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Thursday, October 17

Some of the largest macro moves in the market today include: Nasdaq 100 Index (US) +1.0%. US 10Y Treasury Bond -0.3%. S&P 500 Index (US) +0.6%. Some of the largest moves among US mega-cap stocks include: NVIDIA Corp (NVDA) +3.1%. Broadcom Inc (AVGO) +2.7%. UnitedHealth Group Inc (UNH) -1.6%. 

The European Central Bank (ECB) has lowered its key interest rates by 25 basis points, marking the third rate cut this year. This decision reflects an updated assessment of inflation trends in the Euro Area, where disinflation is progressing and core inflation eased to a five-month low of 2.7%, as confirmed for September.

In economic data from the United States, jobless claims fell unexpectedly last week while retail sales rose more than anticipated in September with a month-over-month increase of 0.4%. Additionally, factory activity expanded significantly according to October's Philadelphia Fed Manufacturing Index, which jumped to 10.3 from September’s reading.

Japan reported that its trade balance shifted back into deficit territory in September due primarily to unexpected declines in exports alongside rising imports; this marks Japan's first drop since November last year and continues its trend of monthly deficits over recent months.

US 10Y Treasury Bond (USB10Y/USD) [-0.4%]
The US 10Y Treasury Bond (USB10Y/USD) has declined by 0.4% since Wednesday. This movement coincides with the European Central Bank's decision to cut its key interest rates by 25 basis points, reducing the deposit facility rate to 3.25%. This action is part of a strategy to combat disinflationary pressures. Concurrently, US retail sales for September rose by 0.4%, surpassing expectations and reflecting ongoing consumer spending strength, which could lead to higher future interest rates from the Federal Reserve. Additionally, the Philadelphia Fed Manufacturing Index reported a strong expansion, further influencing market sentiment. In related movements, the US 2Y Treasury Bond (USB02Y/USD) has also seen a decline of 0.10%, indicating broader market sentiment affecting longer-term bond prices.

SPDR S&P 500 ETF Trust (SPY) [+0.6%]
The American Association of Individual Investors (AAII) weekly survey reveals a shift in sentiment, with the bull-bear spread decreasing to 20.1 from 28.4 last week. The percentage of bulls fell to 45.5%, while bears increased to 25.4%. In premarket trading, the SPDR S&P 500 ETF Trust (SPY) registered a modest increase of 0.39%, reaching a price of 5909. On social media, discussions highlighted the significant rise in U.S. federal debt since President Biden took office, alongside concerns over retail sales data and the closure of over 1,000 bank branches this year. Additionally, SPY closed up by 0.4% on October 16, with low trading volume reported at 30.5 million shares. Notably, top contributors to SPY's performance included Nvidia, Apple, and Broadcom, while the S&P 500 Index is experiencing a slight decline amid expectations of an interest rate cut from the European Central Bank.

TSM | +9.2% | +490.7B
Taiwan Semiconductor Manufacturing Co Ltd | Semiconductors
Taiwan Semiconductor Manufacturing Co Ltd (TSM) reported third-quarter earnings per share (EPS) of 1.94, exceeding the consensus estimate of 1.77 and significantly up from 1.29 in the same period last year. The company's sales reached 23.5 billion, surpassing expectations of 23.1 billion and reflecting a 36% year-over-year increase from 17.28 billion. TSMC's net income for the quarter was NT$325.3 billion, compared to NT$211 billion last year, marking a 54% year-over-year rise. The gross margin stood at 57.8%, above the estimated 55%. For the fourth quarter, TSMC provided revenue guidance of 26.1 billion to 26.9 billion, exceeding the consensus estimate of 24.94 billion. Following the earnings announcement, TSM shares rose approximately 9.7% in pre-market trading, buoyed by strong demand for high-end chips, particularly in AI applications, with advanced process technologies contributing significantly to revenue.

CSX | -4.2% | -2.8B
CSX Corp | Rail Transportation
CSX Corp reported its third-quarter results on October 16, 2024, with earnings per share (EPS) of 0.46, missing the consensus estimate of 0.48. Revenue was reported at 3.62 billion, below the expected 3.68 billion. Operating income reached 1.35 billion, a 7% year-over-year increase, yet fell short of the estimated 1.4 billion. The company attributed its performance to external factors such as recent storms and declining coal revenue, which are expected to continue affecting sequential operating margins in the fourth quarter. Revenue expectations for the next quarter are approximately 3.73 billion, about 200 million lower than prior projections. Following these results, CSX shares dropped significantly in after-hours trading. Social media discussions highlighted the company's challenges and noted that rebuild costs for infrastructure are projected to exceed 200 million, with construction efforts anticipated to extend into next year.

ELV | -12.6%| -12.7B
Elevance Health Inc | Managed Health Care
Elevance Health Inc. reported its Q3 results, showing adjusted earnings of $8.37 per diluted share, which fell short of the consensus estimate of $9.66. The company achieved operating revenue of $44.72 billion, exceeding expectations of $43.14 billion. However, Elevance has revised its FY24 adjusted EPS outlook to approximately $33.00, down from a previous estimate of at least $37.20 and below the consensus of $37.26. This adjustment is attributed to challenges in the Medicaid sector, impacting overall performance. Following the earnings announcement, Elevance Health shares dropped significantly in pre-market trading, reflecting concerns over the earnings miss and lowered guidance. Additionally, the medical membership reached approximately 45.8 million as of September.

TRV |+5.2%|+3.0B
Travelers Companies Inc | Property & Casualty Insurance
Travelers Companies Inc reported robust third-quarter results, with earnings per share (EPS) of $5.24, significantly exceeding the consensus estimate of $3.64. This represents a substantial increase from $1.95 in the same quarter last year. Total revenues reached $11.904 billion, surpassing expectations of $11.491 billion and reflecting an 11.93% year-over-year growth from $10.635 billion. Net income surged to $1.26 billion compared to $404 million a year prior. Additionally, net written premiums rose to $11.317 billion, up from $10.493 billion last year. The underlying combined ratio improved to 85.6% from 90.6%, indicating enhanced underwriting performance. Conversations on social media highlighted the strong earnings results, with TRV's stock trading at $242.95, up four points following the announcement.

LCID | -18.9% | -1.2B
Lucid Group Inc | Automobile Manufacturers
Lucid Group Inc. has announced a public offering of approximately 262.4 million shares of its common stock, expected to close around October 18, 2024. This offering aims to raise about $1.67 billion, with proceeds allocated for general corporate purposes, including capital expenditures and working capital. Concurrently, Ayar Third Investment Company plans to purchase 374.7 million shares in a private placement, maintaining a 58.8% ownership stake. Lucid also projected a wider-than-expected operational loss for the third quarter, estimating losses between $765 million and $790 million, surpassing analysts' expectations. The company produced 1,805 vehicles and delivered 2,781 vehicles during the same period. The anticipated dilution from the offering is approximately 26%, increasing total shares outstanding to nearly 3 billion, leading to significant discussions on social media regarding the company's financial health and future prospects.

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