S&P futures are up 0.6% on Monday morning following a mostly lower week for US equities, where the S&P 500 snapped a six-week winning streak, while the Nasdaq secured its seventh consecutive weekly gain, buoyed by big tech. Asian markets were mostly positive overnight, led by Japan, which rose nearly 2% on election results. European markets are up about 0.8%. Treasuries are weaker, while the Dollar Index is steady. Gold is down 0.3%, Bitcoin futures are up 2.5%, and WTI crude is down 5.6% due to easing Middle East tensions.
Key factors in focus include a sharp drop in oil prices following limited Israeli strikes over the weekend, which avoided targeting oil and nuclear sites. However, oil weakness hasn’t eased bond yields, which continue to rise on growth, Fed, and election-related concerns. Japan is also in focus after its ruling coalition lost its lower house majority, raising questions about potential changes to BoJ policy. Markets await peak Q3 earnings reports this week, including five from the “Mag 7,” as well as US economic data releases and next Tuesday’s election.
Economic data this week includes JOLTS, Conference Board consumer confidence, and house prices on Tuesday, ADP payroll and Q3 GDP on Wednesday, and NFP on Friday. The October NFP is expected to show a ~130K increase, with potential distortions from strikes and hurricanes.
Corporate highlights:
- Boeing (BA) plans a $15B+ capital raise, with reports hinting at a potential sale of its space business.
- EQT (EQT) is in talks to sell stakes in its pipelines to Blackstone (BX) for ~$3.5B.
- Delta (DAL) sued CrowdStrike (CRWD) over a July tech outage.
- Google (GOOGL) is reportedly developing an AI tool to manage web browsing.
- McDonald’s (MCD) and food safety officials ruled out beef in an E. coli investigation
US equities ended mostly lower on Friday, with the Dow down 0.61%, S&P 500 off 0.03%, and the Nasdaq up 0.56%. This marked the end of a six-week winning streak for the S&P, down over 1% for the week, while the Nasdaq posted its seventh straight weekly gain. Despite strength in big tech, breadth remained negative, with underperformance across equal-weight S&P and various cyclicals. Laggards included banks, insurers, asset managers, hospitals, homebuilders, restaurants, utilities, and REITs. Outperformers featured semis, energy, credit cards, apparel, travel/leisure, and managed care. Treasuries weakened further, with the 10Y yield rising about 16bp this week. The Dollar Index gained 0.3%, gold rose 0.2%, Bitcoin futures fell 2.0%, and WTI crude ended up 2.3%, logging a modest weekly gain.
No major catalysts drove Friday’s session as investors awaited key big tech earnings next week alongside a busier economic calendar, including the Non-Farm Payrolls (NFP) report on Friday. Persistent concerns over election uncertainty, deficit-driven rate repricing, and supply issues linger, though some expect the removal of election overhang and seasonal trends to potentially lift risk sentiment.
Notable Stock Movements by GICS Sector
Information Technology
- Intel (INTC) +1.5%: Announced a $28B initial investment for new advanced semiconductor manufacturing facilities in Ohio to meet growing chip demand.
Consumer Discretionary
- Deckers Outdoor (DECK) +10.6%: Strong Q3 earnings, revenue, and margin beat driven by demand for UGG and HOKA brands. FY guidance raised with analysts noting robust wholesale and direct-to-consumer trends.
- Mohawk Industries (MHK) -13.8%: Q3 results met expectations, but Q4 EPS guidance fell short due to hurricane impacts and a weaker demand environment amid high rates and inflation.
- AutoNation (AN) -4.5%: Missed Q3 earnings and revenue, with new vehicle sales above expectations but weaker used vehicles and parts/service segments. Management flagged challenges from CDK outage, weather, and OEM stop-sale orders.
Financials
- Capital One (COF) +5.2%: Beat on EPS, NII, and NIM; credit quality remained solid despite expected normalization. Analysts viewed credit resilience positively.
- Booz Allen Hamilton (BAH) +9.2%: Q2 beat, supported by double-digit growth in federal defense and civil markets, strong client headcount, and backlog expansion. FY guidance raised.
Health Care
- Centene (CNC) +4.2%: Q3 earnings and revenue beat expectations, with membership above consensus. MLR missed but was better than feared, leading analysts to praise execution and cost management.
- HCA Healthcare (HCA) -8.9%: Missed Q3 earnings and revenue, citing ongoing hurricane impacts, and projected year-end results in the lower half of guidance ranges.
Industrials
- L3Harris Technologies (LHX) +3.5%: Q3 beat on earnings and record bookings. Organic growth driven by demand for aircraft missionization and advanced electronics, with an increase in FY guidance midpoints.
- Digital Realty Trust (DLR) +9.6%: Positive Q3 report with record new leasing and improved 2024 renewal guidance. Increased occupancy and stable leverage also well-received by investors.
- Comfort Systems USA (FIX) -10.4%: Revenue missed despite earnings beat; backlog fell sequentially, leading to concerns about future demand, though margins improved.
- Booz Allen Hamilton (BAH) +9.2%: Strong Q2 performance, double-digit growth in defense, and civil markets; headcount and backlog both expanded
Materials
- Olin Corp (OLN) -8.0%: Q3 EBITDA missed, with guidance revised lower due to hurricane impacts, weak Epoxy and Winchester segments, and uncertainty around earnings power.
Consumer Staples
- Colgate-Palmolive (CL) -4.1%: Slightly beat on Q3 EPS and revenue but saw organic growth and operating margins miss. North America sales declined, leading analysts to question future pricing power.
- Newell Brands (NWL) +21.6%: Q3 results in line with higher-than-expected gross and operating margins. Raised FY24 EPS, OM, and cash flow guidance, helping lift investor sentiment.
Real Estate
- Digital Realty Trust (DLR) +9.6%: Reported record new leasing and improved 2024 renewal spread guidance; occupancy rates rose, with positive takeaways from long-term fundamentals.
Communication Services
- Coursera (COUR) -9.7%: Q3 earnings beat, but guidance for Q4 fell short. Key concerns included a second FY guidance cut and lower retention in Professional Certificates, though AI demand remains a bright spot.
Energy
- Olin Corp (OLN) -8.0%: Missed EBITDA expectations in Q3, with hurricane impacts, weaker-than-expected Epoxy, and Winchester segments pressuring results.
Financials
Eco Data Releases | Monday October 28th, 2024
S&P 500 Constituent Earnings Announcements | Monday October 28th, 2024
Data sourced from FactSet Research Systems Inc.
