Market Performance
The S&P 500 set a new record high today, driven by strong performance in semiconductor stocks following Micron's (MU) better-than-expected earnings report and guidance. Additionally, positive news from China regarding potential policy stimulus and a reassuring initial jobless claims report contributed to the market's gains.While the S&P 500 reached a new high, other indices also saw gains due to broad-based buying interest. This optimism is grounded in the belief that global growth prospects will improve as the Federal Reserve, European Central Bank, and People's Bank of China move towards more accommodative policies. Other central banks, like the Swiss National Bank and Mexico's central bank, also cut their key policy rates, suggesting more cuts may follow.Sector Performance
- Materials Sector: Outperformed with a 2.0% increase. - Copper Futures: Rose 3.6% to $4.65/lb. - Philadelphia Semiconductor Index: Jumped 3.5%. - Caterpillar (CAT): Reached an all-time high, up 3.4% to $391.16. Shares of CAT are up 27.4% from their August 5 low.Despite the positive economic outlook, oil prices continued to decline as OPEC+ confirmed it would proceed with planned oil output increases in December. WTI crude futures fell 3.0% to $67.68/bbl, negatively impacting the energy sector, which was the weakest area today with a 2.0% decline.Industrials and Consumer Discretionary
Caterpillar's performance also supported the industrials sector, which gained 0.5%. Southwest Airlines (LUV, Financial) saw a significant increase of 5.0% to $29.82 after raising its Q3 RASM guidance and announcing a $2.5 billion share repurchase program.In the consumer discretionary sector, there was notable strength, but it was not evident at the surface level due to laggards like Amazon.com (AMZN) and Tesla (TSLA). CarMax (KMX) made a notable move, rising 5.0% to $78.18 after its earnings report.Treasury Yields
Treasury yields increased following today's economic data. The 2-year note yield settled at 3.62%, up from 3.53%, while the 10-year note yield settled at 3.79%, up from 3.75%.Index Performance
- Nasdaq Composite: +21.2% - S&P 500: +20.5% - S&P Midcap 400: +12.0% - Dow Jones Industrial Average: +11.9% - Russell 2000: +9.1%Economic Data Review
- Initial Jobless Claims: Decreased by 4,000 to 218,000 (consensus 224,000). - Continuing Jobless Claims: Increased by 13,000 to 1.834 million. - Durable Goods Orders: Flat month-over-month in August (consensus -2.9%). Excluding transportation, orders were up 0.5%. - Q2 GDP: Third estimate remained at 3.0% (consensus 3.0%). - Pending Home Sales: Increased 0.6% in August (consensus 1.0%) versus -5.5% in July.Upcoming Economic Data
- 08:30 ET: August Personal Income (consensus 0.4%), Personal Spending (consensus 0.3%), PCE Price Index (consensus 0.1%), Core PCE Price Index (consensus 0.2%). - 08:30 ET: August Adv. Intl. Trade in Goods (prior -$102.7 billion), Adv. Retail Inventories (prior 0.8%), Adv. Wholesale Inventories (prior 0.3%). - 10:00 ET: Final September University of Michigan Consumer Sentiment (consensus 69.0).Overseas Markets
- Europe: DAX +1.6%, FTSE +0.2%, CAC +2.3% - Asia: Nikkei +2.4%, Hang Seng +4.2%, Shanghai +3.6%Commodities
- Crude Oil: -2.10 @ 67.68 - Natural Gas: -0.06 @ 2.75 - Gold: +8.60 @ 2694.40 - Silver: +0.26 @ 32.36 - Copper: +0.16 @ 4.65MU, CAT, LUV, AMZN, TSLA, KMX
Today's News
Accenture (ACN, Financial) received an upgrade from Piper Sandler to Overweight after surpassing its fiscal fourth-quarter results expectations and issuing a Q1 revenue outlook that topped estimates. The firm noted that generative AI new bookings reached $1B for the quarter, contributing to total new bookings of $20.1B. Piper Sandler cited robust bookings and increased hiring as key factors for the upgrade, indicating a bullish outlook for FY25. Shares in Accenture rose 4.7% following the news.
Visa (V, Financial) authorized a $1.5B deposit into its litigation escrow account, which is part of its U.S. retrospective responsibility plan. This move will result in the dilution of its class B-1 and B-2 common stock through downward adjustments to their conversion rates to class A common stock. Visa stock saw a slight increase of 0.2% in after-hours trading following the announcement.
Costco (COST, Financial) reported Q4 GAAP EPS of $5.29, beating estimates by $0.23, although its revenue of $79.69B missed expectations by $340M. Despite the revenue miss, the earnings beat highlights Costco's strong operational efficiency. The retailer continues to be a dominant player in the retail food sector, although some analysts express concerns about its long-term growth potential.
Southwest Airlines (LUV, Financial) announced several strategic updates during its Investor Day, including a $2.5 billion buyback plan and new global airline partnerships set to launch in 2025. The airline also plans to introduce vacation packages and redeye flights, along with an assigned seating model to broaden consumer appeal. These updates contributed to a positive market response.
Super Micro Computer (SMCI, Financial) is under investigation by the U.S. Justice Department following allegations of accounting violations by a former employee. The company's stock fell about 12% on Thursday as the probe remains in its early stages. This development follows a report by short-seller Hindenburg Research, which had also raised concerns about the company's practices.
David Tepper (Trades, Portfolio), founder of Appaloosa Management, expressed a bullish outlook on Chinese markets following significant stimulus measures announced by the Chinese government. Tepper stated he is "all-in on China," highlighting attractive valuations and growth prospects for major Chinese stocks.
Johnson & Johnson (JNJ, Financial) announced the closure of its cardiovascular and metabolic drug unit as part of a broader restructuring of its pharmaceutical division. The move primarily impacts sales, marketing, and medical affairs personnel. This decision follows last year's wind-down of its infectious disease and vaccine operations.
David Tepper (Trades, Portfolio) also mentioned he is cautious about Nvidia (NVDA, Financial), having sold a substantial portion of his shares. Tepper questioned whether the chipmaker has enough growth potential to justify its current valuation, despite its strong performance year-to-date.
SM Energy (SM, Financial) declared a quarterly dividend of $0.20 per share, an 11.1% increase from the prior dividend. The company reported strong non-GAAP EPS of $1.85 and revenue of $634.56M, both beating estimates. This reflects the company's robust operational performance and commitment to returning value to shareholders.
Postal Realty Trust (PSTL, Financial) provided updates on its lease negotiations with the United States Postal Service, securing new rents on expired 2023 leases and the majority of 2024 leases. These agreements include annual rent escalations, contributing to a stable revenue outlook for the trust.
Petrobras (PBR, Financial) is exploring partnerships with major oil companies like Exxon Mobil (XOM) and Shell (SHEL) for deepwater exploration projects in Africa. The company aims to leverage its expertise in developing deepwater wells to capitalize on these opportunities.
Apple (AAPL, Financial) is reportedly developing a new product that combines the functionalities of an iPad, Apple TV, and HomePod. Codenamed J490, the device will feature a square screen and be powered by the A18 chip. It is expected to launch in the spring of 2025.
Google (GOOG, Financial) announced a $3.3B investment in South Carolina to expand its data center and cloud infrastructure. This investment aims to create local jobs and support economic activity, further strengthening Google's cloud capabilities.
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