- Dow Jones Industrial Average is down 0.2%
- S&P 500 is down 0.3%
- Nasdaq 100 is down 0.4%
US futures are down as markets weigh-up the conflict in the Middle East with the start of the third-quarter earnings season, with a number of big names including Bank of America, Goldman Sachs, J&J and Lockheed Martin reporting today.
The economic calendar for today includes US retail sales and industrial production for September, business inventories for August and the NAHB housing market index. Federal Reserve members Michelle Bowman, Neel Kashkari and Tom Barkin will also be speaking today.
Most discussed Reddit stocks
Below is a list of the top 10 most mentioned US stocks on the WallStreetBets thread on Reddit over the last 24 hours, according to data from Quiver Quantitative. Exchange-Traded Funds (ETFs) and other instruments have been excluded:
- Lockheed Martin
- RTX Corp
- Grupo Televisa
Most active US stocks before the bell
Below are the most active stocks with a valuation of at least $500 million before the bell, based on trading data taken from Bloomberg:
- Bank of America
- CIRCOR International
- Marathon Digital
- Lucid Group
US premarket winners and losers
Here are the stocks worth at least $500 million experiencing the sharpest movements in premarket trade, according to data from Bloomberg:
Blue Owl Capital
Top US stocks to watch
Let’s have a look at the top stocks to watch today.
Higher rates and trading deliver BofA beat
Bank of America is up 1.1% after becoming the latest major US bank to impress the markets by beating earnings expectations in the third quarter.
The bank reported an 11% rise in EPS to $0.90, which was welcomed considering Wall Street had only anticipated a mild 1.5% rise to $0.82. Net interest income rose faster than anticipated at 4% thanks to higher rates, while non-interest income increase 3% thanks to a bumper performance from its trading arm. It increased provisions, which totalled $1.2 billion.
Bank of NY Mellon benefits from higher rates
Bank of NY Mellon is up 0.4% after also beating expectations this morning, with adjusted EPS of $1.27 coming in ahead of the $1.15 forecast. Net interest income rose 10% as it reaped more rewards from loans, but overall revenue grew at a slower pace of 4.4%.
Goldman Sachs misses on write-downs
Goldman Sachs is down 0.1% after earnings fell much sharper than expected in the latest quarter after being dragged down by a write-down on its GreenSky fintech arm and property investments, as well as losses from the loan portfolio held by consumer banking arm Marcus.
EPS of $5.47 came in much lower than the $6.82 forecast by analysts as a result. The one bright spot was in investment banking as fees held broadly flat from last year thanks to a recent revival in IPOs and an improvement in debt underwriting.
“We continue to make significant progress executing on our strategic priorities and we’re confident that the work we’re doing now provides us a much stronger platform for 2024. I also expect a continued recovery in both capital markets and strategic activity if conditions remain conducive. As the leader in M&A advisory and equity underwriting, a resurgence in activity will undoubtedly be a tailwind for Goldman Sachs,” said CEO David Soloman.
J&J delivers beat and raise
Johnson & Johnson is up 1.6% and at a three-week high after beating expectations in the latest quarter and widening its profit target for the full year.
The pharmaceutical firm reported third-quarter sales of $21.35 billion, ahead of the $21.04 billion forecast thanks to a beat from its anti-inflammatory drug Stelara, which is used to treat conditions like arthritis. EPS of $1.69 came in ahead of the $1.62 estimate. It also booked a large $21 billion one-off gain from the spin-off of consumer healthcare unit, having recently completed an offer allowing shareholders to trade in their shares for stock in Kenvue.
J&J said it is now expecting annual adjusted EPS, excluding its consumer healthcare unit, of $10.07 to $10.13, compared to its previous range of $10.00 to $10.10.
Lockheed Martin stock: Earnings will test recent rally
Lockheed Martin shares are down 0.7% after hitting six-week highs yesterday, ahead of quarterly results due out later today. Appetite for defence stocks has increased amid conflict in the Middle East and rising geopolitical tensions, but is pulling back today.
The recent rally, which has allowed Lockheed shares to recover from one-year lows, will be tested by the update. Investors are expecting the conflict and rising geopolitical tensions to push-up demand but this will not have any immediate impact on its results.
Lockheed Martin is expected to report mild 1.1% year-on-year rise in revenue to $16.76 billion as a weak performance from the aeronautics unit that is known for making F-35 jets counters tepid growth from its other businesses. Net earnings per share are forecast to fall 2.9% to $6.67.
Other defence stocks could also move depending on how Lockheed’s results are received, so keep an eye on RTX Corp and Northrop Grumman, which are both trading marginally higher before the bell.
Tesla stock: Wall St sees no upside ahead of earnings
Tesla shares are down 0.3% at $253.15. Evercore ISI raised its target price on the electric vehicle maker to $180 this morning, although that is still significantly below the current share price. The average estimate on Wall Street stands at $236.80.
Tesla reports results tomorrow. All eyes are on what the impact of price cuts, as well as the big delivery miss in the third quarter, has had on margins and whether it will need to offer more discounts in order to drive-up demand going forward.
The lower production was put down to factory downtime, but it only managed to clear a small amount of inventory to suggest demand is more muted. Wall Street has become more cautious on its ability to grow earnings, which are set to fall in the third quarter as margins contract.
You can find out everything you need to know, including all the consensus numbers to watch out for and our latest technical analysis on the share price, in our Tesla Q3 Earnings Preview.
Netflix’s new strategy faces first test
Netflix is down 0.2% before the bell and also reports earnings tomorrow. The spotlight is on the initial success of its crackdown on password sharing and a push into advertising as it tries to accelerate growth.
Netflix has said revenue growth will accelerate in the second half as its crackdown forces more users to pay-up for its services, and analysts believe subscriber additions will speed-up too. The ad-supported tier may take more time to really make an impact and could be more of a slow-burner.
The risk this season is that markets are expecting too much too quickly from the new strategy, especially as its content slate has been weakened by the ongoing strike by actors in Hollywood and makes it more difficult to convert ‘borrowers’ into paying subscribers. That suggests there is room for disappointment if Netflix’s new plan doesn’t pay-off as quickly as investors hope, and that Netflix may have to over-deliver in order to really impress.
You can find all the consensus numbers and our technical analysis in our Netflix Q3 Earnings Preview.
Wyndham Hotels pops on hostile takeover
Wyndham Hotels & Resorts is up over 14% at $79.25, marking an eight-month high, after Choice Hotels launched a proposal to buy the company for $90 per share in a cash-and-stock deal, giving Wyndham a valuation of around $7.8 billion.
The offer is for $49.50 in cash and 0.324 shares in Choice Hotels for each Wyndham share. Choice said it was making its latest proposal public after management from Wyndham decided to “disengage from further discussions … following nearly six months of dialogue”. Choice argues the deal would enhance the return on investment for both companies and deliver about $150 million in annual run-rate synergies.
Amazon to launch ecommerce in South Africa
Amazon shares are down 0.7% after the company announced it will launch its online shopping services in South Africa in 2024, inviting independent sellers the opportunity to register with its marketplace as it tries to take on companies like TakeAlot, owned by Naspers.
Has Apple lost its lead in China?
Apple shares are down 0.4% in premarket trade today.
The stock took a hit in early trade yesterday amid reports that its iPhone 15 is not proving as popular as hoped in China, but it recovered almost all of its losses to close broadly flat.
The report said iPhone 15 sales in China are down about 4.5% over their first 17 days of release compared to its predecessor the year before, according to research from Counterpoint Research and published by Bloomberg, putting it on course to see the worst debut of an iPhone in the country since 2018. That coincided with a research note from Jefferies, which warned it thinks sales are down at a much sharper double-digit percentage because of the success of Huawei’s new Mate 60 Pro, which it believes has allowed the Chinese firm to leapfrog Apple and take the top spot in the market.
Snap impresses with 2024 targets
Snap, the owner of social media platform Snapchat, is down 0.8% this morning and giving back some of the gains secured yesterday.
The stock popped 12% yesterday after a report citing an internal memo from the company’s CEO pointed toward improving trends. The memo said it is expecting to have over 475 million daily active users in 2024, up from its last reported figure of 397 million. That is markedly higher than Wall Street forecasts for Snap to have 452 million users by the end of 2024.
It also said that advertising revenue should rise over 20% next year, ahead of the 14% growth pencilled-in by analysts.
Dollar Tree rises on upgrade
Dollar Tree is up 2.2% at $112.50, marking a four-week high, after Goldman Sachs upgraded the retailer to Buy and set a target price of $137, significantly above the current share price. The broker believes it has strong potential to grow earnings and said it is continuing to gain market share as consumers seek savings.
The current average target price on Dollar Tree, set by 27 brokers, stands at over $150, according to a Refinitiv-compiled consensus.
Grupo Televisa has price target cut
Grupo Televisa is up 2.1% at $2.94 after Citigroup lowered its target price to $5.00 from $8.50 this morning. The media stock is down almost 38% this year and hit all-time lows last week. The current average target price set by nine brokers, according to a Refinitiv-compiled consensus, stands at more than double the current share price at $6.00, although that has been steadily coming down in recent months.