FT : Carmakers sound warning over EU’s ‘very dangerous’ local sourcing rules

Carmakers sound warning over EU’s ‘very dangerous’ local sourcing rules
Companies and industries are divided over the bloc’s ‘Made in Europe’ plans

Carmakers have warned that “Made in Europe” proposals that set local content levels for products could cause further disruption to supply chains and trigger a slowdown in the transition to electric vehicles.

Oliver Zipse, BMW’s chief executive, said that setting complex local sourcing rules was “very dangerous” because they would be “extremely cumbersome” to calculate. Europe would risk being “cut out of the [global] innovation race”, he added.

EU plans to set local sourcing targets for parts in products such as cars and solar panels have divided industry and prompted heavy lobbying over what would count as European.

The targets, first reported by the Financial Times, will vary according to Europe’s dependency on certain trading partners, particularly China, and the bloc’s ability to scale up production. Initially local content levels of up to 70 per cent for some goods such as solar panel inverters or cars were discussed, but are now likely to be reduced.

They will be part of a set of proposals aimed at boosting the EU’s flagging industrial base and are subject to intense negotiations within the European Commission. A policy announcement scheduled for this week has been pushed back and officials have warned that the sourcing rules could still change before they are due to be presented on January 28.

France has been the biggest proponent of the local sourcing strategy but member states and businesses have been divided over how the rules should be designed and implemented.

Japanese carmakers, for example, are concerned that “made in Europe” will exclude even friendly trading partners and have requested its expansion in a letter sent to the European Commission last week, according to people with knowledge of the matter.

Katsuhisa Okuda, president of Honda Motor Europe, said overly restrictive sourcing requirements risked “unintended consequences, which could slow down Europe’s transition towards clean mobility”. He called for a “made with common values” framework that included factors such as “trade liberalisation, market economy status and alignment with common political and economic values”.

Other carmakers, including several inside the EU, want countries such as the UK and Turkey — where they have large manufacturing hubs — to be included in local content thresholds.

European industry, which is subject to strict climate rules and high energy costs, has been struggling as Chinese manufacturers have caught up or overtaken their technical expertise but have managed to keep prices low.

Unlike the carmakers themselves, their suppliers have argued that local content measures were critical to their survival especially since the EU’s higher tariffs on China-made EVs have failed to slow the incursion of Chinese rivals into the continent.

Benjamin Krieger, secretary-general of CLEPA, representing auto parts suppliers, said the EU could not afford to wait to introduce the rules, which would “protect jobs and reduce our reliance on imports until deeper reforms kick in”.

Renewable energy companies have also been vocal in their support.

“We have seen what’s happened with clean tech in Europe in the past — Chinese oversupply and then dumping in Europe,” said Constantine Levoyannis, head of government affairs at Norway’s Nel Hydrogen. The “devil is in the detail . . . but we would be happy with a high share of European content on the component level,” he said.

Last year, the EU proposed targets for domestic manufacturing in industries such as solar, wind and heat pumps in response to former US president Joe Biden’s $370bn Inflation Reduction Act. But many executives have warned that these were far from being met.

Ilka von Dalwigk, director-general of Recharge Europe, which represents companies in the battery supply chain, said that as projects were getting postponed or cancelled, local sourcing requirements would provide “investment certainty”. However, the rules should be part of a wider industrial strategy that included incentives and support, she added.

Walburga Hemetsberger, chief executive of SolarPower Europe, said local content mandates should be build into public procurement.

However, Fatih Birol, executive director of the International Energy Agency, said Europe needed to find a balance between local sourcing and accept that there were technologies where it was “difficult for Europe now to start and compete”.

He added: “Europe needs to look at the areas where Europe can be competitive.”

FT : Inside the failed green revolutions at BP and Shell

Inside the failed green revolutions at BP and Shell
How the energy giants tried to transform their businesses — but ended up dramatically scaling back those plans and writing off billions of dollars

The green revolution at BP began on February 12 2020, in Bernard Looney’s second week as chief executive.

Looney, a charismatic BP lifer who had run the company’s oil and gas operations, embraced the energy transition with the zeal of a convert.

“We have got to change, and change profoundly,” he declared in a speech in London, just weeks before Covid lockdowns swept much of the world, leading to an oil price crash that seemed to underline his message.

As well as accelerating its clean energy businesses, Looney said, BP would also cut spending on oil and gas, and slash not just its own emissions by 2050, but also the hundreds of millions of tonnes of CO₂ produced when its oil and gas was burned by its customers each year. In total, he said, “that is not far off the emissions of the UK”.

He also sent a warning shot to any doubters within the company. “If anyone sees BP acting counter to what I say today, then I want to hear about it.”

The speech stunned BP’s own senior staff.

Two former executives claim Looney had been working with consultants from McKinsey for months but had not shared the plan with the other 11 members of BP’s executive team before unveiling it. “It was a big bang approach,” one of them says. “[He was saying:] ‘I will actually destroy my current business because it is doomed and I am going to build a brand new business on the ashes of that.’”



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Observing from outside, one rival oil company boss was also shocked that BP had tied its net zero targets to the oil and gas it produced. “You are going to be toast. The only way you are going to get to zero is to get to zero production,” the person recalls thinking. Looney declined to comment for this article.

By the time Looney announced BP’s plans, Shell, the UK’s other oil and gas giant, had been working on its own transformation for six years under chief executive Ben van Beurden.

Both companies were cheered on by the UK government, the media and by investors, such as BlackRock, which adopted new climate-friendly investment frameworks.

There was a powerful mood of optimism in the markets. By 2021, Denmark’s Ørsted, the first oil and gas company to exit fossil fuels and embrace renewable energy, saw its valuation hit $82bn, making it around a third more valuable than BP or Shell in January 2021.

Van Beurden says that while Shell began slowly, he believed it was essential for the company to identify what its role would be after the transition to clean energy. “For the long-term survival of the business, you have to think about the future of the energy system, which is not going to be oil and gas, let’s be honest,” he tells the FT.

The two UK oil majors spent heavily on their plans, hiring thousands of new staff and promising to be part of the solution to climate change, rather than its cause.

But neither effort lasted beyond the tenure of the chief executive who launched it. The two companies have since dramatically scaled back several of their energy transition businesses, writing off billions of dollars of value as they shut down, or sell off underperforming units.

The majority of the staff they hired have now moved on and both BP and Shell have promised investors they will cut costs and focus on their core business of finding and selling oil and gas.

“Our optimism for a fast transition was misplaced and we went too far, too fast,” Murray Auchincloss, BP’s current chief executive, said in February, as he killed off Looney’s plan. “Oil and gas will be needed for decades to come.”

The first and biggest mistake that both companies made was to believe they could jump from oil and gas to becoming major players in electricity.

Both Shell and BP had dabbled in wind and solar power since the 1990s, but decided the technology was not yet mature. By 2014 however, Shell had realised that if the world was serious about getting to net zero “you have to have deep electrification”, according to Mark Gainsborough, the first head of the company’s “New Energies” division.

At that time, the world appeared to be changing fast. Oil prices were collapsing after Saudi Arabia’s price war against US shale producers, governments were sharpening climate policy and the Paris Agreement on emissions targets was imminent.

Even as Shell was betting on gas for its medium-term future, buying BG Group in 2015 for $52bn, van Beurden wanted to prepare for a post-fossil fuel world.

After closing the deal, he surprised his executives by telling them that while Shell was now the world’s largest gas company, it was already cheaper to generate electricity from renewables than from gas.

There was plenty of external pressure too: van Beurden remembers attending conferences and being told Shell was a dinosaur, waiting to become extinct.

Embracing wind and solar power was the quickest way for Shell to reduce its overall carbon footprint, as it offset some of its oil and gas emissions with zero emission electricity.

It was also the only option that could be quickly scaled; other clean technologies such as hydrogen, biofuels or carbon capture were all too expensive for consumers.

But Shell’s huge bureaucracy moved slowly and cautiously. Executives worried about the profitability of becoming an electricity utility, while the board fretted about the risk to Shell’s reputation if a business selling power to households went awry.


After much internal wrangling, the company set out a methodical transformation plan and started building or acquiring businesses along the green energy supply chains to Shell’s vast customer base.

But winning over its own oil and gas-focused staff was a huge challenge. “It was the finance guy who would come in and say, ‘I don’t get it. I don’t know why we are investing in this, the returns are low.’ And the lawyers, and the treasury. Everyone had an opinion,” says one former Shell executive.

Joe McDonald, one of the founders of Limejump, a virtual power plant start-up acquired by Shell in 2019, remembers the culture shock of joining the giant company. “You moved from one meeting to a hundred meetings. I remember one meeting where we spent the whole 45 minutes introducing everyone, and then we had to reschedule another meeting later.”

For Gainsborough, the biggest challenge was that the nascent division was tiny, in an organisation pulled inexorably by the gravity of oil and gas.

“At Shell, if it does not move the dial, it gets ignored,” he says. “I’ve done some difficult jobs and by far and away the most difficult one was running New Energies. And that was in an environment where both the CEO and the chair were massive supporters.”

In the decade before Looney took charge, BP was simply trying to steady its ship. The 2010 Deepwater Horizon disaster cost it over $70bn and absorbed all the attention of the company’s leadership.

There were some small hedges on the future. In 2017, it bought nearly half of UK solar farm company Lightsource for $200mn. In 2018, it bought Chargemaster, the UK’s largest electric vehicle charging network, for £130mn after seeing how quickly electric vehicles were being adopted in China.

But everything changed after the arrival of Helge Lund, the former Statoil chief executive, as BP chair at the end of 2018 — and then the appointment of Looney as chief executive at the start of 2020.

To consolidate control and prepare BP for disruption, Looney and McKinsey dismantled the company’s traditional “upstream” and “downstream” divisions, which explored and produced oil and gas and then refined, traded and sold it.

Instead, there were 11 new business units, some of which left staff baffled. One new team was called “Cities and Regions” and its job was to imagine how urbanisation would change energy use and consult with cities on what opportunities there might be for BP to play a role. “It looked like a consulting job on a piece of paper rather than something that was really going to fly,” admits one former BP executive. Last year, BP reorganised again to get rid of the Cities and Regions unit and “reduce duplication”.

“You could see the mis-steps happening live. The degrees of change were just too fast,” says another. “Changing the CEO is one degree of change. Then the CEO changes the strategy overnight. Then he decimates anybody in divisions that he didn’t think were important.”

Later in 2020, Looney set out more details. BP went beyond Shell, and any other oil company, in pledging to actually reduce the oil and gas it produced, with an initial target of a 40 per cent cut by 2030. “No other company followed, so either you are a prophet and others did not get it, or you are the lonely guy on top of a mountain,” observes the second executive.

With McKinsey teams embedded across the organisation to offer rebuttals, and amid the chaos of the reorganisation, insiders say it was hard to speak out against the plan. “You could not have a dialogue about this being the wrong thing. If the numbers did not work, you would fit them,” the executive adds.

Both companies increased their spending on green technology rapidly, to a peak in 2022 of nearly a third of overall investment, or $4.9bn, for BP, and nearly a fifth, or $4.3bn, for Shell. BP promised to spend a further $55bn to $65bn between 2023 and 2030.

The reaction from investors was mixed, at best.

Gainsborough recalls visiting one major investor who greeted him with five people from the ESG department and five from oil and gas. “The oil and gas side said, ‘We prefer you to do as little as possible of this new energy stuff because you have to focus on the core,’ and the ESG team said, ‘You have to do this much faster.’”

Among investors, the media and the public, the two companies were mainly judged by how quickly they had increased their investment on renewable energy, and how much they were still spending on oil and gas. They found it impossible to satisfy their critics.

Van Beurden remembers trying to explain that Shell should be judged by its efforts to reduce the carbon emissions of what it supplied to customers, since the company’s large trading business sold six times as much fuel as Shell produced itself.

“How much you invest in renewables is the wrong metric to judge us,” he says. “But nevertheless people looked at it and said, ‘Why can’t you do twice as much?’”

But as the external pressure mounted, and companies such as Ørsted soared to heady valuations, Shell began chasing projects for volume rather than value.

Internally, some executives got carried away. One proposed that Shell, the largest supplier of jet fuel in the world to a network of 800 airports, should divest the hugely profitable business because it was so carbon intensive, according to two former colleagues. The idea was quickly killed.

“There was a lot of Fomo,” remembers Elisabeth Brinton, who succeeded Gainsborough at New Energies in 2020. “I could already see the headwinds in offshore wind, and we all see where it is now,” she says, referring to recent slump in the market.

Her regret, in hindsight, is that Shell did not stick to the businesses that would have better suited its core skill of trading, where it often bought and sold energy, including renewable electricity and clean fuels, rather than trying to produce it itself. “The mandate I had was too spread out and it was just too much for the organisation and the shareholders to really digest,” she says.

Another former executive says it was never in Shell’s long-term interest to adopt the business model of the utility companies, which compete on capital discipline and thin margins. “In 2019/2020 we embraced the Ørsted model. Both Shell and BP brought in people from utilities. It’s a bit like challenging Usain Bolt to a 100-metre race. You are never going to win so why are you trying to be a utility?”

Gainsborough disputes that the lower margins from electricity was a problem. “Oil and gas is a 10 per cent return over the cycle at best,” he says. “People only remember the peaks.”

Instead, he says, there was a lack of patience. “How long did it take Shell’s LNG business to get double-digit returns? Between 10 and 15 years,” he says. “Now it is the jewel in the crown. With oil and gas we were prepared to take long-term bets. And there was an expectation that the gestation period for New Energies was going to be very, very short, which is just totally unrealistic.”

The music stopped when Russia invaded Ukraine in early 2022. The ability of Shell and BP to spend freely on the energy transition was always constrained by the decision of their US rivals, ExxonMobil and Chevron, to maintain a focus on oil and gas.

When the war in Europe created an energy crisis that sent prices, and oil company profits, sky high, some investors started to push Shell and BP to stop diverging from their peers and ditch their unprofitable green plans altogether.

Most insiders agree that the decisive blow to the green push at both companies came with leadership change.

At Shell, Brinton saw New Energies shift from being considered a possible candidate for a spin-off IPO to a problem that needed fixing.

She says the business was performing according to its financial plan at the time of her departure in 2022. “It was very frustrating because all of a sudden the expectations and the game rules and the funding started changing and it became very easy to scapegoat those businesses and blame them and say it’s not working. They starved their children and then say the children failed.”

Van Beurden, who stepped down at the end of 2022, says the world changed. Inflation and interest rates rose, he argues, governments moved more slowly, and the global pace of progress on climate change is currently below the bottom end of Shell’s forecasts from 2016.

He says the scale of the challenge to reduce emissions became clear during Covid, when global shutdowns only made a roughly 5 per cent dent in the total. “People started realising that this is actually a much bigger challenge. Unless we have big pandemics every year, we are not going to get anywhere on this,” he says.

At BP, Looney’s sudden departure at the end of 2023, for misleading the board about his past relationships with BP colleagues, left the company with the dawning realisation that its revolution was out of step with reality.

“The problem with BP’s targets was that they ignored the force of the market, so if the market changed, you did not have exit routes,” says one former executive. These days, since new chief executive Auchincloss reset the strategy, there is “radio silence” about the green push, according to one current employee.

Today, Shell and BP have retreated to be more in line with their US rivals, though still with targets to have net zero emissions by 2050. The grand narrative of transformation has been discarded for renewed focus on shareholder returns.

While the world continues to electrify, and to grow the share of solar and wind power generation, the two companies are now focusing on other parts of the transition, such as moving from heavy fuels with high emissions to gas and eventually biofuels and hydrogen. In the first nine months of this year, BP cut its spending on clean energy by 80 per cent compared with last year, to just $332mn.

Shell says it is now “focused on disciplined capital allocation in our areas of competitive strength while driving improved returns”. The company has “clear plans” for “more profitable lower-carbon businesses” which it can scale “as customer demand and government policies evolve.” BP declined to comment

Yet the failed experiments left a legacy. An entire generation of executives trained at the two companies has fanned out across the energy sector. “None of the people who worked for me at New Energies have struggled to get great jobs,” says Gainsborough. “I had lunch with 10 CEOs in London who had all worked for me in New Energies. The Shell diaspora into the rest of the energy transition is massive.”

Van Beurden’s regret is that the industry failed to clearly define a collective plan for the energy transition. “It was impossible to get everybody on the same page,” he says. Climate strategy became a source of competition, with each company seeking to differentiate itself by taking a different approach. “That’s where the industry collectively has made a big mistake.”

FT : Where the Netflix vs Paramount battle stands

Where the Netflix vs Paramount battle stands

Warner Bros Discovery: Netflix vs Paramount — where things stand
It’s been an incredible week stretching from Wall Street to Hollywood, with the battle over the future of Warner Bros Discovery roping in big players from the Middle East and Washington. 

After Netflix sealed an $82.7bn cash-and-stock deal last week to buy the media giant’s studios and streaming platforms, Paramount stormed in on Monday with a $108bn hostile bid for all of WBD’s assets.

DD will catch you up on what promises to be one of the biggest M&A dramas in decades. The jockeying has just begun between the rival bidding groups as they try to convince shareholders, regulators and even the White House that their deal is the best.

The antitrust case 
Paramount chief executive David Ellison met with WBD investors in New York this week to convince them that his company was a better bet than Netflix in the fight to control the Hollywood group.

He has argued Paramount is more likely to receive the blessing of regulators.

But whichever buyer WBD shareholders choose has to be approved by federal competition regulators, and legal experts say both deals would raise antitrust concerns.

A Netflix takeover is likely to be scrutinised over the platform’s dominance in streaming.

Globally, Netflix has 302mn paying subscribers, while WBD has 128mn and Paramount has 79mn. Combining WBD with Netflix would further bolster its position as the biggest global player in streaming — traditionally a major regulatory red flag.

But if regulators recognise platforms such as YouTube and TikTok as competitors to Netflix’s streaming business, its market share looks a lot smaller.

For Paramount, regulators would likely be focused on the combination of two big studios.

Beyond the economic considerations, there are also the preferences of President Donald Trump, who said on Sunday he “would be involved” in the decision over who ultimately buys WBD, with the potential to influence the outcome through the justice department’s antitrust powers.

At first glance, Paramount seems to have the advantage on this front. Ellison is the son of Larry Ellison, the billionaire Oracle founder and Trump ally. And the president’s son-in-law Jared Kushner is among the financial backers for Paramount’s bid.

But Trump met with Netflix chief executive Ted Sarandos at the White House recently and called him a “great person” who has done “one of the greatest jobs in the history of movies”.

On Monday, the president indicated he hadn’t picked a winner. “I know the companies very well . . . but I have to see what percentage of [the] market they have,” he said, adding: “None of them are particularly great friends of mine. I want to do what is right.”

There is also a risk that state attorneys-general jump in, especially if they deem federal scrutiny insufficient. Any deal is also expected to face scrutiny in Brussels.

What’s the better deal for Hollywood?
After the Netflix deal was announced, entertainers and Hollywood unions called for regulators to block the takeover.

Netflix has traditionally been seen as an anti-Hollywood player because of its reluctance to widely distribute films for the big screen. And unions are concerned that the deal could lead to lay-offs, although Warner Bros chief executive David Zaslav said he didn’t expect widespread job cuts.

A Paramount acquisition could likewise lead to lay-offs, but there have been more voices in Hollywood in favour of a Paramount takeover.

But Paramount as a buyer may raise political concerns. While Netflix’s deal excludes WBD’s legacy television channels, Paramount’s offer is for the whole business — including CNN.

Trump loathes the television network, referring to it as “Fake News CNN”, and may want to see it end up in Paramount’s hands. Paramount owns CBS News where it has recently installed Bari Weiss, a prominent critic of “woke culture”, as editor-in-chief.

Ellison visited Washington in recent days to meet Trump administration officials, during which they discussed his commitment to making CNN’s news operations “more balanced” if his bid succeeds, according to people briefed on the meeting.

WBD and others have also expressed concerns about Paramount’s reliance on investors from the Middle East to fund its offer. 

Saudi Arabia, Abu Dhabi and Qatar are set to contribute almost 60 per cent of the $41bn equity in Paramount’s bid. It’s a rare opportunity for the Gulf states to gain a sizeable stake in one of the most prized American assets, and also a chance for them to continue to diversify into sports and entertainment.

But their interest has raised concerns about their potential influence over a major studio and a large news organisation.

The battle bears a resemblance to Sumner Redstone’s acquisition of Paramount in the 1990s, The New York Times writes, when he fended off a hostile bid and a lawsuit from Barry Diller to gain control of the company. History suggests we could be here a while.

What happens next?
WBD investors fully expect Paramount to raise its bid. The consensus is that they’re probably right, though no final decision has been made inside Paramount HQ, according to people briefed on the matter.

Ellison and his advisers are working through several scenarios, including a higher offer. They’ve had a series of good conversations with WBD shareholders to make their case. 

Mario Gabelli, a fund manager and veteran media investor, said Ellison and his deputies “did an extraordinarily good job at answering questions at a regulatory level, state level and global level with regards to the difference between Netflix and Paramount”.

The clearest sign that Paramount is preparing to sweeten its bid came in a regulatory filing posted on Monday. On page 46, Centerview’s Blair Effron, Paramount’s adviser, texts his friend Roger Altman at Evercore, who is advising WBD, to stress that his client’s last offer “did not include ‘best and final’ in our bid”.

Effron, a veteran media dealmaker, contacted Altman after Zaslav ghosted Ellison’s December 4 text message saying he was willing to go the extra mile to get a deal done. (Full text below.)


It would be wrong to assume Paramount will only raise the headline price from $30 a share, though that’s very possible. Ellison could also offer sweeter terms: a larger termination fee, firmer financing guarantees, or other commitments that boost closing certainty. Paramount must also factor in the $2.8bn break fee that WBD would have to pay Netflix. CreditSights thinks Paramount should offer $32 per share to win the bidding war.

So what does Netflix do in the meanwhile? Sarandos faces the task of steadying his own shareholders, especially after Netflix lost roughly $100bn in market value since mid-September, when talk first surfaced of a potential move on WBD’s assets. As he reassures investors, he’ll also have to gauge their appetite for a bidding war with Paramount. The mood suggests patience may be wearing thin as the stock keeps sliding.

Still, it may serve Netflix to drag out the process. Even if regulators ultimately block the deal, it slows a competitor’s momentum and ties up an ambitious rival. For Sarandos, that’s close to a win-win.

>>> US Close Dow +1.05% S&P +0.67% Nasdaq +0.33% Russell +1.32%

Closing Market Summary: FOMC delivers rate cut, optimistic outlook lifts stocks
The stock market captured solid broad-based gains this afternoon following the FOMC's decision to reduce the federal funds rate by 25 basis points, snapping a streak of muted sessions and moving the S&P 500 (+0.7%), Nasdaq Composite (+0.3%), and DJIA (+1.1%) within close proximity of their all-time highs. The Russell 2000 (+1.3%) captured record highs of its own as small-cap stocks, with their increased domestic presence and sensitivity to borrowing costs, surged in reaction to today's FOMC decision.

The market was largely expecting the FOMC to deliver a "hawkish cut" at today's meeting, meaning that a rate reduction was anticipated alongside commentary that would dampen expectations of further easing.

Indeed, the Summary of Economic Projections (SEP) showed a median expectation of just one rate cut in 2026, unchanged from the September SEP. However, the SEP also showed an upward revision in the median estimate for the change in real GDP to 2.3% from 1.8%. Meanwhile, the median estimate for the unemployment rate held steady at 4.4%, as the outlook for PCE inflation was revised down to 2.4% from 2.6%.

While the FOMC may now embrace a "wait-and-see" approach, as noted by Fed Chair Powell's comment, "the Fed funds rate is now within a broad range of estimates of its neutral value," optimistic revisions to the economic outlook, in tandem with an expressed willingness to make policy decisions on a meeting-by-meeting basis, invite questions as to just how hawkish today's meeting truly was.

Today's decision also featured an announcement that the Fed will begin purchasing Treasury bills, starting December 12, to the tune of $40 billion per month before likely being "significantly reduced" after a few months, noting that reserve balances have declined to ample levels.

The stock market certainly benefitted from the more dovish than expected tilt, with the major averages capturing solid gains after a morning spent in a mixed fashion near their unchanged levels.

Nine S&P 500 sectors finished higher, with six notching gains of 1.0% or wider. A smattering of corporate news items contributed strength to several of the top-performing sectors.

The industrials sector (+1.8%) finished at the top of the leaderboard, supported by shares of GE Vernova (GEV 722.97, +97.67, +15.62%) rallying after the company issued upbeat guidance and provided an optimistic long-term financial outlook.

The consumer discretionary sector (+1.5%) was another top mover, garnering the bulk of today's mega-cap strength due to solid gains in Amazon (AMZN 231.78, +3.86, +1.69%) and Tesla (TSLA 451.44, +6.27, +1.41%).

Homebuilder names, which are sensitive to borrowing costs, added support, with the iShares U.S. Home Construction ETF gaining 3.2% today.

Banking names lifted the financials sector (+1.1%) to a nice gain, with JPMorgan Chase (JPM 310.17, +9.66, +3.21%) mounting a solid rebound from yesterday's 4.6% slide.

Elsewhere, the materials (+1.8%), health care (+1.5%), and energy (+1.1%) sectors round out today's top performers.

While losses in Microsoft (MSFT 478.76, -13.26, -2.70%) and NVIDIA (NVDA 183.74, -1.23, -0.66%) limited gains in the information technology sector (+0.1%), solid participation across a majority of its components helped the sector recover from a loss of nearly 1.0% this morning. Oracle (ORCL 223.30, +1.78, +0.80%) ended with a modest gain ahead of its earnings release this afternoon despite spending the bulk of the session in negative territory.

Only the defensive utilities (-0.1%) and consumer staples (flat) sectors failed to notch a gain today.

All told, today's FOMC decision delivered on the promise of a rate cut, while Fed Chair Powell's emphasis on a meeting-by-meeting approach and his comment that a rate hike is not in anyone's base case conveyed a surprisingly dovish tone that helped lift risk sentiment and support solid growth across stocks today. Still, investors will have plenty to monitor on the policy front going forward, as today's decision featured two dissenters (Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid), while a new Fed Chair, likely one with an initiative to lower interest rates, will take the helm in May.

U.S. Treasuries climbed on Wednesday, snapping a four-day skid in the 10-year note and shorter tenors. The 2-year note yield settled down four basis points to 3.57%, and the 10-year note yield settled down two basis points to 4.16%
  • Nasdaq Composite: +22.5% YTD
  • S&P 500: +17.1% YTD
  • Russell 2000: +14.8% YTD
  • DJIA: +13.0% YTD
  • S&P Mid Cap 400: +7.7% YTD

Reviewing today's data:
  • Compensation costs for civilian workers increased 0.8% (consensus: 0.9%), seasonally adjusted, for the 3-month period ending in September 2025. That was a moderation from the 0.9% increase registered in the second quarter.
    • The key takeaway from the report is that it was an inflation-friendly report, evidenced by wages and salaries decelerating on a year-over-year basis for civilian workers (3.5% vs 3.9% a year ago), private industry (3.6% vs 3.8% a year ago), and state and local government workers (3.5% vs 4.6% a year ago).
  • The U.S. Treasury reported a $173.0 bln deficit for November (consensus -$223.4 bln) after a deficit of $284.0 bln in October.
  • The weekly MBA Mortgage Index rose 4.8% to follow last week's 1.4% decrease. The Refinance Index jumped 14.3% while the Purchase Index was down 2.4%.

>>> US After Hours Summary: ORCL -11.3%, OXM -21.7% lower on earnings/guidance;

After Hours Summary: ORCL -11.3%, OXM -21.7% lower on earnings/guidance; ADBE +0.5% slightly higher on earnings; KO flat gets a new CEO

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: ASYS +11.3% (also authorizes new $5 mln share repurchase program), PL +9.7%, NDSN +4.1%, SNPS +2.3%, MTN +1.1%, ADBE +0.5%

Companies trading higher in after hours in reaction to news: GEMI +13.9% (receives US license for prediction markets), CRBP +8.2% (to report results from Phase 1a study of Oral CB1), RYTM +4.2% (to announce preliminary data from exploratory Phase 2 trial), CERS +3.2% (group purchasing agreement with Blood Centers of America), AAOI +2.9% (receives first volume order for its 800G data center transceivers from a major hyperscale customer), PRM +2% (to acquire Medical Manufacturing Tech), ODC +1.5% (increases dividend), AB +0.9% (reports November AUM), PSTG +0.6% (authorizes new $400 mln share repurchase program), NFLX +0.6% (PSKY sends letter to WBD shareholders), GFS +0.6% (names new CFO), PSKY +0.3% (PSKY sends letter to WBD shareholders), ISRG +0.2% (FDA approves expanded indications for da Vinci SP), HOG +0.2% (announces a series of leadership and organizational changes), BMY +0.1% (increases dividend), CHYM +0.1% (names new COO)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: OXM -21.7%, ORCL -11.3%

Companies trading lower in after hours in reaction to news: TE -10.6% ($120 mln convertible notes offering; also $140 mln common stock offering), STC -2.6% (commences 1.9 mln share offering; also files mixed securities shelf offering), GRI -2.5% (topline data from its phase 2a study in Idiopathic Pulmonary Fibrosis), GOGO -2% (expects to have 300 Galileo HDX and FDX antennas shipped by year-end), NBP -1% (Phase 1 dose expansion data), HOOD -0.5% (November operating data), WBD -0.5% (PSKY sends letter to WBD shareholders), NOV -0.5% (announces sale of Shepherd Power), GOOG -0.4% (to name Amin Vahdat chief technologist for AI infrastructure, according to Semafor), AMSC -0.3% (acquires Comtrafo Indústria, a privately held co based in Brazil), SERV -0.2% (launches robotic delivery service in Alexandria, Virginia)

>>> US Gapping down

Gapping down
In reaction to earnings/guidance
:
  • LAKE -26%, AEG -7.6% (guidance), CBRL -6.7%, BLLN -5.9%, GME -5.9%, AVAV -4.9%, CASY -1.5%
Other news:
  • AGRO -7.5% (stock offering)
  • SMX -7.5% (amendment to equity purchase agreement)
  • DNLI -7.1% (prices offering consisting of common stock and warrants)
  • MIAX -3.8% (stock offering by selling shareholders)
  • LGN -3.4% (stock offering by selling shareholders)
  • WVE -3% (prices offering consisting of shares and warrants)
  • PTEN -2.1% (reports November drilling activity)
  • VERA -1.6% (prices offering of 6,138,108 shares of common stock at $42.50 per share)
  • NUKK -1.1% (names new CFO)
  • ASST -1% (launches $500 mln preferred stock ATM to fund bitcoin strategy and growth)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance
:
  • BRZE +16.6%, PLAB +15.2%, GEV +10.3% (guidance; also increases dividend and buyback program), CHWY +3.3%
Other news:
  • DYN +6.3% (prices offering of 18,980,478 shares of common stock at $18.44 per share)
  • MRVI +4.7% (Director bought 100,000 shares at $3.67-3.70 worth ~$369K)
  • TERN +3.5% (prices offering of 16.25 mln shares of common stock at $40.00 per share)
  • GPCR +2.6% (prices offering consisting of ADSs and warrants)
  • RKLB +1.9% (accelerates responsive launch cadence with KAIST mission moved forward)
  • MRVL +1.7% (introduces Golden Cable initiative)
  • FITB +1.6% (enters agreement to acquire Mechanics Bank's (MCHB) Delegated Underwriting and Servicing business line)
  • KYMR +1.5% (prices offering of 7.0 mln shares of common stock at $86.00 per share)
  • BTI +1% (extends buyback program through 2026)

>>> US Research Calls I

Research Calls I
  • Upgrades
    • AbbVie (ABBV) upgraded to Buy from Hold at HSBC, tgt $265
    • Andersons (ANDE) upgraded to Outperform from Market Perform at BMO Capital, tgt $65
    • Blue Owl Capital (OWL) upgraded to Strong Buy from Market Perform at Raymond James, tgt $20
    • Commercial Metals (CMC) upgraded to Buy from Hold at Jefferies, tgt $78
    • Compass Pathways (CMPS) upgraded to Outperform from Perform at Oppenheimer, tgt $15
    • Docebo (DCBO) upgraded to Outperform from Sector Perform at ATB Capital
    • Dyne Therapeutics (DYN) upgraded to Outperform from Perform at Oppenheimer, tgt $40
    • EchoStar (SATS) upgraded to Overweight from Equal Weight at Morgan Stanley, tgt $110
    • Franco-Nevada (FNV) upgraded to Outperform from Sector Perform at RBC Capital, tgt $250
    • GE Vernova (GEV) upgraded to Outperform from Sector Perform at RBC Capital, tgt $761
    • GE Vernova (GEV) upgraded to Outperform from Perform at Oppenheimer, tgt $855
    • Helmerich & Payne (HP) upgraded to Overweight from Neutral at JPMorgan, tgt $34
    • HSBC (HSBC) upgraded to Buy from Neutral at BofA Securities
    • JBT Marel (JBTM) upgraded to Buy from Hold at Jefferies, tgt $180
    • Liberty Energy (LBRT) upgraded to Overweight from Neutral at JPMorgan, tgt $24
    • Middleby (MIDD) upgraded to Buy from Hold at Jefferies, tgt $175
    • Parsons (PSN) upgraded to Buy from Hold at TD Cowen, tgt $75
    • Pentair (PNR) upgraded to Buy from Hold at Jefferies, tgt $135
    • PepsiCo (PEP) upgraded to Overweight from Neutral at JPMorgan, tgt $164
    • ProPetro Holding (PUMP) upgraded to Overweight from Neutral at JPMorgan, tgt $13
    • Terex (TEX) upgraded to Overweight from Equal Weight at Morgan Stanley, tgt $60
    • Vale (VALE) upgraded to Outperform from Sector Perform at RBC Capital, tgt $14.20
    • Waters (WAT) upgraded to Outperform from Peer Perform at Wolfe Research, tgt $480
    • Wheaton Precious Metals (WPM) upgraded to Outperform from Sector Perform at RBC Capital, tgt $130
  • Downgrades
    • Biogen (BIIB) downgraded to Reduce from Hold at HSBC, tgt $143
    • Lakeland Industries (LAKE) downgraded to Neutral from Buy at DA Davidson, tgt $14
    • Noble Corp. (NE) downgraded to Neutral from Overweight at JPMorgan, tgt $33
    • Patterson-UTI (PTEN) downgraded to Underweight from Neutral at JPMorgan, tgt $6
    • Regal Rexnord (RRX) downgraded to Hold from Buy at Jefferies, tgt $160
    • Rogers Communications (RCI) downgraded to Hold from Buy at Desjardins
    • Transocean (RIG) downgraded to Underweight from Neutral at JPMorgan
    • Veralto (VLTO) downgraded to Hold from Buy at Jefferies, tgt $105
  • Others
    • ABM Industries (ABM) initiated with a Buy at Freedom Capital, tgt $54
    • American Bitcoin (ABTC) initiated with a Buy at Roth Capital, tgt $4
    • Apogee Therapeutics (APGE) initiated with a Buy at Deutsche Bank, tgt $103
    • ArriVent Biopharma (AVBP) initiated with a Buy at BTIG Research, tgt $45
    • Bath & Body Works (BBWI) initiated with a Neutral at Guggenheim
    • Birkenstock (BIRK) initiated with a Buy at Guggenheim, tgt $60
    • Bridgewater Bancshares (BWB) initiated with an Equal Weight at Stephens, tgt $20
    • Burlington Stores (BURL) initiated with a Neutral at Guggenheim
    • Capri Holdings (CPRI) initiated with a Buy at Guggenheim, tgt $32
    • Clean Harbors (CLH) initiated with a Neutral at Citigroup, tgt $263
    • Deckers Outdoor (DECK) initiated with a Neutral at Guggenheim
    • Ferrari (RACE) initiated with a Neutral at Oddo BHF
    • Gap (GAP) initiated with a Neutral at Guggenheim
    • Laureate Education (LAUR) initiated with an Overweight at JPMorgan, tgt $40
    • LKQ Corp (LKQ) initiated with an Overweight at Stephens, tgt $39
    • Lululemon (LULU) initiated with a Neutral at Guggenheim
    • Macy's (M) initiated with a Neutral at Guggenheim
    • Magnum Ice Cream (MICC) initiated with a Neutral at BofA Securities
    • Magnum Ice Cream (MICC) initiated with an Overweight at Morgan Stanley
    • National Vision (EYE) initiated with a Buy at Guggenheim, tgt $32
    • Nike (NKE) initiated with a Buy at Guggenheim, tgt $77
    • On Holding (ONON) initiated with a Buy at Guggenheim, tgt $59
    • Opus Genetics (IRD) initiated with a Buy at B. Riley, tgt $9
    • Orchestra BioMed (OBIO) initiated with a Buy at TD Cowen, tgt $15
    • OrthoPediatrics (KIDS) initiated with a Buy at Canaccord, tgt $24
    • Peloton (PTON) initiated with a Neutral at Guggenheim
    • Planet Fitness (PLNT) initiated with a Buy at Guggenheim, tgt $130
    • PVH Corp (PVH) initiated with a Neutral at Guggenheim
    • Revolve Group (RVLV) initiated with a Neutral at Guggenheim
    • Roblox (RBLX) initiated with a Buy at B. Riley, tgt $125
    • Ross Stores (ROST) initiated with a Buy at Guggenheim, tgt $199
    • Samsara (IOT) initiated with an Overweight at KeyBanc, tgt $55
    • SharkNinja (SN) initiated with a Buy at TD Cowen, tgt $135
    • Sprott (SII) initiated with a Sector Perform at RBC Capital
    • Take-Two (TTWO) initiated with a Buy at B. Riley, tgt $300
    • Tapestry (TPR) initiated with a Neutral at Guggenheim
    • TJX (TJX) initiated with a Buy at Guggenheim, tgt $175
    • Under Armour (UAA) initiated with a Buy at Guggenheim, tgt $6
    • Unisys (UIS) initiated with an Outperform at William Blair
    • Urban Outfitters (URBN) initiated with a Neutral at Guggenheim
    • VF Corp (VFC) initiated with a Neutral at Guggenheim
    • Victoria's Secret (VSCO) initiated with a Neutral at Guggenheim