Market Performance

Today's trade started on a downbeat note after the release of the August Consumer Price Index (CPI). The report stoked selling interest due to the understanding that core-CPI, which excludes food and energy, remained above the Fed's 2.0% target at 3.2% year-over-year.

Indices Performance

• The S&P 500 was down as much as 1.6%
• The Nasdaq Composite was down as much as 1.4%
• The Russell 2000 was down as much as 1.9%
• The Dow Jones Industrial Average was down as much as 1.8%

Stocks staged a turnaround, leaving the major indices near session highs:

• The S&P 500 logged a 1.1% gain
• The Nasdaq Composite rose 2.2%, propelled by strength in the semiconductor space and mega cap stocks
• The Dow Jones Industrial Average and Russell 2000 logged slimmer gains

Weekly Gains

This week's gains range from 1.3% to 4.2% in the three major indices. The recovery kicked into gear when the S&P 500 held above last Friday's low (5,402) on the initial retreat. Positive price action was helped by strength in NVIDIA (NVDA, Financial) along with other semiconductor and mega cap shares.

Sector Performance

• The Vanguard Mega Cap Growth ETF (MGK) was up 2.1%
• The PHLX Semiconductor Index (SOX) was up 4.9%

Many stocks participated in the afternoon rally, leaving the equal-weighted S&P 500 0.1% higher and six S&P 500 sectors with gains. The information technology sector (+3.3%) was the best performer by a decent margin. The consumer discretionary sector also showed strength, rising 1.3%. The energy sector logged the biggest decline, down 0.9%, followed by the consumer staples sector (-0.9%).

Treasury Yields

Treasuries exhibited choppy action following the CPI report:

• The 2-yr note yield went from 3.55% to 3.69% and settled four basis points higher on the day at 3.65%
• The 10-yr note yield went from 3.61% to 3.69% and settled one basis point higher on the day at 3.65%

Year-to-Date Performance

• S&P 500: +16.4% YTD
• Nasdaq Composite: +15.7% YTD
• Dow Jones Industrial Average: +8.4% YTD
• S&P Midcap 400: +6.4% YTD
• Russell 2000: +3.8% YTD

Today's Economic Data

• Weekly MBA Mortgage Applications Index 1.4%; Prior 1.6%
• August CPI 0.2% (consensus 0.2%); Prior 0.2%
• August Core CPI 0.3% (consensus 0.2%); Prior 0.2%

The key takeaway from the report is the understanding that core inflation is sticking stubbornly above the Fed's inflation goal of 2.0%, which is oriented around the PCE Price Index. The elevated core reading on a monthly and annual basis will be a focal point for the Fed and a likely reason to keep a September rate cut capped at 25 basis points.

Looking Ahead

Thursday's economic lineup features:

• 8:30 ET: August PPI (consensus 0.2%; prior 0.1%), Core PPI (consensus 0.2%; prior 0.1%), weekly Initial Claims (consensus 229,000; prior 227,000), and Continuing Claims (prior 1.838 mln)
• 10:30 ET: Weekly natural gas inventories (prior +13 bcf)
• 14:00 ET: August Treasury Budget (prior -$243.7 bln)

Overseas Markets

• Europe: DAX +0.3%, FTSE -0.2%, CAC -0.1%
• Asia: Nikkei -1.6%, Hang Seng -0.7%, Shanghai -0.8%

Commodities

• Crude Oil +1.45 @ 67.30
• Nat Gas +0.04 @ 2.27
• Gold +0.70 @ 2542.90
• Silver +0.32 @ 28.92
• Copper +0.05 @ 4.15

NVDA,MGK

Guru Stock Picks

Warren Buffett has made the following transactions:

• Reduce in BAC by 0.67%

Today's News

OpenAI, backed by Microsoft (MSFT, Financial), is in discussions for a $6.5 billion funding round from investors, potentially valuing the artificial intelligence startup at $150 billion. This would nearly double its valuation from earlier this year. Additionally, OpenAI is negotiating a $5 billion revolving credit facility with banks. Thrive Capital is expected to lead the funding round, with Microsoft participating. Apple (AAPL, Financial) and Nvidia (NVDA, Financial) have also shown interest in investing in OpenAI.

Nvidia (NVDA, Financial) may soon be allowed to export its AI chips to Saudi Arabia, as the U.S. government is close to lifting restrictions. This development follows Saudi Arabia's efforts to meet U.S. security requirements after Nvidia's chip shipments were limited earlier this year due to concerns over the country's ties with China. The Gain summit in Riyadh saw participation from other AI players like Alphabet (GOOGL) and Qualcomm (QCOM).

Medical Properties Trust (MPW, Financial) received interim approval from a bankruptcy court for its settlement agreement with tenant Steward Health Care. The deal will see MPW take over Steward's hospitals and fund operational expenses, settling disputes over billions in lease obligations. The final approval is expected later this month.

Goldman Sachs (GS, Financial) CEO David Solomon suggested that the Federal Reserve might cut interest rates by 25 basis points in the upcoming Federal Open Market Committee meeting. However, he also mentioned a low probability (around 30%) for a 50-basis-point cut, citing a weakening labor market as a potential trigger for a more significant rate reduction.

RTX (RTX, Financial) CEO Christopher Calio stated that the company is focusing on making its businesses more efficient and interconnected rather than pursuing a major merger or acquisition. The aerospace and defense company is dealing with significant backlogs across its divisions, including Pratt & Whitney and Collins Aerospace. RTX recently divested its Goodrich Hoist and Winch business to realign its corporate structure.

SentinelOne (S, Financial) CEO Tomer Weingarten reported increased interest in the cybersecurity firm following a security incident at CrowdStrike (CRWD) in July. Weingarten mentioned that many affected parties are looking to either add another layer of security or completely switch to SentinelOne's services.

Nike (NKE, Financial) shares ended a six-session losing streak, closing up 0.4% at $78.38. The athletic apparel company has faced a challenging year, with its stock down over 28% year-to-date. Wall Street analysts have mixed ratings on NKE, with a majority recommending a Hold.

Rivian Automotive (RIVN, Financial) saw its stock rise following updates at investor conferences. CEO RJ Scaringe mentioned supply chain issues affecting production rates, while CFO Claire McDonough discussed ongoing efforts to resolve these challenges. The company is currently focusing on ramping up production for its R1T and R1S models.

Inseego (INSG, Financial) has paid down $9.5 million of its outstanding short-term loan and signed an agreement to convert an additional $5 million of convertible notes into long-term debt and equity. These actions have reduced the company's obligations under its Loan and Security Agreement to $10 million.

W.P. Carey (WPC, Financial) shares ended a seven-session winning streak, closing 0.3% lower at $62.13. The stock has lost nearly 5% year-to-date but has gained 12% over the past month. Analysts are divided on WPC, with mixed ratings from Wall Street and Seeking Alpha analysts.

Phillips 66 (PSX, Financial) shares fell after a seven-session decline, closing at $125.04. The stock has seen a 12% drop over this period, touching lows not seen since December 2023. Year-to-date, PSX is down nearly 7%, compared to a 16% rise in the S&P 500.

Antero Resources (AR, Financial) led gains among natural gas producers, rising 4.2% as Hurricane Francine threatened Gulf of Mexico production. Wolfe Research upgraded Antero to Outperform, citing improved risk-reward and a strong balance sheet.

Roku (ROKU, Financial) is expected to report third-quarter results ahead of consensus, driven by gains in linear TV, programmatic efforts, and strong execution on new products. Cleveland Research noted that Roku's outlook appears constructive, with growth expected from new advertisers and lower CPMs.

US Steel (X, Financial) surged 7% as Nippon Steel attempts to salvage a $14 billion acquisition deal. Nippon Steel's Vice Chairman is in Washington to meet U.S. officials to discuss the deal, which faces potential blocking by the Committee on Foreign Investment in the U.S.

Starbucks (SBUX, Financial) continued to rally following a strategy update from incoming CEO Brian Niccol. TD Cowen analysts believe Niccol is focusing on the right drivers for improving traffic and store operations, with a commitment to digital menu boards and SKU rationalization.

First Solar (FSLR, Financial) and Enphase Energy (ENPH) were among the top gainers as investors speculated on the impact of the recent U.S. presidential debate. Analysts believe a win for Vice President Harris could benefit clean energy stocks, which have received support from the Biden administration's policies.

Albemarle (ALB, Financial) led gains among lithium miners following a report that China's CATL might suspend some lithium production operations. This could remove significant supply from the market, benefiting companies like Albemarle and SQM (SQM).

AT&T (T, Financial) shares fell 2%, ending a seven-session winning streak. The company recently signed a five-year agreement with Nokia (NOK) to expand its fiber network, which has received positive analyst reviews.

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