October 10th Market Overview

October 10th Market Overview (no fluff)

Author

J.L. Bernstein
October 10, 2024

In partnership with

Happy Thursday everyone.

The east coasters of Florida got through this storm easily but I cannot say the same for the fellow west coasters. I have never been in a hurricane with less rain…it was almost all wind - no rain from where I am!

Today we got CPI numbers that came in hot, Delta's earnings miss, and anticipation building for Tesla and AMD's big reveals.

Lets dig in…

Executive Summary

  • CPI data came in hotter than expected at 0.2% month-over-month and 2.4% year-over-year, likely cementing a 25bps rate hike in November

  • $DAL missed earnings expectations, impacting the broader airline sector

  • Tech giants $AMD and $TSLA are hosting major events today, potentially moving markets

  • Hurricane Milton’s impact was less severe than feared, boosting insurance stocks like $UNM

Market Overview

It’s a mixed market reaction to today’s inflation data and earnings reports. As of midday trading, the S&P 500 is down 0.4%, the Dow has dropped 0.4% (179 points), and the Nasdaq is lower by 0.3%. Despite the overall pullback, some stocks, including $IBM, reached new 52-week highs.

A personal ask from me - each time someone checks out today’s sponsor it buys me a sip of coffee.

Key Market Drivers

  1. Inflation Data: September’s CPI rose 0.2% month-over-month and 2.4% year-over-year, exceeding expectations. Core inflation remains sticky, driven by durable goods and transportation costs.

  2. Earnings Season: $DAL’s disappointing results are setting a cautious tone for the airline sector.

  3. Tech Events: $AMD’s AI event and $TSLA’s robotaxi unveiling are drawing significant market attention.

  4. Hurricane Milton: Less severe impact than expected, positively affecting insurance stocks.

Stock Spotlight

  1. $DAL: ▼5% after missing Q3 earnings expectations (Adj. EPS: $1.50 vs $1.52 est.) and providing weak Q4 guidance (Adj. EPS: $1.60-$1.85 vs $1.78 est.).

  2. $AMD: ▼3.6% despite unveiling new AI chips, including the MI325X and upcoming MI350 series, as investors digest competitive implications.

  3. $TSLA: Set to unveil its robotaxi prototype later today, with the stock’s performance closely tied to the event’s reception.

  4. $EVGO: ▲ after UBS upgraded to Buy, raising the price target to $8.50 from $4.00, citing improved funding visibility following DOE loan commitment.

  5. $UNM: ▲10% as Hurricane Milton’s impact came in less severe than initially feared.

Other Magnificent 7 Updates

  • $MSFT: Goldman Sachs lowered its price target to $500 from $515, citing increased AI CapEx estimates, but reiterates buy rating.

  • $AMZN: Added Apple TV+ to Prime Video in the US, expanding its streaming offerings. DA Davidson rates as Buy with $235 PT, citing edge in retail supply chain automation.

  • $AAPL: Concerns arise as China detains four employees at Foxconn’s iPhone factory, potentially impacting business confidence.

Other Notable Company News

  • $GXO: Exploring a potential sale after receiving inbound interest.

  • $ZM: Updated long-term profit outlook, raising operating profit target to 33%-36% of revenue from previous 28%-32%.

  • $BA: Union negotiators report some progress but note improvements are still insufficient, particularly regarding performance bonus guarantees.

  • $CVS: Barclays upgrades to overweight from equal weight, raising PT to $82 from $63, citing potential margin recovery.

Sector Watch

Sector

Symbol

% Change

Energy

XLE

+0.95%

Technology

XLK

-0.13%

Consumer Discretionary

XLY

-0.34%

Financials

XLF

-0.48%

Healthcare

XLV

-0.42%

Industrials

XLI

-0.74%

Consumer Staples

XLP

-0.66%

Real Estate

XLR

-1.06%

Materials

XLB

-0.04%

Communication Services

XLC

-0.50%

Utilities

XLU

-0.15%

Bond Market

The bond market is reacting to the hotter-than-expected inflation data, with yields likely to adjust as investors reassess the Federal Reserve’s potential rate decisions.

The sticky inflation numbers are increasing the likelihood of continued tight monetary policy.

Policy Watch

  • The Federal Reserve is now widely expected to implement a 25 basis point rate hike in November, following the latest CPI data.

  • China’s Ministry of Justice and NDRC have released draft guidelines to support the private sector, aiming to boost economic growth and lower transaction costs for private firms.

  • Atlanta Fed President Raphael Bostic indicated openness to holding rates steady in November, highlighting the potential for policy divergence within the Fed.

What to Watch

  1. $TSLA Robotaxi Event: Watch for market reaction to Tesla’s robotaxi unveiling, as it could significantly impact the stock and broader autonomous vehicle sector.

  2. $AMD AI Chip Performance: Monitor how AMD’s new AI chips are received by the market and potential customers, as this could shift competitive dynamics in the semiconductor industry.

  3. Airline Earnings: Keep an eye on upcoming airline earnings reports to see if $DAL’s challenges are industry-wide or company-specific.

  4. Hurricane Milton Aftermath: Watch for ongoing assessment of Hurricane Milton’s economic impact, particularly on insurance and construction-related stocks.

  5. Fed Speak: Pay attention to upcoming Fed official comments for clues on how the latest CPI data might influence November’s rate decision.

P.S. 
Please fuel my coffee pot with a quick click to our sponsor today. 
It's free, fast, and keeps these insights coming daily.

Thank you for reading,

- JB

Today’s Sponsor - A company that tries it’s hardiest to deliver unbiased, bi-partisan news.

The Daily Newsletter for Intellectually Curious Readers

If you're frustrated by one-sided reporting, our 5-minute newsletter is the missing piece. We sift through 100+ sources to bring you comprehensive, unbiased news—free from political agendas. Stay informed with factual coverage on the topics that matter.

Note: This newsletter is intended for informational purposes only.