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Thursday, December 19

Some of the largest macro moves in the market today: S&P 500 Index (US) +0.9%. Nasdaq 100 Index (US) +0.9%. US 2Y Treasury Bond +0.1%. Noteworthy US mega-cap moves today: Amazon.com Inc (AMZN) +1.5%. Alphabet Inc (GOOGL) +1.4%. Alphabet Inc (GOOG) +1.4%.

The Federal Reserve's recent decision to cut interest rates by 25 basis points has led to significant market reactions, with projections indicating only two additional cuts in 2025 instead of the previously expected four. This hawkish shift contributed to a sharp decline across major U.S. equity indices, including a notable drop of over 1,100 points for the Dow Jones Industrial Average and declines exceeding 3% for both the S&P 500 and Nasdaq Composite.

In Japan, the Bank of Japan maintained its key short-term interest rate at around 0.25%, citing uncertainties regarding wage trends and global economic conditions as factors influencing their cautious stance on future policy adjustments. The yen weakened against other currencies following this announcement due to concerns about monetary divergence between Japanese policies and those anticipated from incoming U.S. administration fiscal strategies under President-elect Donald Trump.

Additionally, initial jobless claims data released showed a larger-than-expected decrease in unemployment filings within the United States—falling by approximately 22,000—which aligns with ongoing labor strength despite broader inflationary pressures that remain concerning for policymakers moving forward into next year’s economic landscape.

SPDR S&P 500 ETF Trust (SPY) [+0.8%]
The SPDR S&P 500 ETF Trust (SPY) has seen a price increase of 0.8% since Wednesday. Recent social media activity reflects a cautious sentiment among investors, with the Wall Street Fear & Greed Index dropping to 29, indicating 'FEAR' territory. Notably, the S&P 500 experienced a significant decline of 3% on Wednesday, marking its largest drop following a Federal Reserve meeting since March 2020. In addition, SPY erased over two months of gains and recorded its highest one-day trading volume since early August. Volatility measures have surged, with a notable increase in the VIX and SPY options volatility. The Federal Funds Effective Rate has decreased to 4.64%, the lowest since March 2023, amid ongoing inflation concerns and political tensions regarding potential government shutdowns, contributing to market volatility.

USD/JPY (USD/JPY) [+1.4%]
The Bank of Japan (BoJ) has maintained its key interest rate at 0.25%, leading to a depreciation of the Japanese yen against major currencies, notably resulting in an increase in USD/JPY. This decision was reached with an 8-1 vote among BoJ members, reflecting stability in Japan's monetary policy. Concurrently, recent Federal Reserve actions have signaled fewer expected cuts next year due to ongoing inflation concerns, exerting upward pressure on the US dollar. Social media discussions have highlighted the cautious stance of Governor Ueda regarding inflation monitoring and the delicate state of Japan's economy. Additionally, foreign investors sold approximately ¥587.6 billion in Japanese stocks prior to December 14th, indicating profit-taking behavior ahead of central bank meetings.

LEN | -8.5%| -3.2B
Lennar Corp | Homebuilding
Lennar Corp reported disappointing fourth-quarter results, revealing revenues of $9.95 billion, which fell short of the $10.08 billion estimate and marked a 9.3% decline year-over-year. Adjusted earnings per share (EPS) were $4.03, below the consensus of $4.16 and down from $5.17 a year ago. New orders decreased by 3% to 16,895 homes, underperforming expectations, while the backlog fell 22% year-over-year to 11,633 homes. The company attributed rising mortgage rates as a significant challenge affecting affordability. Following this release, shares experienced notable declines in after-hours trading, with reports indicating a drop of approximately 9%. By the morning of October 18th, shares were noted to have declined further to a price of $145.93, reflecting the market's negative reaction to the earnings report and ongoing concerns regarding the new construction market.

MESO | +48.4% | +10.0B
Mesoblast Ltd | Biotechnology
Mesoblast Ltd. has experienced a significant surge in its stock price following the FDA's approval of RYONCIL (remestemcel-L), the first mesenchymal stromal cell therapy authorized in the United States for treating steroid-refractory acute graft-versus-host disease (SR-aGVHD) in pediatric patients aged two months and older. This approval addresses a critical medical need, as around half of children undergoing allogeneic bone marrow transplants develop aGvHD, with many unresponsive to standard steroid treatments. Clinical trials demonstrated that 70% of participants achieved an overall response by Day 28, with no treatment interruptions due to laboratory abnormalities. The news has led to a notable increase in stock activity, with reports indicating a significant rise in Mesoblast's share price since the announcement. Social media discussions have highlighted the importance of this milestone, emphasizing its potential impact on treatment outcomes for affected children.

VRTX | -10.3% | -10.7B
Vertex Pharmaceuticals Inc | Biotechnology
Vertex Pharmaceuticals Inc. announced results from its Phase 2 study of suzetrigine for painful lumbosacral radiculopathy, achieving a statistically significant reduction in pain, with a mean change of -2.02 for the suzetrigine group versus -1.98 for the placebo group. Despite this achievement, shares have dropped significantly, reportedly over 13%, amid skepticism expressed on social media. Critics questioned the credibility of the results, arguing that the difference in pain reduction was not substantial compared to placebo and suggesting that the study's design could be misleading. Although there were no serious adverse events reported during the trial, concerns about suzetrigine's potential in the chronic pain market have emerged, influencing market sentiment around Vertex Pharmaceuticals. The company intends to advance suzetrigine into pivotal development following discussions with regulators regarding the study's design and regulatory package.

ACN | +6.0%| +14.8B
Accenture PLC | IT Consulting & Other Services
Accenture PLC reported first-quarter earnings that exceeded expectations, with a GAAP EPS of 3.59 compared to the consensus estimate of 3.42. Revenue reached 17.69 billion, surpassing the anticipated 17.13 billion and reflecting a 9% year-over-year increase. New bookings totaled 18.7 billion, driven by strong contributions from consulting and managed services. The company raised its fiscal 2025 revenue growth forecast to a range of 4%-7%, up from the previous 3%-6%. Operating cash flow for the quarter was reported at 1.02 billion, although it slightly missed estimates. The operating margin improved to 16.7%, up from 15.8% year-over-year. On social media, discussions highlighted the strong earnings results, with consulting revenues at 9.0 billion and managed services at 8.6 billion. Guidance for Q2 revenues is projected between 16.2 billion and 16.8 billion, suggesting year-over-year growth of 5-9%.

MU | -11.7% | -11.9B
Micron Technology Inc | Semiconductors
Micron Technology Inc reported its fiscal Q1 results, with adjusted earnings per share of $1.79, slightly exceeding analyst estimates of $1.76. Revenue matched expectations at $8.71 billion, reflecting a significant year-over-year increase. However, the company's guidance for Q2 projected revenue of $7.9 billion, falling short of the anticipated $8.97 billion, and adjusted EPS is expected between $1.33 and $1.53, compared to forecasts of $1.91. Following the announcement, Micron's shares experienced a sharp decline in after-hours trading, dropping significantly. Multiple brokerages revised their price targets downward, with Needham adjusting from $140 to $120 and Baird from $150 to $130.

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