Luke Kawa12/18/24

Stocks crater as Federal Reserve’s inflation concern swells

The S&P 500 fell 3% — its second-worst day of 2024. The Nasdaq 100 slumped 3.6% and the Russell 2000 cratered 4.4%, its biggest loss this year.

The Invesco S&P 500 Equal Weight ETF closed below its November 5 level, erasing all of its postelection gains, as did small caps.

Day 13 in a row of breadth is bad, but this time even worse: the S&P 500’s advance-decline line was extremely negative. The number of falling stocks outnumbered those that rose by 464, the lowest reading this year.

The options market thought this would be the sleepiest Federal Reserve meeting of the year, and boy was it wrong. The S&P 500 and Russell 2000 were comfortably in the green ahead of the central bank’s rate decision. The Fed’s projections showed heightened concern about inflation risk given recent readings that have surprised to the upside as well as potential policies that might be pursued by the incoming Trump administration.

The median monetary policymaker thinks two interest-rate cuts would be appropriate in 2025; the market swung even more dramatically and now is pricing in only one 25-basis point reduction.

Some lowlights among individual stocks: Tesla fell 8.3%, Broadcom retreated by 6.9%, and GameStop was down 8.5%.

Jabil Circuit managed to book a strong 7.3% gain on the heels of its quarterly results and upgraded sales forecast.

Quantum Computing was one of the other rare Fed-proof stocks out there: shares were up about 40% heading into the announcement, and finished even higher than that.

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Toby Bochan, Luke Kawa

Double dose of long-delayed jobs data weighs on US stocks

The markets continued to slide on Tuesday, with the S&P 500 and Russell 2000 finishing lower, while the Nasdaq 100 managed a last-hour rally to finish slightly up.

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IonQ and D-Wave Quantum spike as Jefferies initiates coverage with “buy” ratings

Shares of IonQ and D-Wave Quantum are soaring on Tuesday after Jefferies initated coverage on the stocks with “buy” ratings and price targets of $100 and $45, respectively.

Rigetti Computing, which Jefferies started with a “hold” rating and $30 price target, is modestly lower. These three quantum computing companies are all down between 40% and 60% from their October all-time highs.

All 13 analysts who cover D-Wave have a “buy” (or equivalent) rating, while 75% of the dozen on Wall Street who have a rating on IonQ recommend the stock.

While the speculative AI-linked stocks continue to largely get crushed, this pocket of the market also favored by retail traders is showing some signs of life.

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Chip stocks are in a bubble, at least by this definition, says analyst

The definition of a “bubble” is notoriously difficult to pin down. But these analysts applied a Harvard academic’s rubric and found the shoe fits for some popular tech stocks.

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RadNet tumbles after Hunterbrook Media calls it “the AI story that doesn’t add up” and investment arm announces short position

In investigating the company, “what emerged was a gap between story and substance: a Digital Health business that generates much of its growth by invoicing a different RadNet business line; a same-center sales metric seemingly juiced by undisclosed consolidations; financial disclosures that don’t add up; and insiders using the stock run-up to cash out,” wrote Hunterbrook authors led by Bethany McLean.

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Max Knoblauch13h

Frontier sinks as longtime CEO, who regularly feuded with United, suddenly departs

Shares of ultra-budget airline Frontier are down more than 10% on Tuesday morning following the carrier’s announcement that it would replace its longtime CEO, Barry Biffle. Frontier President James Dempsey will fill in as interim CEO.

Biffle, who has been Frontier’s CEO since early 2016, will remain at the airline in an “advisory capacity” until December 31. The move is “not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices,” per a company filing.

Under Biffle, Frontier attempted to acquire rival Spirit twice since 2022 — both unsuccessful. Last week, the carrier’s shares dropped after Spirit’s pilots ratified a lower-paying contract in an effort to keep it afloat through its latest bankruptcy.

Biffle was a staunch defender of the ultra-budget model, which has been falling out of fashion in the US market in recent years. He’s regularly feuded with United Airlines CEO Scott Kirby over comments about budget airlines.

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