Morning in New York: quotes drifting ahead of the Fed meeting

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

No significant macroeconomic statistics are scheduled to be published on Monday, December 8, so traders will focus on expectations related to the two-day meeting of the Federal Reserve System on December 9. According to Polymarket, the probability of a rate cut by 25 basis points is estimated at about 95%, which supports positive sentiment on the stock exchanges.

Of interest to the investment community is the ambiguous statistics of China's trade balance for November. Exports from the country grew by 5.9% YoY against a consensus of 3.8%. At the same time, shipments to the US collapsed by 28.6% despite the recent trade truce. Thus, the double-digit drop in exports from China to the US continued for the eighth consecutive month, signaling persistent structural problems in bilateral trade, even despite a 24% YoY increase in shipments of rare earth metals from China. Imports to China in November increased by only 1.9%, falling short of forecasts, confirming weak domestic demand due to the protracted crisis in the real estate market and consumer uncertainty.

An additional risk factor for the media sector is President Donald Trump's comments about plans to merge Netflix (NFLX) and Warner Bros. Discovery (WBD). He said he would personally participate in the review of the deal, emphasizing that the high concentration of the combined company's market share "could be a problem," which increases regulatory risks for the merger.

After the close of this Monday's main session, Toll Brothers (TOL) will release its quarterly report.

Futures on US indices show moderately positive dynamics. We assess the balance of risks for the upcoming trades as neutral with low volatility. We focus on the S&P 500 fluctuations in the range of 6850-6920 points (from -0.3% to +0.7% of the previous session's closing level).

- IBM (IBM) is reported by the Wall Street Journal to be in advanced discussions to buy streaming data processing platform Confluent (CFLT) for $11 billion. The deal is aimed at strengthening IBM's position in the cloud and AI infrastructure market. News of the possible purchase at a price significantly higher than Confluent's current capitalization ($8.1 billion) could cause CFLT stock to surge.

- Microsoft (MSFT) is in talks with Broadcom (AVGO) to develop custom chips for its Azure cloud AI infrastructure. The move is aimed at reducing dependence on NVIDIA (NVDA) and optimizing the hardware for OpenAI tasks. The news is a positive driver for Broadcom stock. At the same time, Marvell Technology (MRVL), Microsoft's current chip development partner, may come under pressure due to concerns about a shrinking share of the corporation's orders.

- Eli Lilly (LLY) quotes got a positive driver thanks to the inclusion of the drug Mounjaro in China's national health insurance program for the treatment of type II diabetes. Normally, this would involve lowering the price of the product, but at the same time the company gains access to a huge market, which strengthens its competitive advantage over Novo Nordisk (NVO) and its drug Ozempic.

- Robinhood Markets (HOOD) has announced its entry into the Indonesian market through the acquisition of local broker Buana Capital Sekuritas and crypto trader Pedagang Aset Kripto. The deal opens up access to a vibrant sector with 17 million participants, which is in line with the company's international expansion strategy.

Trading on December 5 on American stock exchanges ended mixed. S&P 500 added 0.19%, NASDAQ 100 rose by 0.43%, Dow Jones rose by 0.22%, and Russell 2000 declined by 0.38%. The communications sector (XLC: +1.16%) led the gains, while utility providers (XLU: -0.94%) were the outsiders. The securities of the "Magnificent Seven" showed mixed dynamics. Meta (META: +1.8%) closed in a strong plus, while Apple (AAPL: -0.68%) was under moderate pressure.

The main event was the announcement of the takeover of Warner Bros. Discovery (WBD: +6.3%) by Netflix (NFLX: -2.9%) for $82.7 billion ($27.75 per share). The deal carries significant antitrust risks. If it is canceled by regulators, Netflix will pay Warner Bros. a compensation of about $5.8 billion.

The preliminary data of the consumer sentiment index from the University of Michigan for December exceeded expectations, amounting to 53.3 points. The key positive signal in the report was the decrease in annual inflation expectations from 4.5% to 4.1%, and long-term inflation expectations from 3.4% to 3.2%.

The core consumer spending deflator (PCE) rose 0.2% mom, while the overall deflator rose 0.3% mom (Freedom Broker forecast: +0.18% and 0.21% mom, respectively). Personal income increased by 0.4% mom, while spending rose by 0.3% mom, which was in line with our expectations.

- Paramount Skydance (PSKY: -9.8%) shares collapsed after Warner Bros. Discovery (WBD: +6.3%) accepted a takeover offer from Netflix (NFLX: -2.9%). Quotes of the failed buyer fell even despite media reports that Paramount may approach WBD shareholders directly with a higher offer ($30 per share).

- Successful results from a Phase 2 clinical trial of relutrigine and the completion of a pre-registration meeting with the FDA sparked explosive gains in shares of Praxis Precision Medicines (PRAX: +30.5%).

- A strong third quarter report, in which revenue and earnings beat expectations, was a positive driver for Samsara (IOT: +11.1%). Investors were particularly impressed by the 24% YoY increase in net new annualized recurring revenue (NNARR).

- ServiceTitan (TTAN: +10.5%) jumped thanks to a strong third-quarter report and an increase in its full-year forecast. Management noted success in the corporate segment and strengthening demand for AI-enabled products.

- SoFi Technologies (SOFI: -6.2%) shares were pressured by the announcement of a secondary offering of 54.5 million securities at a price of $27.5 per unit.

- The announcement of the launch of a share sale program worth up to $1.5 billion drove Oklo (OKLO: -6.3%) down.

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