Market Overview

For most of today's trade, the stock market remained relatively calm until a late rally effort concluded a strong third quarter. Losses were modest, even at the day's lows around 2:30 p.m. ET, following comments from Fed Chair Powell at an NABE Conference. He indicated that if the economy evolves as expected, there would be two more cuts this year of 25 basis points each. The fed funds futures market had anticipated a total of 75 basis points worth of cuts before year-end, causing some initial selling interest that pushed the S&P 500 down by as much as 0.6%.The Treasury market responded with yields increasing. The 2-year note yield rose nine basis points to 3.65%, while the 10-year note yield climbed five basis points to 3.80%. However, the market quickly rebounded, buoyed by the understanding that the Fed will still cut rates and will act more aggressively if necessary. This "Fed put" trade, combined with the successful "buy-the-dip" strategy, helped the S&P 500 hit session highs just before the close, ending the third quarter on a positive note.

Sector Performance

Although sector performance was mostly negative throughout the day, things turned around late. Nine of the 11 S&P 500 sectors finished in positive territory with gains ranging from 0.1% to 0.8%. The materials sector (-0.6%) and the consumer discretionary sector (-0.3%) were the only exceptions, with the latter hindered mainly by a loss in Amazon.com (AMZN).The communication services sector (+0.8%) received a boost from Alphabet (GOOG) and Meta Platforms (META), along with industry-related M&A news. DIRECTV will acquire EchoStar's video distribution business, including DISH TV and Sling TV. AT&T (T) is selling its remaining stake in DIRECTV to TPG for $7.6 billion in cash payments through 2029. Verizon (VZ, Financial) has entered into an agreement for Vertical Bridge to lease, operate, and manage 6,339 wireless communications towers across the U.S. for approximately $3.3 billion.The energy sector (+0.8%) also performed well, influenced by a Washington Post report indicating that Israel has informed the U.S. of an imminent and limited ground operation in Lebanon.

Index Performance

• Nasdaq Composite: +21.2% YTD (+2.6% for Q3)
• S&P 500: +20.8% YTD (+5.5% for Q3)
• Dow Jones Industrial Average: +12.3% YTD (+8.2% for Q3)
• S&P Midcap 400: +12.2% YTD (+6.6% for Q3)
• Russell 2000: +10.0% YTD (+8.9% for Q3)

Economic Data Review

The September Chicago PMI came in at 46.6 (consensus 46.2), compared to 46.1 in August. A reading below 50.0 indicates contraction, so the September figure suggests manufacturing activity in the Chicago Fed region contracted but at a slower pace than in August.

Upcoming Economic Calendar

• 09:45 ET: September Final S&P Global US Manufacturing PMI (prior 47.9)
• 10:00 ET: September ISM Manufacturing PMI (consensus 47.7%; prior 47.2%)
• 10:00 ET: August JOLTS - Job Openings (prior 7.673M)
• 10:00 ET: August Construction Spending (consensus 0.1%; prior -0.3%)

Overseas Markets

• Europe: DAX -0.7%, FTSE -1.0%, CAC -2.0%
• Asia: Nikkei -4.8%, Hang Seng +2.4%, Shanghai +8.1%

Commodities

• Crude Oil: -0.02 @ 68.13
• Nat Gas: +0.01 @ 2.91
• Gold: -9.10 @ 2658.80
• Silver: -0.33 @ 31.43
• Copper: -0.03 @ 4.55

AMZN,GOOG,META,T,VZ

Guru Stock Picks

Andreas Halvorsen has made the following transactions:

• Add in LBPH by 5.65%

Invesco EQV European Equity Fund has made the following transactions:

• Reduce in OSTO:INVE B by 12.17%
• Sold out in XMAD:AMS
• Add in XTER:FTK by 2.46%
• New position in XPAR:EDEN

Today's News

General Motors (GM, Financial) subsidiary Cruise has entered a consent order with the National Highway Traffic Safety Administration (NHTSA) due to incomplete reports on crashes involving its automated driving systems. The order addresses a specific incident where a Cruise vehicle dragged a pedestrian post-crash. The order includes provisions to enhance compliance and safety practices at Cruise.

Bristol Myers Squibb (BMY, Financial) triumphed in a $6.4 billion lawsuit regarding Celgene contingency value rights. The suit, which alleged Bristol Myers delayed regulatory approvals for Celgene drugs, was dismissed by a federal court. The judge ruled that the trustee for the CVR holders was not properly appointed, closing the case filed in June 2021.

Verizon (VZ, Financial) experienced significant service outages affecting nearly 105,000 users across several major cities, including Chicago, Phoenix, and Los Angeles. The company acknowledged the issue and stated that engineers are working to resolve it. The outages began before market opening and peaked around midday.

TD Bank's (TD, Financial) U.S. securities division faced charges from the SEC for manipulating the U.S. Treasury cash securities market through a strategy known as spoofing. The bank was also charged with failing to supervise its U.S. Treasuries trading desk head, who executed hundreds of illegal trades over 13 months. TD Securities was ordered to pay $400K in disgorgement and prejudgment interest.

Capri Holdings (CPRI, Financial) saw a notable rise as traders grew more optimistic about the company's merger with Tapestry (TPR, Financial) following closing arguments in the FTC trial. Reports suggest the judge may be more skeptical of the FTC's arguments against the merger than those of the apparel companies.

Enbridge (ENB, Financial) shares fell following a downgrade by Jefferies to Hold from Buy, with a price target of C$58. The downgrade cited the need for more clarity on future catalysts that could drive stock re-rating. Despite recent positive catalysts, Jefferies believes these are already reflected in the current trading levels.

Nokia (NOK, Financial) provided recast financial information for its Network Infrastructure segment after classifying its Submarine Networks business as a discontinued operation. This follows Nokia's agreement to sell Alcatel Submarine Networks to the French State for EUR 350 million, resulting in an impairment loss of EUR 514 million.

Nike (NKE, Financial) is expected to report a significant decline in revenue for its first quarter, with Wall Street anticipating EPS of $0.53 and revenue of $11.65 billion. This earnings report is the first since Elliott Hill took over as CEO. Analysts have expressed concerns over consumer demand, macro factors, and rising competition.

Intel (INTC, Financial) and Samsung's (OTCPK:SSNLF) recent issues are likely to impact the semiconductor equipment market negatively, with wafer fab equipment spending projected to be lower than expected. This has earnings implications for companies like Applied Materials (AMAT, Financial), ASML (ASML, Financial), KLA Corp. (KLAC), and Lam Research (LRCX).

Abu Dhabi National Oil Co. is expected to announce a $13B deal for Germany's Covestro (OTCPK:CVVTF) (OTCPK:COVTY) soon. The acquisition would give Covestro a market value of ~€11.7B, making it one of the year's biggest deals. Covestro is a major producer of polymer materials used in various industries.

Trinseo (TSE) announced restructuring initiatives aimed at improving profitability and cash generation. The company plans to combine the management of several business units and exit virgin polycarbonate production at its Stade, Germany facility. These actions are expected to save $30 million annually by the end of 2026.

Biohaven (BHVN) has commenced an underwritten public offering of $250M of its common shares, with an option for the underwriter to purchase an additional $37.5M. The proceeds will be used for general corporate purposes.

BGC Group (BGC) announced that its Q3 2024 revenue and pre-tax adjusted earnings are expected to be at the high end of its previously stated outlook. The company had guided Q3 revenue of $505M-$555M and pre-tax adjusted earnings of $110M-$127M.

CPI Card Group (PMTS) said certain stockholders affiliated with Parallel49 Equity have commenced an underwritten secondary public offering of 1M shares of its common stock. The selling shareholders will receive the proceeds from the offering.

NCR Voyix (VYX) announced the reduction of $1.84 billion of its outstanding debt using proceeds from the sale of its Digital Banking segment. This move aims to strengthen the company's financial position.

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