Constellation Energy Corp : Jefferies Cuts Target Price To $277 From $350

U.S. stock futures were lower early Monday, as investors gear up for an earnings-heavy week (Tesla, Microsoft, Meta, Apple) amid trade tensions between the U.S. and Canada and looming government shutdown fears. Traders are also watching for the Federal Reserve’s first policy decision and a potential ruling on the validity of tariffs, later this week.

Over the weekend, President Donald Trump warned of 100% tariffs on Canadian exports if they were to go ahead with a free-trade deal with China. Canadian Prime Minister Mark Carney has responded, saying that Ottawa has “no intention” of pursuing such an agreement. 

As of 3:00 a.m. ET on Monday, the S&P 500 and Dow futures fell 0.1%, and the Nasdaq and Russell 2000 futures were down 0.2%. 

Meanwhile, retail sentiment toward the SPDR S&P 500 ETF (SPY), an exchange-traded fund that tracks the S&P 500 Index, was back to ‘extremely bearish’ from 'bearish’ last week, and the Invesco QQQ Trust (QQQ) ETF, which tracks the Nasdaq 100 Index, has remained ‘bearish,’ amid high message volumes. Both SPY and QQQ were among the top trending tickers on Stocktwits at the time of writing. 

Safe-haven demand pushed gold to record highs above $5,100 an ounce, and silver continued its rally after recently clearing $100 an ounce. Silver stocks such as Hecla Mining (HL), First Majestic Silver (AG), and Avino Silver & Gold Mines (ASM) were garnering heavy retail attention on Stocktwits. 

Trending Stocks To Watch

Meta Platforms (META): Sued by an international group of plaintiffs for misleading privacy claims regarding WhatsApp’s end-to-end encryption. The stock could face pressure as it gears up to report earnings this week.

Revolution Medicines (RVMD) & Merck (MRK): Reports suggest that acquisition talks with Merck, valued at roughly $30 billion, have halted due to price disagreements. Despite the setback, Stifel said it expects buyers to step in on weakness, reiterating a Buy rating with a $170 price target.

USA Rare Earth (USAR): The Trump administration plans to invest $1.6 billion for a 10% stake in the company. Watch out for other rare-earth plays like UAMY and CRML, too. 

Samsung (SSNLF) & Nvidia (NVDA): Samsung is reportedly entering the final qualification phase for its HBM4 AI memory chips with Nvidia, with mass production slated for February.

Power stocks such as Constellation Energy (CEG), Vistra (VST), and Generac (GNRC) remain in the limelight as extreme winter weather drives power demand. Reports suggest that PJM is locking in power purchases through Jan. 31 to secure natural gas supplies ahead of an expected deep freeze. 

Eisai (ESALY) and Biogen (BIIB): The FDA accepted for review Eisai’s supplemental application for a subcutaneous autoinjector version of Leqembi, granting Priority Review with a PDUFA date of May 24, 2026.

Volkswagen (VWAGY): Reports suggest it will not proceed with plans to build an Audi factory in the U.S. unless auto tariffs are reduced.

Other tickers trending on Stocktwits at the time of writing included Brand Engagement Network (BNAI), Corvus Pharmaceuticals (CRVS), Immunity Bio Inc (IBRX), and Sarepta Therapeutics (SRPT), among others. 

And in other news, SoftBank has reportedly halted talks to fully acquire U.S. data-center operator Switch, shelving a proposed $50B deal tied to Masayoshi Son’s Stargate AI ambitions. 

Other Catalysts To Watch

On the economic front, traders will monitor the durable goods orders release at 8:30 am. 

• 08:30 ET: Durable Goods Orders
• 08:30 ET: Chicago Fed National Activity Index
• 10:30 ET: Dallas Fed Manufacturing Index
• 13:00 ET: U.S. 2-Year Treasury Auction

And on the earnings radar, investors will be watching for the quarterly reports from Steel Dynamics (STLD) and Baker Hughes (BKR) before the bell. While Nucor (NUE), W.R. Berkley (WRB), Western Alliance (WAL), and Alexandria Real Estate (ARE) report after market close, among others, later today. 

By Avi Salzman

Early signs of a political backlash against utilities played out in New Jersey and New York this week, in a preview of what could be a rocky year for the sector.

Pressure is building on utilities across the country to slow electricity rate increases. It's likely to hurt returns for utility investors.

In New Jersey, incoming Gov. Mikie Sherrill declared "a state of emergency on utility costs" in her inauguration speech on Tuesday. It appears to be the first electricity emergency declared by any state in recent years. New Jersey's residential electricity rates increased by 42% in the past five years, based on the latest government data, which runs through October.

In her first executive order, Sherrill told the state's Board of Public Utilities to rebate residents for another expected increase in utility prices slated for later this year. The money for the rebates is expected to come from fees that power plants pay into a greenhouse gas fund.

Sherrill also wants the board to pause any rate increase requests, and scrutinize the financial models of utilities operating in the state, with a close eye on things like their return on equity. Utility companies tend to make returns on equity of around 10% on their investments in new infrastructure, but that number could start to trend downward.

If New Jersey starts to claw back the financial returns of utilities, it would almost certainly affect the stocks of those utilities. Shares of Public Service Enterprise Group, or PSEG — one of New Jersey's largest utilities — have fallen 3% since Sherrill was elected in November on a platform of stopping rate increases. The stocks of power plant owners in New Jersey and nearby states, such as Constellation Energy and Vistra, have also struggled since Friday, when the White House and governors called for changes to how electricity costs are allocated to try to slow down rate hikes.

Similar dynamics have been playing out in New York. On Thursday, the New York State Public Service Commission announced it had come to an agreement with utility Con Edison that will cut the utility's latest rate request by 87%. Con Edison agreed to the reduction.

Rate hikes will come in at around the rate of inflation for the next three years, the state said, after New York households saw an average 40% increase over the past five years. To save money, the state will defer nonessential capital improvements, along with other methods. Utilities make money by earning a rate of return on their capital investments; if their allowable investments decline, their returns will, too.

After years of rising rates, politicians are focused on stopping more increases this year. New York Gov. Kathy Hochul, who is up for reelection this year, released a plan this month "demanding strict fiscal discipline from utilities" and saying the state won't approve "gold-plated rate cases" anymore.

Utilities have benefited in the past two years from growing power demand from data centers and other users. This year, there are forces that could slow their momentum down.

Write to Avi Salzman at avi.salzman@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.