October 11th Market Overview

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Happy Friday everyone. The weekend is just about here.

Wall Street is throwing a bit of a party today, and almost everyone's invited—except Tesla.
Bank earnings are carrying most of the weight into close with tech behind for the first time in…. awhile.

Lets dig in…

Executive Summary

1. S&P 500 ▲ 0.68% and Dow ▲ 0.99% hit new highs, driven by strong bank earnings

2. $TSLA ▼ 8% after underwhelming robotaxi event, boosting $UBER ▲ 9%

3. $BLK reports record AUM of $11.5T ▲, beating estimates

4. PPI data comes in cooler than expected, alleviating some inflation concerns

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Market Overview

All major indices are showing green performance today.

S&P 500 ▲ 0.68% to 5,819.30
Dow Jones ▲ 0.99% to 42,875.46
Nasdaq ▲ 0.45% to 18,364.23

This marks the fifth consecutive winning week, with over 80% of S&P 500 stocks set to finish in the green (positive market breadth).

Key Market Drivers

1. Strong start to Q3 earnings season, particularly in the banking sector

2. September PPI unchanged vs 0.1% increase expected, cooling inflation fears

3. Continued investor optimism despite geopolitical tensions

4. Growing number of companies exceeding earnings expectations

Stock Spotlight

1. $JPM: ▲ 4.7% after beating Q3 expectations.
   Adj. EPS $4.37 vs $3.99 est., revenue $43.32B vs $41.9B est.

2. $WFC: ▲ 6% despite mixed Q3 results.
   Net interest income $11.69B ▼ vs $11.88B est., ROE 11.7% ▲ vs 10.8% est.

3. $BLK: ▲ 2% on record AUM of $11.5T ▲.
   Adj. EPS $11.46 vs $10.40 est., revenue $5.2B vs $5.00B est.

4. $TSLA: ▼ 8% following disappointing robotaxi event.
   Analysts note lack of substantive details.

5. $UBER: ▲ 9% as Tesla’s setback boosts ride-sharing outlook.
   Citi: event removes major overhang.

Other Magnificent 7 Updates

• $AMZN: Record Prime sales day reported; Scotiabank rates outperform with $245 PT ▲

• $GOOGL: Scotiabank rates outperform with $212 PT ▲, citing AI monetization potential

• $NVDA: Goldman Sachs raises PT to $150 ▲ from $135, maintains Conviction Buy. Latest AI chips reportedly sold out for next 12 months.

Other Notable Company News

• $AMD: Mixed analyst reactions post-AI event; Wells Fargo says buy with $205 PT ▲, others call it a non-event

• $RACE: JPMorgan upgrades to overweight, raises PT to $525 ▲ on strong demand

• $TEAM: Morgan Stanley names it a top pick, raises PT to $224 ▲

• $AFRM: Wells Fargo upgrades to overweight, raises PT to $52 ▲ on market share gains

• $SMCI: Introduced new servers featuring AMD’s EPYC 9005 Series processors

Sector Watch

Bond Market

The 10-year Treasury yield stands at 4.081% ▼ 0.013 points. This slight decline suggests investors are balancing positive earnings against cooling inflation data. The yield curve remains inverted, indicating concerns about long-term economic growth.

Policy Watch

Fed’s Bostic comments on being “totally comfortable with skipping” a rate cut this year, shifting expectations towards a potential 25bps hike in November followed by a pause.

However, dissenting voices like Neel Kashkari suggest rates may need to remain higher for longer to combat inflation.

What to Watch

1. China’s fiscal stimulus announcement (Oct 14): Expected up to 2 trillion yuan ($283B), focusing on local debt relief. Could impact global markets and Chinese equity sentiment.

2. Upcoming inflation data: With cooler PPI, focus shifts to consumer inflation expectations and CPI data. Crucial for shaping Fed policy and market rate expectations.

3. Q3 earnings season continuation: Monitor results vs expectations and forward guidance for insights into economic health and sector performance.

4. Tesla’s response to robotaxi event reaction: Watch for follow-up announcements on autonomous driving progress, impacting $TSLA and broader EV/ride-sharing sectors.

5. AI chip demand developments: With $NVDA’s latest chips sold out for 12 months, monitor impacts on other chipmakers and AI-focused tech companies.

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Thank you for reading - have a great weekend everyone.

- JB

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Note: This newsletter is intended for informational purposes only.