Elliott's $2B Stake Rockets Southwest Shares 6.8%

Key Takeaway

• AMD shares fell 2.5% pre-market after a Morgan Stanley downgrade, citing overly high investor expectations for its AI business.
• Southwest Airlines surged 6.8% as Elliott Investment Management took a nearly $2 billion stake, signaling potential strategic changes or improvements.

Pre-market Top Moves

As the U.S. equity markets prepare to open, futures indicate a slight decline with investors focusing on upcoming inflation data and a Federal Reserve meeting later in the week. Here are the key pre-market movements:

• S&P 500 Futures: Down 0.2% to 5,343.50, reflecting cautious sentiment ahead of critical economic data.
• Advanced Micro Devices (AMD): Shares fell 2.5% following a downgrade by Morgan Stanley, which cited overly high investor expectations for the chipmaker’s AI business.
• CrowdStrike (CRWD), GoDaddy (GDDY), and KKR (KKR): Shares rose after confirmation that these stocks would join the S&P 500 Index in the latest quarterly weighting change.
• Southwest Airlines (LUV): Shares surged as much as 6.8% after the Wall Street Journal reported that Elliott Investment Management has built an almost $2 billion stake in the airline.

Highlights by Sector

Technology

• Advanced Micro Devices (AMD): The chipmaker's shares dropped 2.5% after Morgan Stanley downgraded the stock to equal-weight from overweight. The downgrade was based on the belief that investor expectations for AMD’s AI business are too high.

Cybersecurity and Internet Services

• CrowdStrike (CRWD): Shares rose as the company is set to join the S&P 500 Index, reflecting positive sentiment and expected increased demand from index funds.
• GoDaddy (GDDY): Also saw a rise in shares due to its inclusion in the S&P 500 Index, which typically boosts stock prices due to increased visibility and demand.

Private Equity

• KKR (KKR): Shares increased following the announcement of its addition to the S&P 500 Index, signaling strong performance and investor confidence.

Airlines

• Southwest Airlines (LUV): Shares jumped 6.8% after news broke that Elliott Investment Management has taken a significant stake in the company, indicating potential strategic changes or improvements.

Notable Gains and Losses

• Southwest Airlines (LUV): Up 6.8%, driven by Elliott Investment Management's substantial stake.
• CrowdStrike (CRWD): Up due to its inclusion in the S&P 500 Index.
• GoDaddy (GDDY): Shares rose for the same reason as CrowdStrike.
• KKR (KKR): Also saw gains from its S&P 500 inclusion.
• Advanced Micro Devices (AMD): Down 2.5% following a downgrade by Morgan Stanley.

Key Movers & Takeaway

The pre-market session is characterized by strategic index inclusions and significant investment moves. The inclusion of CrowdStrike, GoDaddy, and KKR in the S&P 500 Index is a positive signal for these companies, likely leading to increased demand from index funds. On the other hand, AMD's downgrade highlights the market's sensitivity to analyst ratings and investor expectations, particularly in the high-stakes AI sector. Southwest Airlines' surge due to Elliott Investment Management's stake suggests potential strategic shifts or improvements, which investors are optimistic about.

Key Movers Table by Market Cap

LargeCap Movers (>$20B)

Mid-Cap Movers ($5B-$20B)

Top Overbought/Oversold by 14-Day RSI

Overbought Stocks

Oversold Stocks

In summary, the pre-market session is setting the stage for a cautious trading day with significant movements driven by strategic index inclusions and notable investment stakes. Investors should keep an eye on the upcoming inflation data and Federal Reserve meeting, which are likely to influence market sentiment further.