Daily Game Plan

TODAY’S GAME PLAN:  from
the trading desk, this is not research

DATA/HEADLINES:  ET 7:00 a.m.: US MBA Mortgage Applications,
8:15 a.m.: US April ADP Employment Change, 9:45 a.m.: US April S&P Global Manufacturing PMI, 10:00 a.m.: US March Construction Spending, JOLTS Job Openings, April ISM Manufacturing, 10:30 a.m.: EIA US Crude Oil Inventories, 2:00 p.m.: FOMC Rate Decision

TODAY’S HIGHLIGHTS and News:  

• Biden announces fresh round of $6.1 billion in student loan handouts, brings total given to $160 billion
• NYC police break up Columbia protest as clashes erupt at UCLA

Global stocks were lower as investors awaited the Federal Reserve’s decision on interest rates. Jerome Powell is anticipated to signal a commitment
to maintaining higher rates for an extended period due to persistent inflation. Options traders are braced for the biggest Fed-day move in the S&P 500 in almost a year, Citi said. Amazon gained in premarket trading after its AWS unit posted strong sales growth,
making up for the company’s lower-than-expected current-quarter sales forecast.  Treasuries struggled for direction and the dollar edged higher in holiday-thinned sessions in Europe and Asia.

EQUITIES: 

US equity futures were lower and are expected to see another day of losses with S&P 500 futures down 0.4% as investors assess mixed corporate earnings
and await the Federal Reserve’s rate decision. In premarket trading, Advanced Micro Devices shares slid 6.8% following a disappointing forecast for artificial intelligence processors, while Amazon’s shares rise 2.2% after beating first-quarter expectations.
Cryptocurrency-linked stocks decline amidst concerns over higher interest rates, with Coinbase Global, Marathon Digital, and others experiencing losses. In premarket trading, Inari Medical shares surge 12% after reporting strong sales, while Leggett & Platt
shares drop 13% after cutting its dividend. Pinterest shares gain 17% on better-than-expected results, while Polestar ADRs fall 7.9% due to a postponed earnings report and accounting errors. Root shares jump 28% after surpassing analyst revenue estimates,
and Sirius XM shares rise 1.7% following a rating upgrade by Goldman Sachs. Conversely, Skyworks Solutions shares slump 14% after issuing weak forecasts, and Starbucks shares slide 12% due to lower-than-expected sales. Additionally, Lemonade shares rise 8.1%
after raising its revenue forecast for the year. TransMedics shares gain 14% after reporting better-than-expected sales and raising its revenue guidance for 2024. Earnings include eBay, Qualcomm, KKR, Mastercard, DoorDash, Carvana, AIG, Marriott, MetLife,
Kraft Heinz, Yum! Brands, DuPont.

PFE +1.2% , *PFIZER SEES FY ADJ EPS $2.15 TO $2.35, SAW $2.05 TO $2.25

Futures ahead of the data: E-Mini S&P -0.4%, Nasdaq -0.6%, Russell 2000 -0.4%, DJI -0.2%.

Most European markets were closed on Wednesday for Labor Day. FTSE 100 rose after recording back-to-back monthly gains, with investors awaiting the Federal Reserve’s
policy decision later in the day for hints on its interest rate path. GSK advanced 1.7% after the drugmaker raised its full-year profit forecast and said its sales would be higher in the first half of the year. Haleon fell 1.7% after the consumer healthcare
firm’s first-quarter revenue missed estimates. Aston Martin dropped 7.2% after the luxury carmaker posted a bigger-than-expected first-quarter pretax loss. FTSE 100 +0.4%.

Asian stocks, as represented by the MSCI Asia Pacific Index, declined by 0.7% due to worries about the Federal Reserve’s monetary policy. Most regional markets were
closed for holidays, contributing to subdued trading. Concerns about labor costs in the US reinforced expectations of unchanged interest rates from the Fed. However, positive sentiments were noted due to China’s government pledges to address the housing crisis
and boost the economy. Mainland China markets remained closed for the week, with attention shifting to Hong Kong’s GDP figures and earnings from Japanese companies. Notable movers in the market included West Japan Railway and Lasertec posting gains, while
Otsuka Corp. and Endeavour Group experienced declines. Additionally, China’s fourth-quarter earnings in 2023 were reported as the worst since 2018. Overall, market sentiment was influenced by concerns over US interest rates and optimism surrounding China’s
economic measures. Topix -0.5%, Nikkei 225 -0.3%, ASX 200 -1.2%.

FIXED INCOME: 
 

Treasuries are showing narrow mixed movements, with yields remaining close to Tuesday’s levels, while European rates experience broader declines, particularly in gilts
following a 10-year bond sale. In the US, a data-heavy session is anticipated, featuring the April ADP employment change, manufacturing gauges, and March JOLTS job openings, preceding the Federal Reserve’s policy announcement. Most US yields are slightly up
for the day, with the 10-year hovering around 4.68%, while gilts lag behind by 3 basis points in the sector. Bond market positioning suggests a leaning towards short positions ahead of the meeting, anticipating a potentially hawkish pivot.

METALS: 
   

Gold prices were slightly higher, uncertainty ahead of the Fed’s policy announcements improves the appeal of the US Dollar and bond yields. Prospects
of interest rates remaining higher bode poorly for Gold as it increases the opportunity cost of holding an investment in it. Elsewhere, Palladium dropped below platinum for the first time since February, as the precious metal’s long-standing premium is eroded
by a pessimistic outlook for demand from gasoline-powered cars.  Spot gold +0.3%, silver +0.6%

ENERGY:   

Oil prices were down for a third straight day early Wednesday after industry data pointed to an unexpected rise in U.S. crude inventories and investors
continued to monitor negotiations for a cease-fire between Israel and Hamas. US crude stockpiles increased 4.9 million barrels last week, the API is said to have reported. That would be the fifth expansion in six weeks if confirmed by the EIA’s data released
this morning. WTI -1.4%, Brent -1.3%, US Nat Gas -3.3%, RBOB -1.4%

CURRENCIES:   

In currency markets, the dollar
remained largely unchanged on a trade-weighted basis ahead of the Federal Reserve’s policy decision amid reduced trading volumes due to a public holiday in some markets. USDJPY saw a second consecutive day of gains, with leveraged names reportedly adding long
positions after the Tokyo fix. The euro reversed losses from the Asia session to trade slightly higher.US$ Index +0.1%, GBPUSD -0.1%, EURUSD +0.05%, USDJPY -0.05%, AUDUSD +0.1%,USDCHF -0.1%

Spot Bitcoin -3.5%, Ethereum -2.1%.

Colors within the report:
Green is always the 200 period (day, week).
Red is always 21,
Blue = 50,
Brown =
100 *Stars have added importance 

Data sources: Bloomberg, Reuters, CQG

Upgrades

• 3M Co (MMM) Raised to Overweight at JPMorgan; PT $111
• Boyd Group Services (BYD CN) Raised to Buy at Cowen; PT C$310
• Dollar Tree (DLTR) Raised to Overweight at KeyBanc; PT $150
• Endava (DAVA) ADRs Raised to Buy at HSBC; PT $45
• Fifth Third (FITB) Raised to Overweight at JPMorgan; PT $39.50
• Potlatch (PCH) Raised to Outperform at RBC; PT $46
• Sirius XM (SIRI) Raised to Neutral at Goldman; PT $3.25

Downgrades

• Autodesk (ADSK) Cut to Hold at Berenberg; PT $295
• CVRx (CVRX) Cut to Market Perform at William Blair
• Cut to Neutral at JPMorgan; PT $13
• Logitech (LOGN SW) Cut to Neutral at JPMorgan; PT $85
• Macerich (MAC) Cut to Underweight at Piper Sandler; PT $11
• Newmont Corp (NEM) Cut to Sector Perform at National Bank; PT $49.44
• Skyworks (SWKS) Cut to Hold at Cowen; PT $90
• Starbucks (SBUX) Cut to Hold at Deutsche Bank; PT $89
• Cut to Market Perform at William Blair
• Stellantis (STLA) Cut to Neutral at Mediobanca SpA; PT $25.57
• UDR (UDR) Cut to Sector Perform at Scotiabank; PT $39
• Voxtur Analytics Corp (VXTR CN) Cut to Neutral at Eight Capital

Initiations

• Cullinan Therapeutics (CGEM) Rated New Buy at Stifel; PT $40
• Cyclo Therapeutics (CYTH) Rated New Buy at HC Wainwright; PT $3
• Longboard Pharmaceuticals (LBPH) Rated New Outperform at Baird; PT $36
• NervGen Pharma (NGEN CN) Rated New Buy at Stifel Canada; PT C$4
• Nevada King Gold Corp (NKG CN) Rated New Buy at Desjardins; PT C$1
• Praxis Precision (PRAX) Rated New Outperform at Baird; PT $117