Nasdaq said the video game maker's stock will be added to the Nasdaq-100 Index
Integra LifeSciences Holdings (IART) announced an agreement to acquire Acclarent from Ethicon, a Johnson & Johnson (JNJ) MedTech company, for $275M in cash at closing and an additional $5M upon the achievement of certain regulatory milestones
The U.S. Federal Reserve kept interest rates unchanged at 5.25%-5.5% and projections signaled multiple rate cuts may come in 2024
Twilio (TWLO) has hired Qatalyst Partners to advise on its defense against a group of activist investors, CNBC reports
U.S. Steel's (X) board is meeting to review bids received for the company, including "multiple bids" valued at over $40 per share, CNBC says
PGT Innovations (PGTI) has rejected a bid worth $2.2B from Koch-backed Miter Brands, Reuters reports
EQT Corporation (EQT) is looking to sell a $3B portfolio of natural gas stakes, Reuters says
Farfetch (FTCH) is in talks over emergency funding with Apollo (APO) and others, Sky News reports
Acadia Pharmaceuticals (ACAD) increases after company prevailed in a District Court patent hearing
Photronics (PLAB) higher after reporting quarterly results
Etsy (ETSY) slides after announcing the departure of its Chief Marketing Officer and an 11% reduction of its marketplace workforce
Southwest (LUV) falls after cutting its Q4 RASM to 9%-10% year-over-year from 9%-11% year-over-year
Payoneer Global (PAYO) declines after updating its Q4 guidance and providing an outlook for FY24
Rev Group (REVG) reported Q4 results and provided its guidance for FY24
Cognyte (CGNT) reported Q3 results, with CEO Elad Sharon commenting "We are executing well and are pleased to deliver another solid quarter"
Loop Media (LPTV) reported Q4 EPS and revenue that missed consensus
ABM (ABM) reported Q4 results and provided guidance for FY24
Adobe (ADBE) will report its quarterly results later today
Leerink upgraded Incyte (INCY) to Outperform from Market Perform with a $78 price target following the recent hematology meeting, ASH. The firm's previously rating had been based on concerns about the Jakafi patent cliff and the perceived lack of R&D productivity, but with a new head of R&D, it appears the company has refocused efforts and is "leveraging dominance in myeloproliferative diseases."
Piper Sandler upgraded Q2 Holdings (QTWO) to Neutral from Underweight with a price target of $41, up from $30. The firm is "increasingly more comfortable" on improving fundamentals for Q2 looking out over the next 12-18 months.
Morgan Stanley upgraded MSCI (MSCI) to Overweight from Equal Weight with a price target of $600, up from $526. The firm cites MSCI's defensive characteristics and growth opportunities for the upgrade.
Wells Fargo upgraded RxSight (RXST) to Overweight from Equal Weight with a price target of $42, up from $31. The firm believes RxSight's light adjustable lens technology for cataracts has reached an inflection point and its new LAL+ will expand the market in 2024.
Keefe Bruyette upgraded Opendoor Technologies (OPEN) to Market Perform from Underperform with a price target of $3.50, up from $1.65. The firm cites a lack of downside catalysts for the upgrade but admits the firm's conviction level is low.
Wells Fargo downgraded Johnson & Johnson (JNJ) to Equal Weight from Overweight with a price target of $163, down from $170. The company's earnings growth will be "muted" the next few years due to the Stelara loss of exclusivity and its medical technology growth targets "seems optimistic," the firm tells investors in a research note.
Exane BNP Paribas downgraded Ford (F) to Neutral from Outperform with a $12 price target. Today's battery electric vehicle weakness "is merely the tip of a melting iceberg as affordability constraints bite," the firm tells investors in a research note.
Oppenheimer downgraded Hertz (HTZ) to Perform from Outperform as the firm believes next year will be a transition year for the company. Hertz will face several headwinds in 2024, including significant ongoing challenges to its EV initiative, higher vehicle interest expense, and higher DPU.
Citi downgraded Church & Dwight (CHD) to Sell from Neutral with an unchanged price target of $90. The firm views the stock's relative valuation as "too elevated" after the 2023 outperformance.
Wells Fargo downgraded Inspire Medical (INSP) to Equal Weight from Overweight with a price target of $187, down from $245, ahead of Eli Lilly's (LLY) SURMONT-OSA data in the first half of 2024 and uncertainty in how the OSA treatment paradigm will change.
Truist initiated coverage of Microsoft (MSFT) with a Buy rating and three-year price target of $600. The firm believes Microsoft can grow revenue and free cash flow in the mid-teens, driven by upside to consensus numbers in artificial intelligence, Azure, and Copilot, "which could propel shares to compounding strong gains."
Wells Fargo initiated coverage of Roblox (RBLX) with an Overweight rating and $49 price target. The firm views Roblox as a growing audience platform with "deep" engagement, rather than a gaming platform.
William Blair resumed coverage of AutoZone (AZO) with an Outperform rating. The firm believes there is room for multiple expansion in line with the company's peers on a continued acceleration in do-it-from-home comps, which should ease investor concerns around demand volatility.
William Blair resumed coverage of Advance Auto Parts (AAP) with a Market Perform rating. While the firm is encouraged by the new management team's efforts to streamline core operations and reduce costs, it says Advance Auto is in the very early days of executing against its strategic review.
B. Riley initiated coverage of Vizio (VZIO) with a Buy rating and $11 price target. The firm believes Vizio has a "strong hand" to play in a rapidly growing -- and likely consolidating -- TV operating system industry.
