- Dow Jones Industrial Average is down 0.2%
- S&P 500 is down 0.4%
- Nasdaq 100 is down 0.6%
US futures are down today as tensions continue to rise in the Middle East and markets digest a wave of earnings out from Wall Street.
The economic calendar is predominantly focused on the US housing industry today, with housing starts and building permits figures due out following the latest mortgage data out this morning. Otherwise, attention is on speeches from several Federal Reserve members including Christopher Waller, John Williams, Michelle Bowman, Lisa Cook and Patrick Harker. That comes ahead of Jerome Powell speaking tomorrow.
Oil and gold prices rise
Oil prices have spiked today as the conflict in the Middle East casts more concerns over supplies, with Brent up 1.5% today at over $91 per barrel and WTI up 1.6% at over $87.70.
That is partly in response to Iran calling for an oil embargo to be applied to Israel over its air strikes in Gaza, highlighting the risk that the conflict spills over and embroils other major oil producing nations. That comes as US president Joe Biden visits Israel today in an effort to support Israel while trying to calm the situation down, although scheduled talks with leaders from several Arab countries including Jordan and Egypt have now been cancelled.
Gold has also popped today, trading up 1.2% at its highest level since early August at $1,945 an ounce as investors flock to safe haven assets in light of rising geopolitical tensions.
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
- Bank of America
- United Airlines
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:
- Lucid Group
- American Airlines
- United Airlines
- Plug Power
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:
Floor & Décor
Top US stocks to watch
Let’s have a look at the top stocks to watch today.
Tesla stock: Q3 earnings preview
Tesla is down 0.5% as markets prepare for the electric vehicle maker to report third quarter results after markets close today.
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.
Lucid Group deliveries disappoint
Lucid Group is down 0.6% today after the company delivered far fewer electric vehicles than hoped in the third quarter.
The company said yesterday it delivered 1,457 vehicles in the quarter, way below the 2,100 units pencilled-in by Wall Street. Production came in at just 1,550 and fell sharply from what we saw in the previous quarter, although Lucid did say an additional 700 vehicles are in transit to Saudi Arabia for final assembly.
Netflix stock: Q3 earnings preview
Netflix shares are down 0.8% and testing five-month lows ahead of third quarter results that will be released after the closing bell today. 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.
TSM stock: TSMC Q3 earnings preview
Taiwanese giant TSMC is down 1.8% before the bell and reports quarterly results tomorrow.
We already know that TSMC delivered quarterly revenue of NT546,732 million based on its monthly sales reports. That was ahead of forecasts, but still down about 10.8% from what we saw the year before. EPS is seen dropping at a sharper pace of over 32% to NT7.34 as margins come under pressure amid lower sales and higher costs.
Sales are under pressure as demand for consumer electronics has waned since booming during the pandemic, leaving TSMC’s customers with excess inventory that is still being worked through. Production of its new 3-nanometer chips is ramping-up, with demand for its most advanced tech helping counter softer conditions for its older options. Investors will be keen to discover how quickly major customers are moving to the more advanced chips. Demand for its advanced packaging solutions needed for AI chips is also robust.
Rising geopolitical tensions, with the US having announced it is tightening export curbs on advanced US-made semiconductors to stop them flowing to China, will likely be a concern ahead of the update.
NVIDIA and chip stocks remain under pressure
NVIDIA is down 3.3% this morning, at fresh October-lows as it follows other semiconductor stocks lower as markets fret the industry could lose access to the huge market in China after the US introduced new rules to crackdown on loopholes around its ban on exports of advanced chips to China.
Semiconductor stocks were hit by a selloff yesterday when the US government confirmed speculation it was tightening export restrictions. NVIDIA and others like AMD have tweaked their most advanced chips to ensure they don’t fall foul of the rules and can keep being sold to China, but the US is now directly targeting them to stop them being exported to the country.
NVIDIA confirmed its products will be impacted but said it does not expect the development to have a “near-term meaningful impact on our financial results”, although analysts are becoming more concerned with what it could mean over the longer-term.
Semiconductor stocks may also be under strain after European outfit ASML, which makes the vital equipment need to make chips around the world, warned sales will still flat next year, describing 2024 as a “transition year”, and posting net bookings plunged from the previous quarter and came in nowhere near forecasts.
Morgan Stanley miss down to lack of deals
Morgan Stanley is down 2.7% this morning after posting a sharper drop in profits than anticipated in the third quarter thanks to a lull in dealmaking.
EPS dropped to $1.38 from $1.47 the year before and came in short of the $1.41 forecast by Wall Street. Net revenue increased thanks to its investment management benefiting from higher management fees and assets under management and its wealth management business grew thanks to higher assets. They countered a drop in institutional securities thanks to softer investment banking conditions.
Ultimately, trading was stronger than expected but it was not enough to prevent weakness in investment banking, where fees are under pressure due to more supressed M&A activity.
Bank of America slips from 2-week high
That follows on from results out yesterday from Bank of America, which is down 0.6% at $27.45 and falling from two-week highs. The bank beat expectations as net interest income received a bigger boost from higher interest rates than anticipated, while its trading arm also delivered a stellar performance in a tough market.
Jefferies trimmed its target price on the second largest bank in the US this morning to $28 from $29.
United Airlines issues weak earnings guidance
United Airlines is down 5.5% and dropping toward 2023-lows after a beat in the latest quarter was overshadowed by disappointing earnings guidance as higher fuel prices and the conflict in the Middle East hurt profits. The weak forecast is also dragging down rivals today, with American Airlines, Southwest Airlines and Delta Air Lines all down 1% to 1.5% today.
United, which will be holding a conference call with investors about the results today, said it expects to deliver adjusted EPS of $1.80 in the fourth quarter if the ban on flights to Tel Aviv lasts until the end of October, or as low as $1.50 it the disruption continues for the remainder of 2023. That was disappointing compared to the $2.10 predicted by analysts. That took the shine away from solid third-quarter results, when adjusted EPS jumped to $3.65 and blew past the $3.34 estimate.
P&G beat driven by higher prices
Procter & Gamble shares are up 1.7% and at October-highs after beating expectations in the first quarter of its new financial year as it reaped rewards from higher prices.
Net sales climbed 6% from last year in the first quarter to $21.9 billion and came in ahead of the $21.6 billion forecast, while core EPS jumped 17% to $1.83 and came in above the $1.72 forecast. Grooming, healthcare, homecare and baby product sales all grew faster than expected, countering more disappointing growth in sales of beauty products. All-in-all, topline growth was driven purely by a 7% increase in prices, offsetting a 1% drop in volumes.
P&G said it now expects full year sales to rise 2% to 4%, having previously predicted 3% to 4%, and reiterated its EPS target. It did, however, say it is on course to deliver the upper-end of its guidance for organic sales to grow 4% to 5% and for core EPS.
Lockheed Martin rally survives earnings test
Lockheed Martin shares are up 0.2% this morning. The defence giant proved highly volatile yesterday, initially sinking before reversing its losses and hitting a six-week high before falling back to close up just 0.2%.
Lockheed and other defence stocks have rallied from recent lows as the conflict in the Middle East drives up appetite and the stock has managed to hold its ground despite the development having no impact on its near-term results. Still, Lockheed did say that it is receiving more supplemental requests to support Ukraine, Israel and potentially Taiwan.
Lockheed beat expectations in the latest quarter despite a weak performance from its aeronautics division that makes the F-35 jet, but countered by rising demand for missiles, artillery and other weaponry. It reiterated its full year guidance.
A number of brokers tweaked their target prices on Lockheed this morning. Wells Fargo raised its target to $450 while a wave of others cut their view, including JPMorgan to $481, Morgan Stanley to $510 and Citigroup to $540.
The update also influenced other defence stocks, with RTX and Northrop Grumman trading up as much as 0.6% this morning.
Meta: Reels gaining traction ahead of results
Meta shares are down 0.6% at $322.20 this morning and giving back some of the gains booked yesterday, when UBS raised its target price to $415 from $400.
The stock also found support yesterday from a recent note from Morgan Stanley that said more consumers are using Reels and that this engagement will help its improve monetisation next year. Meta releases quarterly results next week, when analysts are anticipating an improving picture for its social media business and more losses from its experimental operations covering everything from the metaverse and AR headsets to its recently-revealed Ray-Ban smart glasses.
Visa falls on fears of debit fee reduction
Visa shares are down 1.6% at $237.26 and falling from their highest level in almost a month today.
Keybanc raised its target price on the payments giant to $275 this morning. However, investors appear to be digesting news that broke yesterday, when the Federal Reserve said it is considering revising the cap on fees merchants must pay companies like Visa and Mastercard when consumers pay using their debit cards. The current maximum was set a decade ago and analysts at Cowen & Co warned this could be reduced by as much as 20%, which could deliver a big blow to the payments industry.
Albemarle hit by target price cut
Albemarle is down 2.6% at $165 after BofA Global Research downgraded the chemicals company to Underperform from Neutral and set a target price of $161.