Equities moved higher on Wednesday with a rebound in AI sentiment leading to Tech. and Nasdaq outperformance. For the day, the Nasdaq composite led the major US indices higher adding 2.17% while the S&P 500 gained 1.07 while the Dow brought up the rear advancing 0.31%.
At the sector level, Tech shares paced gains up 3.41% on the day while XLY was the only other sector up >1.00%. Lower vol. exposures like Staples, Real Estate and Healthcare, which have approached overbought levels in the near-term were negative on the day. Utilities were the only positive outlier in that cohort.
Tech has led the market bounce over the past few days, fueled by oversold conditions, improving AI sentiment, and strong software earnings. Growth stocks outperformed as investors sought refuge from growth fears and political uncertainty. The Federal Reserve’s anticipated easing cycle next week is expected to support this trend, despite a reduced probability of a 50-basis-point rate cut.
Today’s key economic releases include PPI and Initial Jobless Claims, while overseas, the ECB is widely expected to cut rates. Friday will bring the University of Michigan consumer sentiment report, and next week holds significant data on retail sales, housing, and the FOMC meeting.
Eco Data Releases | Thursday September 12th, 2024
S&P 500 Constituent Earnings Announcements | Thursday September 12th, 2024
Stock Level Highlights
In Information Technology, tech stocks were the standout performers, driven by positive AI-related takeaways from a Goldman Sachs conference. Software companies saw better-than-expected earnings, with Oracle (ORCL-US, Information Technology) benefiting from the AI-driven optimism.
In Communication Services, Democratic and Harris-related trades outperformed following the recent debate, showing strength in this sector.
Energy stocks lagged despite WTI crude rising 1.2% today, following a nearly 2.5% jump on Wednesday. Copper prices also rose by 1.9%, providing a boost to materials-related stocks.
In Financials, bank stocks continued to underperform as Treasury yields weakened across the curve. The Dollar Index rose by 0.1%, and the yen weakened despite another round of normalization comments from the Bank of Japan. Meanwhile, Bitcoin futures gained 1.3%. MasterCard (MA-US, Financials) announced the acquisition of Recorded Future for $2.65B
In the Consumer Discretionary sector, McDonald’s (MCD-US, Consumer Discretionary) extended its $5 value meal promotion through December. Signet Jewelers (SIG-US, Consumer Discretionary) reported that comparable store sales turned positive in Q3. However, Oxford Industries (OXM-US, Consumer Discretionary) missed on Q2 earnings and cut its full-year EPS guidance by nearly 20% at the midpoint, and Caleres (CAL-US, Consumer Discretionary) missed expectations and cut its full-year guidance, citing ERP implementation challenges and weak seasonal demand.
In Industrials, Norfolk Southern (NSC-US, Industrials) terminated CEO Alan Shaw for cause and appointed CFO Mark George as the new CEO.
In Healthcare, Moderna (MRNA-US, Healthcare) saw its stock decline after issuing weaker-than-expected revenue guidance for 2025.
In the Consumer Staples sector, General Mills (GIS-US, Consumer Staples) confirmed the sale of its North American yogurt business for $2.1B.
Lastly, in Materials, Copper prices rose by 1.9%, providing a lift to materials-related stocks.
Data sourced from FactSet Data Systems
