US Equities Close Mixed on Friday: Dow +0.33%, S&P 500 -0.13%, Nasdaq -0.39%, Russell 2000 +0.67%
US equities ended the Friday session mixed, with the S&P 500 and Nasdaq declining, while the Dow and Russell 2000 saw modest gains. The S&P and Nasdaq posted their third consecutive weekly gains, driven largely by China stimulus and broader risk-on sentiment. Energy, autos, media, and biotech were among the outperformers, while sectors such as discounters, semiconductors, and hospitals lagged. Treasuries firmed with some curve steepening, and the dollar index slipped 0.1%. Yen strength followed news that Shigeru Ishiba will be the next Prime Minister of Japan. Gold fell 1.0%, while Bitcoin futures gained 1.5%. WTI crude ended up 0.8% in choppy trading but finished the week down more than 4%.
Macro & Market Dynamics
The focus of the week remained on China’s aggressive stimulus measures and their impact on global markets. The broader rally was driven by a combination of accommodative monetary policies and optimism surrounding a potential soft landing, supported by the Atlanta Fed’s Q3 GDP estimate of +3.1%. However, concerns around valuations, geopolitical tensions, and election uncertainty served as headwinds. Core PCE inflation came in slightly below expectations, easing to 2.7% y/y, while personal income and consumption data showed some deceleration.
GICS Sector Recap
Information Technology (XLK)
- Nvidia (NVDA-US): Declined as part of a mixed performance in big tech. Despite recent AI optimism, NVDA saw profit-taking amid broader sector weakness.
- HP Inc (HPQ-US): Dropped 4.0% following a downgrade to neutral from buy by BofA. Analysts noted concerns over EPS growth reliant on buybacks, and unsustainable margins in Printing due to COVID-era cost savings.
Consumer Discretionary (XLY)
- Wynn Resorts (WYNN-US): Gained 7.2% after being upgraded to overweight from equal weight at Morgan Stanley, which highlighted underappreciated growth opportunities in the UAE and Macau.
- Vail Resorts (MTN-US): Fell 3.9% after a weak FQ4 EBITDA report and disappointing skier visits. FY25 EBITDA guidance came in 2% below expectations, but the company announced a new efficiency program and boosted its buyback authorization.
Consumer Discretionary (XLP)
- Costco (COST-US): Dropped 1.8% despite beating Q4 EPS expectations. Revenue came in line with estimates, but membership fees missed projections. Analysts were generally positive about margin expansion and share gains, though valuation concerns lingered.
Healthcare (XLV)
- Bristol Myers Squibb (BMY-US): Gained 1.6% after the FDA approved its Cobenfy oral medication for schizophrenia treatment, marking a significant new pharmacological approach.
- Acadia Healthcare (ACHC-US): Plunged 16.4% following the disclosure of a grand jury subpoena related to investigations into admissions, length of stay, and billing practices. The company emphasized that recent media coverage was inconsistent with its practices.
- Eli Lilly (LLY-US): Fell 3.5% after Wells Fargo analysts flagged that Q3 diabetes/obesity sales could come in below consensus based on script tracker data.
- TransMedics (TMDX-US): Rose 10.1% after news it will join the S&P SmallCap 600, effective October 1
Industrials (XLI)
- IonQ (IONQ-US): Surged 20.5% after signing a $54.5M, four-year contract with the US Air Force Research Lab, aimed at scaling quantum systems. The company reiterated confidence in its bookings guidance.
- Scholastic (SCHL-US): Climbed 6.2% after reporting a better-than-feared fiscal Q1 and reaffirming FY25 guidance. The stock has been down nearly 20% YTD.
- Establishment Labs Holdings (ESTA-US): Gained 14.3% after the FDA approved its Motiva breast implants, marking the first such approval since 2013.
Communication Services (XLC)
- EchoStar (SATS-US): Jumped 8.9% on Bloomberg reports that DirecTV is in advanced talks to combine with Dish, though no specific terms were disclosed.
Key Economic Data
- Core PCE Inflation: Up 0.1% m/m in August, slightly below the 0.2% consensus. Y/Y growth inched up to 2.7% from 2.6% in July.
- Personal Income & Consumption: Both decelerated from prior months, pointing to cooling consumer spending.
- University of Michigan Consumer Sentiment: Rose above the flash reading and exceeded forecasts, reflecting brighter economic prospects despite election-related uncertainty.
- Geopolitics: Israeli strikes near Beirut, targeting Hezbollah militia leaders, brought geopolitics back into focus.
Outlook
Despite a mixed session on Friday, US equities logged their third consecutive weekly gain, buoyed by optimism surrounding China’s stimulus and signs of a soft landing in the US economy. However, near-term concerns over valuation, geopolitical risks, and potential election-related volatility could act as headwinds as we approach Q4 earnings season
Eco Data Releases | Monday September 30th, 2024
S&P 500 Constituent Earnings Announcements | Monday September 30th, 2024
Data sourced from FactSet Data Systems
