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- 📈 Merck’s $2B Slim Chance
📈 Merck’s $2B Slim Chance
TikTok ban to be heard by Supreme Court, Micron's stock slides, Altman backed nuclear startup gets massive deal, CVS accused of billing US govt. for opioids, Merck inks mega-deal for weight loss drug
Evelio Silvera
December 19, 2024
Good morning.
⚡ The Fast Five → TikTok ban to be heard by Supreme Court, Micron's stock slides, Altman backed nuclear startup gets massive deal, CVS accused of billing US govt. for opioids, Merck inks mega-deal for weight loss drug
🔎 Market Trends → Stocks dive after Fed cuts rates, signals slower easing pace in 2025; US Futures Stabilize After Sharp Market Selloff
And now…
⏱️ Your 5-minute briefing for Thursday, December 19, 2024:
MARKET BRIEF
Before the Open
As of market close 12/18/2024.
Pre-Market
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Fear & Greed
Markets in Review
Fed’s Rate Signal Rattles Markets, But Optimism Holds for Long-Term Growth
The Nasdaq fell 3.6% to 19,392.7, while the S&P 500 lost 3% to 5,872.2. The Dow declined 2.6% to 42,326.9, extending its losing streak to 10 days—the longest since 1974. Consumer discretionary led declines, falling 4.7%.
The Big Picture:
Markets reacted sharply to the Federal Reserve’s revised rate outlook, which signaled fewer rate cuts ahead as inflation remains sticky. The Fed cut its benchmark rate by 25 basis points, bringing it to a range of 4.25%–4.50%, but updated projections showed a more cautious approach for 2025 and beyond.
Fed Chair Jerome Powell emphasized a deliberate strategy, citing the significant easing already achieved. While markets wobbled on the news, Powell’s measured tone suggests confidence in the underlying economy.
The 10-year yield surged 12.9 basis points to 4.51%, its highest in months, as investors adjusted to the tighter rate outlook.
Oil prices were steady at $70.08/barrel, while gold fell 2.2% to $2,603/oz and silver tumbled 3.6%, reflecting reduced demand for safe-haven assets amid rising yields.
Market Movers:
Tesla (TSLA): Plunged -8.3%, reflecting concerns about profit margins and competitive pressures in the EV space.
Jabil (JBL): Soared +7.3%, topping the S&P 500, as its better-than-expected Q1 results and 2025 outlook upgrade reassured investors.
Toro (TTC): Dropped -4.5% after issuing a fiscal 2025 outlook below analysts’ expectations, despite meeting Q4 earnings projections.
What They’re Saying:
"The Fed’s cautious approach is prudent given inflation dynamics, but investors should focus on the broader picture—strong corporate fundamentals and resilient consumer spending," said TD Economics.
WHAT WE’RE WATCHING
Events
Today: Bureau of Economic Analysis - Final Gross Domestic Product (GDP) - 8:30am
Why You Should Care: It's the broadest measure of economic activity and the primary gauge of the economy's health.
Today: Department of Labor - Jobless Claims - 8:30am
Why You Should Care: Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy.
Earnings Reports
Today: Accenture, Nike, FedEx, BlackBerry, Cintas, Scholastic
Tomorrow: Carnival Corp., Winnebago, Soho House
MARKET BRIEF
Leading News
Merck's $2 Billion Bet on Weight Loss Pills
Why it matters:
The global obesity drug market is projected to surpass $100 billion annually by 2030, and Merck (MRK) is positioning itself to capture a slice of this booming industry.
Zoom Out:
Merck has inked a deal with Chinese drugmaker Hansoh Pharma for exclusive rights to an experimental oral weight loss drug, HS-10535, targeting the GLP-1 hormone. GLP-1 drugs, such as Novo Nordisk’s Wegovy and Eli Lilly’s Mounjaro, have redefined weight management with injections—but pills could be the next big leap.
This move underscores a high-stakes race among pharmaceutical giants like Pfizer, Roche, and AstraZeneca to innovate more convenient treatments for obesity. Merck will pay Hansoh $112 million upfront, with potential milestone payments bringing the total to $2 billion.
Merck aims to showcase benefits beyond weight loss, targeting conditions like diabetes and cardiovascular health—a broader approach to ensure insurance reimbursement and patient adoption.
Key Insights:
GLP-1’s growing appeal: These drugs mimic a gut hormone that suppresses appetite and regulates blood sugar, making them pivotal in tackling obesity, diabetes, and fatty liver disease.
Strategic entry: Oral options could outpace injectable competitors, especially for patients hesitant about needles.
Market signals: Merck’s investment aligns with bullish expectations for obesity treatments to drive long-term revenue growth in pharma.
Market Pulse:
"The potential of oral GLP-1 drugs goes beyond convenience—they may redefine cardiometabolic care,” said Dean Li, president of Merck Research Labs.
Bull’s Take:
Merck is betting on innovation to claim a stake in a transformational market. If successful, HS-10535 could disrupt the obesity drug landscape and generate substantial ROI. Savvy investors should monitor progress as Merck expands its pipeline into high-growth therapeutic areas.
Headlines
U.S. Supreme Court agrees to hear challenge to TikTok ban (link)
Micron's stock skids as AI momentum doesn't make up for pressures elsewhere (link)
US accuses CVS of filling, billing government for illegal opioid prescriptions (link)
Stellantis delays its first BEV pickup to push ahead its range-extended Ramcharger (link)
Sam Altman-backed nuclear startup Oklo lands massive data center power deal, with caveats (link)
CRYPTO
Fear & Greed
Headlines
DAILY SHARE
On the Socials
*Hat-tip to Wall Street Memes