December 16th Market Overview

Happy Monday everyone.

Markets are up ahead of this year's final Federal Reserve meeting.

Quantum computing developments are making bold claims about the multiverse and SoftBank announces plans for a $100B US investment focused on artificial intelligence infrastructure.

The simulation is in full swing baby.

Let's dig in...

Executive Summary

• S&P 500 and Nasdaq hit fresh highs while Dow continues seven-day decline
  

• SoftBank announces landmark $100B AI investment plan in US, targeting 100,000 new jobs
  

• Tech sector dominates with multiple stocks hitting all-time highs despite $NVDA correction
  

• Quantum computing stocks up after Alphabet’s breakthrough announcement, with some names up over 40%

Market Overview

All major indices posting solid gains today.

Key Market Drivers

1. Fed Meeting Anticipation: Markets showing 95.3% probability of a rate cut this week, with expectations of a pause in January
   

2. Tech Sector Momentum: Multiple tech giants hitting all-time highs, led by Broadcom’s entry into the trillion-dollar club
   

3. Quantum Computing Wave: $DWAV ▲43%, $RGTI ▲32%, $IONQ ▲23% following Alphabet’s quantum breakthrough
   

4. AI Investment Boost: SoftBank’s $100B investment plan targeting AI infrastructure development

Stock Spotlight

• $BRCD: ▲10% after joining trillion-dollar market cap club, with Goldman Sachs noting strong AI Ethernet connectivity position and VMware margin expansion from 30% to 70%
  

• $NVDA: Enters correction territory, down over 10% from November highs despite Truist raising PT to $204 on AI dominance outlook
  

• $MSTR: Added to Nasdaq-100 index, boosting crypto-related stocks amid Bitcoin’s push above $105,000
  

• $HON: ▲3% on potential aerospace division separation announcement

Big Name Updates

• $AAPL: WSJ reports company exploring thin foldable phones; Jefferies warns of accelerating China discounts in Q1 2025
  

• $TSLA: Wedbush raises PT to $515 with bull case of $650, citing Trump presidency as potential AI catalyst; Truist more cautious at $360
  

• $AMZN: Jefferies boosts PT to $275, highlighting >50% cloud market share and improved AI offerings
  

• $NFLX: Oppenheimer raises PT to $1,065, citing weakening competition and live events potential

Other Notable Company News

• $PLTR: Partners with Red Cat Holdings to enhance Black Widow drones with GPS-free navigation capabilities
  

• $OKTA: JPM upgrades to overweight with $100 PT, citing 12.7% cRPO growth and 30% bookings acceleration
  

• $SNOW: Jefferies raises PT to $200, positioning as prime AI beneficiary under new product-led CEO
  

• $NVO: Investing $1.2B in new Denmark factory following $11.7B Catalent deal approval

Sector Watch

Bond Market

Treasury yields adjust as markets anticipate Fed policy shift, with traders showing strong conviction for a rate cut this week while expecting January pause (95%).

Jupiter Strategic Absolute Return Bond Fund managers dismiss concerns about U.S. debt serviceability.

Policy Watch

• Fed begins two-day meeting Tuesday, with focus on forward guidance and inflation concerns
  

• Trump administration signals potential rollback of EV policies and battery material tariffs
  

• PBOC signals intention to cut interest rates and reserve requirements

What to Watch

1. Fed’s Forward Guidance:

• Impact on market expectations for 2025 rate path

• Commentary on recent uptick in inflation metrics

2. Tech Sector Rotation:

• Quantum computing stocks momentum following recent surge

• AI-related names performance amid valuation concerns

3. EV Policy Developments:

• Potential impact of policy shifts on EV manufacturers

• Supply chain implications for battery materials

4. Crypto Market Dynamics:

• Bitcoin’s behavior above $100,000 level

• Performance of crypto-adjacent stocks post index inclusion
  
  
  Thanks for reading 🙂
  
  - John