Scott Bessent's appointment as Donald Trump's future U.S. Treasury Secretary was music to Wall Street's ears, boosting the risk appetite that's been in play since the election. Wall Street Indices climbed despite a sell-off in recent darlings like Nvidia and Tesla. Investors hunted for bargains, fitting for Black Friday. The Russell 2000, packed with smaller undervalued stocks, led the charge with a 1.5% gain, marking its sixth straight positive session. The dollar and bond yields dipped, suggesting that Bessent's perceived moderation might mean less inflation and lower Fed rates .Even Europe joined the party with what the pros call cheap buybacks. Investors snapped up battered stocks, betting they'd bottomed out. The Stoxx Europe 600 saw its biggest rebounds in companies that had lost 20% to 50% since January. 

Next, whispers of a ceasefire between Israel and Hezbollah swirled during trading. An announcement is expected today. This news sent oil prices tumbling, with Brent crude dropping from over $75 to $72.50. A 3.5% drop in oil signals something significant. Geopolitics pushed oil and defense stocks down, while Bessent's appointment fueled bullish speculation due to his Wall Street-friendly reputation.

Now, onto the third act: Donald Trump, in his typical fashion, announced tariff hikes on Canadian, Mexican, and Chinese goods. The President-elect, seemingly already in office, declared a 25% tariff on Mexican and Canadian products and a 10% increase on Chinese goods. This news boosted the U.S. dollar against the Mexican peso and Canadian dollar. Europe, meanwhile, breathed a sigh of relief, having dodged the tariff bullet. Optimists think Europe escaped unscathed, while pessimists brace for future tariffs. 

Wall Street futures remain steady, despite the surprise tariff announcement. The Dow Jones Industrial Average futures fell by 0.3%, while the S&P 500 and Nasdaq 100 futures rose by 0.2% and 0.3%, respectively. This reflects a belief that, despite uncertainties, the U.S. will ultimately prevail.

Today's trading will focus on these tariff discussions and U.S. interest rate trends. Fed member Neel Kashkari hinted at potential monetary easing on December 18. The CME's FedWatch tool shows a 52.5% chance of a 25 basis point rate cut and 47.5% for the status quo. A few economic data due to be released today will refine forecasts before the Fed meeting minutes are released this afternoon.

In Asia-Pacific, markets like Taiwan, South Korea, Japan, and Australia fell between 0.5% and just over 1%. India and China are slightly down. The Stoxx Europe 600 fell 0.1%.

Economic highlights today:

They include the FFHA house price index, the Conference Board confidence index, Richmond Fed manufacturing index, and new home sales, before the release of the Fed minutes.

  • dollar: €0.9517 - £0.7944
  • Ounce of gold: $2,631
  • Brent crude: $72.95
  • U.S. 10-year: 4.28%
  • Bitcoin: $92,330

In corporate news:

  • Tesla faces environmental violations at its facilities, potential exclusion from California EV tax credits, and competitive pressures requiring price adjustments, amidst settling a lawsuit with Rivian and adjusting Model Y prices in China, all of which could impact its stock performance and market strategy.
  • Intel has secured up to $7.86 billion in funding from the US Department of Commerce for semiconductor manufacturing, while Qualcomm's interest in acquiring the company has diminished due to deal complexities.
  • Agilent Technologies reported a Q4 earnings increase to $1.46 per share and revenue of $1.7 billion, both surpassing Street estimates, and provided guidance for Q1 with EPS between $1.25-$1.28 on revenue of $1.65-$1.68 billion, while also setting optimistic FY 2025 earnings expectations above analyst forecasts.
  • Kohl's has appointed Ashley Buchanan, formerly of Michaels, as its new CEO effective January 15, 2024, while Walmart is scaling back its diversity, equity, and inclusion initiatives amid pressure from conservative groups.
  • Zoom Video Communications reported strong fiscal third-quarter results with a beat on earnings per share and revenue, raised its full-year outlook, and expanded its share repurchase plan, despite a drop in revenue from customers contributing more than $100,000.
  • Financial stocks are experiencing gains in Monday's trading, influenced by Citigroup's cost-cutting measures including reduced promotions, and Credit Agricole's rise in the global systemically important banks list, amidst mixed economic indicators.
  • Woodward consistently surpassed expectations in both Q3 and Q4, with earnings per share and revenue exceeding analyst estimates.
  • Kohl's has lowered its annual sales forecast due to weak holiday shopping demand, announced the departure of CEO Tom Kingsbury after less than two years, appointed Ashley Buchanan as the new CEO, and reported a Q3 revenue of $3.51 billion amidst a significant drop in share prices following a Q3 earnings miss.
  • Embecta has announced the discontinuation of its insulin patch pump program and a restructuring plan to save $60-$65 million annually, alongside reporting a Q4 earnings decline but increased revenue, beating street estimates, and issuing a FY2025 EPS forecast of $2.70-$2.90, while maintaining a quarterly dividend of $0.15 per share.
  • Google is enhancing digital infrastructure with a new subsea cable from Darwin to Christmas Island, adjusting search results in Europe to comply with the Digital Markets Act and address smaller businesses' concerns, amidst scrutiny from EU regulators and a legal battle with the DOJ over search advertising practices.

Analysts recommendations:

  • Brunswick Corporation: B Riley Securities Inc. upgrades to buy from neutral with a price target raised from USD 88 to USD 95.
  • Charter Communications, Inc.: BNP Paribas Exane upgrades to neutral from underperform with a price target raised from USD 230 to USD 360.
  • Chevron Corporation: Citi upgrades to buy from neutral with a price target raised from USD 145 to USD 185.
  • Eastman Chemical Company: Wells Fargo upgrades to overweight from equalweight with a target price raised from USD 110 to USD 125.
  • Hubbell Incorporated: Deutsche Bank downgrades to hold from buy with a target price reduced from USD 493 to USD 473.
  • Morgan Stanley: HSBC downgrades to hold from buy with a price target raised from USD 128 to USD 131.
  • Science Applications International Corporation: Wells Fargo upgrades to overweight from equalweight with a target price reduced from USD 157 to USD 147.
  • Target Corporation: Daiwa Securities downgrades to neutral from outperform with a price target reduced from USD 170 to USD 130.
  • The Goldman Sachs Group, Inc.: HSBC downgrades to hold from buy with a price target raised from USD 569 to USD 608.
  • Affirm Holdings, Inc.: Jefferies remains at hold with a target price raised from 49 to USD 70.
  • Applovin Corporation: Jefferies maintains its buy recommendation and raises the target price from USD 270 to USD 400.
  • Bath & Body Works, Inc.: Barclays maintains its underweight recommendation and raises the target price from 28 to USD 34.
  • Bill Holdings, Inc.: Morgan Stanley maintains its market weight recommendation and raises the target price from 58 to USD 95.
  • Block, Inc.: RBC Capital maintains its outperform rating and raises the target price from USD 88 to USD 110.
  • Godaddy Inc.: Citigroup maintains its buy recommendation with a price target raised from USD 195 to USD 240.
  • Moderna, Inc.: JP Morgan maintains its underweight recommendation and reduces the target price from 59 to USD 45.
  • Mongodb, Inc.: Piper Sandler & Co maintains its overweight recommendation and raises the target price from USD 335 to USD 425.
  • Motorola Solutions, Inc.: Deutsche Bank maintains its buy recommendation and raises the target price from USD 440 to USD 530.
  • United Airlines Holdings, Inc.: Citigroup maintains its buy recommendation and raises the target price from USD 98 to USD 122.
  • Williams Companies, Inc.: Goldman Sachs maintains a neutral recommendation with a price target raised from 45 to USD 55.
  • Woodward, Inc.: Truist Securities maintains its buy recommendation with a price target raised from 187 to USD 226.
  • Zoom Video Communications, Inc.: HSBC maintains its buy recommendation with a price target raised from 74 to USD 103. 
  • Next Plc: RBC Capital upgrades to outperform from sector perform with a target price of GBX 10800.
  • Anglo American Plc: Citigroup remains neutral recommendation with a price target reduced from 26.50 to GBX 26.
  • Sage Group Plc: BNP Paribas Exane maintains its outperform recommendation and raises the target price from GBX 1200 to GBX 1450.