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Thursday, October 24

Some of the largest macro moves in the market today include: Gold +0.9%. Some of the largest moves among US mega-cap stocks include: Tesla Inc (TSLA) +14.1%. 

Recent economic data releases have shown mixed signals regarding the health of major economies. In the U.S., initial jobless claims fell to 227,000 for the week ending October 19th, indicating a resilient labor market and strengthening expectations that aggressive rate cuts by the Federal Reserve may not be forthcoming. Conversely, Germany's services sector showed unexpected growth with a PMI rise to 51.4 in October; however, manufacturing continues to contract significantly as indicated by an increase in its PMI from September’s low.

Political uncertainties are influencing global markets ahead of upcoming elections in both Europe and North America. The potential implications of these elections on fiscal policies—especially concerning inflationary measures—are causing traders to hedge their positions across various asset classes including currencies like USD/JPY, which has seen fluctuations amid speculation about Bank of Japan interventions due to yen depreciation pressures linked with election outcomes.

In equity markets, European stocks experienced gains driven largely by positive earnings reports despite disappointing business activity readings overall within key sectors such as manufacturing and services across France and Germany.

Meanwhile, rising Treasury yields continue impacting investor sentiment negatively towards tech-heavy indices like Nasdaq while also contributing positively toward commodities such as oil which saw price increases amidst heightened demand forecasts following recent geopolitical tensions affecting supply chains globally.

Invesco QQQ Trust Series I (QQQ) [+1.0%]
Invesco QQQ Trust Series I (QQQ) experienced a notable price movement, increasing by 1.0% since Wednesday. Social media discussions highlighted that Tesla's earnings exceeded EPS expectations but missed revenue targets, suggesting limited positive impact on QQQ. Notably, QQQ closed down by 1.60% yesterday, alongside the S&P 500's decline. Active trading engagement was evident as traders responded to QQQ's fluctuations, with some expressing optimism regarding potential market discounts. Significant contributors to QQQ's performance included Tesla, which reported strong third-quarter earnings and surged in after-hours trading, and Lam Research Corporation, which also exceeded expectations and provided optimistic guidance for the upcoming quarter.

SPDR S&P 500 ETF Trust (SPY) [+0.5%]
The SPDR S&P 500 ETF Trust (SPY) experienced a price increase of 0.5% in pre-market trading on Thursday. On October 23, SPY closed down nearly 1%, alongside declines in other major indices. Social media discussions highlighted expectations for favorable jobless claims data, which could influence market performance positively. HSBC raised its year-end target for the S&P 500 to 5,900, citing a positive economic outlook characterized by easing inflation and lower interest rates. Notably, Tesla reported strong third-quarter earnings, surpassing analyst expectations, which contributed positively to tech shares and boosted futures for major indices. Additionally, the Bank of Canada cut its key borrowing rates by 50 basis points, potentially affecting monetary policy expectations across North America.

TSLA | +14.3% | +110.9B
Tesla Inc | Automobile Manufacturers
Tesla Inc. reported third-quarter earnings that exceeded expectations, with adjusted earnings per share of 0.72, surpassing the consensus estimate of 0.58. Revenue reached 25.18 billion, an 8% year-over-year increase, though it fell short of the anticipated 25.37 billion. The company's gross margin improved to 19.8%, exceeding estimates of 16.8%. CEO Elon Musk announced plans for the Cybercab to enter volume production in 2026, targeting 2 million units annually, while reiterating a focus on an all-autonomous future. Following the earnings report, Tesla shares surged over 12% in after-hours trading and continued to rise by approximately 12% in premarket trading. Social media posts highlighted the strong Q3 performance, noting that the energy division achieved a record gross margin of 30.5% and that Cybertruck production is now profitable.

UPS | +8.6% | +10.4B
United Parcel Service Inc | Air Freight & Logistics
United Parcel Service Inc (UPS) has seen a significant price increase, largely influenced by the positive momentum within the Air Freight & Logistics sub-sector. The company reported third-quarter earnings that surpassed expectations, with an adjusted EPS of 1.76 compared to the consensus estimate of 1.63. Revenues for the quarter reached 22.2 billion, exceeding the anticipated 22.14 billion. UPS also noted a 6.5% rise in average daily volumes domestically and reported a net income of 1.539 billion, up from 1.127 billion in the prior year. Following these results, UPS revised its full-year 2024 revenue outlook to approximately 91.1 billion, down from a previous estimate of around 93 billion, reflecting the impact of the recent Coyote Logistics sale. The stock moved notably higher shortly after the earnings announcement.

ICLR | -12.9%| -2.6B
ICON PLC | Life Sciences Tools & Services
ICON PLC reported disappointing Q3 financial results, with adjusted earnings per share (EPS) of 3.35, below the consensus estimate of 3.84. Revenue for the quarter was 2.03 billion, falling short of the expected 2.13 billion. The company lowered its FY24 adjusted EPS guidance to a range of 13.90 to 14.10, under the consensus of 15.06, and projected revenue of 8.26 billion to 8.30 billion, against an estimate of 8.51 billion. CEO Dr. Steve Cutler attributed the revenue shortfall to significant headwinds from two large customers facing budget cuts, reduced vaccine-related activity, and delays in awards and studies from biotech clients. Following these announcements, shares dropped significantly, reflecting the market's reaction to the negative earnings report and outlook.

IBM|-3.4%|-7.0B
International Business Machines Corp | IT Consulting & Other Services
International Business Machines Corp reported its third-quarter earnings on October 23, 2024, revealing adjusted earnings per share of $2.30, exceeding the consensus estimate of $2.22. Total revenue was $14.97 billion, falling short of the expected $15.07 billion, with a year-over-year increase of only 1%. The software segment saw growth, with revenues rising to $6.5 billion, while consulting revenue remained flat and infrastructure revenue dropped significantly. A net loss of $330 million was attributed to a one-time pension settlement charge. Following the announcement, shares fell approximately 4% in after-hours trading. Social media discussions highlighted the mixed performance, with free cash flow reported at $2.06 billion, slightly below expectations. CEO Arvind Krishna noted challenges in the consulting business due to a pause in discretionary spending, while also emphasizing growth in the generative AI segment, now valued at over $3 billion. In pre-market trading, IBM's stock further declined to $232.75.

BA | -2.1% | -2.0B
Boeing Co | Aerospace & Defense
Boeing Co. has encountered significant challenges as its machinists rejected a new labor contract, with approximately 64% opposing a proposal that included a 35% wage increase over four years. This rejection has extended an ongoing strike that has disrupted production for over six weeks. Boeing reported a substantial quarterly loss of $6 billion and is experiencing a monthly cash burn of about $1 billion due to the strike's impact on operations. Analysts have responded with downgrades, with Wells Fargo reducing its price target to 86 from 109, and Baird lowering theirs to 200 from 240. Additionally, Spirit AeroSystems, a key supplier, reported wider-than-expected losses attributed to the strike. Compounding these issues, a Boeing-made satellite recently exploded in space, marking a total loss and adding to the company's financial strain.

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