December 12th Market Overview

Happy Thursday everyone.

Markets are down today. A hotter-than-expected PPI report showed wholesale prices rising more than expected. The tech sector leads today’s red, with Adobe dropping more than -13% on weak guidance.

Real life inflation continues to show its ugly face.

Let's dig in...

Executive Summary

• Producer Price Index rises 0.4% vs 0.2% expected, sparking renewed inflation concerns - mainly due to eggs cost
  

• Technology stocks lead market decline with several big tech names pulling back
  

• President-elect Trump rings NYSE opening bell after being named TIME’s Person of the Year
  

• Warner Bros Discovery announces major restructuring plan, shares up 16%

Market Overview

All major indices posting solid gains today.

Key Market Drivers

1. PPI data shows 0.4% monthly increase versus 0.2% expected, suggesting persistent inflation pressures
   

2. Higher-than-expected jobless claims point to potential labor market softening
   

3. Mixed corporate earnings and guidance creating sector-specific volatility
   

4. Big tech weakness weighing on broader market sentiment
   

Stock Spotlight

• $ADBE ▼ 13%: Q4 earnings beat but FY25 guidance disappoints with revenue forecast of $23.3B-$23.55B vs $23.78B expected
  

• $WBD ▲ 15%: Announces restructuring to split business into linear and streaming segments
  

• $TTAN: ServiceTitan IPO debuts strongly at $101, well above $71 IPO price
  

• $CIEN ▲ 16%: Heading for best day in two years after strong fiscal 2025 guidance of 8-11% revenue growth

Big Name Updates

• $NVDA: Refutes rumors about China supply restrictions, announces increased AI focus for self-driving cars
  

• $AAPL: Citi maintains buy rating, $255 PT, citing iPhone 17 refresh cycle and iOS 18.2 ChatGPT integration
  

• $GOOGL: Launches enhanced Gemini 2.0 AI model with doubled processing speed
  

• $AMZN: TD Cowen raises PT to $265 from $240

Other Notable Company News

• $CELH: JPM initiates coverage at overweight, says category trends support growth
  

• $GD: Goldman downgrades to sell, PT $245, citing challenges across all segments
  

• $KO: Deutsche Bank upgrade to buy, PT $70, citing exceptional business momentum
  

• $PLTR: Baird initiates neutral coverage, PT $70, noting strong AI position but valuation concerns
  

Sector Watch

Bond Market

The 10-year Treasury yield has reached its highest level in two weeks following today’s PPI data. Fed funds futures still show a 95% probability of a rate cut next week, though today’s inflation data adds uncertainty to the timing and pace of future cuts.

Policy Watch

• U.S. November budget deficit expands 17% year-over-year to $367B
  

• IEA warns of potential oil supply glut/excess in 2025
  

• Federal Reserve meeting next week garners increased attention following inflation data

What to Watch

1. Fed Meeting Next Week:

• Market reaction to potential rate decision

• Updated economic projections and dot plot

• Powell’s commentary on inflation trajectory

2. Tech Sector Response:

• $ADBE guidance impact on broader software sector

• AI developments from $NVDA, $GOOGL

• Holiday season impact on consumer tech demand

3. Economic Data Pipeline:

• Retail sales figures

• Housing market indicators

• Further inflation metricsw
  
  
  Thanks for reading 🙂
  
  - John