Happy Thursday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

• 🟥 | US stocks fell today as the Street digested more Q4 earnings, with the Nasdaq weighed down by Apple’s worst day in six months. More on that below.

• 📈 | One Notable Gainer: Shares of Taiwan Semiconductor (TSM) climbed more than 4% following its earnings report, which showed a pop in quarterly profit, a promising sign for AI chipmakers across the… ahem… board.

• 📉 | One Notable Decliner: Bucking the trend of surging banks, US Bancorp’s (USB) stock shed 5.6% despite its own earnings beat, after posting high credit losses.

Plus, read to the bottom to see what you said about yesterday’s featured stock…

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MARKET MOVERS

Apple, Bank of America, UnitedHealth

AAPL (-4%) Apple's AI Is Constantly Butchering Huge News Stories Sent to Millions of Users (Futurism)

MS (+4%) Morgan Stanley earnings jump on trading and dealmaking boom (FT)

UNH (-6%) UnitedHealth’s quarterly revenue misses on weakness in insurance unit (CNBC)

BA (+1.6%) Trump Transportation Dept nominee says he will work to restore global confidence in Boeing (Reuters)

LUV (-1.9%) Citi downgrades Southwest to sell, says the airline’s stock can fall 10% (CNBC)

OVERHEARD ON THE STREET

AP: US retail sales saw modest growth last month, fueled by strong holiday shopping, indicating that consumers remain willing and able to spend.

Reuters: US weekly jobless claims rose by 14,000 to 217,000, higher than expected, but still reflecting a healthy labor market.

CNBC: In 2024, US EV and hybrid sales reached a record 20% of total vehicle sales, with over 3.2 million electrified vehicles sold.

Bloomberg: Fed Governor Christopher Waller said the central bank may still cut interest rates in the first half of 2025, depending on favorable inflation data.

WaPo: President-elect Donald Trump is considering an executive order to "save TikTok" from a US ban or sale.

TOMORROW’S TRADE IDEA, TODAY

Playing the Commercial Real Estate Comeback

CRE Confidence

The reports of the commercial real estate (CRE) sector’s demise may have been greatly exaggerated.

The industry took a big hit amid the pandemic, as offices were vacated in the wake of stay-at-home orders and the rise of remote work. And for a while there, it looked like the shift might be permanent.

But the return-to-work mandates keep rolling in, and Morgan Stanley (MS) is confident that CRE will recover. That could be great news for one company in particular.

Catalysts for Continued Growth

The commercial real estate industry’s net revenue grew 20% year-over-year in Q3 2024, according to MS’s Ronald Kamdem. The analyst believes CBRE Group (CBRE) could be a major benefactor of that continued growth.

The bank lifted its rating on the stock to Overweight and raised its price target to $160 per share. That represents nearly 19% upside from current price levels. Kamdem pointed to an increase in commercial mortgage-backed securities issuance and spreads as a potential catalyst.

The analyst also thinks the post-pandemic world will illuminate the true value of real estate assets. CBRE has changed drastically since the onset of the pandemic, with 60% of its EBITDA now coming from resilient business lines, well above its competition's 40-55% average.

Word on Wall Street

The stock has gained nearly 60% over the past 12 months, and more than 40% over the past six alone, so momentum doesn’t appear to be a problem. But can it be sustained?

The Street seems to think so. Of the 12 analysts covering CBRE, eight have given it either a Buy or Strong Buy rating, according to LSEG. The other four have rated it a Hold.

Morgan Stanely may be more bullish than the rest of Wall Street. But most observers agree that CBRE could have a skyscraper-sized ceiling.

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ON OUR RADAR

WSJ: In the wake of devastating fires and billion-dollar losses, what will happen to LA's luxury home market?

AP: BP is cutting 4,700 jobs and 3,000 contractor roles globally as part of its cost-saving initiative.

CNBC: American Express will pay $230M to settle a DOJ fraud investigation and deceptive marketing claims.

Barron’s: Trump’s tax-cut plans face challenges from rising bond yields, a growing federal deficit, and GOP budget hawks.

The Verge: The Switch 2 is boring. Its familiarity is exactly what Nintendo needs after years of reinventing its console design.

WEDNESDAY’S POLL RESULTS

Which of these stocks do you think will outperform over the next 12 months?

🟩🟩🟩🟩🟩🟩 NVIDIA (NVDA)

🟨🟨🟨🟨🟨⬜ Broadcom (AVGO)

🟨🟨🟨🟨🟨🟨 AMD (AMD)

And, in response, you said:

• AMD — “It makes sense that they are poised for an uptick.”

• Broadcom — “Sure, but it could still be eany meani.”

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