US index futures advanced in pre-market trading on Tuesday,
extending the positive momentum from the previous day. This came in
response to optimistic comments about interest rates in the U.S.,
contributing to improved investor sentiment.
At 06:53 AM, Dow Jones (DOWI:DJI) futures rose by 79 points, or
0.23%. S&P 500 futures increased by 0.22%, and Nasdaq-100
futures rose by 31%. The yield on 10-year Treasury bonds was at
4.682%.
In the commodities market, West Texas Intermediate crude oil for
November fell by 0.57% to $85.89 per barrel. Brent crude oil for
December declined by 0.48% to near $87.75 per barrel. Iron ore with
a 62% concentration, traded on the Dalian exchange, fell by 1.74%
to $112.31 per ton.
The conflict between the terrorist group Hamas and Israel raises
concerns, creating uncertainty in the markets. There are fears of a
potential geopolitical escalation and impacts on the commodities
market, especially in the price of Brent crude oil. Investors are
concerned about a destabilization in the oil supply if Iran becomes
involved and closes the Strait of Hormuz, through which a
significant portion of global oil production passes. Additionally,
the conflict has led to a search for safe-haven assets, such as
gold and the U.S. dollar, which could harm developing
economies.
On the agenda, the IMF and World Bank meetings in Morocco stand
out, featuring speeches by central bank presidents, including
Christine Lagarde of the European Central Bank (ECB). The IMF has
also released a report warning of persistent inflation and the need
for more restrictive monetary policies, as well as weaker global
growth in 2024.
In Asia, markets closed with mixed directions. In Japan, the
current account balance in August fell below projections due to
reduced global demand for the country’s products, impacted by
inflation. In China, despite expectations of new stimuli, the
market did not sustain positive territory. The country is
considering issuing additional sovereign debt to finance
infrastructure spending. Furthermore, real estate developer Country
Garden indicated the possibility of default and hired consultants
due to declining sales. In the corporate sphere, another executive,
He Jinbi, founder of Maike Metals, was detained by police due to
creditor actions, following the case of Hui Ka Yan, founder of
Evergrande.
On Tuesday’s U.S. economic agenda, investors are awaiting a
speech by Atlanta Fed President Raphael Bostic at 9:30 AM, followed
by Fed Governor Christopher Waller at 1:30 PM. Neel Kashkari,
President of the Minneapolis Fed, will speak at 3:00 PM, and San
Francisco Fed President Mary Daly will address the audience at 6:00
PM.
At Monday’s close, the Dow Jones gained 197.07 points or 0.59%
at 33,604.65. The S&P 500 finished up 27.16 points or
0.63% to 4,335.66, while the Nasdaq Composite ended with a gain of
52.90 points or 0.39% to 13,484.24. It was a day of ups and
downs, and US markets headed towards a positive close, thanks to
more conciliatory statements from Federal Reserve leaders. Fed
Vice Chairman Philip Jefferson recommended a cautious approach to
monetary policy. On the other hand, L. Logan, leader of the
Dallas Fed, opined that an increase in long-term interest rates
could reduce the need for future rate hikes by the
FOMC. Notably, the price of Brent registered an increase of
over 4% on the day.
On Tuesday’s corporate earnings front, investors will be
watching reports from Pepsico (NASDAQ:PEP), Neogen (NASDAQ:NEOG),
AZZ (NYSE:AZZ) and E2Open (NYSE:ETWO).
Wall Street Corporate Highlights for Today
Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL)
– The EU is investigating whether Microsoft’s Bing, Edge and
Microsoft Advertising as well as Apple’s iMessage must follow the
new Digital Markets Act (DMA) technology rules. The European
Commission questioned users and competitors about the importance of
these services in relation to competitors and their
ecosystems. The investigation is expected to be completed
within five months.
Nvidia (NASDAQ:NVDA) – Nvidia shares have
faced pressure due to news about OpenAI exploring manufacturing its
own AI chips, threatening Nvidia as a supplier. However,
Nvidia remains optimistic, expecting to maintain its leadership in
the AI GPU market.
Arm Holdings (NASDAQ:ARM) – Arm Holdings
has received positive reviews from Wall Street analysts,
highlighting its leadership in smartphone chips and potential in
data centers. This followed the post-IPO quiet period when
banks underwrote Arm’s initial public offering. Analysts
expressed confidence in increased revenue through royalties and
expansion in markets such as cloud and automotive. While some
brokerages were cautious due to uncertainty in the smartphone
market, most analysis was bullish, with target prices in the range
of $57 to $85. SoftBank Group, owner of Arm, expects to maintain
its majority stake in company.
Unity Software (NYSE:U) – Video game
software maker Unity has announced the immediate retirement of John
Riccitiello as CEO. James Whitehurst has been named interim
CEO, joining from IBM (NYSE:IBM)
following its acquisition of Red Hat, where he served as president
and CEO from 2008 to 2020. Roelof Botha has been named
president.
PagerDuty (NYSE:PD) – PagerDuty, a company
specializing in incident management software, announced its
intention to issue $350 million in convertible senior notes.
ParaZero Technologies (NASDAQ:PRZO) –
ParaZero Technologies shares rose in Tuesday’s pre-market trading,
following a 133% gain on Monday, after its drone manufacturing
partner received approval in Australia to operate drones in densely
populated areas.
Walt Disney (NYSE:DIS) – Activist investor
Nelson Peltz plans a new challenge to Walt Disney’s board less than
10 months after plans to respond to his criticism. With Disney
shares falling 30% since then, Peltz, an 82-year-old billionaire,
could seek multiple board seats, including one for
himself. Peltz’s Trian Fund Management is one of Disney’s
biggest investors, owning about $2.5 billion in the company’s
shares. If Disney rejects the request, Trian could nominate
director candidates, paving the way for shareholders to vote.
Best Buy (NYSE:BBY) – Best Buy is
expanding its presence in healthcare by selling the Dexcom G7
prescription medical device, which monitors glucose
levels. The company plans to expand its glucose monitoring
product offering and enter other areas of healthcare. The
initiative is part of Best Buy’s efforts to increase its long-term
profitability.
Ventyx Biosciences (NASDAQ:VTYX) – Pivotal
results from Ventyx Biosciences’ VTX002 clinical trial in patients
with moderately to severely active ulcerative colitis were at the
low end of the company’s guidance.
General
Motors (NYSE:GM), Stellantis (NYSE:STLA), Ford
Motor (NYSE:F) – Canada’s Unifor union announced
strikes at three General Motors facilities after negotiations to
improve wages and pensions failed before the deadline. The
strike affects locations in Oshawa, St. Catharines and Woodstock,
increasing unrest in the U.S. and Canadian auto industry. GM
expressed disappointment and will continue
negotiations. Stellantis said Monday it laid off 570 workers,
and General Motors cut nearly 200 employees due to the United Auto
Workers strike. Ford also laid off another 70 workers in
Michigan, bringing the total to 1,865 layoffs since the strike
began.
Tesla (NASDAQ:TSLA) – Employees at Tesla’s
factory in Brandenburg, Germany, are joining the IG Metall union
over health, safety and overwork concerns. The union alleges
understaffing and inadequate safety measures, leading to frequent
accidents and a high rate of illness among workers. IG Metall
reported a sharp increase in Tesla membership.
Rivian Automotive (NASDAQ:RIVN) – Rivian
Automotive saw a 3.3% increase in Tuesday pre-market trading to
$19.40 after receiving an upgrade to “Buy” from “Neutral” along
with a target price of $24 per share. The electric truck
maker’s shares fell significantly last week due to the announcement
of a $1.5 billion convertible note offering to raise additional
funds.
Northrop
Grumman (NYSE:NOC), Lockheed
Martin (NYSE:LMT) – In the wake of Hamas’ attack on
Israel, defense stocks performed remarkably well on
Monday. Northrop Grumman posted an 11% increase in regular
trading on Monday, with an additional 0.99% in pre-market trading
on Tuesday, while Lockheed Martin, which gained 8.9% on the same
day , had an increase of 0.88% in pre-market negotiations.
Chevron (NYSE:CVX) – For security reasons
amid the conflict with Hamas, Israel requested that Chevron close a
natural gas platform in the Eastern Mediterranean Sea. Chevron
operates two platforms in the Tamar and Leviathan gas fields in
Israel. Shares rose 3.1% on Monday, leading the Dow Jones
Industrial Average.
Pioneer Natural
Resources (NYSE:PXD), Exxon
Mobil (NYSE:XOM) – Exxon Mobil’s possible acquisition
of Pioneer Natural Resources could further restrict production
growth in the Permian oil field, affecting companies and pipeline
suppliers. This could also allow the company to negotiate
favorable pricing due to increased work volume. The White
House would have difficulty preventing such a takeover.
AO Smith (NYSE:AOS) – AO Smith
Corp. announced on Monday a 7% increase in its quarterly cash
dividend, bringing it to 32 cents per share. The company
justified the increase as a reflection of confidence in the
stability of replacement demand in its business and its commitment
to returning capital to shareholders.
Truist Financial (NYSE:TFC) – Truist
Financial Corp is in discussions to sell its insurance brokerage
unit to private equity firm Stone Point for approximately $10
billion, according to Semafor. The sale follows the sale of a
20% stake in Truist’s insurance business to Stone Point in
February. The deal is still in progress and may depend on
Stone Point’s ability to obtain adequate financing.
JPMorgan (NYSE:JPM), Apple (NASDAQ:AAPL)
– JP Morgan lowered its confidence in demand for Apple’s iPhone 15
Pro and 15 Pro Max, citing shorter delivery times suggest less
robust demand.
Morgan Stanley (NYSE:MS) – Morgan Stanley
has agreed to pay a $20 million option mentioned in the commodities
fraud case involving Neil Phillips, co-founder of Glen Point
Capital, who faces trial in New York. The bank was involved as
an options seller in the case, but was not directly
accused. The trial could question the legality of so-called
“barrier chases” in foreign exchange markets, as Phillips alleges
authorities are trying to criminalize normal trading
practices. The trial begins on October 16th.
Citigroup (NYSE:C) – Investors are
reducing their bets on the continued decline in U.S. stock futures
as the pace of flows slows, according to Citigroup
strategists. While positioning is still moderately bearish on
S&P 500 and Nasdaq 100 futures, it is unclear whether this
slowdown in momentum will mark the end of the sell-off. The
S&P 500 rebounded in October after two months of declines, but
10-year bond yields have fallen recently. The minutes of the
last Fed meeting and US inflation data are on investors’ radar.
Deutsche Bank (NYSE:DB) – Spanish securities
regulator CNMV is scrutinizing Deutsche Bank’s sales of currency
derivatives to small businesses in Spain, intensifying its
investigation into the matter. The analysis focuses on
compliance with rules that prohibit the marketing of complex
derivatives to inexperienced buyers. The European Central Bank
also expressed concern about Deutsche Bank’s sales in the
country. The bank has stopped selling these products and is
trying to reduce its existing portfolio, but this process is taking
longer than expected. Additionally, Deutsche Bank formed a
panel with internal executives and external organizations, such as
the United Nations and the World Wide Fund for Nature, to assess
nature-related risks and develop financial products linked to
biodiversity. The bank seeks to better understand these risks,
integrate them into its processes and offer sustainable products to
global clients, while global biodiversity faces
challenges. Deutsche Bank is also considering investing in
nature-related startups and participating in debt-for-natural
resource swaps, aiming for financial and environmental
sustainability.
Imax Corp (NYSE:IMAX) – Benchmark raised
its price target for Imax Corp. from US$23 to US$24, due to
better than expected box office performance. Global box office
in the third quarter surpassed estimates, reaching 141% of
pre-pandemic performance. China is seen as a market with
recovery potential by 2024, and national and international markets
are expected to equal or exceed pre-pandemic values. Imax had
success with the film “Oppenheimer” and had the best July at the
box office ever. Imax shares fell 1.9% on Monday.
Carnival (NYSE:CCL), Royal
Caribbean (NYSE:RCL), Norwegian
Cruise Line Holdings (NYSE:NCLH) – Of the three major
cruise operators, Carnival Corp. is the least exposed to
cruises in Israel, but its shares are taking the most significant
hit. Wells Fargo analyst Daniel Politzer notes that Hamas’
surprise attack on Israel over the weekend had the biggest impact
on the Royal Caribbean Group, followed by Norwegian Cruise Line
Holdings and then Carnival. He predicts pressure on prices in
the fourth and first quarter due to cancellations and modifications
of cruise itineraries to Israel.
Hyatt Hotels (NYSE:H) – Hyatt Hotels will
replace National Instruments Corp in the S&P MidCap 400 before
trading opens on Thursday, after Emerson Electric Co. agreed to
acquire National Instruments.
Gamer Pakistan (NASDAQ:GPAK) – Gamer
Pakistan, the first Pakistani esports company listed on the Nasdaq,
saw its shares debut higher before falling. The company raised
$6.8 million in its IPO and is looking to develop collegiate and
professional sporting events in Pakistan, with plans for global
expansion. The company sold 1.7 million shares at a price of
$4 each. With 25.6 million shares outstanding, the company was
valued at $102.4 million at the IPO. The shares opened at
US$4.20, exceeding the IPO price by 5%, reaching a valuation of
around US$107.4 million. After trading at $4.39, they fell
29%.
PepsiCo (NASDAQ:PEP) – PepsiCo exceeded
analysts’ expectations by reporting quarterly earnings and
revenue. Adjusted EPS was $2.25 compared to the $2.15
expected, and revenue came in at $23.45 billion compared to the
$23.39 billion forecast. Additionally, Pepsi raised its
full-year profit outlook, projecting 13% growth from its previous
forecast of 12%. However, the company’s sales volume continued
to fall due to price increases implemented to combat
inflation. The company’s shares rose 2.5% in pre-market
trading.
AO Smith (NYSE:AOS)
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