US futures lower:
S&P futures down 0.2% in Friday premarket trading, following a modest pullback on Thursday. Despite this, the S&P and Nasdaq are on track for their fifth straight week of gains. European markets are largely higher, while Asian markets were mixed. Treasuries weaker with curve steepening, Dollar down 0.1% after nine straight days of gains, Gold up 0.6%, Bitcoin futures up 2.4%, and WTI crude down 1.1% but set for its fourth weekly gain in five.
This week saw some market push and pull. The S&P hit a record close on Wednesday, though it has faced pressure from rising Treasury yields (10Y yield up ~35bp over eight days). Economic data has been mostly positive, but Thursday’s slightly hotter-than-expected CPI and weather-impacted jobless claims have brought Fed rate concerns back into focus. Despite this, consensus remains in the soft-landing camp, with cautious optimism around Q3 earnings and positive seasonality supporting the bull case. Bears, however, point to stretched valuations, potential consumer weakness, labor market concerns, and geopolitical risks.
Big focus today on Q3 earnings season kickoff, with major reports from JPM-US, WFC-US, BLK-US, BK-US, and FAST-US. On the economic front, September PPI and October UMich sentiment reports are key. Fedspeak slows down after a busy week, with Goolsbee, Logan, and Bowman on the calendar but not expected to bring major policy updates. Overseas, UK industrial production beat expectations, Germany’s final CPI was in line, and the Bank of Korea cut rates by 25 bp.
In corporate news, TSLA-US down after underwhelming robotaxi event, AMD-US to ship AI chip in Q4, BA-US filed an unfair labor charge against its striking union, and HUM-US hit by poor CMS star ratings for 2025 MA plans
US equities closed lower on Thursday: Dow -0.14%, S&P 500 -0.21%, Nasdaq -0.05%, and Russell 2000 -0.55%. Trading was choppy, with a mixed performance across sectors. Laggards included airlines, building products, semis, credit cards, and grocers. Outperformers included P&C insurance, energy, managed care, and cybersecurity. The 10-year Treasury yield rose, now up ~34bp over the past seven sessions. The Dollar Index was fractionally lower, and Gold gained 0.5%. WTI crude settled up 3.6%, closing near the highs amid reports Israel may strike Iran. Bitcoin futures were down 2.2%.
The hotter-than-expected CPI report contributed to today’s weakness, though analysts and Fed officials downplayed it. Initial jobless claims rose to 258K, likely influenced by Hurricane Helene and strike activity. Fed officials offered mixed commentary, with Atlanta’s Bostic open to a pause in rate hikes. The Treasury market continued to face pressure with today’s $22B 30-year auction, which stopped through after earlier sales tailed. Hurricane Milton made landfall in Florida, though damage appeared less severe than feared.
Consumer Discretionary
- NCLH-US (Norwegian Cruise Line Holdings): +10.9% – Upgraded to buy from neutral at Citi; optimism on cruise stocks through 2025 with strategic pricing advantages offsetting rising costs.
- CELH-US (Celsius Holdings): +14.4% – Rose on positive notes from Goldman Sachs at the NACS conference, highlighting innovation, flavors, and clean energy offerings.
- BIRK-US (Birkenstock): +2.1% – Initiated at buy at BTIG; cited valuation and strong customer loyalty, as well as investment in production capacity.
- DPZ-US (Domino’s Pizza): EPS beat, but revenue missed expectations, with management cautious on the macro environment ahead.
Industrials
- GXO-US (GXO Logistics): +14.1% – Bloomberg report indicated the company is exploring a sale after receiving interest from potential buyers.
- BA-US (Boeing): -3.4% – Withdrew its pay offer for striking factory workers; S&P placed the company’s debt on negative credit watch.
Information Technology
- GTLB-US (Gitlab): +7.7% – Initiated overweight at Morgan Stanley; expected to be a key player in the DevOps/DevSecOps market.
- APLD-US (Applied Digital): Reported earnings beat, highlighting additional GPU cluster deployments in 2H.
- TXG-US (10X Genomics): -24.7% – Preannounced Q3 revenue at ~$151.7M vs. the FactSet consensus of $162.2M; CEO cited disruptions and cautious customer spending.
- ETWO-US (E2open): -21.6% – FQ2 earnings and margins beat, but revenue fell short; company also cut FY revenue guidance due to extended deal timelines and seller training issues.
- PYPL-US (PayPal): -3.3% – Downgraded to market perform from outperform at Bernstein, citing competitive pressures and uncertainty around its long-term strategy.
- SWKS-US (Skyworks Solutions): -1.4% – Downgraded to equal weight from overweight at Barclays, which cited more modest unit ramp assumptions for next year.
- CRUS-US (Cirrus Logic): -1.3% – Downgraded to equal weight from overweight at Barclays due to valuation concerns and potentially high December estimates.
Health Care
- CVS-US (CVS Health): +1.3% – Upgraded to overweight from equal weight at Barclays, citing confidence in Medicare margin improvement.
- PFE-US (Pfizer): -2.8% – Former executives stated they are not involved in Starboard Value’s activist push, expressing confidence in current management.
- NEOG-US (Neogen): -7.1% – Reported better-than-expected revenue, but earnings were in line. Revenue declines were noted in both Food and Animal Safety segments, and the company reaffirmed FY guidance.
Materials
- WULF-US (TeraWulf): +2.9% – Announced a new long-term ground lease at its Lake Mariner facility, supporting the company’s expansion into HPC and AI data centers.
- TROX-US (Tronox Holdings): +5.1% – Upgraded to buy from neutral at UBS, citing improved operational rates and potential benefits from interest rate cuts and China stimulus.
Eco Data Releases | Friday October 11th, 2024
S&P 500 Constituent Earnings Announcements | Friday October 11th, 2024
Data sourced from FactSet Research Systems Inc.
