New York morning: 'witching days' provoke turbulence

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

This Friday, the largest options expiration in history will take place: the open interest on contracts worth about $7.1 trillion in nominal terms will expire. On the exchange, such sessions are called Witching Days. They fall on dates when contracts for several types of exchange-traded derivatives on stocks and indices expire simultaneously. Against this background, volatility is likely to increase by the end of the session. At the same time, movements during the day will be determined primarily by fundamental factors. We believe that sentiment will continue to be positively influenced by the consumer inflation statistics published the day before.

The key macro release of the day will be the final value of the University of Michigan Consumer Sentiment Index for December. Forecasts suggest an increase in this estimate from the preliminary 53.3 points to 53.4.

In addition, the data on secondary market home sales for November will be published (consensus: +1.2% month-on-month, the same as a month earlier). Steady dynamics of this indicator will be a signal in favor of stable demand for real estate and related sectors.

In the focus of attention of market participants remains the revision of export restrictions on shipments of NVIDIA (NVDA) H200 gas pedals to China. The interagency approval of licenses at the Department of Commerce, State Department, Department of Energy and Pentagon, which started on December 18, is taking place against the backdrop of a discussion between supporters of strict restrictions and those who do not see controlled deliveries as a threat to the U.S. technological superiority in the field of AI.

Futures on US indices demonstrate upward dynamics. We assess the balance of risks for the upcoming trades as positive with moderate volatility. We focus on the S&P 500 fluctuations in the range of 6735-6840 points (from -0.6% to +1% to the closing level of the previous session).

- According to The Wall Street Journal, OpenAI is discussing a new round of financing that could raise up to $100 billion and give the company a valuation of up to $830 billion.

- ByteDance, the parent company of TikTok, and a consortium led by Oracle (ORCL), Silver Lake and MGX are forming a joint venture, TikTok USDS, with a 45% stake and control of the US app transferred to it. Against this backdrop, ORCL's premarket quotations rise by more than 6%.

- BlackBerry's (BB) quarterly report beat revenue and earnings expectations. QNX (technology solutions) segment revenues increased by a record 10% YoY. However, investors reacted primarily to higher development costs and subdued license dynamics, so the stock is losing about 4% before the opening of the main session.

- Nike (NKE) reported second-quarter fiscal 2026 wholesale sales growth of 8%. Its revenue in North America was up 20%, but margins declined 300 bps. Revenue in mainland China fell 16%. Online sales were down 14%. Import tariff pressures and uneven sales performance in key regions were recorded in the report. The corporation's shares reacted to the release by falling within 10%.

- FedEx (FDX) adjusted operating profit rose 20% on the back of its Network 2.0 program and preparations for the FedEx Freight spin-off. At the same time, the company warned of pressure on performance in the second half of the year. Its quotations show neutral dynamics on the premarket.

- KB Home (KBH) generated over $6.2 billion in revenue for fiscal 2025 as construction cycles accelerate, easing the transition to a build-to-order model. However, margin pressure amid declining average home prices and a weak backlog for 2026 is causing the stock to fall about 4% before the start of major trading.

Trades on December 18 on American stock exchanges ended in plus. S&P 500 grew by 0.79%, NASDAQ 100 added 1.51%, Dow Jones rose by 0.14%, and Russell 2000 strengthened by 0.62%. The technology sector (XLK: +1.54%) led the growth, while energy companies (XLE: -1.45%) were the outsiders.

All representatives of the "Magnificent Seven" closed in the plus. The most pronounced positive dynamics showed Tesla (TSLA: +3.45%), Apple (AAPL: +0.13%) quotes recorded a close to neutral result.

The trades were guided by the publication of the consumer price index for November. The core indicator grew by 2.6% YoY with a consensus of 3%, which corresponds to the minimum since March 2021. Market participants regarded this result as evidence of accelerating disinflation and a reason for the Fed to cut the Fed Funds rate by about 50 bps in 2026. After the release of this data, the yields of treasuries declined by 2-4 bp.

The number of initial applications for unemployment benefits for the previous week amounted to 224 thousand (consensus: 225 thousand, previous value: 237 thousand). The number of repeated applications increased from 1.83 million to 1.897 million with average forecasts at 1.95 million. This indicates a gradual increase in the number of citizens experiencing difficulties with employment while maintaining relative stability of the labor market.

The business activity index from the FRB Philadelphia unexpectedly fell to -10.2 points with a consensus of 3.5.

- Accenture (ACN: -1.4%) reported better-than-expected revenue and earnings for the quarter, but its operating margin fell short of guidance despite accelerating growth in AI-related orders and a reaffirmation of full-year guidance.

- Activist investor Elliott, which owns more than $1 billion worth of Lululemon Athletica (LULU: +3.5%) shares, is pushing to appoint Jane Nielsen as the new CEO of the company, which plans to expand into six new markets in 2026.

- Woodside Energy Group (WDS: -5.6%) announced the departure of CEO Meg O'Neill, who has accepted an offer to lead BP, adding to the uncertainty surrounding the company's future strategy.

- Cintas' (CTAS: +1.3%) revenue, earnings and margins for the last reported quarter beat estimates. Management noted strong organic growth in all areas and raised median revenue and EPS guidance for FY 2026.

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