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 rose Monday. The Dow Jones Industrial Average touched 38,000 for the first time while the S&P 500 registered another all-time high. Why? Some experts think FOMO is driving the new bull market.

• 📈 | One Notable Gainer: Spirit Airlines' stock jumped 19% during Monday's session after announcing an appeal against a federal judge's ruling.

• 📉 | One Notable Decliner: Archer-Daniels-Midland's stock plunged over 24%, marking its second-worst day since 1972.

• 💊 | Tomorrow's Trade: Something Biden & Trump Agree On. Scroll down for more.

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LAST WEEK’S POLL RESULTS

Are you bullish or bearish on TSMC (TSM) stock in the next 12 months?

🟩🟩🟩🟩🟩🟩 🐂 Bullish

🟨⬜️⬜️⬜️⬜️⬜️ 🐻 Bearish

MARKET MOVERS

StoneCo, Gilead Sciences & Vita Coco

STNE: StoneCo's shares rose 1.7% after Goldman Sachs upgraded the Brazilian payments company to “buy” citing its strong revenue and earnings growth prospects.

GILD: Gilead Sciences' stock dropped over 10% following the failure of its lung cancer drug, Trodelvy, to meet the primary endpoint in a phase 3 trial.

COCO: Vita Coco's stock fell over 6% after William Blair downgraded it to “market perform” citing shipping issues in the Red Sea and Suez Canal impacting profits.

SEDG: SolarEdge Technologies' stock climbed 4% following its announcement to cut 16% of its global workforce, impacting about 900 employees, to reduce operating expenses.

RILY: B. Riley Financial's shares fell 2.5% amid a Bloomberg report of an SEC investigation into its dealings with a client linked to securities fraud.

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OVERHEARD ON THE STREET

Reuters: Bankrupt cryptocurrency exchange FTX's affiliate Alameda Research has dropped a lawsuit against Grayscale Investments that had accused the digital asset manager of "enriching itself at shareholders' expense," a court filing showed on Monday.

CNN: Boeing received a boost amidst recent setbacks as India's latest airline ordered 150 Boeing 737 Max aircraft, marking the first significant order since the Alaska Airlines incident involving a 737 Max 9.

Reuters: J.P.Morgan said it expects the Bank of England to start cutting interest rates in August this year.

YF: Apple's high-end Vision Pro VR headset, priced at $3,499, opened for pre-orders on Friday, and analyst Ming-Chi Kuo estimates 160,000-180,000 pre-orders were placed over the weekend.

BI: The housing market is breaking out of mortgage rate lock as a wave of sellers look poised to list their homes in the coming years, Zillow says. The housing market could be breaking free from the "rate lock" phenomenon that froze activity in 2023.

TOMORROW’S TRADE IDEA, TODAY

Something Biden & Trump Agree On

Ignore the Politics

There aren’t many things that President Joe Biden and former President Trump agree on, but when it comes to big pharma they have some common ground.

Both have been critical of drug prices and insurance companies, and this topic is expected to be a major pillar of both of their campaigns. 

However, from an investment standpoint, it may be best to ignore the politics. Despite having one of its worst years to date in 2023, and facing mounting political pressure, analysts believe there is value to be found in drug stocks this year.

Showing Signs of Life

In 2023 the pharmaceutical sector underperformed the S&P 500 by around 21%. 

As a result, some drug company stocks can be bought at a discount right now. Moreover, many experts think the political backlash is already priced in. Pharma’s price-to-forward-earnings ratio is 16.7, well below the S&P 500’s which is hovering around 19.7. 

According to Goldman Sachs, the healthcare sector saw more net buys in its clients’ prime brokerage accounts last week than at any time in the last five months. In fact, the NYSE Arca Pharma Index is up 3% YTD.

The Economy is What Matters

Zooming out, analysts believe the industry's success depends more on the overall economy and Federal Reserve decisions than on political statements.

To that end, if inflation proves to be stickier than anticipated, geopolitical unrest grows, or the Fed doesn't stick its soft landing Wall Street might batten down the hatches and rotate into healthcare.

Many investors are keeping their eyes on the “Dogs of the Dow,” which have outperformed in the past: Johnson & Johnson, Amgen, and Walgreens. These are all defensive plays but still pay out decent dividends.

With that said, from a statistical standpoint, pharma has outperformed the S&P 500 by an average of 27 percentage points during years when there is both an election and a downturn.

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ON OUR RADAR

Reuters: U.S. crude futures increased roughly 2% today, driven by tightening oil supply from the Middle East and Ukraine conflicts, North American cold weather, and positive U.S. stock market signals for future demand growth.

BI: Companies have embarked on a $150 billion debt binge, borrowing at the fastest rate to begin a year in three decades.

CNN: China's stock market, declining since 2023, worsened this year with Hong Kong's Hang Seng Index dropping 2.3%, hitting its lowest since October 2022 and almost matching last year's total loss in just one month.

Global News: Canada plans to cut international student admissions by 35% over the next two years, capping approvals at around 364,000, down from 2023's figures.

BI: A Zillow survey reveals that 21% of homeowners are contemplating selling their homes within the next three years.