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- October 3rd Market Overview
Happy Thursday everyone.
Today's market is giving a lot to chew on. Middle East tensions are heating, sending oil prices up. We're seeing some swings in energy and tech, plus the jobless claims are raising brows ahead of tomorrow's payroll report.
Two key things I'm watching: how this oil spike ripples through different sectors, and what these labor market signals might mean for the Fed's next move
Lets dig in…
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Executive Summary
S&P 500 ▼ 0.4% amid Middle East tensions and oil price surge
Crude oil futures ▲ 4%, boosting energy sector but raising inflation concerns
Jobless claims rise more than expected, signaling potential labor market softening
$NVDA reports “insane” demand for next-gen AI chips, bucking broader tech decline
Market Overview
A challenging start to October trading. The S&P 500 and Nasdaq both shed 0.4%, while the Dow slid 285 points or 0.7%. Over 80% of S&P 500 stocks are trading lower, underscoring broad market weakness (breadth).
This marks a turn after a strong three quarters, with Bespoke Investment Group noting 2024 had the biggest gain over the first nine months of a year since 1997.
Key Market Drivers
Middle East Tensions: Escalating conflict between Israel and Lebanon is dampening investor sentiment and driving oil prices higher. Israel’s potential ground operation into Lebanon has heightened uncertainty.
Oil Surge: U.S. crude futures rose more than 4%, bringing its week-to-date advance to over 7%. WTI traded at $73.03 per barrel, breaking above its 50-day moving average of $72.89 for the first time since August 14.
Labor Market: Weekly jobless claims rose to 225,000, slightly above the 220,000 Dow Jones estimate. This potentially signals a softening labor market ahead of Friday’s crucial payrolls report.
Tech Sector Resilience: Despite overall market decline, the information technology sector rose 0.9%, buoyed by strong performance from chipmakers.
Stock Spotlight
$NVDA: Shares climbed 3.5% after CEO Jensen Huang reported “insane” demand for next-generation Blackwell AI chips. The company expects to ship these chips in Q4.
$EVGO: Surged 60% after securing a conditional $1 billion loan guarantee from the U.S. Department of Energy for charging network expansion.
$HIMS: Plummeted 14% as the FDA resolved shortages of popular weight loss drugs from Eli Lilly, impacting Hims & Hers’ compound versions.
$LEVI: Dropped over 9% in after-hours trading on mixed quarterly results and considerations to sell its underperforming Dockers brand. The company trimmed its full-year revenue outlook.
$XRP: Fell more than 9% to 52 cents a coin after the SEC appealed a 2023 court ruling on its regulatory status.
Other Magnificent 7 Updates
$NVDA stood out among the Magnificent 7 today, with shares rising 3.5% following CEO Jensen Huang's comments about "insane" demand for their next-gen Blackwell AI chips.
Other Notable Company News
Berkshire Hathaway further reduced its $BAC stake to 10.2%, selling $338 million worth of shares in the past three trading sessions.
$TMUS: Trading at all-time highs back to the MetroPCS IPO in Apr, 2007.
Solar stocks struggled as oil climbed, with the Invesco Solar ETF ($TAN) down 2%.
Sector Watch
Sector | Symbol | % Change |
|---|---|---|
Energy | XLE | +1.47% |
Technology | XLK | +0.12% |
Communication Services | XLC | +0.10% |
Utilities | XLU | -0.16% |
Financials | XLF | -0.60% |
Industrials | XLI | -0.65% |
Consumer Staples | XLP | -1.01% |
Real Estate | XLRE | -1.11% |
Materials | XLB | -1.21% |
Consumer Discretionary | XLY | -1.45% |
Healthcare | XLV | -1.00% |
Bond Market
Nothing significant going on the bond market today.
Policy Watch
The U.S. Department of Energy’s $1 billion loan guarantee to $EVGO signals continued government support for EV infrastructure expansion.
Economists will closely monitor Friday’s payrolls report, which could significantly influence upcoming monetary policy discussions.
What to Watch
September Payrolls Report (Friday): This crucial report could provide insights into labor market health and influence Fed policy decisions. Watch for any deviation from the expected figures, as it may trigger market volatility.
Middle East Developments: Monitor news from Israel and Lebanon, as further escalation could impact oil prices and overall market sentiment. Any signs of de-escalation could lead to a market rebound.
$NVDA’s Q4 Performance: With the company’s next-gen AI chips set to ship in Q4, keep an eye on Nvidia’s performance and any updates on demand or production capacity. This could have broader implications for the tech sector and AI-related stocks.
Energy Sector Momentum: As oil prices continue to rise, watch for potential impacts on inflation expectations and consumer spending. This could affect various sectors beyond energy, including transportation and retail.
Bank Earnings: With Berkshire Hathaway reducing its stake in $BAC, monitor upcoming bank earnings reports for insights into the financial sector’s health and potential ripple effects on the broader economy.
P.S.
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Thank you for reading,
- JB
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