US Market Overview | Macro Commentary
US equities closed mostly lower on Friday, with the Dow up 0.09%, the S&P 500 down 0.19%, and the Nasdaq down 0.36%. The Russell 2000 fell 1.10%, ending a seven-day winning streak. Friday’s session was relatively quiet following Thursday’s big rally, which saw the S&P and Dow close at record highs. Key laggards included parcels/logistics, semiconductors, homebuilders, chemicals, machinery, life sciences, and autos, while outperformers included utilities, apparel, tech hardware, aerospace & defense, and airlines. Treasuries were mixed, with the curve steepening, while the Dollar Index rose 0.1% amid yen weakness. Gold climbed 1.2% to new record levels, Bitcoin futures fell 0.5%, WTI crude declined 0.2%, and Copper rose 0.4%.
The overall bullish narrative remains driven by the Fed’s recent 50 basis point rate cut, combined with optimism for a soft economic landing. Analysts at Bank of America noted that historically, such an environment suggests a 10% market upside within six months. However, concerns about today’s $4.5T options expiration, cautious industrial earnings results, and negative volatility seasonality into October provided headwinds. Additionally, weak economic data out of China and ongoing geopolitical uncertainties remain points of concern.
Next week is expected to be uneventful on the US economic front, with flash PMIs on Monday and PCE inflation data on Friday being the key releases. Overseas, the BoJ left policy unchanged, and China kept its LPRs steady, though there is growing speculation of additional policy support measures from China.
Information Technology
- CrowdStrike (CRWD-US) rose 8.1% after Goldman Sachs raised its price target to $324 from $295, citing strong organic R&D, M&A strategy, and visibility into long-term growth.
- ASML (ASML-US) fell 4.0% after being downgraded to equal weight from overweight at Morgan Stanley. The downgrade was based on late-cycle share price dynamics, China demand concerns, and a slowing DRAM cycle in 2024.
Consumer Discretionary
- Nike (NKE-US) rose 6.8% after announcing that CEO John Donahoe will retire in October, to be replaced by former Nike executive Elliott Hill. Analysts noted Hill’s extensive product and industry knowledge.
- Chewy (CHWY-US) fell 4.3% after announcing a $500M share offering by its largest shareholder, BC Partners. Chewy also agreed to repurchase $300M worth of shares at $30 per share.
- Lennar (LEN-US) dropped 5.3% despite reporting better-than-expected Q3 earnings and revenue. Analysts flagged concerns over light ASPs, new orders, backlog, and weak Q4 gross margin guidance.
Health Care
- Apellis Pharmaceuticals (APLS-US) plunged 11.5% after receiving a negative opinion from the EU’s CHMP on its treatment for geographic atrophy, despite a re-examination.
Industrials
- FedEx (FDX-US) fell 15.2% after missing Q1 EPS estimates by nearly 25% and lowering FY EPS guidance by 2.5%. The company cited a shift in demand from priority to deferred services, which hurt yield growth.
- Dana Inc (DAN-US) declined 5.7% after Wells Fargo downgraded the stock to underweight, citing expected weakness in North American heavy truck and medium-duty volumes.
- MillerKnoll (MLKN-US) dropped 14.5% after missing FQ1 earnings and revenue estimates, citing a sluggish housing market. The company reaffirmed FY25 EPS guidance but provided weak next-quarter guidance.
Energy
- Valero Energy (VLO-US) fell 3.1% after Piper Sandler downgraded the stock to neutral, citing increased refined product capacity and weaker-than-expected demand, particularly in distillates.
Utilities
- Constellation Energy (CEG-US) jumped 22.3% after announcing a 20-year power purchase agreement with Microsoft (MSFT-US), driving investor optimism for the company’s future growth in the clean energy sector.
- Vistra (VST-US) rose 16.6% after announcing it would acquire the remainder of Vistra Vision from minority investors for $3.1B, becoming the sole owner.
Financials
- B. Riley Financial (RILY-US) was in talks to sell its wealth management division to Stifel for $100M, according to media reports. This move is seen as part of a broader restructuring effort.
Materials
- MillerKnoll (MLKN-US) missed expectations as it flagged a tepid demand environment amid sluggish housing data. Customers have also extended the time between ordering and shipping requests, pushing out some revenue.
Overnight Market Preview | Asia
Asian markets are set for a mixed start on Monday, with Nikkei futures up 1.17%, Hang Seng futures down 0.46%, and ASX SPI 200 futures down 0.82%. Japan will be closed for the Autumnal Equinox Day, while S&P 500 futures are flat. The yen weakened further after BoJ Governor Ueda‘s Friday comments suggested a higher hurdle for the next rate hike, with futures reducing odds of a December hike to just 30%. Gold is steady after reaching record highs, Bitcoin is hovering near a one-month high, and crude is flat.
Eco Data Releases | Monday September 23rd, 2024
S&P 500 Constituent Earnings Announcements | Monday September 23rd, 2024
No S&P 500 Constituents report today
Data sourced from FactSet Data Systems
