Macro Events & News
The anticipated Santa Claus rally failed to gain significant traction, though positive momentum carried the markets into the Christmas break. Initial jobless claims released on Thursday after the holiday showed a decline to 219,000, but also suggested increasing difficulty in finding employment. The 10-Year Treasury yield climbed to its highest level of the year, surpassing 4.63%, raising concerns about borrowing costs and potential pressure on equity valuations. Despite these developments, market action for the week did not signal a clear directional shift or a change in the relatively bullish sentiment surrounding the economy and markets.
The 10-Year Treasury yield jumped to 4.63%, and the VIX declined from prior week highs to 15.95.
For the week, all major indexes ended modestly higher: the Dow up < 1%, the S&P 500 up < 1%, and the Nasdaq up < 1%.
Watchlist News
GameStop (NYSE:GME) 8% ▲
GameStop saw a 10% surge when markets reopened on Thursday, following a cryptic Christmas post on X by Roaring Kitty. However, the gains largely faded by Friday as the broader market pulled back, leaving the stock to close near its pre-surge levels. There was no company-specific news since the earnings earlier in the month.
GameStop has been trading in a range since its earnings report, which highlighted a slowing core business but stabilization supported by a $4 billion-plus cash reserve. However, the lack of commentary or direction from management leaves investors waiting for clarity. The cryptic posts from Roaring Kitty no longer generate the same enthusiasm, they are no longer a catalyst. For GameStop to regain momentum, the company must unveil a long-term strategy beyond its core business. Once a credible plan is announced, this meme stock could fly.
august bear notes
Meta Platforms (NASDAQ:META) < 1% ▲
Meta climbed back above $600 early in the week, buoyed by an overwhelmingly bullish report and a price target raise from Rosenblatt. However, like many stocks, it lost momentum after markets reopened following the Christmas break. Despite this, Meta managed to close the week in positive territory.
Meta showed a strong recovery last week, highlighting its resilience and signaling potential profit-taking activity. While the stock retreated after Christmas alongside the broader market, the late Friday surge offered an encouraging signal for investors, reflecting sustained confidence in its prospects heading into 2025. Rosenblatt’s research underscoring Meta’s ad dominance and effective use of AI further bolstered investor optimism, reinforcing its position as a key player for the coming year.
august bear notes
Microsoft began the week on a positive note, reclaiming the $440 level. However, post-Christmas, the stock declined, experiencing a notable drop on Friday. This downturn coincided with reports of friction between Microsoft and OpenAI regarding their partnership terms. Specifically, discussions emerged about OpenAI’s desire to amend the “AGI clause” in their agreement, potentially altering the dynamics of their collaboration.
Microsoft’s recent performance is somewhat concerning, as it continues to lag behind other Magnificent 7 peers. While Loop Capital provided bullish commentary and raised their price target to $550 from $500, this failed to alleviate investor concerns about the company’s direction, particularly regarding AI. Reports of friction with OpenAI and potential changes to their agreement appear to have exacerbated these worries, as evidenced by the subsequent price drop. This hints at a growing lack of confidence in Microsoft’s AI initiatives, including its CoPilot offering, which has been a key pillar of its growth narrative. This could be more consolidation before a definitive move past all time highs.
august bear notes
