October 21st Market Overview

Happy Monday everyone.

Markets are catching their breath after last week's sprint.

Meanwhile - gold and silver pushed up over the weekend amid global tensions, reminding us of their haven status.

Somewhere, Peter Schiff is polishing his "I told you so" speech about gold hitting new highs.

Let's dig in...

Executive Summary

• Small pullback today follows six consecutive weeks of gains across all major indices

• Treasury yields rise, with 10-year yield up 10 basis points to 4.178%

• $AAPL faces mixed sentiment on generative AI progress and iPhone 16 demand

• $BA nears strike resolution, offering 35% wage increase over four years

• Gold and silver reach new all-time highs amid geopolitical tensions

Market Overview

The market opened with initial gains but is closing red here at end of day.

This pullback comes after both the S&P 500 and Dow registered all-time highs on Friday, marking their sixth straight weekly advance.

Key Market Drivers

1. Earnings season progress: 79% of reporting S&P 500 companies have beaten expectations so far

2. Rising Treasury yields: The 10-year yield jumped over 10 basis points to 4.178%, pressuring rate-sensitive sectors

3. Geopolitical tensions: Ongoing concerns following an assassination attempt on Israel’s PM are influencing commodities

4. Economic indicators: The Conference Board’s Leading Economic Index fell 0.5% in September, more than expected

Stock Spotlight

• $AAPL: Mixed reports on generative AI progress and iPhone 16 demand. Bloomberg reports Apple is over 2 years behind leaders in generative AI, while JPMorgan notes iPhone 16 lead times are in line with iPhone 15, suggesting stable demand.
  

• $BA: Shares up 3% after reaching a new contract proposal with machinists’ union, offering a 35% wage increase over four years. This could end the month-long strike that halted production since September 13.
  

• $APP: Bank of America raises price target to $210 from $120, citing growth and profitability transformation following the Q2 launch of Axon 2.0, AppLovin’s AI engine.
  

• $HOOD: Price target raised to $30 from $27 at Bank of America, maintaining overweight rating. New products, including index options and futures trading, are expected to be significant growth drivers.
  

• $GTLB: Upgraded to buy from hold at Needham, price target set at $70. The upgrade cites product innovation and expectations of increased enterprise selling.

Big Name Updates

• $TSLA: Down 1.5% as Elon Musk faces calls for probe into potential election law violations.

• $NVDA: Outperforming the market, up 1.7% amid broader tech sector strength.
  

• $UPS: Downgraded to underweight at Barclays with a $120 price target, citing near-term earnings risks due to a lackluster freight environment and increased competition from FedEx.
  

• $CI and $HUM: Reports indicate resumed merger discussions, potentially leading to volatility in stock prices.

Other Notable Company News

• $NVO: Oral Semaglutide shows promising results in clinical trials, reducing major cardio events risk by 14%.
  

• $NOW: Downgraded by Morgan Stanley, citing a balanced risk-reward profile.
  

• $KVUE: Starboard Value increases stake, advocating for changes within the consumer products firm.
  

• $SPIRIT: Shares up 4.9%, benefiting from Boeing’s positive news.
  

• $MSTR: Price target raised to $240 from $180 by BTIG, maintaining buy rating.

Sector Watch

Bond Market

Treasury yields are rising , with the 10-year yield up over 10 basis points to 4.178%. This move is impacting rate-sensitive sectors (Fintech and financial sector) and influencing market sentiment.

Policy Watch

• Dallas Fed President Lorie Logan emphasized a cautious but gradual approach to reducing interest rates, stating, “If the economy evolves as I currently expect, a strategy of gradually lowering the policy rate toward a more normal or neutral level can help manage the risks and achieve our goals.”
  

• Minneapolis Federal Reserve President Neel Kashkari suggests the longer-term trajectory for interest rates could be higher than previously thought.
  

• Dallas Fed President Lorie Logan emphasized the FOMC's readiness to adjust policy as needed, maintaining a flexible approach in response to evolving economic conditions.

What to Watch Out For

1. Earnings reports: With one-fifth of S&P 500 companies set to report this week, including $TSLA, $KO, and $GE, watch for potential market-moving surprises.

2. Consumer spending trends: Recent credit card transaction data suggests a potentially challenging holiday shopping season. Monitor retail sector performance and upcoming consumer confidence reports.

3. Bitcoin ETF developments: The SEC’s approval of NYSE options trading for spot Bitcoin ETFs could impact cryptocurrency-related stocks and overall market sentiment.

4. Geopolitical developments: Keep an eye on the ongoing situation in the Middle East, as it continues to influence commodity prices and overall market risk sentiment.

P.S. 
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Thank you for reading,

- John