Happy Monday 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 Monday, with the S&P 500 and Nasdaq retreating from record highs ahead of Wednesday’s key inflation print, the November CPI.

• 📈 | One Notable Gainer: Hershey had a sweet, sweet day. Its stock soared nearly 11% on news that Cadbury-owner Mondelēz International is considering acquiring its rival candy conglomerate.

• 📉 | One Notable Decliner: Shares of NVIDIA stumbled 2.6% after Chinese regulators opened an antitrust investigation into the chipmaking giant.

Plus, ditch the high fees typically associated with direct index investing and use today’s partner, Frec, to automate your way to thousands of dollars in tax savings.

Sponsored by Frec

Why Evan moved from ETFs to direct indexing

Last Thursday, we told you about Richard. But you don’t have to be a former hedge fund manager to understand the value of Frec.

Take, Evan, for example, a 39-year-old software engineering manager with a wife and two kids. He’s been investing for a long time. 

When he first got started, Evan self-managed his portfolio. Then, a few years ago, he got married, and his finances got more complicated, with things like a family trust and college savings accounts.

Direct indexing appealed to him because he would get similar returns as he was getting from his ETFs while saving money on advisory and ETF fees.

Evan’s favorite thing about Frec? “The killer performance that I’ve seen so far.”

He’s used a lot of other robo-advisors and other fintech tools, but “Frec seems to maximize tax loss harvesting opportunities better than any other product that I’ve used.”

St. Sheet is not a Frec customer and Frec paid a one-time fee for this full sponsorship. Evan is a Frec customer and was not paid for his testimonial. His experience may not be representative of the experience of other customers and is not a guarantee of future performance or success. Investing involves risk, including the risk of loss. Brokerage services provided by Frec Securities LLC, member FINRA/SIPC and advisory services provided by Frec Advisers LLC, an SEC RIA. Both wholly owned subsidiaries of Frec Markets, Inc.

MARKET MOVERS

Boeing, Apollo, Workday

BA (+2.1%) Boeing to lay off 396 employees in Washington (Reuters)

APO (-3.1%) / WDAY (+5.1%) Apollo and Workday to Join S&P 500 After Index Rebalancing (Bloomberg)

APP (-14.7%) AppLovin’s S&P 500 snub could make for the stock’s worst day in two years (MarketWatch)

BABA (+7.5%) / PDD (+10.5%) Chinese Stocks Jump on Stimulus Hopes. Investors Should Be Wary. (Barron’s)

AMD (-5.6%) AMD stock slides as BofA cuts to Neutral on 2025 downside risks to expecations (Investing.com)

OVERHEARD ON THE STREET

CNBC: Luigi Mangione has been identified as a person of interest in the UnitedHealthcare CEO killing and arrested on a gun charge.

BI: ChatGPT-creator OpenAI’s latest product, an AI-powered image generator called Sora, launched today.

WSJ: Following its CEO’s departure, Jeep-maker Stellantis is back Timothy Kuniskis to run its Ram truck brand and naming a new US sales chief.

Businesswire: Comcast and Warner Bros. Discovery announced multi-year distribution agreements for Xfinity and Sky UK.

AP: Omnicom is acquiring Interpublic Group in a stock-for-stock deal to create the world's largest ad agency.

TOMORROW’S TRADE IDEA, TODAY

This Sector Is In Need of Repair

Going the Cheaper Route

There have never been more cars on the road than there are now, and they’ve never been as old. The average age of passenger cars is currently 13.6 years, up from 8.4 three decades ago.

That should be great news for the companies and businesses that help keep Americans’ cars on the road. But data suggest otherwise.

Instead, in today’s uncertain economic climate, many consumers are opting for cheaper maintenance options or delaying service altogether. That has been bad news for the auto repair sector.

Feeling the Pinch

Penny-pinching consumers are increasingly going cheap on auto maintenance — and companies like Monro (MNRO), Genuine Parts (GPC), and Valvoline (VVV) are starting to feel the pinch too.

Monro saw its stock drop 12% at the end of May, after it announced a dramatic downturn in adjusted same-store sales for 2024, as customers opted for off-brand items. Its shares remain down by more than 6% YTD.

Genuine Parts stock lost around a fifth of its value after poor Q3 retail sales, with its shares down more than 9% in 2024.

And Valvoline’s stock fell 9% following cautious comments from its leadership. Although its stock recovered and has yielded roughly 3.7% YTD, it still lags substantially behind the broader market.

Bad Economy = Good Thing?

Economic turbulence may have caused headwinds for the sector in the short-term, but historically, downturns can be a good thing for the auto maintenance sector. During the financial crisis from 2007 to 2009, retail auto parts chains outperformed the S&P 500 by 55 points.

According to AutoZone’s (AZO) CEO, this is because consumers will push off repairs at first, but ultimately get them done in order to avoid more costly repairs down the road. These companies tend to see consumer spending stabilize as high unemployment causes a drop in new car sales.

In other words, the question of whether the sector continues to break down or manages to repair itself may correlate inversely with the broader economy.

Auto repair companies could be worth a second look from investors looking to hedge against a potential downturn — or short-sellers who feel sure the market has nowhere to go but up.

Sponsored by Frec

Why Evan moved from ETFs to direct indexing

Last Thursday, we told you about Richard. But you don’t have to be a former hedge fund manager to understand the value of Frec.

Take, Evan, for example, a 39-year-old software engineering manager with a wife and two kids. He’s been investing for a long time. 

When he first got started, Evan self-managed his portfolio. Then, a few years ago, he got married, and his finances got more complicated, with things like a family trust and college savings accounts.

Direct indexing appealed to him because he would get similar returns as he was getting from his ETFs while saving money on advisory and ETF fees.

Evan’s favorite thing about Frec? “The killer performance that I’ve seen so far.”

He’s used a lot of other robo-advisors and other fintech tools, but “Frec seems to maximize tax loss harvesting opportunities better than any other product that I’ve used.”

St. Sheet is not a Frec customer and Frec paid a one-time fee for this full sponsorship. Evan is a Frec customer and was not paid for his testimonial. His experience may not be representative of the experience of other customers and is not a guarantee of future performance or success. Investing involves risk, including the risk of loss. Brokerage services provided by Frec Securities LLC, member FINRA/SIPC and advisory services provided by Frec Advisers LLC, an SEC RIA. Both wholly owned subsidiaries of Frec Markets, Inc.

ON OUR RADAR

Bloomberg: President-elect Donald Trump's proposed federal bitcoin reserve could potentially be the biggest crypto scam yet.

WSJ: This app for selling secondhand clothes went from near collapse to a $5 billion valuation.

Barron’s: Teens and young adults are increasingly hooked on gambling with virtual items called skins.

CNBC: The US Treasury Department may fine small businesses $10,000 or more if they fail to file a new required report.

MarketWatch: Taylor Swift fans this many billions of dollars on her two-year global Eras Tour, which concluded in Vancouver on Sunday.

FRIDAY’S POLL RESULTS

Are you bullish or bearish on the dollar over the next 12 months?

🟩🟩🟩🟩🟩🟩 🐂 Bullish

🟨🟨🟨🟨⬜️⬜️ 🐻 Bearish