S&P futures down 0.2% in Thursday premarket trading, following Wednesday’s 1% rally that marked the S&P 500’s 44th record high of the year. Banks and Transports were among top performers, while big tech was mixed. Treasuries are slightly weaker, the Dollar Index is down 0.1%, Gold is up 0.3%, Bitcoin futures are up 0.1%, and WTI crude is up 1.5%.
Market sentiment is slightly risk-off this morning, with stocks giving back some gains from the past two sessions. Rising yields, ongoing Fed rate path uncertainty, dollar strength, and a buyback blackout are key overhangs, though weekly gains remain intact on soft landing optimism, resilient labor market, and positive seasonality ahead of Q3 earnings.
Key data today includes September core CPI (expected at +0.2% m/m, +3.2% y/y) and initial jobless claims. San Francisco Fed’s Daly mentioned 1-2 cuts are possible this year if conditions evolve as expected. Fed speakers today include Cook, Barkin, and Williams. Treasury auctions continue with a $22B 30Y sale. Hurricane Milton hit Florida overnight as a Category 3 storm, while China markets rallied on anticipated stimulus.
Corporate updates:
- TSLA holds its robotaxi event tonight.
- COST September comps jumped 9% y/y, boosted by hurricane and port strike impacts.
- DAL missed earnings with weaker Q4 guidance.
- DPZ posted an EPS beat but soft revenue, citing macro caution.
- BA talks remain stalled with union workers.
- GXO is exploring a sale after receiving buyer interest.
- AZZ raised its full-year EPS guidance.
- TXG preannounced lower Q3 revenue.
- APLD beat earnings and highlighted future GPU deployments
US equities were higher in Wednesday afternoon trading, with the Dow up +0.85%, the S&P 500 +0.50%, the Nasdaq +0.35%, and the Russell 2000 +0.40%. The S&P 500 set a fresh intraday high, building on Tuesday’s rally that erased Monday’s declines. Gains were broad-based, with outperformers including big tech, software, cruise lines, investment banks, regional banks, home improvement, and airlines. Underperformers included China tech, industrial metals, energy, and casinos.
Treasuries were weaker, with the curve flattening as the 10Y auction tailed. The Dollar Index rose 0.3%, with the biggest FX story being the New Zealand dollar weakening after a surprise rate cut by the RBNZ. Gold fell by 0.3%, while Bitcoin futures slipped by 0.7%. WTI crude saw choppy trading, ending down 0.3%.
Market Narrative
Despite today’s rise in yields, equities continued to add to Tuesday’s solid upside, with sentiment driven by optimism around a soft landing and improving economic growth prospects. Volatility measures such as the VIX remained lower, reflecting more stable rate expectations despite continued hawkish Fed repricing.
Key Fed Developments
- The September FOMC minutes revealed that most participants supported a 50 bp rate cut, with some officials expressing concerns about downside risks to employment.
- Dallas Fed’s Logan stated a preference for a more gradual path to ensure inflation doesn’t get stuck above the 2% target.
- Boston Fed’s Collins highlighted the importance of data dependence while maintaining favorable economic conditions.
- Vice Chair Jefferson reiterated that the labor market is cooling, and the Fed would continue taking decisions on a meeting-by-meeting basis.
Treasury Auction & Geopolitical Developments
- A weaker-than-expected $39B 10Y Treasury auction had a tail of 0.4 bp, with dealer take being the lowest since 2018.
- Hurricane Milton fluctuated between Category 4 and Category 5 ahead of expected landfall in central Florida.
- In China, the Finance Minister’s upcoming briefing on Saturday has sparked new stimulus speculation, which comes amidst market volatility following a large run-up in equities.
Corporate News Highlights
- The DoJ is considering forcing Google (GOOGL) to sell parts of its business as an antitrust remedy.
- TSMC reported a 40% y/y revenue jump for Q3.
- Pfizer’s (PFE) CEO is set to meet with Starboard Value, which recently took a $1B stake in the company.
- Boeing (BA) withdrew its latest offer to striking union workers and is now under review for a potential credit downgrade by S&P.
- General Motors (GM) updated that 2025 EBIT is expected to remain in line with this year, with an anticipated EV tailwind.
Notable Gainers/Decliners by GICS Sector
Information Technology
- +7.7% Gitlab (GTLB-US): Initiated overweight at Morgan Stanley, viewed as a key beneficiary in the growing DevOps/DevSecOps market and well-positioned to emerge as a consolidator in a fragmented market.
- +15.6% Astera Labs (ALAB-US): Introduced a new portfolio of fabric switches built for AI infrastructure.
- -1.5% Alphabet (GOOGL-US): The DoJ is considering antitrust remedies, which may involve breaking up the company, with final remedies expected in late November. Potential separations include Chrome, Play, and Android.
Industrials
- -3.4% Boeing (BA-US): Withdrew its pay offer for striking factory workers with no further negotiations planned. The union’s demands were deemed “non-negotiable.” Additionally, S&P placed Boeing’s debt on credit watch for a potential downgrade to junk.
Consumer Discretionary
- +10.9% Norwegian Cruise Line Holdings (NCLH-US): Upgraded to buy from neutral at Citi, citing optimism about cruise stocks through 2025 and the company’s strategic shift enabling capitalizing on pricing opportunities.
- +2.7% G-III Apparel Group (GIII-US): Initiated at buy at Guggenheim, citing a strong management team and growth plans for brands like DKNY, Donna Karan, and Karl Lagerfeld.
Consumer Staples
- +17.9% Helen of Troy (HELE-US): Beat FQ2 earnings and revenue estimates. Beauty & Wellness declines were partially offset by Home & Outdoor strength, reaffirming full-year guidance despite soft consumer demand.
Financials
- +5.1% Affirm Holdings (AFRM-US): Upgraded to equal weight from underweight at Morgan Stanley, noted for attracting higher-income customers and younger consumers with high-income potential through better distribution, 0% promotions, and lower pricing.
Communication Services
- +4.1% Zeta Global Holdings (ZETA-US): Announced the acquisition of LiveIntent for $250M in cash and stock. The deal is expected to immediately contribute to earnings and broaden cross-selling opportunities.
Materials
- +30.9% Arcadium Lithium (ALTM-US): To be acquired by Rio Tinto (RIO-US) for $5.85/share in a $6.7B deal, representing an almost 90% premium to Arcadium’s closing price on Oct-3. The transaction is expected to close by mid-2025.
Eco Data Releases | Thursday October 10th, 2024
S&P 500 Constituent Earnings Announcements | Thursday October 10th, 2024
Data sourced from FactSet Research Systems Inc.
