Morning Preview: October 07, 2024

Early Look
Monday, October 7, 2024
Futures |
Up/Down |
% |
Last |
Dow |
-174.00 |
0.41% |
42,472 |
S&P 500 |
-27.25 |
0.49% |
5,772 |
Nasdaq |
-129.50 |
0.64% |
20,097 |
After surging late Friday to close out the day at the highs and turn positive on the week, U.S. stock futures are looking lower to start the new week as Treasury yields rise (10-yr above 4%) and the CBOE Volatility index (VIX) spikes. Last week, the S&P 500 gained 0.23%, the Nasdaq climbed 0.10%, and the Dow climbed 0.09%, erasing weekly losses in the final 30-minutes of trading, ending at the highs. The jump late Friday came after strong monthly jobs data earlier in the session (nonfarm payrolls rose +254K jobs and unemployment fell to 4.1%), easing recession fears, however, traders slashed their bets on the pace of future Federal Reserve interest-rate cuts after September US employment data blew past estimates and signaled a robust hiring trend. The chance of a half-point rate cut in November was priced out, with the contract showing 25 basis points of easing now expected. The Dow Jones Industrial Average registered a record closing high at 42,352.75. The S&P 500 energy index was up 6.87% for week, its biggest weekly% gain since October 2022 as WTI crude oil prices gained around 10% on the week on Middle East escalating tensions. The 10-year yield was up about 2 basis points to 4%, its highest since early August and a big turnaround from its 2024 low of around 3.58% touched a little more than a month ago. The yield on the 2-year Treasury was up over 6 basis points to 3.99%. Reminder today marked the first anniversary of the devastating Hamas attack on Israel that triggered a war which has sparked protest worldwide and risks igniting a far wider conflict in the Middle East. In Asian markets, The Nikkei Index jumped 697 points to 39,332, the Shanghai Index remained closed for its Golden Week holiday (market will resume trading tomorrow morning with optimism running high that Beijing’s stimulus measures will give shares another leg up) and the Hang Seng Index gained 362 points to 23,099. In Europe, the German DAX is down -38 points to 19,082, while the FTSE 100 is up about 30 points to 8,312.
Market Closing Prices Yesterday
- The S&P 500 Index gained 51.13 points, or 0.90%, to 5,751.07.
- The Dow Jones Industrial Average rose 219.37 points, or 0.81%, to 42,352.75.
- The Nasdaq Composite surged 219.37 points, or 1.22%, to 18,137.85.
- The Russell 2000 Index advanced 32.65 points, or 1.50% to 2,212.80.
Economic Calendar for Today
- 10:00 AM ET Employment Trends for September
- 1:50 PM ET Fed’s Kashkari Participates in Q&A
- 3:00 PM ET Consumer Credit for August
- 6:00 PM ET Fed’s Bostic Moderates Conversation with Steve Koonin
- 6:30 PM ET Fed’s Musalem Speaks on Economy, Policy
Earnings Calendar:
- Earnings Before the Open: none
- Earnings After the Close: NAPA
Other Key Events:
- Ad Week in new York, 10/7-10/10
- JP Morgan Software Forum, 10/7-10/9, in Napa
Macro |
Up/Down |
Last |
Nymex |
1.96 |
76.34 |
Brent |
1.79 |
79.84 |
Gold |
9.10 |
2,676.90 |
EUR/USD |
-0.0008 |
1.0986 |
JPY/USD |
-0.21 |
148.49 |
10-Year Note |
+0.025 |
4.006% |
World News
- Hurricane Milton is on track to hit Florida midweek, bringing more storm surge and flood warnings to weather-battered residents recovering from Hurricane Helene’s disastrous impact. Milton was a Category 1 storm late Sunday, with winds reaching about 85 mph, and located about 800 miles southwest of Tampa, Fla. It is expected to become a powerful Category 4 hurricane with winds exceeding 130 mph over the southern Gulf of Mexico.
Sector News Breakdown
Consumer
- Amazon.com (AMZN) downgraded to Equal Weight from Overweight at Wells Fargo and cut tgt to $183 from $225.
- Constellation Brands (STZ) downgraded to Neutral from Buy at Bank America and cut tgt to $255 from $300
- Wynn Resorts (WYNN) said it had been awarded the first commercial gaming operator’s license in the United Arab Emirates by the country’s General Commercial Gaming Regulatory Authority. The Las Vegas-based casino firm said it was developing a luxury resort at Wynn Al Marjan Island in Ras Al Khaimah.
- Vista Outdoor Inc. (VSTO), which split itself into ammunitions and outdoor goods businesses, agreed to sell both divisions for a total of about $3.4 billion. Vista will sell its outdoor goods unit Revelyst to Strategic Value Partners in an all-cash transaction at an enterprise value of about $1.13 billion.
Energy, Industrials and Materials
- Barnes Group Inc. (B) said it has entered into a definitive agreement to be acquired by funds managed by affiliates of Apollo Global Management, Inc. (APO) in an all-cash transaction that values Barnes at an enterprise value of approximately $3.6B; the agreement provides that Barnes shareholders will receive $47.50 per share in cash.
- Chevron (CVX) said it would sell its non-operated interest in the Athabasca Oil Sands project and its operated interest in Duvernay shale to Canadian Natural Resources (CNQ) for $6.5B; the all-cash transaction is expected to close during Q4.
- Activist investor Mantle Ridge has built a more than $1B stake in Air Products (APD) and plans to push for improvements at the industrial gas manufacturer, according to people familiar with the matter. Air Products had a market value of around $63B as of Friday https://tinyurl.com/5n7dh8wz
- BP Plc (BP) has abandoned a target to cut oil and gas output by 2030 as CEO Murray Auchincloss scales back the firm’s energy transition strategy to regain investor confidence – Reuters reported.
- Rio Tinto (RIO) expressed interest in acquiring U.S. lithium producer Arcadium (ALTM), the two companies confirmed in separate statements on Monday. No financial specifics were disclosed. Rio Tinto said that there is no certainty that any transaction will be agreed to. https://tinyurl.com/4ew7r2na
- 3M Co. (MMM): The US Judicial Panel on Multidistrict Litigation told 3M Co. again on Friday that litigation seeking to form a nationwide class of individuals with PFAS in their blood belongs in a federal district court.
Financials
- Comerica (CMA) downgraded to Underperform from Neutral at Bank America and cut tgt to $52 from $55 as believes the positive rate trade underpinning Comerica has run its course with shares now trading above the high-end of their historical trading range
Healthcare
- Activist investor Starboard Value has taken a roughly $1 billion stake in Pfizer (PFE) and wants the struggling drugmaker to make changes to turn its performance around, according to people familiar with the matter. Pfizer had a market value of about $162 billion as of Friday, the WSJ reported.
- Hims & Hers Health, Inc. (HIMS) will replace Vector Group Ltd (VGR) in the S&P SmallCap 600 effective prior to the opening of trading on Wednesday, October 9. JT Group is acquiring Vector Group in a deal expected to close soon pending final conditions.
Technology, Media & Telecom
- Google’s (GOOGL) grip on the nearly $300 billion search advertising business is loosening, according to the WSJ. For years, the tech giant has seemed invincible in this corner of the ad market, which is the foundation of its business. Now, rivals are beginning to eat into its lead, and new offerings—fueled by the rise of artificial intelligence and social video—threaten to reshape the landscape. – WSJ
- Mobileye (MBLY) downgraded to Underweight from Neutral at JPMorgan and cut tgt to $10 from $16.
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.