Closing Recap

Thursday, October 17, 2024

Following a super strong overnight/pre-market, stocks somehow managed to finish the day mixed. U.S. equity futures pushed higher overnight following better earnings and a stronger 2024 revenue growth forecast out of TSMC (with a reference to insane demand), offsetting yesterday’s ASML disappointment. AI and chip stocks rallied pre-market on the news and better jobless claims and retail sales data supported further early gains in the equities complex. Yields, gold and the Dollar also all rallied into the open as investors again re-evaluated positions on soft landing versus recession scenarios even as traders priced in less Fed easing. The implied October 2025 Fed Funds rate inched up to 3.413% from 3.375% prior to this morning’s economic releases. The buying party was quickly met by profit taking after the open, but equities still held modest gains into mid-morning. Early breadth favored decliners by about 3:2 on the back of small-cap underperformance. IWM lagged at -0.56% versus SPY +0.20% and QQQ +0.56%. Early S&P sector ETF outperformers were Technology, Energy, Financials and Materials, all in the green. Real Estate, Health Care and Consumer Staples led the remaining sectors lower.

In data today, the AAII weekly bull-bear spread contracted to 20.1 from 28.4 last week as bulls fell to 45.5% from 49% and bears rose to 25.4% from 20.6%. Also on sentiment, today’s Fear and Greed Index registered 70/100 (Greed) versus yesterday’s 69 (Greed), last week’s 69 (Greed) and last month’s 55 (Neutral). A year ago, the index was just a 39 (Fear). On inflation, @charlibilello notes US Core CPI has been above 3% for 41 straight months, marking the longest stretch of elevated inflation since the early 1990s. On sector performance, @DataTrekMB highlights large cap US industrials recent outperformance over the past three months and notes history back to 2000 shows the group tends to outperform several times during an economic cycle (often by at least 10 points during a year-long period) but that the last twelve months have only produced a 1.9 point outperformance in industrials. And on volatility, @DataTrekMB points out NVDA and AVGO are the only two big tech stocks with larger daily price moves this year versus their five-year averages. Doesn’t feel that way.

Heading into the final hour of trading, stocks held small gains following a quick roll and test of the unchanged line in SPY spuz on no news. Small caps continued to underperform with IWM -0.40% versus SPY +0.14% and QQQ +0.41%, leading to breadth remaining near 3:2 still favoring decliners. Technology (XLK, +0.80%), Energy (XLE, +0.53%) and Financials (XLF, +0.37%) remained leaders across S&P sector ETFs. Real Estate (XLRE, -0.89%), Health Care (XLV, -0.47%) and Consumer Staples (XLP, -0.35%) paced the decliners. Growth outperformed value with the Russell 1000 Growth +0.40% versus its Value counterpart -0.12%. IRDM, BX, EXPE and PSTG led on the growth side, while LCID, ELV, MOH and MAN were primary laggards in value.

• Continuing Claims versus of 1.867Mm roughly in-line with the estimate of 1.865Mm and prior 1.861Mm.
• Philly Fed Business Survey for October way better at 10.03 versus an estimate of 3.0 and prior 1.7.
• Retail Sales Mo/Mo for September slightly better at +0.4% versus estimates of +0.3% and prior +0.1%.
• Core Retail Sales Mo/Mo for September beats at +0.5% versus estimates of +0.1% and prior +0.1%.
• Industrial Production Mo/Mo slipped by -0.3% for September versus estimates of -0.2% and prior +0.8%.
• Capacity Utilization for September came in a bit light at 77.5% versus estimated 77.8% and prior 78%.
• Business Inventories Mo/Mo for August were in-line with estimates of +0.3% versus prior +0.4%.
• NAHB Housing Market Index for October beat slightly at 43 versus an estimated 41 and prior 41.

• December gold futures gained $16.20/oz, or +0.60%, to settle at $2,707.50 after hitting new all-time highs earlier in the session despite gains in yields and the US Dollar. Uncertainty ahead of US elections combined with consistent tensions and fear of escalation in the Middle East continue to support gold as a safe-haven asset. Technical indications also continue to favor buyers. Further, though economic data was stable this morning, investors continue to see Fed easing ahead. On a sentiment basis, today’s Gold Fear and Greed Index again registered Greed at 82/100 versus 61 (Greed) last week and 85 (Greed) last month.
• Despite ongoing conflicts and fear of escalation in the Middle East and an early boost from data showing a weekly inventory draw versus and expected build, November WTI crude futures needed a late recovery to break a four-day slide and finish the session with a gain. The final tally was +$0.28/bbl, or +0.40%, to settle at $70.67. Brent similarly gained $0.23/bbl, or +0.31%, to settle at $74.45. Better US economic data also provided support for the demand picture as investors once again may be tilting toward soft landing over recession….for now.

• U.S. Sept motor vehicle assembly rate fell to 10.82M units/yr from Aug 11.07M units/yr. GM, F, STLA

• Expedia (EXPE) were in the green all day following last night’s FT article which said that Uber (UBER) had considered an acquisition. CNBC’s David Faber later stated that the 2 companies were not in talks.
• Amazon (AMZN) teamsters’ drivers in California demand union recognition.
• Deere (DE) probed by US FTC over farm equipment repair practices – probes Deere in an antitrust, consumer protection inquiry.

• Nintendo (NTDOY) The Legend of Zelda: Echoes of Wisdom was the biggest selling boxed game in Japan for September, with over 200,000 copies sold.

• Gevo Inc (GEVO) shares were aloft all day after last night’s announcement that Gevo received a conditional commitment for a loan guarantee with disbursements totaling $1.46B from the U.S. Department of Energy.
• Nano Nuclear (NNE), NuScale Power (SMR), Oklo (OKLO) and other budding nuclear energy names saw profit taking following 2 days of gains after the Amazon nuke announcement.
• Centrus Energy (LEU) shares reacted higher after the company’s American Centrifuge Operating unit was selected to participate, along with 3 other companies, on a potential 10-year, $2.7B contract to procure uranium enrichment services to help establish a domestic supply chain of high-assay low-enriched uranium, or HALEU, used for deploying advanced nuclear reactors.
• BP Plc (BP) is considering selling a minority stake in its offshore wind business, according to four sources with knowledge of the matter, the latest effort by CEO Murray Auchincloss to scale back the energy company’s focus on renewables per Reuters.

• Merchants Bancorp (MBIN) was the subject of a “short report” by Ningi Research.
• Robinhood Markets (HOOD) shares were slightly lowered following last night’s CBOE options news and CEO Vlad Tenev round of financial interviews this morning.
• Webster Finl Corp (WBS) shares rallied after pre-market earnings 1c EPS miss and revs beat

• Globe Life (GL) reported extortion attempt to and is cooperating with federal law enforcement.
• Manpower Group (MAN) shares fell after a pre-market report which showed that Manpower matched both EPS & revs estimates. It was sharply lowered Q4 guidance that spooked traders.
• Allstate (ALL) announced September catastrophe losses of $889M and total catastrophe losses for Q3 were $1.70B or $1.35B, after-tax including Hurricane Helene but not Milton.

• AbbVie (ABBV) announced that the U.S. FDA Approves VYALEV™ (foscarbidopa and foslevodopa) for Adults Living with Advanced Parkinson’s Disease.
• Amylyx Pharmaceuticals (AMLX) shares were lifted after announcing positive topline results from Phase 2 Helios clinical trial demonstrating sustained improvements with amx0035 in people living with wolfram syndrome.
• Avadel Pharmaceuticals Plc (AVDL) announced FDA approval of lumryz™ and said it was granted orphan drug exclusivity through October 16, 2031.

• After Germany’s Sartorius AG (SOAGY) confirmed its FY outlook, American science serving companies such as Danaher (DHR), Thermo Fisher (TMO) and Agilent (A) moved higher, recouping losses incurred yesterday after Tecan, another European company in the same sector, dragged them lower with a guidance cut.
• Baxter (BAX) said that more than 2,500 North Cove employees are returning to work at levels nearing pre-hurricane staffing across multiple round-the-clock shifts after the hurricane exceeded expectations.

• Universal Stainless (USAP) signs a definitive agreement to be acquired by Aperam for $45.00 per share in an all-cash transaction.
• DRDGOLD Ltd (DRD) shares advanced after the South African miner gave a bullish operating update.

• Google (GOOGL) said Prabhakar Raghavan, the most senior Google executive overseeing its search engine and ads products, is leaving the role after a four-year tenure leading the company’s core money-making business.
• Iridium (IRDM) shares saw strength following a double earnings beat this morning and positive forward guidance.

• Roblox Corp (RBLX) was the target of a follow-up “short report” from the The BearCave this morning.
• Zuora Inc. (ZUO) shares traded higher following an announcement the cloud company would be acquired by Silver Lake and GIC.
• OpenAi and Bain expand AI pact to sell ChatGPT to businesses

• ASML Hldg (ASML) regained some lost ground since Tuesday’s surprise earnings/guidance report. Susquehanna Group defended the chipmaker in a note reiterating their Positive rating.