Closing Recap

Friday, August 30, 2024

US equity futures gained overnight, but PCE data loomed, so a smooth end of month was not a given. Benign inflation data, though, made for a low-volatility morning as markets generally held gains then extended to the upside a bit after the Michigan survey noted consumers’ 1-year inflation expectations dipped to 2.8%, the lowest since 2020. Meanwhile, today’s Fear and Greed Index came in at 62/100 (greed) versus 57 (greed) yesterday and 54 (neutral) a week ago, but well above last month’s reading of 40 (fear). Early breadth was about 2:1 favoring advancers as only Energy declined amongst S&P sector ETFs following OPEC+ headlines. Technology, Materials, Industrials and Consumer Discretionary led the early gainers. By mid-day, though indices gave up much of the early performance and breadth tipped to slightly in favor of decliners as small caps went negative.

In data points of interest today, as the month comes to a close @bespokeinvest notes the Russell 2000 has declined 1.9% month-to-date, yet is up 8.4% since August 5^th. And in honor of PCE day, @charliebilello highlights US gasoline prices have moved lower to $3.35/gallon from $3.82 a year earlier, saying this should help push August headline CPI to about 2.6% from July’s 2.9% (would be lowest rate since early 2021). Of course, it should also be great for consumers looking to keep dollars in their wallets ahead of the holiday spending season. @charliebilello also notes the spread between Fed Funds and Core PCE remains at its widest since September 2007, marking the tightest monetary policy in 17 years. Lastly, on housing, @KobeissiLetter mentions the typical homebuyer’s down payment climbed 14.8% yr/yr in June to a new record ($67,500), more than double the pre-pandemic average of about $30,000.

Heading into the final hour of trading for the month, equities had fought off a dip and were back on the up-side. Breadth hovered just better than 1:1 as small caps continued to lag. IWM was flat versus SPY +0.4% and QQQ +0.73%. Energy (XLE, -0.43%) was back to being the lone negative sector group, while Consumer Discretionary (XLY, +0.78%) and Technology (XLK, +0.76%) paced the gainers. AMZN, TSLA WYNN and GRMN were consumer discretionary sector ETF standouts and INTC, WDC, HPE, AVGO and QCOM supported gains in technology. Growth outpaced value, but both were enjoying gains with the Russell 1000 growth +0.55% versus its Value counterpart +0.30%. Markets accelerated higher into the close and now we get a long weekend, but September awaits.

• US Personal Spending rose 0.5% mo/mo in line with expectations and above the 0.3% previous.
• US Core PCE Price Index rises 0.2% mo/mo in line with expectations and previous.
• US Supercore PCE (ex. Food, energy, housing) +0.1%.
• US Core PCE Price Index rises 2.6% yr/yr versus 2.7% expected and 2.6% previous.
• Chicago PMI 46.1 versus 44.8 expected and 45.3 previous.
• University of Michigan Sentiment (Final) 67.9 versus expected 68.1 and previous 67.8.
• University of Michigan surveys of consumers 1-year inflation outlook final Aug 2.8% vs prelim 2.9% and final July 2.9%.
• University of Michigan surveys of consumers 5-year inflation outlook final Aug 3.0% vs prelim 3.0% and final July 3.0%.

• October WTI crude futures were flattish overnight but slid following OPEC+ headlines indicating members are likely to proceed with planned gradual production increases from October. The current schedule calls for an output boost of 180,000 bpd in October and is expected to remain in place following the loss of Libyan output. It would appear yesterday was an anomaly and we are back to China demand concerns and general excess-supply fears creating a significant overhang on the market. As such, crude finished near the lows -$2.36/bbl, or -3.11%, at $73.55. Brent similarly slid $1.14/bbl, or -1.43%, at $78.80.

• In Apparel Retail: ANF Rebounds modestly for 2nd day after weak earnings selloff on Wednesday; Citigroup upgraded to a Buy rating this morning.

• In Leisure: LESL shares rise sharply after 2 insiders bought stock on 8/29; they are the 1st insider buys in 12 months with Leslie’s shares -52% over that timeframe

• In Energy: TALO Shares declined after the company announced CEO Tim Duncan had unexpectedly stepped down effective 8/29 & a CEO search has begun. EE Shares of Excelerate Energy fell after being downgraded to Underweight by Wells Fargo. EQNR Equinor ASA announced it will downsize its renewables unit and is beginning discussions with unions regarding employees at the division.
• In Green Energy: JKS moved higher after an initial pre-market decline following Q2 earnings: EPS $0.29 vs est $0.17 and revs $$3.31B vs est $3.91B; Gross margin 11.1% vs. 15.6% y/y, EST 11.8% (2 ESTs); Solar module shipments 23,822 mw, +34% y/y; reported repurchasing $134.5M worth of ADS. GEV GE Vernova states that analysis indicates that the causes of recent turbine blade failures at US and UK offshore wind farms are unrelated.
• In Metals: HBM Hudbay announced that it received aquifer protection permit for its Copper World project from the Arizona Department of Environmental Quality.

• BBIO moves higher the ALNY news as they have a competing drug also trialing.
• NCNA NuCana’s stock loses 50% of its value on colorectal combo therapy trial setback, ends mid-stage study after disappointing data.
• EBS Shares (which were +19% in the pre-market) turned negative mid-morning as the initial euphoria on Emergent Bio’s FDA green light for their Mpox vaccine faded.
• PGNY Shares of the fertility solutions company rose after candidate Trump’s pledge to have health insurance cover IVF procedures yesterday.
• BTSG Shares moved a tad lower after The Capital Forum published a report for their subscribers on the health services company: BrightSpring Health: “State Inspections of Group Homes Reveal Pattern of Serious Regulatory Violations, Including Client Abuse, Neglect, and Poor Medical Care.”

• CRWD A CrowdStrike VP is to testify next month before a U.S. house panel on its outage per a committee spokesperson.
• MSFT OpenAI is considering changes to its corporate structure amid latest funding talks and becoming more investor friendly and removing existing cap on investor profits per FT.
• MSFT Blizzard unit posting “hints at mysterious new RPG and FPS game. As Diablo 4 Season 5 rolls on and The War Within hits WoW, a posting from a Blizzard executive hints at a mystery new RPG and FPS game,” per PCGames.