10 things to watch in the stock market Friday, including Nike, inflation

1. Wall Street indicated for a mixed open Friday as the November personal consumption expenditures (PCE) price index comes in cooler than expected, which is a positive sign in the Fed’s winning battle against inflation. Down 0.1% vs. flat expected – wow first time down since April 2020. 2.6% year over year versus 2.8% expected. Core PCE, the Fed’s favorite inflation gauge, up 0.1% versus 0.2% expected and 3.2% year over year versus 3.3%. The U.S. stock market will be closed Monday on Christmas Day.
2. Quarter was fine but a rough outlook from Nike sends the Dow stock more than 11% down. The company lowered its revenue and earnings-per-share (EPS) guidance as it expects softer sales over the next two quarters. China weak, getting more promotional. EMEA (Europe, Middle East, and Africa) sluggish as well. Cost savings program of up to $2 billion will help. Stock had made a huge move so it will give some of that back. TD Cowen downgrades on too-high estimates. JPMorgan cuts to $128 from $138, maintains neutral.
3. Bristol-Myers Squibb gives an early Christmas gift to shareholders of Karuna Therapeutics, shelling out $14 billion to acquire the biotech for $330 per share and boost its psychiatric and neurological portfolio. Shares of Karuna, which makes a promising experimental schizophrenia drug, are up nearly as much as the more than 53.4% premium compared to Thursday’s close.
4. Oppenheimer likes the banks into the new year, prefers Club name Morgan Stanley as well as Bank of America, Goldman Sachs, Citigroup, Jefferies, and US Bancorp. In his CNBC exit interview Thursday, outgoing Morgan Stanley CEO James Gorman highlighted why we’re staying in the bank stock. Ted Pick takes over as CEO on Jan. 1, 2024.
5. Needham says its two favorite FAANG picks for 2024 are Club names Alphabet and Amazon. During this week’s December Monthly Meeting for Club members, Jim Cramer and I ran through all of our tech stocks, including Nvidia and the three other Magnificent Seven we own.
6. Wedbush raises its Tesla price target to $350 from $310 on electric vehicle share gains and margin stabilization next year. Tesla is the only Magnificent Seven stock we don’t own.
7. UBS says stay bullish on semiconductor and semi-equipment companies “as inventory trends enter the ‘sweet spot.'” Top ideas are Micron and Advanced Micro Devices but they like Club names Nvidia and Broadcom, as well as Marvell Technology, Lam Research and Microchip Technology.
8. Bank of America reiterated buy on Disney and $110 price target in its fiscal 2024 first quarter preview. The analysts think the quarter will be a continuation of recent trends – box office bad, director-to-consumer streaming improving, inflation and tough comps weighing on theme park margins.
9. China surprises the video game industry with a new crackdown, enacts measures that limit time and spending on online games. News hits shares of Roblox, Electronic Arts, and Take-Two Interactive.
10. Warren Buffett’s Berkshire Hathaway buys more Occidental Petroleum, increasing his stake to about 28%.

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