Early Look

Monday, September 16, 2024

U.S. stock futures are mixed after stocks finished higher again on Friday, where Smallcaps outperformed (Russell 2000 rose 2.49% Friday) and the Nasdaq Composite and S&P 500 rose for a fifth straight session all in anticipation of “dovish” commentary from the Fed this week, which meets Wednesday after and is expected to deliver a 25bps rate cut. For the week, the Dow was up 2.60%, the S&P gained 500 4.02%, the Nasdaq jumped 5.95% and the Russell 2000 rose 4.19%. Expectations of a 50-bps cut rose late last week, as late Friday, futures tied to the Fed’s policy rate now reflect about a 47% chance that the Fed will cut its policy rate, currently in the 5.25%-5.50% range, by half of a percentage point. That’s up from about 28% on Thursday. The FOMC isn’t the only central bank meeting this week: Other important data points this week outside the FOMC include: Tuesday (9/17) US Retail Sales for Aug, Industrial Production data; On Wednesday the Bank of Canada policy meeting, UK CPI; on Thursday (9/19), Bank of England policy meeting, Philly Fed Survey and Existing Home Sales, and on Friday (9/20) is option expiration (quad witching), and the Bank of Japan policy meeting (widely seen holding its policy rate at 0.25%). In other political news this weekend, there was another assassination attempt on former President Donald Trump on Sunday. A suspect was arrested on Sun in what the FBI called an apparent assassination attempt, the second in about two months.

Markets came very close to closing at new all-time highs on Friday, as The Dow Jones Industrial Average hit an intraday high of 41,533.83 off all-time intraday high of 41,585.21 on 8/30/24 (its all-time closing high stands at 41,563.08 (also on 8/30). The S&P 500 index (SPX) hit an intraday high of 5,636.27 this afternoon, with its all-time intraday high standing at 5,669.67 on 7/16/24 (all-time closing high is 5,667.20 also on 7/16).  This week could bring new records for investors if they like what the Fed says. The Nasdaq outperformed, rising almost 6% last week led by a surge in semis (SOX +10%) with NVDA up over 15% on week. In Asian markets, The Nikkei Index fell -251 points to 36,581, the Shanghai Index fell -13 points to 2,704, and the Hang Seng Index rose 53 points to 17,422. In Europe, the German DAX is down -48 points to 18,651, while the FTSE 100 slips -8 points to 8,264.

• The Dow Jones Industrial Average rose 297.01 points, or 0.72%, to 41,393.78.
• The Nasdaq Composite jumped 114.30 points, or 0.65%, to 17,683.98.
• The Russell 2000 Index surged 53.06 points, or 2.69% to 2,182.49.

• Earnings After the Close: OPTT RFIL VNCE

• Deckers Brands (DECK) announces stockholder approval of six-for-one forward stock split and proportionate increase in authorized common stock.
• Target (TGT) is offering consumers savings all season long starting with Target Circle Week, Oct. 6-12, for those who want a head start on holiday shopping. Target is preparing to hire approximately 100,000 additional seasonal team members.

• Alcoa (AA) announced that it has entered into a binding share purchase and subscription agreement with Saudi Arabian Mining Company, or Ma’aden, under which Alcoa will sell its full ownership interest of 25.1% in the Ma’aden Joint Venture to Ma’aden for approximately $1.1 billion.
• Apollo Global Management (APO) has signed a $1 billion deal with British energy major BP Plc (BP) to fund its stake in the Trans Adriatic natural gas pipeline, the companies said
• SLB (SLB) mentioned positively in Barron’s this weekend saying the world’s leading oil-services company, with operations in 100 countries, is “worth a fresh look”. Despite fears of obsolescence, the oil-and-gas business will probably be around for the rest of this century—demand continues to rise globally and stands at more than 100 million barrels a day—and the industry needs the varied expertise in assessing and developing energy deposits that SLB provides.
• In Energy, Mizuho lowered their commodity price outlook for 2H2024 to 2027+ and reduced NAV-based PTs by ~7%. They say they remain constructive on the U.S. Oil & Gas sector fundamentals despite lowering 2024/25 EBITDA estimates by ~5%/10%, respectively. Upgrade Delek (DK) to Neutral from Underperform given improved SOTP clarity.
• BHP Group (BHP) upgraded to Outperform from Market Perform at Bernstein.

• Discover Financial Services (DFS) said credit card charge-off rate 2.48% at August end and credit card delinquency rate 1.67% at August end, much improved from the prior month.
• JPMorgan (JPM) reported charge-offs for August of 1.64%, and Delinquencies 0.84%.
• Simon Property (SPG), EastGroup Properties (EGP) both upgraded to Outperform from In Line at Evercore ISI and raised tgt along with upgrades of Community Healthcare (CHCT), SLG Green Realty (SLG) to In-line from Underperform, while downgraded Regency Centers (REG), Sun Communities (SUI) to Inline from Outperform

• Pfizer’s (PFE) experimental drug on Saturday showed promise in cancer-related condition (cachexia) that causes weight loss and weakness. On Saturday, Pfizer reported the experimental antibody not only helped cancer patients with cachexia regain some weight versus placebo, but that it also seemed to increase their muscle mass and activity levels.
• Hologic Inc (HOLX) said its board authorized new stock repurchase program, with five-year term, to repurchase up to $1.5B of common stock.
• 23andMe Inc. (ME) agreed to a $30 million settlement and committed to a three-year security monitoring program to resolve claims it failed to safeguard the privacy of more than six million customers affected by a 2023 data breach.

• DirecTV (T) and Disney (DIS) announced an agreement in principle that provides “greater choice, value, and flexibility to their mutual customers,” the companies said. As a result, Disney’s full linear suite of networks has been restored to DirecTV, DirecTV STREAM and U-verse customers while both parties work to finalize a new, multi-year contract.
• Trump Media & Technology Group (DJT) shares rise pre mkt after another assassination attempt on former President Donald Trump on Sunday. A suspect was arrested on Sun in what the FBI called an apparent assassination attempt, the second in about two months.
• Intel (INTC) has officially qualified for as much as $3.5 billion in federal grants to make semiconductors for the Pentagon, according to people familiar with the matter, after the chipmaker reached a binding agreement with US officials, Bloomberg reported.
• In semiconductors, Citigroup cut estimates and, accordingly, lower TPs by ~10% on the big 3 AMAT/LRCX/KLAC in semi equipment, and downgraded both MKS Instruments (MKSI) and Nova Ltd (NVMI) to Neutral and upgraded Entegris (ENTG) to Buy to add to our defensive picks list of KLA-Tencor (KLAC) and Teradyne (TER).