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- October 1st Market Overview
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Happy Tuesday, everyone.
Today marks the start of October - the markets are a little shaked up from political tensions in the east. Ideally Iran doesn’t invade Israel, it’s crazy to me that we still blow each other up over extreme differences in ideology. I hope humanity as whole can get past that behavior soon.
Everybody needs more love.
Lets dig in…
Executive Summary
S&P 500 ▼ 0.7% and Nasdaq ▼ 1.3% as Middle East tensions escalate
Oil prices ▲ nearly 4% on fears of Iran-Israel conflict
Job openings rise unexpectedly in August, while manufacturing sector continues to decline
VIX ▲ teetering around $20, reflecting increased market apprehension
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Market Overview
The markets retreated from recent highs today, with the S&P 500 falling 0.7% to 4,303.34, the Nasdaq Composite dropping around 1.3% to 316.94, and the Dow Jones shedding 51 points (0.1%) at 37,949.
This pullback comes after a strong September performance, which defied the month’s typical negative trend. The CBOE Volatility Index (VIX) spiked above 20, signaling heightened investor concern.
Key Market Drivers
Geopolitical Tensions: Reports of Iran preparing an imminent attack on Israel have intensified market volatility and driven oil prices higher.
Economic Data: August job openings unexpectedly rose to 8 million, while the ISM manufacturing index remained unchanged at 47.2% in September, indicating continued contraction.
Sector Divergence: Energy stocks rallied on surging oil prices, while tech shares faced significant selling pressure.
Stock Spotlight
$META: Bucking the tech sector trend, Meta Platforms traded near all-time highs.
$LMT: Lockheed Martin shares ▲ 3.7% as defense stocks rallied amid heightened geopolitical tensions.
$CVS: Shares ▲ 2% following reports of a strategic business review, potentially including a company breakup.
$NFE: New Fortress Energy jumped ▲ 17% after pricing a public offering at $8.63 per share.
$APA: APA Corp. climbed ▲ 5%, leading the energy sector gains.
Other Magnificent 7 Updates
$AAPL, $NVDA, $TSLA: All three tech giants ▼ more than 3%, contributing significantly to the Nasdaq’s decline.
$NFLX: Netflix held steady despite industry-wide pressures.
$GOOGL: Alphabet showed resilience, supported by strong ad revenue forecasts.
Other Notable Company News
$F: Ford Motor ▲ 2.3% after Goldman Sachs upgraded the stock to buy, citing potential tailwinds from software and services.
$DIS: Disney shares ▼ 0.9% following a Raymond James downgrade due to pressure on the company’s parks segment.
$STLA: Stellantis ▼ over 1% after extending its production halt on electric Fiat 500s due to weak demand.
Charles Schwab ($SCHW): Announced CEO Walt Bettinger will retire at year-end, with Rick Wurster taking the helm.
Cerebras Systems: AI chip startup filed for IPO, entering the competitive public market landscape.
Sector Watch
Sector | Symbol | % Change |
|---|---|---|
Energy | XLE | +1.93% |
Technology | XLK | -2.28% |
Communication Services | XLC | +0.74% |
Consumer Discretionary | XLY | -0.23% |
Utilities | XLU | +0.64% |
Industrials | XLI | +0.19% |
Healthcare | XLV | -0.38% |
Financials | XLF | -0.17% |
Materials | XLB | -0.16% |
Consumer Staples | XLP | -0.14% |
Real Estate | XLR | -0.49% |
Bond Market
Treasury yields showed some volatility as investors sought safety amid geopolitical uncertainties. The increased demand for safer assets could potentially push yields lower if the equity market uncertainty remains from the geopolitical concerns.
Policy Watch
Federal Reserve Chair Jerome Powell recently stated that the central bank is “not on any preset course” regarding rate policy.
The Fed anticipates two more quarter-point rate cuts this year if the economy performs as expected. I think everyone is closely monitoring upcoming economic reports, particularly Friday’s nonfarm payrolls data, for further clarity on potential Fed actions.
What to Watch
Nonfarm Payrolls Report (Friday): This crucial economic indicator could significantly influence Fed policy decisions and market sentiment. A strong report might reinforce the “soft landing” narrative, potentially boosting stocks as suggested by Bank of America analysts.
Middle East Developments: Keep a close eye on any escalation or de-escalation of tensions between Iran and Israel. Further conflicts could lead to increased volatility in oil prices and global markets.
Tech Sector Performance: With major tech stocks facing pressure, monitor whether this trend continues or if bargain hunters step in, potentially leading to a sector rebound.
Manufacturing Data: Watch for any signs of improvement in the manufacturing sector, which has been in contraction territory. A turnaround could signal broader economic resilience.
Corporate Earnings: As we enter Q4, be alert for any early earnings reports or guidance updates that might set the tone for the upcoming earnings season.
P.S.
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- JB
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Note: This newsletter is intended for informational purposes only.