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Friday, August 16

Some of the largest macro moves in the market today include: Oil (WTI) -1.9%. Gold +0.9%. Nikkei 225 Index (Japan) -1.8%. Some of the largest moves among US mega-cap stocks include: Broadcom Inc (AVGO) -1.4%. Walmart Inc (WMT) -1.2%. Exxon Mobil Corp (XOM) -0.8%. 

Recent economic data from the United States has shown a significant decline in housing starts and building permits for July 2024, with both metrics falling more than expected. Housing starts dropped by 6.8% to an annualized rate of 1.238 million units, while building permits fell by 4% to their lowest level since June 2020 at an annualized rate of 1.396 million units.

In Canada, manufacturing sales declined less than initially estimated but still saw a notable drop of -2.1% month-over-month in June across most sectors except wood products and beverages & tobacco products which posted gains. Meanwhile foreign investment figures also came below forecasts as investors acquired $5.2 billion worth Canadian securities compared against market expectations set around $15 billion mark primarily targeting debt instruments rather equities during same period.

The Eurozone reported better-than-expected trade surplus numbers for June amounting EUR22bn driven largely due decreased imports (-8%) relative exports contraction pace(-6%). This positive development comes amidst broader concerns about global growth prospects influenced ongoing geopolitical tensions.

Mixed signals emerging from major economies worldwide regarding future policy directions central banks likely to adopt in coming months ahead of key events. Like the Jackson Hole symposium; where Federal Reserve Chair Jerome Powell is scheduled to speak next week potentially providing further insights into US monetary stance.

SPDR S&P 500 ETF Trust (SPY) [-0.5%]
The SPDR S&P 500 ETF Trust has seen a decline of 0.5% since the previous close. Recent economic indicators revealed a drop in housing starts and building permits, with July housing starts at 1.24 million, below the expected 1.33 million. Additionally, U.S. Building Permits fell to 1.396 million, missing the anticipated 1.43 million and marking the lowest level since June 2020. Federal Reserve Chairman Jerome Powell's remarks on a measured approach to potential rate cuts may also be influencing market sentiment. Among the ETF's holdings, notable declines were observed in Nvidia, Microsoft, Amazon, Meta, and Apple. Concurrently, the Dow Jones Index has decreased, reflecting broader market sentiment that may affect the S&P 500's performance.

USO [-2.2%]
Crude oil prices have declined, influenced by rising inventories and geopolitical tensions. Ongoing ceasefire discussions in Gaza and potential Iranian retaliation have heightened negative sentiment. Brent crude futures dropped to 80.11 per barrel, reflecting concerns over an economic slowdown impacting global oil consumption. Additionally, a significant decrease in China's oil refinery output suggests reduced fuel demand. While positive economic data supports demand, it contrasts with the prevailing supply-demand challenges. Expectations of Federal Reserve rate cuts are affecting overall market sentiment but may not provide immediate support for oil prices. As a result, the United States Oil Fund LP experienced a decline of 2.4%.

AMAT |-3.0%|-5.2B
Applied Materials reported a third-quarter adjusted EPS of 2.12, exceeding the consensus estimate of 2.02, with revenue of 6.78 billion, surpassing expectations of 6.67 billion. Despite these positive results, shares fell in after-hours trading by 1%. The fourth-quarter guidance projects revenue of approximately 6.93 billion and adjusted EPS between 2.00 and 2.36, compared to the consensus of 2.14. This cautious outlook has led to a negative market reaction, with shares dropping by 3% in premarket trading. Additionally, Wells Fargo and B.Riley have lowered their price targets for the company to 260 and 280, respectively.

META | -0.8% | -11.4B
A bipartisan group of 19 lawmakers has raised serious concerns with Meta Platforms regarding the presence of ads for illicit drugs on its platforms, including Instagram. They noted that despite ongoing federal scrutiny, Meta continues to approve and monetize these advertisements, in violation of its own policies. A Wall Street Journal article indicated that Meta has generated revenue from numerous ads promoting cocaine and opioids. The Tech Transparency Project confirmed over 450 drug-related ads on Facebook and Instagram. In response, Meta stated it removed flagged ads within 48 hours and acknowledged challenges in enforcing its safety policies. Concurrently, the S&P 500 Index has declined slightly, which may also correlate with the -0.7% movement in META's stock price.

BNTX |-4.3%|-848.8M
BioNTech SE's stock has dropped significantly following the announcement of results from its Phase 3 clinical trial in collaboration with Pfizer, evaluating a combined mRNA vaccine for influenza and COVID-19. The trial achieved one of its two primary immunogenicity objectives, demonstrating comparable responses against SARS-CoV-2 and higher responses against influenza A. However, it fell short of meeting the non-inferiority objective against the influenza B strain. The companies are contemplating adjustments to the vaccine candidate and will engage with health authorities regarding future steps. Additionally, data from a separate Phase 2 trial of second-generation trivalent influenza mRNA vaccines showed robust immunogenicity compared to standard influenza vaccines, with no safety signals reported in ongoing reviews.

AMCR |-5.1% | -754.7M
Amcor PLC reported fourth-quarter results revealing a revenue miss, with sales of 3.54 billion falling short of the 3.64 billion consensus estimate. Despite an adjusted earnings per share of 0.21 exceeding expectations of 0.20, this represents a decline from the prior year's sales of 3.67 billion. The company provided guidance for fiscal 2025, projecting adjusted EPS between 0.72 and 0.76 and adjusted free cash flow of 900 million to 1 billion. Additionally, volumes returned to growth in Q4, increasing by 1%. Following these results, Amcor shares experienced a notable decline in trading activity, reflecting the overall underperformance compared to sector peers.

BABA |+2.4% | +37.8B
Alibaba Group Holding Ltd has seen an increase in its share price, attributed to recent analyst updates. Citi analysts suggest that despite slow revenue growth, Alibaba may achieve higher profitability through reinvestment in e-commerce, projecting breakeven profitability in other segments within one to two years. Following the latest earnings results, adjusted net profit forecasts were raised by 14%, although the revenue forecast for fiscal 2025 was reduced by 1.1%. Additionally, JPMorgan raised its price target for Alibaba to 108 from 100 while maintaining an Overweight rating. Bernstein and Baird also increased their price targets to 85 and 88, respectively. These updates coincided with a notable rise in Alibaba shares, which are currently outperforming sector peers.

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