Market Overview
The equity market experienced a negative bias throughout the session, with trading volume below average. However, the downside movements were relatively limited. The equal-weighted S&P 500 decreased by 0.4%, while the market-cap weighted S&P 500 fell by 0.2%.
Economic Data and Market Reactions
- Consumer Price Index (CPI): The September CPI report was hotter than expected. The headline CPI increased by 0.2% (expected 0.1%), and the core CPI rose by 0.3% (expected 0.2%). Year-over-year, the core CPI growth rate rose to 3.3% from 3.2% in August, while the headline CPI growth rate slowed to 2.4% from 2.5% in August. Notably, the shelter component, a major driver of core inflation, saw its smallest increase (+0.2%) since June.
- Jobless Claims: Weekly jobless claims totaled 258,000, up from last week's 225,000. This increase was influenced in part by Hurricane Helene.
Federal Reserve and Interest Rates
The market remains optimistic about a potential 25 basis point rate cut by the Federal Reserve at the upcoming November FOMC meeting. This sentiment is supported by recent data and comments from Atlanta Fed President Bostic, who expressed openness to skipping a rate cut. According to the CME FedWatch Tool, the probability of a rate cut stands at 82.9%, slightly up from 80.3% the previous day and 67.9% a week ago.
Treasury Yields
Treasuries settled mixed in response to the economic data and a strong 30-year offering. The 10-year yield increased by three basis points to 4.10%, while the 2-year yield decreased by two basis points to 4.00%.
Sector Performance
Oil prices continued to rise, with WTI crude oil futures settling 3.5% higher at $75.86 per barrel. This helped boost the S&P 500 energy sector by 0.8%. Other sectors that closed higher include information technology (+0.1%) and materials (+0.2%). The real estate sector experienced the largest decline (-0.9%), followed by communication services (-0.6%).
Market Indices Year-to-Date Performance
- Nasdaq Composite: +21.8% YTD
- S&P 500: +21.2% YTD
- Dow Jones Industrial Average: +12.6% YTD
- S&P Midcap 400: +11.6% YTD
- Russell 2000: +8.0% YTD
Upcoming Economic Events
Friday's economic calendar includes the release of the September Producer Price Index at 8:30 ET and the preliminary October University of Michigan Consumer Sentiment survey at 10:00 ET.
Guru Stock Picks
Steven Romick has made the following transactions:
- Reduce in NATL by 5%
- Sold out in NSTTW
- Add in XKRX:003550 by 1.74%
- New position in XKRX:271560
Jerome Dodson has made the following transactions:
Parnassus Value Equity Fund has made the following transactions:
Tweedy Browne International Value has made the following transactions:
- Reduce in OSTO:HUSQ A by 51.31%
- Sold out in XPAR:SCR
- Add in TSE:4368 by 33.07%
- New position in LSE:STEM
Steven Scruggs has made the following transactions:
Today's News
Tesla (TSLA, Financial) saw its stock dip by 1% as anticipation builds for the "We, Robot" event, where CEO Elon Musk is expected to reveal several innovations, including a robotaxi design and updates on the Optimus humanoid robot. Analysts view this event as a critical moment to determine if Tesla's tech disruptor status justifies its premium valuation. Musk has long touted the vast potential of a fully electric autonomous fleet, which he claims could be one of the most valuable innovations ever.
TD Bank Group (TD, Financial) experienced a 5.4% decline in its stock after agreeing to a $3 billion settlement over anti-money laundering investigations. This settlement involves consent orders with several U.S. regulatory bodies and includes an asset cap on its U.S. banking subsidiaries. The bank has already set aside provisions to cover most of this financial penalty.
HP Enterprise (HPE, Financial) hosted its inaugural AI day, announcing a new server featuring AMD's (AMD, Financial) AI chips. The HPE ProLiant Compute XD685 is designed for complex AI model training, leveraging AMD's Instinct MI325X accelerators. The company emphasized its readiness to support AI advancements with its hybrid solutions approach.
Advanced Micro Devices (AMD, Financial) saw its stock drop 4% as CEO Lisa Su introduced new AI processors at the Advancing AI 2024 event. The unveiling included the Turin EPYC data center CPUs and the Instinct MI325x AI accelerator, aimed at competing with Nvidia's (NVDA, Financial) offerings. AMD also showcased its Ryzen AI PRO 300 Series, targeting enterprise laptops with Microsoft's (MSFT, Financial) Copilot +.
GXO Logistics (GXO, Financial) shares soared 14% following reports of a potential sale. The company is exploring options with financial advisors after receiving interest from potential buyers. Jefferies analyst Stephanie Moore suggested that strategic buyers in the logistics sector could be likely candidates for acquisition.
Upstart Holdings (UPST, Financial) announced a deal to sell $2 billion worth of consumer installment loans to Blue Owl Capital (OWL, Financial). The transaction, structured with Atalaya Capital Management, will unfold over 18 months, with an initial purchase of a $290 million personal loan portfolio already completed.
Celsius Holdings (CELH, Financial) surged 11.6% after Stifel highlighted positive insights from the National Association of Convenience Stores trade show. Analyst Mark Astrachan expects improved sales trends for energy drinks, particularly in convenience stores, and anticipates Celsius will match its competitor Monster Beverage (MNST) in raising prices.
SuRo Capital (SSSS, Financial) revealed significant investments in AI during Q3, including a $17.5 million stake in OpenAI and increased positions in CoreWeave and VAST Data. The company has invested nearly $55 million in AI infrastructure companies, reflecting its strategic focus on this sector's growth potential.
Starboard Value's activist campaign targeting Pfizer (PFE, Financial) has lifted the company's shares, despite mixed reactions from Wall Street. Starboard's push for value-creating measures comes after taking a $1 billion stake in Pfizer, although the involvement of former executives Ian Read and Frank D'Amelio has since ended.
Stocks with high dividend growth and free cash flow yield, such as Twenty-First Century Fox (FOXA) and The Interpublic Group (IPG), have been identified by Wolfe Research as part of a defensive strategy that historically outperforms the S&P 500. This approach has delivered higher returns by focusing on companies with robust financials.
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