S&P futures are up 0.2% in Friday morning trading, extending the rally as both the S&P and Nasdaq head for a fourth consecutive positive session. Stocks are poised for strong gains this week after last week’s sharp pullback, the largest since the SVB crisis. Asian markets had mixed performance, while European markets are up ~0.2%. Treasuries are rallying with a steeper yield curve. The Dollar Index is down 0.4%, the yen is strengthening, gold is up 0.7%, and WTI crude is up 0.8%.
Thursday’s trading saw equities higher again with the Nasdaq pacing the major US indices higher adding 1.00%. The S&P 500 followed, up 0.75% while the Dow gained 0.58%. Interest rates were lower ahead of the Fed’s interest rate policy announcement next week. NVDA and Alphabet were big contributors to Nasdaq outperformance.
At the sector level:
Information Technology
Tech stocks are benefiting from the AI-driven bounce. Oracle (ORCL-US) is extending its post-earnings rally, after raising its FY29 revenue guidance to $104B, far above the $88B consensus. Adobe (ADBE-US), however, is under pressure due to disappointing Q4 guidance, with lower-than-expected net new ARR. AI sentiment continues to drive tech outperformance, particularly with bullish commentary from Nvidia and Microsoft at the Goldman Sachs Cornucopia Conference.
Industrials
Boeing (BA-US) is weaker following news of a worker strike at one of its factories.
Financials
Former Trump administration officials are reportedly working on plans to privatize FNMA-US and FMCC-US if Trump wins the election. Credit concerns from the Barclays Conference this week are largely limited to Ally Financial (ALLY-US), which highlighted intensifying credit challenges. Despite this, most banks remain confident about second-half net interest income expectations, even as investors express concerns about 2025 figures.
Energy
WTI crude is up 0.8%, building on gains from earlier in the week. Despite the rise in energy prices, sector performance remains subdued.
Consumer Discretionary
Retail sales data expected next week will be critical for assessing consumer resilience. The Fed’s focus has shifted from inflation risks to growth risks, with retail sales set to play a key role ahead of the FOMC decision. MasterCard (MA-US) continues to expand with its acquisition of Recorded Future, and McDonald’s (MCD-US) extended its $5 value meal promotion into December. RH (RH-US) is seeing gains despite lowering its 2024 guidance, with analysts remaining optimistic about demand acceleration and assortment refresh.
Consumer Staples
General Mills (GIS-US) confirmed the sale of its North American yogurt business for $2.1B. In terms of consumer sentiment, the University of Michigan’s preliminary report is expected to show an uptick, while inflation expectations are expected to remain steady.
Healthcare
Healthcare stocks have been relatively quiet, with little major movement outside of specific guidance updates.
Materials
Copper prices rose by 1.9%, offering support to stocks in the materials sector.
Macroeconomic and Rate Outlook
The ongoing debate centers around whether the Fed will cut rates by 25 or 50 basis points next week to begin a new easing cycle. While slightly hotter inflation data has supported the case for a 25 bp cut, reports suggest the door for a 50 bp move is still open. Former NY Fed President Dudley even advocated for a 50 bp cut. Despite concerns about seasonality and growth risks, the stock market is bouncing back, driven largely by AI optimism.
In conclusion, tech stocks continue to lead the market, driven by positive AI sentiment, while the broader market benefits from oversold conditions. The Fed’s decision next week, along with retail sales data, will be key events to watch.
Eco Data Releases | Friday September 13th, 2024
S&P 500 Constituent Earnings Announcements | Friday September 13th, 2024
No S&P 500 Constituents report today
Data sourced from FactSet Data Systems
