S&P futures are up 0.1% in Monday morning trading after US equities ended last week higher, with the Dow, S&P, and Nasdaq all up over 1%. This marked five consecutive weeks of gains for all three indices. In Asia, markets were mostly higher overnight, with China standing out as Shanghai surged over 2% and Shenzhen rallied 3%, while Hong Kong lagged. Japan’s market was closed for a holiday. European markets are little changed. US Treasuries are closed for the Columbus Day holiday following a significant rise in rates last week. The dollar and gold are both up 0.1%, while Bitcoin futures jumped 2.5% and WTI crude dropped 2.5%.
It’s a quiet start to the week, with the US bond market closed and a wait-and-see approach ahead of Q3 earnings and major macroeconomic data coming on Thursday. Over the weekend, China’s Ministry of Finance briefing signaled positive sentiment toward stimulus, though details were limited. China’s softer PPI, CPI, and export data also made headlines, along with updates on Boeing’s negative Q3 outlook and increasing support for Trump/GOP in polls. Risk sentiment continues to benefit from soft/no-landing expectations, though concerns remain about valuations, election uncertainty, Fed rate hikes, bond yield increases, and the elevated VIX.
Today, the focus will be on Fedspeak, with remarks from Kashkari at 9:00 and Waller at 15:00, and Kashkari speaking again after the close. The US economic calendar is empty this morning, but Thursday brings important data releases, including retail sales, jobless claims, industrial production, the Philly Fed manufacturing index, and the NAHB housing market index. Retail sales for September are forecast to rise 0.3% month-over-month, with core retail sales expected to increase 0.4%. Previews suggest favorable trends from card spending data and minimal impact from Hurricane Helene.
In corporate news, it’s a quiet day, but earnings season ramps up with 43 S&P 500 companies, representing about 9% of market cap, scheduled to report this week. The blended earnings growth rate for the S&P 500 stands at 4.1%, on track for a fifth straight quarter of positive year-over-year earnings growth. Starbucks is reportedly scaling back discounts, Boeing is in the spotlight for its negative Q3 pre-announcement and 10% workforce reduction, and RILY shares surged on news of selling its Great American unit to Oaktree Capital for $400 million. Notable analyst actions include upgrades for IBTA and downgrades for Amgen, Caterpillar, Triumph Group, KeyCorp, and Yelp.
US equities ended Friday trading higher, with the Dow gaining 0.97%, the S&P 500 up 0.61%, the Nasdaq rising 0.33%, and the Russell 2000 surging by 2.10%. The S&P 500 posted its 45th record close of the year, surpassing 5800 for the first time, while both the S&P and Nasdaq notched their fifth straight week of gains. Stocks advanced despite a significant recent rise in Treasury yields, with the 10-year yield up about 35 basis points over the last eight sessions. The broader economic data remained generally positive, although Thursday’s hotter-than-expected September CPI and higher jobless claims have kept discussions around the Federal Reserve’s monetary easing on the radar.
Consensus still leans towards a “soft landing” for the economy, driven by cautious optimism around Q3 earnings and favorable seasonality. However, there are ongoing concerns among bears regarding stretched valuations, consumer demand, labor market conditions, and geopolitical uncertainties. The 2Y/10Y Treasury yield spread steepened to ~14 basis points, while the US Dollar index fell by 0.1%, breaking a nine-day winning streak. Gold rose 1.4%, Bitcoin futures surged by 5.4%, and WTI crude slipped by 0.4%, though it marked its fourth weekly gain in the past five weeks.
Sector Performance and Key Stock Movements:
- Financials:
- JPMorgan Chase (JPM): Gained 4.4% after reporting a Q3 EPS and revenue beat. Net interest income (NII) and noninterest income exceeded expectations, while noninterest expenses and net charge-offs were better than anticipated. Investment banking revenues also beat estimates, leading the bank to raise its FY24 NII guidance and reduce its expense outlook.
- Wells Fargo (WFC): Up 5.6% on better-than-expected Q3 earnings. While revenue and NII were slightly light, credit metrics were solid across the board, with positive trends in provisions, nonperforming loans, and net charge-offs. Analysts highlighted management’s comments that Q4 could mark a trough for NII.
- BlackRock (BLK): Rose 3.6% following a strong Q3, with EPS and revenue exceeding forecasts. Long-term net inflows surged to $221 billion, while quarterly revenue and operating income reached new records. Assets under management (AUM) now stand at nearly $11.5 trillion.
- Bank of New York Mellon (BK): Reported strong fee income and solid investment revenues, contributing to sector-wide outperformance in financials.
- Information Technology:
- Wolfspeed (WOLF): Soared 20.8% after analysts from Roth Capital suggested the company is in final talks with major customers to supply 200 million wafers, potentially announcing a deal in the near future.
- Affirm Holdings (AFRM): Increased 12.1% after Wells Fargo upgraded the stock to “overweight,” citing tailwinds from its growing e-commerce checkout market share and expectations for GAAP profitability.
- Tesla (TSLA): Dropped 8.8% following an underwhelming product event that unveiled a “robovan” and wireless charging for a new cybercab, which is expected to enter production in 2026. Analysts expressed disappointment over the lack of concrete details and progress on autonomous driving technology.
- Industrials:
- Fastenal (FAST): Jumped 9.8% after beating Q3 earnings and revenue estimates. The company noted increased unit sales driven by larger customers and onsite locations, with September net sales higher sequentially, despite some weather-related disruptions.
- Coherent (COHR): Gained 5.6% following the announcement of Sherri Luther as the new CFO, effective October 11th.
- Uber Technologies (UBER): Climbed 10.8%, along with Lyft (LYFT), after Tesla’s robotaxi event was viewed as less of a threat to ride-hailing companies, due to the lack of concrete timelines for its autonomous driving technology.
- Consumer Discretionary:
- Polestar Automotive (PSNY): Fell 1.7% after reporting Q3 deliveries of approximately 11,900 vehicles, down 10% quarter-over-quarter and 14% year-over-year. The company expects revenue in 2024 to be similar to 2023 and anticipates achieving positive gross profit margins by Q4.
- Stellantis (STLA): Slipped 2.2% after announcing a management shuffle, including the departure of CFO Natalie Knight. CEO Carlos Tavares confirmed his plans to step down in early 2026, but analysts were mixed on whether the changes would address the company’s broader strategic issues
- Healthcare:
- Clover Health (CLOV): Gained 3% after significant improvement in CMS star ratings for its PPO Medicare Advantage plans, which serve over 95% of its membership, earning 4 stars for 2025.
- Humana (HUM): Declined after a poor showing in 2025 CMS star ratings for its Medicare Advantage plans.
- Materials:
- A. O. Smith (AOS): Dropped 6.3% after a negative preannouncement for Q3 earnings, with revenue and EPS missing estimates. The company cited significant consumer headwinds in China and lowered its FY24 revenue guidance.
- Energy:
- Gibraltar Industries (ROCK): Fell 4.3% following a preannouncement of lower-than-expected Q3 earnings and revenue. The company continues to face trade and regulatory uncertainties in the solar industry but expects these headwinds to ease by the first half of 2025.
Eco Data Releases | Monday October 14th, 2024
S&P 500 Constituent Earnings Announcements | Monday October 14th, 2024
No S&P 500 Constituents are Reporting Today
Data sourced from FactSet Research Systems Inc.
