Morning in New York: in search of balance between statistics and geopolitics

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

Market sentiment continues to be driven by tensions caused by US actions in Venezuela and aggressive rhetoric towards Greenland. The market will be watching developments closely as escalation could lead to increased volatility, especially in commodity prices. The news that Venezuela's interim government will hand over 30 million to 50 million barrels of oil to the US has already put pressure on liquid hydrocarbon quotes as it increases their global supply.

In the center of attention of the participants of the upcoming trades will be the index of business activity in the services sector from ISM for December (consensus: 52.3 points, November: 52.6). Both the overall value of the index and the dynamics of its components are important for the market. Weakening price pressure and moderate employment growth will be additional arguments for further easing of monetary conditions by the Fed.

The JOLTS open vacancies statistics for November will also be of heightened interest to the investment community. We expect the indicator to confirm consolidation in the range of 7.6-7.8 million (consensus: 7.726 million), which will indicate stabilization of the labor market. At the same time, the ADP report on the number of new jobs (consensus: +48k, November: -32k) will be released.

A block of macro data published this Wednesday is likely to support stocks of cyclical sectors and small-capitalization companies. This will contribute to the expansion of the rally beyond the bigtechs, the dynamics of which may remain multidirectional.

Futures on US indices are consolidating. We assess the balance of risks for the upcoming trades as neutral with moderate volatility. We focus on S&P 500 fluctuations in the range of 6900-6985 points (from -0.6% to +0.6% to the previous session's closing level).

- Strategy (MSTR) shares were adding about 6% before slowing to +4% following MSCI's announcement that it will not exclude issuers with "treasuries" in digital assets from global indices. The decision eased concerns about potential demand pressure.

- Mobileye (MBLY) shares are up about 11% amid agreement to buy Mentee Robotics Ltd. - a company specializing in humanoid robotics. Investors believe the deal will accelerate Mobileye's entry into related AI areas and expand its technology base.

- Ventyx Biosciences (VTYX) stock soared nearly 68% on news from The Wall Street Journal that Eli Lilly (LLY) has entered the advanced stages of negotiations for its takeover for more than $1 billion. The deal could be announced soon. The acquisition would add drug candidates for inflammatory bowel disease to Eli Lilly's portfolio.

- Praxis Precision Medicines (PRAX) stock is down about 2% after announcing a planned public offering of common stock and warrants.

January 6 trading on the U.S. stock exchanges ended in the green sector. S&P 500 added 0.62%, having updated the historical maximum set on December 24. Dow Jones rose by 0.99%, also breaking another record. Nasdaq 100 rose by 0.94%, Russell 2000 - by 1.37%. The dynamics of the session was determined by capital flows into cyclical sectors, which was supported by positive news related to AI. Materials producers (XLB: +1.98%) became the leaders of growth on the background of rally in shares of metallurgical companies. The energy sector (XLE: -2.67%) was the outsider.

Shares of the "Magnificent Seven" showed mixed dynamics. Amazon (AMZN: +3.4%) was in the highest demand. Tesla (TSLA: -4.1%) and Apple (AAPL: -1.8%) underwent a sell-off.

Investors were focused on Nvidia's (NVDA) presentation at CES, which caused multidirectional dynamics in the technology sector. Comments of the company's CEO Jensen Huang about high demand for AI memory caused a rally in shares of Sandisk (SNDK: +27.6%), Western Digital (WDC: +16.8%) and Seagate Technology (STX: +14%). At the same time, the news about the start of production of the new generation of Rubin chips and high demand for H200 from China did not provide significant support for shares of Nvidia itself.

S&P Global's Services PMI for December from S&P Global final estimate came in at 52.5 points with a consensus of 52.9, indicating a slight slowdown, but the price component showed a sharp increase, signaling continued inflationary pressures.

Comments of the Fed representatives once again demonstrated the lack of a unified position. Member of the Board of Governors Stephen Miran once again called for further rate cuts. Thomas Barkin, President of the Federal Reserve Bank of Richmond, taking a hawkish stance, said that inflation and the labor market still require close monitoring.

-Aeva (AEVA: +34.4%) has entered into an agreement to integrate 4D LiDAR as a reference platform into NVIDIA's DRIVE Hyperion autonomous vehicle technology.

-Trinity Industries (TRN: +9.8%) completed a strategic restructuring of its railcar collaboration and raised its earnings per share guidance by 5%.

-Tesla (TSLA: -4.1%) is facing increased competition in the field of autonomous vehicles. In particular, the launch of NVIDIA's Alpamayo platform was a negative factor for the carmaker.

- Data that the new Vera-Rubin chips are capable of operating at higher temperatures than Blackwell has put pressure on Trane Technologies (TT: -2.5%) and other cooling equipment makers.

This article was AI-translated and verified by a human editor