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Thursday, January 16

Some of the largest macro moves in the market today: Ethereum -3.4%. Gold +0.7%. CAC 40 Index (France) +1.7%. Noteworthy US mega-cap moves today: UnitedHealth Group Inc (UNH) -3.5%. Broadcom Inc (AVGO) +2.7%. JPMorgan Chase & Co (JPM) -1.1%. 

Recent economic data releases have significantly influenced market sentiment, particularly in the U.S. Initial jobless claims rose to 217,000 for the week ending January 11th, exceeding expectations and indicating a rebound from an earlier low. Meanwhile, retail sales increased by only 0.4% month-over-month in December—below forecasts of 0.6%. However, positive news came from the Philadelphia Fed Manufacturing Index which surged to its highest level since April 2021 at 44.3.

In Europe, central bank policy is also shaping financial markets as recent minutes from the European Central Bank (ECB) indicated a cautious approach towards further interest rate cuts amid slowing inflation and weak economic activity across member states like Germany and Italy where growth has disappointed relative to expectations. Recently released figures showed that German inflation remained steady at around two months high while Italian consumer prices confirmed unchanged rates below Eurozone averages.

Global equity indices are experiencing upward momentum following these developments; major indexes such as France's CAC40 gained over +1%, reflecting investor optimism driven by easing concerns about aggressive monetary tightening amidst mixed signals on both sides of the Atlantic regarding future fiscal policies under incoming administrations including President-elect Trump's potential impact on trade relations with China affecting broader global risk appetite.

VanEck Semiconductor ETF (SMH) [+1.6%]
The VanEck Semiconductor ETF (SMH) has experienced an increase of 1.6% in pre-market trading, reflecting a broader positive sentiment in the semiconductor sector. Taiwan Semiconductor Manufacturing Co (TSMC) reported a substantial year-over-year increase in net profit for Q4, which has buoyed related stocks. Social media discussions highlight TSMC's rally linked to a strong capital expenditure forecast, further enhancing market sentiment. Additionally, the Point72 AI Fund has gained traction with a notable increase in assets under management, listing SMH among its tickers of interest. Significant contributors to SMH's performance include NVDA, AVGO, AMAT, LRCX, and KLAC, all of which have shown increased returns. This combination of strong earnings reports and positive developments within the sector has likely bolstered the ETF's upward movement.

United States Oil Fund LP (USO) [-1.0%]
The United States Oil Fund LP (USO) has seen its price decrease by 1.0% since Wednesday. U.S. crude oil inventories fell by 1.9 million barrels to 412.7 million barrels for the week ending January 10, while crude oil production dropped by 30,000 barrels per day to 13.55 million barrels per day. Additionally, crude oil imports and exports decreased, with imports down by 131,000 barrels per day to 6.49 million barrels per day and exports down by 204,000 barrels per day to 3.68 million barrels per day. In contrast, gasoline stockpiles rose significantly by 5.9 million barrels to 243.6 million barrels. Recent social media discussions around USO reflect a lack of interest in energy stocks overall, while specific trades related to USO's January $66 strike puts are expected to expire worthless, suggesting potential gains for traders involved. Oil prices are currently volatile due to uncertainty surrounding Russian supply amid new U.S. sanctions, with Brent crude surpassing $82 per barrel.

TSM | +5.1% | +288.4B
Taiwan Semiconductor Manufacturing Co Ltd | Semiconductors
Taiwan Semiconductor Manufacturing Co. (TSMC) reported strong fourth-quarter results, with net income reaching NT$374.68 billion, a significant increase from the previous year. Earnings per share surged to NT$14.45, exceeding the consensus estimate. Revenue for the quarter hit NT$868.46 billion, up 37% year-over-year and surpassing analyst expectations. Looking ahead, TSMC forecasts Q1 revenue between $25 billion and $25.8 billion, also above market expectations. The company anticipates a gross profit margin of 57% to 59% and an operating profit margin of 46.5% to 48.5%. Additionally, TSMC's CEO projected nearly 20% compound annual growth in revenue over the next five years, driven by demand in smartphones and automotive sectors, as well as a significant increase in AI-related revenue anticipated for 2025.

UNH | -3.5%| -17.0B
UnitedHealth Group Inc | Managed Health Care
UnitedHealth Group Inc reported its fourth-quarter earnings today, revealing an adjusted earnings per share (EPS) of 6.81, exceeding the consensus estimate of 6.73. However, total revenues of 100.81 billion fell short of expectations of 101.6 billion, despite a year-over-year increase of 6.8%. The company reaffirmed its financial guidance for 2025, projecting revenues between 450 billion and 455 billion and adjusted EPS of 29.50 to 30.00. The medical care ratio for the year was reported at 85.5%, up from 83.2% in 2023, attributed to funding reductions and changes in member mix. Following the earnings announcement, shares of UnitedHealth experienced a decline, reflecting concerns over the revenue miss. Additionally, social media discussions highlighted the impact of recent leadership changes and a decrease in overall membership in the UnitedHealthcare unit due to Medicaid redeterminations.

USB | -2.6% | -2.0B
US Bancorp | Diversified Banks
U.S. Bancorp reported its fourth-quarter results, revealing an adjusted EPS of 1.07, surpassing the analyst estimate of 1.05. However, revenue was 6.98 billion, slightly below the consensus estimate of 7.00 billion. The net interest margin declined to 2.71% from 2.78% year-over-year, while quarterly net income attributable to U.S. Bancorp increased to 1.663 billion from 847 million in the same period last year. Following the earnings announcement, shares dropped significantly, reflecting a decline of up to 4.6%. The CEO noted stable credit quality with a CET1 capital ratio of 10.6%. In after-hours trading, the stock declined by 1%. Additionally, PNC Financial Services Group Inc. experienced a notable decline following its earnings report, which may correlate with U.S. Bancorp's price movement.

MS | +2.1%| +4.5B
Morgan Stanley | Investment Banking & Brokerage
Morgan Stanley reported strong fourth-quarter results, with net revenues of $16.22 billion, a notable increase from $12.90 billion year-over-year. Net income surged to $3.71 billion, significantly higher than the previous year's $1.52 billion, resulting in earnings per share of $2.22, surpassing analyst expectations of $1.68. Investment banking revenues rose 25% to $1.64 billion, while wealth management revenue increased by 13% to $7.48 billion. The equity trading segment excelled, generating $3.33 billion in revenue, a 51% year-over-year increase and exceeding expectations by approximately $650 million. Fixed income revenue also performed well, rising 35% to $1.93 billion, surpassing street estimates by about $250 million. Social media discussions highlighted the firm's performance, noting the significant year-over-year revenue increase and robust client activity leading into and following recent U.S. elections.

PRU | -3.4% | -1.4B
Prudential Financial Inc | Life & Health Insurance
Prudential Financial Inc. has reported an immaterial error regarding its adjusted operating income for the fourth quarter, as disclosed in a recent filing. The company will revise its historical adjusted operating income, resulting in a decrease of $115 million, or $0.31 per common share, for the nine months ending September 30, 2024, and a reduction of $24 million, or $0.07 per common share, for the nine months ending September 30, 2023. Importantly, these adjustments will not impact GAAP net income, book value, statutory results, or the historical or expected future cash flows related to these products. Concurrently, Home BancShares Inc. experienced a notable decline following its fourth-quarter results, while the Dow Jones Index also moved down slightly. These developments may correlate with Prudential's recent price movement, which has decreased by 3.0%.

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