After Hours Report

The S&P 500 settled a whisker shy of 5,700, down nearly ten points (-0.2%) from yesterday. The Nasdaq Composite settled flattish while the Dow Jones Industrial Average logged a 0.4% decline and the Russell 2000 fell 0.7%.

There was an element of hesitation in today's trade ahead of Friday's employment report, which may impact the market's thinking on the Fed's rate cut path. Today's negative bias also stemmed from geopolitical worries, which manifested in further upside action in oil prices.

WTI crude oil futures settled 5.0% higher at $73.73/bbl. This price action led the S&P 500 energy sector (+1.6%) to register the largest gain among the 11 sectors by a decent margin. 

Treasuries, which usually benefit from geopolitical tension as a safe-haven trade, closed with losses across the curve. The 10-yr yield settled seven basis points higher at 3.85% and the 2-yr yield settled seven basis points higher at 3.71%.  

The jump in yields was due in part to the release of the September ISM Non-Manufacturing Index, which beat expectations, but didn't change rate cut probabilities in front of the jobs report. The fed funds futures market sees a 65.4% probability of a 25 basis points cut at the November FOMC meeting, little changed from 64.8% yesterday and up from 50.7% one week ago, according to the CME FedWatch Tool. 

Semiconductor shares, led by NVIDIA (NVDA 122.85, +4.00, +3.4%), showed relative strength today after CEO Jensen Huang told CNBC in an interview after yesterday's close that demand for Blackwell is "insane." The PHLX Semiconductor Index (SOX) closed 0.5% higher and the S&P 500 information technology sector, which houses chipmaker constituents, closed 0.6% higher. 

The only other sector to close higher was communication services (+0.2%) thanks to a gain Meta Platforms (META 582.77, +9.96, +1.7%).

Five of the 11 sectors closed more than 0.9% lower. The consumer discretionary sector was the biggest laggard, dropping 1.3%.

• S&P 500: +19.5% YTD
• Nasdaq Composite: +19.4% YTD
• Dow Jones Industrial Average: +11.5% YTD
• S&P Midcap 400: +11.0% YTD
• Russell 2000: +7.6% YTD

Reviewing today's economic data:

• Weekly Initial Claims 225K (Briefing.com consensus 223K); Prior was revised to 219K from 218K, Weekly Continuing Claims 1.826 mln; Prior was revised to 1.827 mln from 1.834 mln
  • The key takeaway from the report is that initial jobless claims, a leading indicator, remain well below recession-like levels (the average of initial claims for the last five recessions, excluding the COVID recession, was 458,000), imparting an encouraging understanding that the labor market might be bending but it isn't breaking.
• September S&P Global US Services PMI - Final 55.2; Prior 55.7
• August Factory Orders -0.2% (Briefing.com consensus 0.1%); Prior was revised to 4.9% from 5.0%
  • The key takeaway from the report is that business spending rebounded in August.
• September ISM Non-Manufacturing Index 54.9% (Briefing.com consensus 51.6%); Prior 51.5%
  • The key takeaway from the report is that overall activity in the largest sector of the U.S. economy accelerated in September, albeit without an expansion in employment activity, as new orders increased along with prices. net-net, this is a report that meshes more with a soft landing outcome than a hard landing one.

Overseas:

• Europe: DAX -0.9%, FTSE -0.1%, CAC -1.3%
• Asia: Nikkei +2.0%, Hang Seng -1.5%, Shanghai market closed

Commodities:

• Crude Oil +3.53 @ 73.73
• Nat Gas +0.08 @ 2.97
• Gold +9.20 @ 2680.10
• Silver +0.48 @ 32.45
• Copper -0.10 @ 4.55

After-Hours Spotlight:

• IonQ (IONQ) demonstrates remote ion-ion entanglement, reaching a significant milestone... IONQ up 0.4%
• MarineMax (HZO) provides update on impact from Hurricane Helene; disruption to certain locations on the west coast of Florida has been significant; lowers FY24 (Sep) revenue expectations... HZO up 1.5%
• TeraWulf (WULF) completes sale of 25% equity interest in Nautilus joint venture to fuel expansion of Bitcoin mining at Lake Mariner facility... WULF down 4.5%

Fair Value for Friday, Oct 4:

• S&P 500: 5,750
• Nasdaq 100: 19,992
• DJIA: 42,321

For a full rundown of today's market and after hours developments, see Live In Play

• Earnings/Guidance (Full Earnings Calendar):
  • Albany Intl (AIN) lowers FY24 guidance below consensus
  • AngioDynamics (ANGO) beats by $0.04, reports revs in-line; reaffirms FY25 EPS guidance, revs guidance
  • BigCommerce (BIGC) reiterates Q3 guidance
  • Constellation Brands (STZ) beats by $0.24, reports revs in-line; reaffirms FY25 EPS guidance, revs guidance
  • Grupo Aeroportuario del Pacifico (PAC) reports September traffic declined 3.9%
  • LaserSight Inc (LASE): Form 10-Q for fiscal quarter ended March 31, 2024 and Form 10-Q/A for the fiscal quarter ended June 30, 2024, should no longer be relied upon and needed to be restated
  • Levi Strauss (LEVI) beats by $0.02, misses on revs; guides FY24 EPS in-line, lowers FY24 revenue guidance; initiates review of strategic alternatives for Dockers brand
  • Nano Dimension (NNDM) sees Q3 revs up 21% yr/yr
  • NovaGold Resources (NG) reports Q3 (Aug) loss of $(0.03) per share, co has no revenue
  • Novavax (NVAX) clarifies that it has neither updated nor reaffirmed its full year 2024 financial guidance issued on August 8, 2024
• General News
  • President Biden signs law which exempts certain projects relating to the production of semiconductors from environmental reviews
  • Israel conducted "a precise strike" in Beirut, Lebanon, according to New York Times
  • Dockworker strike enters third day with no negotiations scheduled, according to Reuters
  • September North America Class 8 net orders increased 0.3% yr/yr to 37,100 units, according to Act Research
  • President Biden asked by reporter if he would support Israel attacking Iranian oil facilities; says that is being "discussed"
  • Abbott Labs (ABT): WHO approves first Mpox diagnostic test for emergency use, boosting global access
  • Aldeyra Therapeutics (ALDX) resubmits NDA for Reproxalap
  • Alphabet (GOOG) posts new blog titled "Ask questions in new ways with AI in Search"
  • Alphabet (GOOG): energyRe and Google sign 12-Year power purchase agreement for 435-mwdc solar project
  • Amazon (AMZN) is hiring 250,000 people across the US as it heads into the holiday season
  • Amazon (AMZN): National Labor Relations Board Region 31 issues formal complaint against AMZN affirming it is a joint employer of its drivers
  • Apple's (AAPL) CEO Tim Cook filed notice of proposed sale of securities of 223,986 shares (acquired as part of performance-based award and sale is pursuant to 5/21/2024 trading plan)
  • Asbury Automotive (ABG) announces that it has won a preliminary injunction against CDK Global
  • AstraZeneca (AZN) receives Priority Review for Calquence for patients with untreated mantle cell lymphoma
  • BAE Systems (BAESY) awarded $92 million U.S. Navy contract for Virginia-class submarine propulsors
  • Bank of America (BAC) 10% owner Berkshire Hathaway's (BRK.A / BRK.B) Warren Buffett sold 8,547,947 shares at $39.25 - $39.785 worth approx. $337.9 mln
  • Becton Dickinson (BDX) reaches agreement to resolve vast majority of its existing hernia litigation; terms of settlement are confidential, and amount will be paid out over multi-year period
  • BigCommerce (BIGC) appoints Travis Hess as CEO, current board member Ellen Siminoff will assume the role of Executive Chair of the Board, effective immediately
  • Blue Owl Capital (OWL) eyes $1 billion acquisition of IPI Partners, aiming to expand digital infrastructure investments, according to Bloomberg
  • Bristol-Myers (BMY): FDA approves neoadjuvant/adjuvant nivolumab for resectable non-small cell lung cancer
  • Chubb (CB) files mixed securities shelf offering for an undisclosed amount
  • Clearwater Paper (CLW) temporarily suspends operations at Augusta, GA paperboard facility and its Shelby, NC tissue facility due to Hurricane Helene
  • Codexis (CDXS) increases cash reserves; appointed new executives, including a new CFO
  • Diana Shipping (DSX) announces that, through a separate wholly-owned subsidiary, it has extended the time charter contract with Aquavita International S.A., for one of its Post-Panamax dry bulk vessels, the m/v Phaidra
  • Dick's Sporting Goods (DKS) plans to hire nearly 8,000 seasonal teammates for the 2024 holiday season (vs 86,00 last year)
  • Eli Lilly (LLY): FDA clarifies policies for compounders as national GLP-1 supply begins to stabilize
  • Eli Lilly (LLY): Texas AG Ken Pax­ton sues big phar­ma drug man­u­fac­tur­ers and phar­ma­cy ben­e­fit man­agers
  • Fresenius Medical's (FMS) mAbxience and Teva (TEVA) announce second strategic global license agreement for biosimilar oncology treatment candidate
  • GE HealthCare (GEHC) receives FDA clearance to perform absorbed dose calculation of radionuclides using a Monte Carlo method
  • Haleon plc (HLN) confirmed it completed the off-market purchase of 60,526,315 ordinary shares from Pfizer (PFE) for an aggregate purchase price of £230 million on Oct 3
  • Helix Energy (HLX) explores strategic options, potential sale amid rising shares and industry consolidation, according to Bloomberg
  • Hims & Hers Health (HIMS): Citigroup warns of potential legal challenges for Hims as FDA tightens rules on compounded tirzepatide, limiting future market expansion
  • HSBC Holdings (HSBC) cancelled some events and put additional restrictions on travel to lower costs, according to Bloomberg
  • Huntington Ingalls (HII) announces that its Mission Technologies division was awarded a task order to conduct research that will enhance the development and evolution of navigation and autonomy technologies for the U.S. Air Force and broader U.S. Department of Defense
  • Ingevity (NGVT) announces CEO transition as Fortson departs company; Fernandez-Moreno appointed as interim president and CEO
  • Lockheed Martin (LMT) increases quarterly cash dividend to $3.30/share from $3.15/share; authorizes the purchase of up to an additional $3 billion of Lockheed Martin common stock
  • McDonald's (MCD) Chicken Big Mac to debut in the U.S. After making appearances on McDonald’s menus around the world, available in the U.S. in a limited time offer starting Oct. 10, at participating locations while supplies last
  • Microsoft: (MSFT) OpenAI announces new credit facility enhances financial flexibility
  • Murphy Oil (MUR) promotes Eric Hambly to be its next CEO, effective January 1, 2025; he succeeds Roger Jenkins, who will retire
  • Nvidia (NVDA) CEO Jensen Huang in interview says next wave of AI is beginning, according to CNBC
  • Parsons (PSN) awarded position on $4 bln defense contract
  • Paylocity (PCTY) announces a new, multi-year corporate sponsorship with the National Hockey League’s Dallas Stars
  • Petrobras (PBR): Moody's raises Petrobras' outlook to positive
  • RPM Inc (RPM) increases quarterly cash dividend 10.9% to $0.51/share from $0.46/share
  • Sallie Mae (SLM): Judge will allow a temporary restraining order against President Biden's student loan forgiveness program to expire, according to CNBC
  • SAP (SAP): US officials expanding investigation of alleged price fixing at SAP, according to Bloomberg
  • Sight Sciences (SGHT) discloses four Medicare Administrative Contractors updates
  • Southwest Air (LUV): Director Rakesh Gangwal (former US Airways Group CEO/chairman, and co-founder of IndiGo airline) bought 3,600,000 shares worth ~$106.7 mln
  • Starbucks (SBUX) announced an expansion of its collaborative coffee innovation network
  • Super Micro Computer (SMCI) and Fujitsu (FJTSY) announce strategic collaboration to develop green AI computing technology and liquid-cooled datacenter solutions
  • Tesla (TSLA) aiming to recall 27K CyberTrucks due to rear view display issue, according to CNBC
  • Tesla's (TSLA) CIO Nagesh Saldi departing ahead of major Robotaxi unveiling, according to Bloomberg
  • Tesla (TSLA): Germany will vote against imposing tariffs on China EVs, according to Reuters
  • Tesla (TSLA) aiming to conduct a $783 million debt sale supported by prime leases, according to Bloomberg
  • The Aaron's Company (AAN) and IQVentures Holdings expect to complete the previously announced acquisition by IQVentures of The Aaron's Company later today
  • The Children's Place (PLCE) announced that Sheamus Toal will be leaving his positions as COO and CFO effective December 13
  • Toyota Motor (TM) pushing back production of EVs in North America to 1H26 amid slowing sales, according to Nikkei
  • Tutor Perini (TPC) announces that its subsidiary, Fisk Electric Company, has been awarded the first phase (valued at ~$29 mln) of a guaranteed maximum price contract currently valued at ~$147 mln by McCarthy Building Companies for electrical services for the new Harris Health hospital on the Lyndon B. Johnson Hospital campus in Houston, Texas
  • United Airlines (UAL): FAA concludes review of UAL after finding no major safety issues, according to Bloomberg
  • USA Compression Partners (USAC) announced the retirement of Eric D. Long, President and Chief Executive Officer
  • Xperi (XPER) and Perceive completed Asset Purchase Agreement with Amazon.com (AMZN) Services
  • Zoom Video (ZM) announces the launch of its industry-leading Zoom Phone in India

Ratings Changes (see Upgrades/Downgrades calendar for full list):

• Upgrades:
  • BMW Group (BMWYY) upgraded to Equal Weight from Underweight at Barclays
  • EQT Corp. (EQT) upgraded to Buy from Neutral at Citigroup; tgt raised to $44
  • EVgo Inc. (EVGO) upgraded to Overweight from Neutral at JP Morgan; tgt $7
  • InvenTrust Properties (IVT) upgraded to Buy from Neutral at BofA Securities; tgt raised to $33
  • RTX (RTX) upgraded to Hold from Sell at Deutsche Bank; tgt raised to $129
  • Shoals Technologies (SHLS) upgraded to Neutral from Sell at Citigroup; tgt raised to $5.50
  • Wolverine (WWW) upgraded to Outperform from Neutral at Exane BNP Paribas; tgt $22
• Downgrades:
  • Academy Sports + Outdoors (ASO) downgraded to In-line from Outperform at Evercore ISI; tgt lowered to $60
  • Blue Bird (BLBD) downgraded to Neutral from Buy at ROTH MKM; tgt $48
  • British American Tobacco (BTI) downgraded to Underweight from Overweight at Morgan Stanley; tgt $33
  • ChargePoint (CHPT) downgraded to Underweight from Overweight at JP Morgan
  • CoreCard Corporation (CCRD) downgraded to Neutral from Buy at B. Riley Securities; tgt lowered to $15
  • Infosys (INFY) downgraded to Sell from Hold at Investec
  • National Grid (NGG) downgraded to Neutral from Buy at Citigroup
  • Nestle (NSRGY) downgraded to Neutral from Buy at Citigroup
  • New Fortress Energy (NFE) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $15
  • Stellantis (STLA) downgraded to Equal Weight from Overweight at Barclays
  • Tractor Supply (TSCO) downgraded to In-line from Outperform at Evercore ISI; tgt $300
  • Voya Financial (VOYA) downgraded to Neutral from Overweight at JP Morgan; tgt $87
  • Wipro (WIT) downgraded to Sell from Hold at Investec
  • Wolfspeed (WOLF) downgraded to Underperform from Neutral at Mizuho; tgt lowered to $8
• Others:
  • BridgeBio Pharma (BBIO) initiated with a Perform at Oppenheimer
  • Cal-Maine Foods (CALM) resumed with an Equal-Weight at Stephens; tgt $82
  • Casella Waste (CWST) initiated with an Outperform at William Blair
  • Concentrix (CNXC) initiated with an Outperform at Robert W. Baird; tgt $70
  • Devon Energy (DVN) resumed with a Hold at Jefferies; tgt $45
  • Dianthus Therapeutics (DNTH) initiated with an Outperform at Oppenheimer; tgt $48
  • Enovis Corporation (ENOV) initiated with a Mkt Outperform at JMP Securities; tgt $62
  • Hormel Foods (HRL) resumed with an Equal-Weight at Stephens; tgt $31
  • Larimar Therapeutics (LRMR) initiated with an Outperform at Wedbush; tgt $22
  • Ligand Pharma (LGND) initiated with an Outperform at Oppenheimer; tgt $135
  • Liquidia Technologies (LQDA) initiated with an Outperform at LifeSci Capital
  • nLIGHT (LASR) initiated with an Overweight at Cantor Fitzgerald; tgt $15.50
  • Pilgrim's Pride (PPC) resumed with an Equal-Weight at Stephens; tgt $43
  • Republic Services (RSG) initiated with an Outperform at William Blair
  • Sila Realty Trust (SILA) initiated with a Buy at Janney; tgt $28
  • Two Harbors Investment (TWO) initiated with a Buy at Compass Point; tgt $15.75
  • Tyson Foods (TSN) resumed with an Equal-Weight at Stephens; tgt $57
  • Verona Pharma (VRNA) initiated with an Overweight at Wells Fargo; tgt $50
  • Waste Mgmt (WM) initiated with an Outperform at William Blair

• Econ Data (Friday):
  • 8:30 ET: September Nonfarm Payrolls (Briefing.com consensus 135,000; prior 142,000), Nonfarm Private Payrolls (Briefing.com consensus 125,000; prior 118,000), Average Hourly Earnings (Briefing.com consensus 0.3%; prior 0.4%), Unemployment Rate (Briefing.com consensus 4.2%; prior 4.2%), and Average Workweek (Briefing.com consensus 34.3; prior 34.3)
• Earnings:
  • Monday (Sept 30)
    • Pre-Market: CCL
    • After-Hours: None
  • Tuesday (Oct 1)
    • Pre-Market: AYI MKC PAYX UNFI
    • After-Hours: CALM LW NKE RGP
  • Wednesday (Oct 2)
    • Pre-Market: CAG RPM
    • After-Hours: LEVI
  • Thursday (Oct 3)
    • Pre-Market: ANGO STZ
    • After-Hours: None
  • Friday (Oct 4)
    • Pre-Market: APOG
    • After-Hours: None
General Motors: 5,000 members at GM's Arlington, TX assembly plant join UAW strike