When a company best known for cliffhangers decides to buy an entire Hollywood studio, investors suddenly stop binge-watching and start reading the fine print.
Friday’s session ended in the green again, capping a quietly positive week for US equities. But under the surface, the market spent most of the day digesting three things: a cooler-but-not-too-cool inflation print, a small rebound in consumer sentiment, and Netflix’s jumbo bid for Warner Bros. Discovery that could reshape the streaming landscape for years.
Indices: Drip, Don’t Rip, Into Fed Week
The major indexes extended their recent winning streak with another modest uptick.
So yes, stocks are flirting with record levels, but the tone is more “measured optimism” than euphoria. Investors are clearly positioning into Wednesday’s Fed meeting, where the market still leans toward another rate cut as the labor market cools and inflation inches closer to target.
Inflation & Sentiment: Just Enough Comfort for the Fed
On the macro side, Friday’s data did exactly what the market wanted, no more, no less.
Core PCE: The Fed’s favorite warms slightly less
The Core PCE price index - the Fed’s preferred inflation gauge - came in at 2.8% year-over-year, down from 2.9% and matching expectations. On a monthly basis, core PCE rose around 0.2%, also in line with forecasts.
That keeps the narrative intact: Inflation is easing, but it’s still above the Fed’s 2% target, and it’s not weak enough to trigger immediate recession fears.
For rate-cut hopefuls, this is about as good as it gets: the Fed can plausibly argue that policy is still restrictive while acknowledging that inflation is drifting in the right direction.
Michigan sentiment: Consumers feel slightly less miserable
The preliminary University of Michigan consumer sentiment index for December ticked higher to about 53.3 from 51.0 in November, beating expectations.
That’s still historically depressed territory - we’re not exactly in a feel-good boom - but the direction finally turned up again after months of gloom. Lower inflation expectations and some easing in price pressure are slowly feeding through to how households view their personal finances.
households are still grumpy, but slightly less likely to yell at the cashier. That’s consistent with ongoing, but more selective, consumer spending.
Netflix Buys the Studio Lot, Market Questions the Script
The headline of the day - and likely of the quarter - was Netflix’s move to swallow Warner Bros. Discovery.
The deal: bigger than most movie franchises
Netflix (NFLX | -2.89) agreed to acquire the studios and streaming assets of Warner Bros. Discovery (WBD | +6.28%) in a deal valued at roughly $83 billion on an enterprise basis, or about $27.75 per WBD share.
Key points:
- WBD will spin off its linear cable networks (CNN and others) into a separate company before the deal closes.
- The transaction is expected to take up to 18 months to complete and faces heavy antitrust scrutiny in the US and abroad.
- NFLX is funding a large cash component with a bridge loan, significantly increasing its leverage versus the “clean balance sheet” image investors were fond of.
If it works, NFLX effectively stitches together its existing platform with HBO Max, DC, and a deep studio catalog, becoming the undisputed content heavyweight in subscription streaming. If it doesn’t, we’ll all be re-watching this one under the “what were they thinking?” category in a few years.
The ripple effects hit the rest of the media and cinema complex:
Paramount Global (PSKY | -9.82%) - whose Paramount Skydance vehicle lost the bidding war - dropped sharply as its “consolider of last resort” narrative took a hit.
Comcast (CMCSA | +0.4%) barely budged, with investors apparently relieved it didn’t overpay just to stay in the headlines.
Theater chains sold off across the board:
AMC Entertainment (AMC | -2.58%)
Cinemark (CNK | -8.01%)
IMAX (IMAX | -1.44%)
Marcus Corp (MCS | -3.08%)
Even though NFLX has promised to maintain theatrical windows for WBD films, investors are clearly worried that a streaming-first owner will gradually tilt the balance away from cinemas over time.
Politically, the deal is already controversial. President Trump has publicly signaled that the merger “could be a problem” given the combined market share, and he’s indicated he intends to be directly involved in the review.
Strategically, the logic for NFLX is strong - scale, IP, and pricing power. But investors hate complex, heavily leveraged, politically sensitive mega-deals. Until markets see a credible deleveraging path and more regulatory clarity, NFLX is likely to trade with a valuation discount versus its pre-deal “capital-light streamer” story.
Beauty & Lingerie: Ulta and Victoria’s Secret Crush Expectations
Away from Hollywood drama, consumer discretionary had a surprisingly glamorous day.
Ulta Beauty (ULTA | +12.65%) ripped higher after delivering a blowout quarter: revenue around $2.9 billion and EPS of $5.14, both ahead of estimates, plus a raised full-year outlook.
Management highlighted the success of targeted promo events, new product launches, and the structural tailwind from the broader health & wellness trend. Analysts responded by pushing up price targets, reinforcing the bull case that ULTA is more than just a cyclical retailer.
Victoria’s Secret & Co (VSCO | +17.99%) exploded nearly 18% higher as the company reported a smaller-than-expected loss, 9% revenue growth, and improved full-year guidance.
Consumers may be grumpy in surveys, but they’re still willing to spend on beauty and self-care, especially when the product positioning and promotions are right.
Other Notable Movers: HPE, SoFi, Rubrik, DocuSign
A few tech and fintech names also made noise:
Hewlett Packard Enterprise (HPE | +1.88%) initially sold off on weaker-than-expected revenue and soft guidance, but dip-buyers stepped in and the stock closed higher as investors focused on margins and the longer-term AI-adjacent story.
SoFi Technologies (SOFI | -6.15%) dropped over 6% after announcing a $1.5 billion common stock offering to fund growth and bolster capital. Equity raises are rarely popular in this tape, and SOFI was no exception.
Rubrik (RBRK | +22.49%) surged more than 20% on a surprise adjusted profit that crushed expectations, reinforcing the market’s appetite for profitable cybersecurity growth stories.
DocuSign (DOCU | -7.64%) slid despite beating on revenue and earnings, as guidance failed to excite and the market continues to question how much growth is left post-pandemic.
Commodities, Crypto & FX: Quiet Moves, Loud Implications
The cross-asset picture stayed relatively tame:
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Oil rose a bit more than 0.5%, helped by stalled peace talks in Ukraine, a reminder that geopolitics can still creep into energy pricing even in a “macro-lite” tape.
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Gold slipped slightly, while silver added about 2.4%, reflecting modest appetite for risk and a softer-but-not-collapsing dollar.
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Bitcoin fell roughly 3% toward $89,500, a reminder that crypto is still high beta to risk sentiment and liquidity expectations.
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US yields drifted higher, and EUR/USD hovered around 1.1645, effectively in “parking mode” ahead of the Fed.
Nothing here screams regime change, but if yields keep edging up while stocks push toward all-time highs, the Fed’s communication on Wednesday suddenly matters a lot more.
How I’m Framing This for Portfolios
A few takeaways I’m keeping in mind as we head into Fed week:
Mega-deals are back — but they’re messy.
The NFLX–WBD saga is a clear sign that corporate America is comfortable leaning into scale and consolidation again. For investors, the critical question is whether the synergy narrative outweighs the balance-sheet and regulatory overhang. Until that’s clearer, I’d expect NFLX-type acquirers to trade with more volatility and a valuation discount.
Quality growth is still being rewarded.
Moves in ULTA, VSCO, RBRK... reinforce a familiar theme: beat and raise stories with credible structural tailwinds still get paid, even this late in the cycle.
Consumers are selectively resilient.
The mix of better-than-feared retail results and cautiously improving sentiment tells me that households are prioritizing, not retreating. That tends to favor category winners over broad-based beta exposure in consumer names.
Macro is in “good enough” territory.
A 2.8% core PCE and a small bounce in sentiment give the Fed room to cut without panic, but leave no room for complacency if inflation re-accelerates. Wednesday’s communication will matter more than the decision itself.
From a practical standpoint, I’m watching three things this week: how far the market dares to push into new highs before the Fed, how spreads react to the Netflix deal (risk appetite for leverage), and whether consumer-facing earnings continue to confirm the “grumpy but spending” narrative.
Kristoff - ChartMill
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