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Briefing.com Summary:
*The major indices are within striking distance of all-time highs.
*The FOMC decision on Wednesday is the main event for the market this week. A "hawkish cut" is expected.
*IBM is acquiring Confluent for $31.00 per share.
The stock market managed some modest gains last week, and it is poised this morning to pick up where it left off.
Currently, the S&P 500 futures are up 10 points and are trading 0.1% above fair value, the Nasdaq 100 futures are up 76 points and are trading 0.3% above fair value, and the Dow Jones Industrial Average futures are up 13 points and are trading in line with fair value.
There is a hodgepodge of corporate news, all of which is interesting but none of which is particularly market-moving. Key items include:
- M&A activity featuring IBM (IBM) acquiring Confluent (CFLT) for $31.00 per share in cash, representing an enterprise value of $11 billion.
- President Trump's assertion that he will be personally involved in the approval process for the Netflix (NFLX)-Warner Bros. Discovery (WBD) deal, which he thinks could be an antitrust problem.
- A downgrade of Tesla (TSLA) to Equal Weight from Overweight at Morgan Stanley on valuation concerns.
- A Bloomberg report that Apple's (AAPL) chip chief, Johny Srouji, is considering leaving the company.
- Berkshire Hathaway (BRK.B): Todd Combs is leaving to head the Strategic Investment Group of Security and Resiliency Initiative at JPMorgan.
The positive disposition in the equity futures market is rooted largely in carryover momentum, as the Dow, Nasdaq, and S&P 500 are within striking distance of new all-time highs.
Market participants continue to fall back on the belief that the Fed will be cutting rates this week, although many are suggesting it will be a "hawkish cut," whereby the Fed cuts rates by 25 basis points but then suggests the next rate cut may not happen for an extended period.
To that end, the probability of a rate cut at the January FOMC meeting is just 21.8%, while March is only 45.3%, according to the CME FedWatch Tool. It isn't until the April meeting (55.5%) that the probability of another 25-basis point cut after this week exceeds 50.0%.
There is no U.S. economic data today, although China posted better-than-expected trade data for November, with exports up 5.9% year-over-year and imports up 1.9%. Results from the $58 billion 3-yr note auction will be released at 1:00 p.m. ET.
