- Dow Jones Industrial Average is down 0.3%
- S&P 500 is down 0.3%
- Nasdaq 100 is down 0.4%
US futures are trading lower today and the S&P 500 and Nasdaq 100 are both on course to lock-in their worst weekly performance in three weeks when markets close today.
US treasury yields have pulled back today but remain not far from the 16-year highs we saw in 10-year bond yields yesterday, which sit at 4.95% this morning and continue to sap energy out of stocks. That is thought to be providing the Federal Reserve more room to manoeuvre but Federal Reserve chair Jerome Powell said that the resilient economy and labour market could require further tightening.
Markets will be keeping an eye on more comments from Federal Reserve members when Patrick Harker and Loretta Mester deliver speeches today. These will be the last speeches from the central bank ahead of its blackout period heading into the next Fed meeting on November 1.
Middle East tensions push up oil and gold
Oil and gold prices continue to climb higher because of the conflict in the Middle East, which is raising appetite for safe haven assets and sparking concerns that major oil supplies could be disrupted.
Gold is up 0.3% this morning at $1,979 and trading at multi-month highs.
Brent and WTI are both up around 0.4% today and at their highest level in almost three weeks.
Can Bitcoin return above $30,000?
Bitcoin is up 4% today and briefly returned over $30,000 for the first time in over two months today before pulling back, with the cryptocurrency currently trading just under $29,900. The move is being attributed to higher hopes that application for an exchange-traded fund tracking Bitcoin will be approved.
Courts are currently in the process of evaluating applications and one is expected to issue a mandate today that could provide support to an effort by Grayscale Investments to convert its Bitcoin trust into an ETF.
That is providing support to cryptocurrency stocks, with the likes of Marathon Digital, Riot Platforms and Coinbase all up between 3% to 6%.
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:
- Enphase Energy
- Eli Lilly
- Jacobs Solutions
- RTX Corp
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:
- Marathon Digital
- Riot Platforms
- Plug Power
- CNH Industrial
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:
Top US stocks to watch
Let’s have a look at the top stocks to watch today.
SolarEdge hammers solar stocks
Solar stocks are sinking today after SolarEdge’s revenue disappointed and sparked fears that the industry could be suffering from higher cancellations and delays in orders.
SolarEdge is down over 28% and at its lowest level since April 2020 after it said revenue will be between $720 million to $730 million in the third quarter, which was way below the $908.4 million forecast by Wall Street. It warned more European distributors have cancelled orders, which it blamed on higher inventory levels, and that installation rates have been slower than expected.
The news is hurting a variety of solar stocks. Enphase Energy is down 14.7% and at a three-year low. Sunrun and Sunnova Energy are down and at their lowest level since April 2020. Other stocks under pressure include First Solar and JinkoSolar.
Tesla stock hits 2-month lows
Tesla shares are down another 0.9% today at $218.15 after suffering their biggest daily fall in six months yesterday, when it was hit by a selloff following disappointing earnings and a bleaker outlook from CEO Elon Musk. The stock is at a two-month low.
Tesla has been slashing prices to help keep demand growing. This has hammered margins and is hurting profitability. Plus, while a big sequential fall in output in the third quarter was put down to factory downtime, deliveries also suffered and inventory levels remain elevated to keep investors worried that demand is softening. That is fuelling fears that more price cuts will be needed to keep its factories busy, and that profitability will come under further strain.
“Tesla is an incredibly capable ship,” Musk said. “We’re not going to sink, but, even a great ship in a storm has challenges.”
The update has seen a wave of brokers cut their target price on Tesla. The average target price has fallen to $228.50 today from over $241 a month ago, according to a consensus from Refinitiv.
The more pessimistic outlook is also weighing on smaller electric vehicle stocks, with Rivian, Lucid Group and Chinese rivals like NIO and Xpeng all hitting multi-month lows yesterday.
Netflix results impress Wall Street
Netflix shares are trading marginally lower today at $401.52 after the streaming giant popped over 16% yesterday and hit a one-month high. That was the biggest daily gain since early 2021 as investors were impressed by its results and pace of subscriber additions, installing confidence that its new strategy is paying-off.
The well-received results led to a wave of upgrades. Morgan Stanley upgraded it to Overweight and hiked its target price to $475, stating it believes Netflix can accelerate growth and expand margins. Truist Securities upgraded the stock to Buy and raised its target price to $465. Keybanc upgraded it to Overweight and set a $510 price target, describing Netflix as a “cleaner story” as we approach 2024. Several other brokers also raised their target price.
“Netflix silenced skeptics with blowout Q3 subscriber gains,” said analysts at Bloomberg Intelligence, which added that its revenue growth guidance could be “conservative” given incoming price hikes.
“There is nothing not to love in the report as they crushed on all major metrics while capital return is ramped, prices are moving up, and the advertising initiative explodes,” said Vital Knowledge.
Apple stock hits 2-week low
Apple shares are down 0.4% this morning and set to open at a two-week low today, with Wall Street and investors becoming increasingly concerned about the growth outlook ahead of quarterly results out early next month.
CEO Tim Cook recommitted to Apple’s interest in expanding smart manufacturing in China during a meeting with senior officials in Beijing, according to media reports. He told minister Jin Zhuanglong that Apple will help China’s economic development and help supply chain partners grow. That comes as Apple ramps-up production of devices in other countries like India.
New export curbs weigh on US chip stocks
US semiconductor stocks remain under pressure as market fret over what new US curbs on exports of advanced chips to China will have on the industry.
NVIDIA is down 0.4% and at new October-lows of $419.30. It had its target price cut to $650 from $750 by Keybanc this morning. AMD is broadly flat today but lingering near two-week lows.
China is a big market for US chipmakers. For example, NVIDIA makes about one-fifth of its sales in the country. The industry has been banned from exporting their most advanced chips to China for a year now but we have not seen much of a financial impact as NVIDIA, AMD and others have tweaked their chips so they can evade the export rules and keep being sold to Chinese customers – but the US is now trying to close these loopholes.
American Express delivers beat
American Express is down 0.2% despite beating expectations in the latest quarter as its wealthier customers prove more resilient in tough conditions.
The company said volumes through its payments network rose 7% in the third quarter and that revenue, net of interest expense, rose 13% to $15.38 billion, coming in just ahead of the $15.33 billion forecast. Revenue grew faster than volumes thanks to higher fees and a mix of more premium products. EPS leapt 34% to $3.30 and blew the $2.95 forecast out of the water. It cited buoyant travel and leisure spending, and said spending in restaurants was also pleasing.
Amex did hike the amount of provisions put aside for potentially bad loans by 58% compared to last year, to $1.23 billion, in a sign that it is feeling more cautious about the economic outlook and anticipates more loans to turn sour. Still, Amex reiterated its hopes of growing revenue by 15% to 17% this year and to deliver annual EPS of $11.00 to $11.40.
Visa and Mastercard “high-quality compounders”
Visa shares are trading flat today after UBS initiated coverage on the payments giant at Buy.
That came after the stock experienced its biggest daily fall in almost a month yesterday, when it announced chairman Alfred Kelly, who previously led the payments giant as CEO, will step down on January 23, 2024. Visa intends to appoint lead independent director John Lundgren as his replacement.
Mastercard is up 0.2% after it was also given a Buy rating by UBS, which said the two companies are “high-quality compounders” that boast several attractive qualities.
Both Visa and Mastercard report earnings next week. Visa is forecast to report a 9.9% rise in revenue to $8.55 billion and adjusted EPS is seen climbing 16% to $2.24. Mastercard is expected to report a 13.4% rise in revenue to $6.52 billion and a 20.4% jump in EPS to $3.23.
Eli Lilly tests Mounjaro for patients as young as 6
Eli Lilly shares are down 0.2% today. The stock hit all-time highs earlier this week as markets get increasingly hyped-up about the prospects around its diabetes drug Mounjaro and its potential to help patients lose weight.
The pharmaceutical giant is reportedly testing Mounjaro in the hopes of getting it approved for use on patients as young as six years old, according to unnamed sources speaking to Bloomberg. European rival Novo Nordisk, which has its own weight-loss drug named Wegovy, is also thought to be testing a less powerful version of its drug called Saxenda on patients as young as six, the report said.
The age range is seen as significant. The report said US and European regulators have so far only approved weight-loss drugs for kids as young as 12 and some analysts said that most estimates for sales of drugs like Mounjaro don’t include younger cohorts, leaving potential for an already rosy outlook to improve further if they can demonstrate they are effective on younger patients.
Meanwhile, we also heard this morning that Eli Lilly has recruited Swiss firm CordenPharma to produce the active ingredient in Mounjaro, according to unnamed sources speaking to Reuters. CordenPharma is thought to be preparing to produce tirzepatide at its factory in Colorado.
Merck teams-up with Daiichi on cancer
Merck is up 0.5% this morning after announcing it is collaborating with Daiichi Sankyo in oncology and cancer therapies in a deal worth billions of dollars.
The two firms will co-develop and sell three of Daiichi Sankyo’s cancer drugs around the world, except for in Japan where Daiichi Sankyo will retain exclusive rights. In return, Merck is paying $4 billion upfront and up to another $1.5 billion in continuation payments over 24 months. It could cough-up another $16.5 billion if sales milestones are met, meaning the deal could be worth up to $22 billion in total! The three drugs are at various stages of clinical development.
RTX lingers at 1-month highs ahead of results
RTX shares are up 0.3% and lingering at one-month highs. Defence stocks have rallied since conflict erupted in the Middle East, although it has tempered this week.
RTX Corp releases results next week and will see the recent rally tested. Fellow defence stock Lockheed Martin managed to retain recent gains after it released an update this week, which suggest RTX could follow a similar path if it can avoid any negative surprises.
Sales are forecast to rise 9.8% from the year before to $18.6 billion in the third quarter and adjusted EPS is seen staying broadly flat at $1.21. Engine maker Pratt & Whitney and, to a lesser degree, Collins Aerospace Systems, will provide the topline growth and counter weakness from its missile, defence, intelligence and space operations. Earnings won’t grow because the topline expansion will be eaten into by higher interest costs and taxes.
Pratt & Whitney is seen booking billions in charges to account for the problems with a powder used on its engines.
Northrop Grumman is up 0.4% and is also due to report next week. The company is forecast to report a 6.8% rise in quarterly revenue to $9.58 billion and a 1.8% decline in EPS to $5.79. All of its divisions are expected to grow sales.
Are you ready for Big Tech earnings?
Big Tech stocks will start reporting quarterly results next week, with all eyes on whether the largest publicly-listed companies can keep providing support to indices. Microsoft, Alphabet, Meta and Amazon will all report results next week, with Apple to follow the week after.
All five are expected to report earnings growth above the average forecast for the S&P 500 this season, suggesting they could keep outperforming. Advertising stocks Meta and Alphabet are seen delivering the fastest growth. Valuations have tempered since last earnings season, with most now trading at a discount to the Nasdaq 100.
Find out everything you need to know, including our individual mini previews on the five Big Tech giants and all the consensus numbers you need, in our Big Tech Q3 Earnings Preview.