Stock futures rise to start the week

Oppenheimer analyst Colin Rusch downgraded Tesla to perform from outperform, noting that CEO Elon Musk’s handling of Twitter is hurting the electric car market.

“While we continue to see Tesla evolving EV and autonomous technology in advance of peers and driving costs to levels those peers will struggle to match—and have tried to separate Elon Musk’s non-Tesla endeavors (personal and professional) from our analysis on TSLA—we believe Mr. Musk’s acquisition and subsequent management of Twitter now make that separation untenable,” Rusch wrote in a Monday note.

To be sure, Musk conducted a poll Sunday asking Twitter users whether he should step down, with most respondents voting yes. Musk said there’s no successor in place at the moment.

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— Sarah Min

Goldman Sachs named SolarEdge Technologies and First Solar as top picks for the new year, noting that both stocks have big upside over the next 12 months.

“While solar equities outperformed in 2022 vs. R2K, stocks are still ~20% below early ’21 peak levels and valuations remain below pre-IRA levels,” analyst Brian Lee wrote.

“This is despite fundamentals having significant positive momentum that we see setting up for healthy upside across many pockets of the group into 2023, particularly in the backdrop of improving margins and policy tailwinds (not uncertainties),” Lee added.

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— Sarah Min

Don’t be surprised if the market volatility experienced in 2022 continues into the new year, according to Art Hogan, chief market strategist at B. Riley Financial.

“The market has been in a tug-of-war between better-than-feared economic data juxtaposed with concerns about the potential for the Fed to over-tighten monetary policy and push the economy into a recession,” he wrote in a note to clients Friday. “That tug-of-war will likely continue in the first quarter of 2023 unless and until the Fed gets to their terminal fed funds rate.

Investors should expect a “bumpy ride” within the first few months of the year as the central bank grinds toward its terminal fed funds rate.

“Weaker economic trends will likely form heading into 2023 as the Fed battles inflation, but a mild recession may help set stocks up for a better second half of the year,” he said.

Given this backdrop, Hogan recommends a “barbell” investing approach, with a focus on energy, staples and healthcare. On the other end, investors should look for well-priced growth companies that have undergone a price-to-earnings multiple contraction. These companies should offer balance sheet liquidity and strong free cash flows, with leadership roles in their sectors.

— Samantha Subin

Here’s where the major averages stand heading into one of the final trading weeks of…