TODAY’S GAME PLAN: from the trading
desk, this is not research
TODAY’S ECONOMIC DATA: 8:30ET Personal Income, Spending, PCE *; 9:45ET MNI Chicago PMI; 10:30ET U. of Mich. Sentiment
HIGHLIGHTS and News:
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Kamala Harris said helping the economy would be her day one priority but offered few specifics
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Donors to Harris’s campaign are pushing her to drop a proposed tax on the wealthiest Americans; NYT
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Intel Mulls Foundry Split & Other Options Amid Stock Collapse
Global stocks rose as signs of moderating inflation cemented expectations of interest-rate cuts across the developed world. Euro-area inflation plunged to the lowest
level since mid-2021 in August – reinforcing arguments for another ECB rate cut. CPI rose 2.2% from a year ago, significantly lower than July’s 2.6%. French inflation eased to its lowest level in three years in August. MSCI’s world share index ticked 0.2%
higher, heading for a 1.8% monthly gain. Expectations for monetary easing saw investors pump $20.7 billion into global bond funds this past week, Bank of America said. Core inflation in Tokyo accelerated for a fourth straight month in August, data showed,
with the 2.4% price increase signaling further BoJ rate hikes ahead.
EQUITIES:
MSCI REBALANCE TODAY – Market volumes on MSCI Rebalance days increased 39% for S&P 500 names and 19% for Russell 2000 names.
US equity futures are higher ahead of the much anticipated PCE data, which is expected to show that the Fed’s preferred inflation index rose 2.6% in July year-on-year, slightly more than
the prior month but unlikely to raise alarm. Recent US inflation readings are “still far” from the Fed’s 2% goal, Fed’s Raphael Bostic said. Nvidia edged higher ahead of the bell, while other tech names, including Marvell Technology and Dell Technologies were
boosted by forecast-beating results.
Futures ahead of the data: E-Mini S&P +0.5%, Nasdaq +0.8%, Russell 2000 +0.6%, DJI +0.25%
In pre-market trading, Dell Technologies (DELL) shares rose 6% after the computer hardware company reported second-quarter results that beat expectations, with particular strength in
orders for AI servers. Intel (INTC) shares rise 2.6% after Bloomberg News reported that the company is discussing various scenarios, including a split of its product-design and manufacturing businesses, as well as which factory projects might potentially be
scrapped. Abercrombie & Fitch (ANF) shares rise 2.3% after the apparel retailer was upgraded to buy from neutral at Citi. Autodesk (ADSK) shares are up 3.7% after the maker of engineering software reported second-quarter results that beat expectations. Elastic
(ESTC) shares are down 27% after the application-software company cut its full-year revenue forecast. Intuitive Machines shares soar 19% after the company said it received a $116.9 million contract from NASA. Lululemon (LULU) shares rise 4% after the activewear
company reported second-quarter earnings. MongoDB shares rise 15.14% after the database software company reported second-quarter results that beat expectations and raised its full-year forecast. Ulta Beauty (ULTA) shares drop 8.5% after the cosmetics retailer
trimmed its sales forecast following weaker-than-expected second-quarter results.
European gauges edge higher as data showed euro-area inflation easing to a three-year low in August. Coming after similar slowdowns in France, Germany and Spain, the print bolsters the
case for the European Central Bank to cut rates again next month. The Euro Stoxx 600 touched a record intraday high in early trading and Britain’s FTSE 100 rose to a three-month peak. Real estate and consumer product shares are leading gains while technology
and media underperform. Chipmaker-machinery stocks decline in Europe after a Bloomberg report saying Intel is considering splitting the design and manufacturing businesses. Stoxx 600 +0.3%, DAX +0.2%, CAC +0.4%, FTSE 100 +0.3%. REITs +1.7%, Utilities +1%,
Basic Resources +0.9%. Media -0.5%, Technology -0.3%.
Shares in Asia were broadly higher, capping a fourth-straight monthly gain, led by strength in Chinese shares as support measures for the property sector added to positive tailwinds.
The MSCI Asia Pacific Index rose 0.8%, with Alibaba and Tencent among the biggest contributors. Key gauges in Hong Kong and mainland China led the advance. Chinese property stocks rallied after news that the nation is considering allowing homeowners to refinance
mortgages in order to lower borrowing costs. Hang Seng Tech Index +2.9%, CSI 300 +1.3%, Hang Seng Index +1.15%, Singapore +1.1%, Topix +0.7%, ASX 200 +0.6%, Kospi +0.45%, Taiwan +0.3%, Sensex +0.3%, Vietnam +0.2%.
FIXED INCOME:
Treasuries are mixed with the yield curve flatter as US trading gets under way, led by similar price action in UK and German bonds after August euro-area headline
and core inflation slowed as expected. US 10-year yield is steady at 3.86% ahead of the PCE data and on course for their longest monthly winning streak in three years.
METALS:
Gold held near a record high as traders waited for a US inflation print that may offer clues on the Federal Reserve’s rate-cutting path. The report is expected to
show the three-month annualized rate of core inflation down to 2.1%, just above the central bank’s 2% target, which would support the case for rate cuts. Spot gold -0.05%, silver +0.5%.
ENERGY:
Oil prices are steady and are on track for weekly gains, supported by a widening disruption of crude production in Libya as a result of a standoff over leadership
of the country’s central bank. Five export terminals in the east with a combined capacity of 800,000 barrels a day have been closed as a result of the standoff. Still, the effect on the market has been relatively muted so far. Brent crude is set for its first
back-to-back monthly loss this year on fears that slowing economic growth, especially in China, will impact demand. WTI -0.05%, Brent +0.05%, US Nat Gas -0.1%, RBOB +0.7%.
CURRENCIES:
In currency markets, the dollar steadied near a one-week high versus major peers, on track to snap a five-week losing streak although still heading for around a 2.5%
monthly loss. The euro inched higher following its worst two-day performance since mid-June. Euro-area inflation plunged to the lowest level since mid-2021 while French inflation eased to its lowest level in three years. Japan’s yen is lower, reversing earlier
gains after stronger-than-expected Tokyo inflation supported the case for the Bank of Japan to gradually raise interest rates. US$ Index +0.02%, GBPUSD +0.05%, EURUSD +0.05%, USDJPY +0.3%, AUDUSD -0.03%, USDNOK +0.25%, USDCHF +0.2%.
Spot Bitcoin -0.1%, Spot Ethereum -1.1%.
- Upgrades
- 1-800-Flowers (FLWS) Raised to Neutral at DA Davidson; PT $7
- Abercrombie & Fitch (ANF) Raised to Buy at Citi
- Banco Macro (BMA AR) ADRs Raised to Neutral at JPMorgan; PT $78
- CrowdStrike (CRWD) Raised to Buy at HSBC; PT $339
- Dell Technologies (DELL) Raised to Outperform at Fox Advisors
- Grupo Financiero Galicia (GGAL AR) ADRs Raised to Overweight at JPMorgan
- Marvell Technology (MRVL) Raised to Buy at Fubon; PT $90
- YPF (YPFD AR) ADRs Raised to Buy at Jefferies; PT $30
- Downgrades
- Apple (AAPL) Cut to Hold at First Shanghai; PT $240
- Baozun (BZUN) ADRs Cut to Hold at CLSA; PT $2.20
- Dollar General (DG) Cut to Market Perform at Telsey; PT $103
- Cut to Equal-Weight at Morgan Stanley; PT $100
- Elastic (ESTC) Cut to Neutral at Baird; PT $95
- EnLink Midstream (ENLC) Cut to Equal-Weight at Wells Fargo; PT $15
- Cut to Hold at Stifel; PT $15
- Excelerate Energy (EE) Cut to Underweight at Wells Fargo; PT $19
- Kohl’s (KSS) Cut to Hold at TD Cowen; PT $21
- NuCana (NCNA) ADRs Cut to Market Perform at William Blair
- Parex Resources (PXT CN) Cut to Neutral at Eight Capital; PT C$16
- Cut to Sector Perform at Peters & Co; PT C$17
- Suburban Propane Partners (SPH) Cut to Underweight at Wells Fargo
- Ulta Beauty (ULTA) Cut to Outperform at Raymond James; PT $450
- Initiations
- AeroVironment Inc (AVAV) Reinstated Buy at William O’Neil
- GE Vernova (GEV) Rated New Buy at William O’Neil
- Greenfire Resources (GFR) Rated New Sector Outperform at Peters & Co
- Nuvalent (NUVL) Rated New Overweight at Barclays; PT $100
- Primerica (PRI) Rated New Neutral at Piper Sandler; PT $283
- Saturn Minerals (SOIL CN) Rated New Sector Perform at Peters & Co
- Trevi Therapeutics (TRVI) Rated New Outperform at Raymond James; PT $9
- Rated New Buy at HC Wainwright; PT $6
Data sources: Bloomberg, Reuters, CQG
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