S&P futures are down 0.5% in Monday premarket trading, giving back some of Friday’s gains. This comes after stronger-than-expected nonfarm payrolls boosted hopes of a soft landing, but also tempered expectations for a 50bp Fed rate cut in November, shifting focus to a 25bp move. European markets are mostly lower after a strong Asian session. Treasuries weakened, with the curve flattening and the 10Y yield climbing above 4%. WTI crude is up 2.7%, nearing its overnight highs.
Key focus remains on Thursday’s September CPI release and Q3 earnings season, which kicks off with big banks reporting on Friday. Mideast tensions and the US presidential election remain wildcards. Sentiment remains stretched, and US equities recently experienced their largest outflow since April.
Corporate news is light today. CVX is selling Alberta assets to Canadian Natural Resources for $6.5B. Starboard Value is pushing for changes at PFE after building a $1B stake. BA is restarting talks with striking unions. WYNN received a gaming license from the UAE. M&A activity includes APO acquiring B for $47.50 per share and Butterfly Equity buying NAPA for $1.95B
US equities closed higher on Friday, with the Dow up 0.81%, S&P 500 gaining 0.90%, Nasdaq increasing 1.22%, and Russell 2000 rising 1.50%. The S&P and Nasdaq posted their fourth straight weekly gains, with big tech leading the charge. Outperformers included airlines, autos, banks, retail, energy, semiconductors, and insurance, while laggards consisted of homebuilders, building products, managed care, and REITs. Treasuries weakened, the dollar index increased by 0.5%, and WTI crude settled up 0.9%, marking its best week since March 2023.
The key market driver was the September nonfarm payrolls, which exceeded expectations by printing 254K jobs against a forecast of 140-150K, boosting optimism for a soft landing. Middle East tensions, particularly concerning Israel and Iran, remained an overhang. Despite positive economic data, expectations for a 25bp November rate cut were reaffirmed, as opposed to a 50bp cut.
With commodities prices, Crude and rates moving higher in the near-term it will be interesting to see if the Energy sector can sustain momentum. The performance trend there nears channel resistance, and the Bloomberg Commodities index is nearing horizontal resistance as well. We are watching this closely as we are near levels that would trigger position change in our models.
Energy
- FANG-US (Diamondback Energy): Upgraded to outperform from market perform at BMO Capital Markets, rising 3.4%. Analysts highlighted the company’s extensive core inventory depth and industry-leading capital efficiency.
Consumer Discretionary
- ANF-US (Abercrombie & Fitch): Shares rose 9.1% after JPMorgan placed the stock on its Positive Catalyst Watch, citing accelerating momentum for its Hollister brand and better Q3 promotional activity.
- SAVE-US (Spirit Airlines): Dropped 24.8% after reports indicated the company was in discussions with bondholders regarding a potential bankruptcy filing, though timing is said to be not imminent. The company is also exploring balance sheet restructuring.
- RIVN-US (Rivian): Fell 3.2% after cutting FY delivery guidance to 47-49K vehicles from a previous estimate of 54K due to production disruption caused by a shortage of shared components across its R1 and RCV platforms.
Materials
- CDE-US (Coeur Mining): Declined 9.5% after announcing the acquisition of SILV-US (SilverCrest Metals) for $1.7B. The purchase price represents a 22% premium to SilverCrest’s closing price on Thursday, and the deal is expected to close in late Q1 2025.
- AZEK-US (AZEK Co.): Dropped 5.0% after being downgraded to hold from buy at Loop Capital Markets. The downgrade was driven by softening demand in the composite decking survey, with the slowdown extending beyond lower-end products to mid- and high-end categories.
- ALB-US (Albemarle): Gained 8.3% after a report in The Australian suggested RIO-US might pursue a large acquisition in the lithium space, with potential targets including Albemarle.
Financials
- B-US (Barnes Group): Gained 13.0% following a Reuters report that APO-US is nearing a deal to acquire the company for over $45 per share.
- CVS-US (CVS Health): Rose 2.7% after being upgraded to buy from hold at TD Cowen, which cited changes to CVS’s 2025 Medicare Advantage plan benefits.
Industrials
- APOG-US (Apogee Enterprises): Surged 22.7% after posting FQ2 earnings, revenue, and margins that beat expectations. The company also raised FY25 EPS guidance, despite anticipating some sales drag from the planned exit of certain low-margin product lines.
Information Technology
- RZLV-US (Rezolve Ai): Rose 5.3% after announcing a strategic partnership with MSFT-US, where Rezolve’s Brain Suite (Brain Commerce, Brain Checkout, and Brain Assistant) will be powered by Microsoft Azure.
- NVDA-US (NVIDIA): Gained 3.3% after CEO Jensen Huang told CNBC that demand for its Blackwell product was “insane,” and also discussed an expanded partnership with ACN-US to help companies leverage AI technology.
Eco Data Releases | Monday October 7th, 2024
S&P 500 Constituent Earnings Announcements | Monday October 7th, 2024
No S&P 500 Constituents report earnings today
Data sourced from FactSet Data Systems
