Morning in New York: time to weigh the risks

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

The upcoming session will be influenced by a combination of geopolitical risks and seasonally lower liquidity ahead of the Christmas holidays. The key external factor remains the increasing US pressure on Venezuelan President Nicolas Maduro. American warships are chasing tankers carrying Venezuelan oil (currently there are three such vessels under US control) as part of the tightening of the blockade of its transportation. Against this background, the market has become more concerned about the reduction in the supply of oil, which is becoming more expensive at the trading in the Asia-Pacific region. Taking into account this factor, shares of oil companies may be in high demand today.

The lack of progress in resolving the conflict between Russia and Ukraine is also contributing to an increase in the risk premium in the energy market.

At the same time, investors are beginning to put into quotations the probability of the traditional "Santa Claus rally", which historically develops in the last five trading days of the year and the first two days of the new year, that is, this time it may take place from December 24 to January 5. Nevertheless, the investment community does not have full confidence in the realization of this scenario. Concerns about overvaluations of issuers from the technology sector and unreasonably high capital expenditures for the development of AI infrastructure, which caused the correction last week, continue to restrain risk appetite and encourage capital flows to more stable assets.

The macroeconomic and corporate calendar today contains no significant releases.

Futures on US indices show moderately positive dynamics. We assess the balance of risks for the upcoming trades as neutral with moderate volatility. We focus on the S&P 500 fluctuations in the range of 6800-6880 points (from -0.5% to +0.7% to the closing level of the previous session).

- Tesla (TSLA) shares are in the spotlight after the Delaware Supreme Court reinstated Elon Musk's 2018 compensation package, which is currently valued at $139 billion. The decision, which overturns a lower court verdict, solidifies Musk's control of the company, increasing his stake to more than 18%, and removes significant legal uncertainty.

- News that Uber (UBER) and Chinese tech giant Baidu (BIDU) plan to jointly test robotaxis in the UK in the first half of 2026 could support shares in both companies. The implementation of this plan should allow Uber to strengthen its position in the autonomous vehicle market.

- Microsoft (MSFT) recorded a 29% YoY drop in Xbox console sales amid a major transformation of its gaming business and a shift in strategic focus.

- Josh Woodward's strengthened role within Alphabet 's (GOOGL) structure is seen as a key factor in keeping the company competitive in the AI technology race.

- Clearwater Analytics (CWAN) shares may react positively to the announcement of a takeover by a consortium of private equity investors led by Permira and Warburg Pincus. The $8.4 billion deal implies a 47% premium to the stock price ahead of news of a possible sale.

- Greenfire Resources (GFR) was supported by the completion of a large-scale refinancing. The company successfully completed a rights offering for CAD300 mln (~$218 mln), using the proceeds to fully repay its high-yield bonds. As a result, it will have virtually no debt on its balance sheet, reducing financial risks.

Trading on December 19 on the U.S. stock exchanges ended in a steady plus. This allowed the S&P 500 (+0.88%) and Nasdaq 100 (+1.31%) to remain in positive territory at the end of the week. The Dow Jones gained 0.38% on Friday, while the Russell 2000 climbed 0.86%. A key driver of the gains was the resurgence of positive sentiment in the artificial intelligence sector. Most of the "Magnificent Seven" companies, led by Nvidia (NVDA: +3.93%), demonstrated growth. The high-tech sector (XLK: +2.16%) emerged as a growth leader against this backdrop. The defensive shares of the utilities industry (XLU: -1.27%) were the outsiders.

The main topic of the day was the return of demand for shares of companies related to artificial intelligence. This allowed to recoup some of the losses incurred at the beginning of the week. Buyers were supported by the news that the U.S. authorities have started a formal procedure that may allow the export of Nvidia H200 chips to China, as well as reports about OpenAI's plans to raise up to $100 billion at a valuation of up to $830 billion. These factors, along with the mentioned expectation of a "Santa Claus rally" outweighed the negativity from the weak report of Nike (NKE: -10.54%).

The final estimate of the consumer sentiment index from the University of Michigan for December was slightly lower than the preliminary one, but the component of inflation expectations for the year ahead fell to its lowest level in 11 months. At the same time, the secondary housing market sales data for November showed a moderate increase from October values, almost matching expectations.

Comments of the Fed representatives did not change the mood in general. Member of the Board of Governors Stephen Miran again spoke about the expediency of easing the MPC to support the labor market, and the head of FRB New York John Williams emphasized the lack of urgency in adjusting the policy and characterized the current conditions as moderately restrictive.

- Amicus Therapeutics (FOLD: +30.2%) will be taken over by BioMarin Pharmaceutical (BMRN: +17.7%) for $4.8 billion at a 33% premium.

- CoreWeave (CRWV: +22.6%) is included in the U.S. Department of Energy's Genesis Mission program focused on harnessing advanced computing power for scientific research.

- Carnival (CCL: +9.8%) reported fiscal Q4 revenue slightly below estimates, but earnings beat expectations and management comments were extremely positive. Management reported record bookings for the coming year, a renewed dividend and a simplified corporate structure.

- Winnebago (WGO: +8.4%) reported strong quarterly results, beating revenue and earnings expectations and improving its outlook.

- The U.S. Navy has selected Huntington Ingalls (HII: +4.3%) as the designer and builder of the new small surface combatant ship of the future.

- Lamb Weston (LW: -25.9%) reported strong results for the quarter, but investors were disappointed by the announcement of a worsening pricing environment.

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