Morning News Call

TOP NEWS

• OECD: Iran conflict erases global growth upgrade, threatens higher inflation due to potential halt in Strait of Hormuz energy shipments.
• US tech liability shield: Juries found Meta and Google liable in first two trials over harm to children, potentially challenging tech liability shield (Section 230).
• Equitable, Corebridge: To merge in $22 billion all-stock deal to boost competitiveness, grow business, and strengthen position in retirement and wealth markets.
• Jefferies: Profit rose on dealmaking but missed estimates due to losses on First Brands and Market Financial Solutions loans.
• Super Micro: Shareholders sued the company for alleged securities fraud, concealing dependence on China sales violating U.S. export laws, leading to criminal charges.

BEFORE THE BELL

• U.S. stock index futures: Down, investors cautious on Middle East, weighing de-escalation prospects.
• Economic Front: Investors awaiting weekly jobless claims and comments from Fed Governors.
• Oil: Rose over 3% on prolonged Middle East conflict worries, fueling supply disruption concerns.
• Gold: Fell as persistent inflation strengthened expectations of further U.S. Fed rate hikes.
• Dollar: Little changed.
• European shares: Slipped on prospect of imminent ECB rate hike.
• Asian markets: Nikkei and Chinese equities declined.

STOCKS TO WATCH

• Alphabet Inc & Meta Platforms Inc: Jurors found both liable for harm to children, awarding $6 million in damages; verdict challenges Section 230 legal shield; companies deny claims and Google plans to appeal.
• Corebridge Financial Inc & Equitable Holdings Inc: Merging in all-stock deal to create $22 billion U.S. retirement, life insurance, and asset management firm; combined entity will be called Equitable, with over $1.5 trillion AUM; expected to close by end of 2026.
• JBS N.V: Reported near-flat Q4 net profit; record revenue offset by tighter margins in U.S. beef due to cattle supplies; faces labor strike at Colorado plant; North American beef results better than expected.
• Jefferies Financial Group Inc: Q1 profit jumped 22% due to investment banking; reported $17 million in losses from collapsed companies; investment banking net revenues up 45%; increased share buyback authorization.
• Navan Inc: Forecast 2027 revenue above Wall Street estimates on strong demand from new corporate clients; shares rose over 21% aftermarket; Q4 revenue grew 34.7%, adjusted EPS 2 cents.
• Super Micro Computer Inc: Shareholders sued over alleged securities fraud, concealing dependence on China sales violating U.S. export laws, leading to criminal smuggling charges involving Nvidia chips; lawsuit seeks unspecified damages.
• Thyssenkrupp AG: Discussions for selling its steel unit to Jindal Steel International might be called off due to differences over pension liabilities, investments, and energy costs; a deal is seen as less likely.
• Uber Technologies Inc & Pony AI Inc: Partnering with Pony.ai and Verne to launch first commercial robotaxi service in Europe (Zagreb, Croatia); Pony.ai supplies tech, Verne manages fleet; Uber integrates service; aiming for thousands of robotaxis in coming years.

INSIGHT

• Trump administration testing Fed independence on bank rules, quietly trying to steer central bank's policy on Wall Street oversight.

ANALYSTS' RECOMMENDATION

• AAR Corp: Jefferies raises target price to $150 from $135, citing stronger sales momentum, improving margins, and solid demand.
• Paychex Inc: Jefferies cuts target price to $105 from $110, noting solid results but limited upside in next year’s growth outlook.
• Robinhood Markets Inc: Jefferies initiates coverage with a buy rating and target price of $88, highlighting strong growth potential from rising retail participation and expanding products.
• Scotts Miracle-Gro Co: JPMorgan cuts target price to $67 from $70, due to rising raw material costs adding uncertainty to earnings growth.