Early Look

Monday, September 23, 2024

After another stock market advance last week, propelled by an aggressive 50-bps rate cut, U.S. futures are again looking higher. The Dow Jones Industrial Average closed modestly higher Friday to notch a fresh record high, while for the week, the Dow rose 1.6%, the S&P 500 climbed 1.4% and the technology-heavy Nasdaq advanced 1.5%. Major benchmarks booked gains in the wake of the Federal Reserve’s large interest-rate cut on Wednesday as they look to support the U.S. economy, particularly weaker jobs data. This week markets look to several Fed speakers for fresh insight into the pace and scope of further easing. Geopolitical tensions heated up this weekend with Israel strikes against Lebanon. Lots of news in the semiconductor sector this weekend as Intel (INTC) shares edge higher after reports late Friday that Qualcomm (QCOM) approached the chipmaker to discuss a potential acquisition of the company. Separately, Apollo Global Management (APO) has also offered to make a multibillion-dollar investment in Intel according to reports. Also, Truist downgraded the semiconductor sector to neutral from constructive.

In Asian markets, The Nikkei Index and Shanghai Index were closed for holiday, while the Hang Seng Index dipped -11 points to 18,247. In Europe, the German DAX is up 93 points to 18,813, while the FTSE 100 is flattish around 8,229. Bitcoin prices +1.25% to $63,600, hitting one-month highs and sustaining its rally after the Federal Reserve’s super-sized rate cut last week, while the Yen extended its decline in markets thinned by a Japanese holiday. Gold touched a record high ahead of economic data this week, including the personal consumption expenditures gauge and jobless claims. There was weaker PMI manufacturing data in the Eurozone and Germany overnight. China announced plans for a rare briefing on the economy just as it cut one of its short-term policy rates, fueling speculation officials are preparing to ramp up efforts to revive growth, Bloomberg reports.

• The Dow Jones Industrial Average rose 38.17 points, or 0.09%, to 42,063.36.
• The Nasdaq Composite dropped -65.66 points, or 0.36%, to 17,948.32.
• The Russell 2000 Index declined -24.82 points, or 1.10% to 2,227.89.

• 8:30 AM ET                  National Activity index for August
• 9:45 AM ET S&P Global Manufacturing PMI, Sept flash
• 9:45 AM ET S&P Global Services PMI, Sept flash
• 9:45 AM ET S&P Global Composite, Sept flash
• 10:15 AM ET                Fed’s Goolsbee Speaks in Fireside Chat

• Earnings After the Close: AIR PEV

• Deutsche Bank 32nd Annual Leveraged Finance Conference, 9/23-9/25, in Scottsdale, AZ
• RBC Capital Pharmaceutical CDMO & Bioprocessing Conference, 9/23-9/24

• Euro zone business activity contracted sharply and unexpectedly this month as HCOB’s preliminary composite euro zone Purchasing Managers’ Index (PMI), compiled by S&P Global, sank to 48.9 this month from August’s 51.0, below the 50 mark that separates growth from contraction for the first time since February.
• German business activity contracted in September at its sharpest pace in seven months, as the HCOB German flash composite Purchasing Managers’ Index, compiled by S&P Global, fell to 47.2 from 48.4 in August, below the 48.2 forecast. The services sector index eased in September to 50.6 from 51.2 in August.

• For luxury retailers including LVMH (LVMUY) and Richemont (CFRUY), Barron’s noted sky-high prices for luxury retail products have turned off many customers, even the loyal and wealthy. Still, there could be a rebound for some luxury goods brands. The article noted jewelry is “timeless, with the main Cartier line offerings.
• Ulta Beauty (ULTA) downgraded to Hold from Buy at TD Cowen.

• Uranium Energy (UEC) said it agreed to the $175 million acquisition of Rio Tinto’s (RIO) assets in Wyoming, U.S., which include its fully licensed Sweetwater Plant and a portfolio of uranium mining projects.

• S&P Global (SPGI) downgraded to Market Perform from Outperform and Moody’s (MCO) downgraded to Underperform from Market Perform at Raymond James in credit rating agencies.

• Ideaya Biosciences (IDYA) has reported positive interim Phase 2 clinical trial data for darovasertib in neoadjuvant uveal melanoma, or UM, as well as a successful Type C meeting with the FDA on registrational trial design for regulatory approval in neoadjuvant uveal melanoma. The data demonstrated “compelling” preliminary clinical efficacy in the neoadjuvant UM setting, with 49% of patients demonstrating greater than 30% tumor shrinkage, and 61% eye preservation rate for enucleation patients. Enucleation refers to the clean removal of organs or tumors.

• Adobe Inc. (ADBE) mentioned positively in Barron’s noting shares slipped after one of its forecast metrics during third-quarter earnings disappointed investors; but says that may be a buying opportunity for the software company as revenue continues to grow off its new AI capabilities.
• Alibaba Group Holding (BABA)’s cloud computing services unit and semiconductor powerhouse Nvidia (NVDA) are collaborating on an artificial intelligence initiative that will enable Chinese automakers to advance the autonomous driving experience for smart vehicle owners.
• Ciena (CIEN) was upgraded to Buy at Citigroup and raised tgt to $68 from $44 saying the extended overhang from excess inventory and weak demand in telco/cable is gradually lifting and will yield a return to M-HSD growth in FY25, in its view.
• News’s Corp. (NWSA) REA Group, the Australian property listings site, has put forward a third offer to acquire its British rival Rightmove in an improved bid that values the U.K.’s top online real estate agent at £6.1 billion ($8.1 billion).
• Truist downgraded the semiconductor industry to Neutral from Constructive saying industry revenue growth has peaked and is entering a slow fade, while stock investment returns have been robust cycle-to-date, making significant additional returns from here more challenging. The firm downgraded shares of ADI, MCHP in conjunction with call.