Mid-Morning Look: October 09, 2024

Mid-Morning Look

Wednesday, October 09, 2024

Index

Up/Down

%

Last

DJ Industrials

81.11

0.19%

42,161

S&P 500

7.79

0.14%

5,758

Nasdaq

30.59

0.17%

18,213

Russell 2000

6.81

0.31%

2,201

 

 

U.S. stocks remain higher, adding to Tuesday’s gains as S&P sectors are mixed ahead of consumer price (CPI) inflation data on Thursday and as Florida bracing for the powerful Hurricane Milton which is expected to make landfall around Tampa this evening/early Thursday morning as a potential Category 4 storm. Early leaders include Technology again (was leader Tuesday), along with Financials ahead of bank earnings Friday, and Industrials while Utilities, Energy and Communications under pressure early. The U.S. dollar is on track for its best run in more than two years rising for an eighth straight day, set for its longest winning streak since April 2022. Meanwhile, gold prices retreated for the sixth straight day amid that advancing dollar and diminished expectations for a larger rate cut in November while markets awaited minutes from the Federal Reserve’s September policy meeting for further insights. Markets quietly churning higher to start the trading day as the S&P 500 (SPX) is within a few points of 5,762.68 closing high on 9/30 and not far from its intraday high of 5,767.37 on 9/30 as markets early push higher. More volatility in Asia overnight as the Nikkei Index gained 340 points to 39,277, but more weakness in China as the Shanghai Index tumbled -230 points or 6.62% to 3,258, and the Hang Seng Index slid -289 points to 20,637. China’s finance ministry announced plans for a media briefing on Saturday, sparking hope for fresh fiscal stimulus announcements. The media briefing comes after signs showed China consumer spending over the recent Golden Week holiday was relatively subdued, underscoring the need for government stimulus.

 

 

Macro

Up/Down

Last

WTI Crude

-1.76

71.81

Brent

-1.58

75.60

Gold

-7.80

2,627.60

EUR/USD

-0.0028

1.0952

JPY/USD

0.97

149.17

10-Year Note

0.006

4.041%

 

Sector Movers Today

  • In Brokers & Investment Banks: BX was downgraded to Neutral from Overweight at Piper and decreased estimates by 7-9% noting Alternatives have outperformed leading up to and since the start of the Fed cutting cycle. Piper continues to be bullish on OWL given its management fee model that is not dependent on deal activity returning. LPLA was upgraded to Overweight at Wells Fargo and raised tgt to $285 from $235 saying its strong growth is boosted by consistent growth in net new assets. RJF was upgraded to Outperform from MP at JMP Securities in Q3 sector preview with $146 PT; the firm said still see best risk reward GS at just ~12x its 2025E EPS in the large cap space and in smaller caps, PWP remains a top pick in this group; top pick remains OWL in Alt managers in Q3 Investment banks/brokers preview and said also likes the setup in CG given more relative exposure to capital markets activity as well as some other company-specific catalysts; fav names in FinTech remain HOOD and COIN.
  • In Metals & Mining: RIO confirmed reports from last week, as it announced a definitive agreement to acquire lithium producer ALTM in an all-cash transaction for $5.85 per share. The transaction values Arcadium’s diluted share capital at approximately $6.7B. CMC downgraded to Peer Perform at Wolfe Research which follows a more cautious U.S. construction outlook, plus tougher landscape for its Polish mill. VALE was downgraded to Underperform from Peer Perform at Wolfe saying now sees structurally weaker Chinese demand and new low-cost capacity from Simandou. WOR announced that Mr. Joseph Hayek will become the company’s next President and CEO effective November 1, 2024, as current CEO Andy Rose is retiring.
  • In Home Improvement Retail: LOW and HD were both upgraded from Hold to Buy w/ $300 (from $250) and $460 PT (from $360), respectively at Loop Capital following recent store checks and management conversations. LOOP’s F2024 revenue estimate is unchanged despite a likely lift from recent storm damage. The storms May well disrupt current quarter sales, but LOOP said it expect investors to look beyond this to a future demand lift. In Building Products: Jefferies said with rainfall in the South up 28%, and further magnified by Helene & Milton, the firm is lowering its ests for MLM, VMC, SUM (weaker wallboard demand) and expect FY guide cuts.
  • In Internet: The U.S. Department of Justice late Tuesday made recommendations for GOOGL search engine business practices, indicating that it was considering a possible breakup of the tech giant as an antitrust remedy. In research, Keybanc raised its price tgts on META to $655 from $560, TTD to $130 from $115 and PINS to $45 from $43 in Q3 Large Cap Internet ad preview saying checks suggest the ad market remained solid in Q3. In the Internet Teen Survey at Piper, TikTok & Instagram both improved their usage leads, while SNAP fell again as the favorite app. RBLX active users improved materially from prior surveys. Teen shopping on China-based retailers was down notably from Spring. Piper sees +results for META, RBLX, PINS, UBER, DASH, mixed for AMZN, GOOGL, and negative for SNAP.

 

Stock GAINERS

  • AFRM +4%; receives its second Wall Street analyst upgrade in as many days as Morgan Stanley raised to Overweight saying the company has demonstrated how better distribution, 0% promos, & lower pricing could attract & retain higher income consumers.
  • ALAB +16%; after the company introduced a new portfolio of switches for AI workloads. Morgan Stanley views this as a reason to buy the stock.
  • ALTM +30%; as RIO confirmed reports from last week, as it announced a definitive agreement to acquire lithium producer ALTM in an all-cash transaction for $5.85 per share. The transaction values Arcadium’s diluted share capital at approximately $6.7B.
  • HELE +14%; shares jumped after the consumer products company reported Q2 net sales and adjusted EPS that exceeded Wall Street projections and reaffirmed its full-year projections.
  • NCLH +8%; upgraded to Buy from Neutral at Citigroup and raised tgt to $30 from $20 saying analysis and data suggest this growth the recent share rally in the cruise space has real legs into 2025 and beyond.
  • PFE +2%; CEO Albert Bourla plans to meet key executives of activist hedge fund Starboard Value next week, the Financial Times reported late on Tuesday, citing people familiar with the matter.
  • RDDT +3%; was initiated at Buy and $90 target price at Jefferies saying the co is combining AI-driven product enhancements with a robust archive of contextual content to spur trial and engagement, resulting in recent user growth accelerating to the highest level in 2+ years.

 

Stock LAGGARDS

  • BA -2%; after negotiations to end an almost monthlong strike collapsed, with the planemaker withdrawing its contract offer saying that the workers’ union did not seriously consider its proposals.
  • BABA -3%; U.S. listed Chinese stocks drop a second day as the recent 2-week rally on China stimulus measures fades. Also, data released by Ministry of Culture and Tourism showed that while travelers made 10.2% more trips during the Golden Week break than in 2019, spending only increased by 7.9%.
  • BAYRY -7%; after Bloomberg reported that Washington state’s Supreme Court accepted to review a case against Bayer’s Monsanto unit over allegations that exposure to the company’s PCBs caused brain injuries to three teachers
  • CEG -4%; seeing pullback in nuclear/power related stocks that have soared in recent months on expected need for more power given AI boom (VST, SMR, NRG also pulling back).
  • DKL -10%; after 3.85M share Spot Secondary priced at $39.00.
  • GOOGL -2%; after the Department of Justice told a federal judge it’s considering recommending that Google be forced to sell off parts of its operations.

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Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.