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Thursday, September 19

Some of the largest macro moves in the market today include: Nasdaq 100 Index (US) +1.9%. S&P 500 Index (US) +1.4%. Oil (WTI) +2.7%. Some of the largest moves among US mega-cap stocks include: Broadcom Inc (AVGO) +3.5%. NVIDIA Corp (NVDA) +3.3%. Tesla Inc (TSLA) +2.9%.

The U.S. Federal Reserve's recent decision to cut interest rates by 50 basis points has significantly impacted global markets, with major indices such as the Nasdaq and S&P 500 experiencing notable gains. This move marks a shift in monetary policy aimed at supporting maximum employment while maintaining inflation targets, leading to increased optimism about economic stability.

In other central bank news, the Bank of England held its main interest rate steady at 5% during its September meeting after cutting it by 25 basis points last month. The BoE also announced plans to reduce government bond purchases over the next year amid stable inflation projections that suggest no dip below their target until at least 2026.

Economic data from the United States showed initial jobless claims falling unexpectedly to a four-month low of 219,000 for the week ending September 14th and an unexpected rebound in factory activity according to Philadelphia Fed Manufacturing Index results for September. These indicators reflect ongoing resilience within key sectors despite broader market volatility.

iShares Russell 2000 ETF (IWM) [+2.5%, +1.5B]
The iShares Russell 2000 ETF (IWM) has risen by 2.4% since Wednesday, reflecting a broader positive trend in the market. This movement coincides with a significant increase in the Russell 2000 Index, which rose by 2.2% during market hours on Thursday, influenced by the Federal Reserve's recent decision to cut interest rates by 50 basis points—the first reduction in over four years. This monetary policy shift is expected to lower borrowing costs, benefiting small-cap stocks. Notably, top contributors to the ETF's performance include Microstrategy Inc. (MSTR), which has seen a notable return linked to Bitcoin's recent surge above $60,000. Additionally, positive employment data showing a drop in initial jobless claims suggests resilience in the labor market. The Dow Jones Index has also increased by nearly 1%, indicating a correlated positive momentum across the market.

United States Oil Fund LP (USO) [+2.4%, +31.3M]
The United States Oil Fund LP (USO) has experienced a price increase of 2.3% during the pre-market session on Thursday. This rise coincides with a notable uptick in Brent crude oil prices, which have risen nearly 1.9% since Wednesday. The recent 50 basis point interest rate cut by the U.S. Federal Reserve has contributed to bullish sentiment in the oil markets, as it is expected to stimulate economic activity and fuel demand. Concurrently, West Texas Intermediate (WTI) is trading higher at approximately $70.64 per barrel, while Brent stands at about $74.42 per barrel. Despite these gains, concerns linger regarding weaker global demand, particularly from a slowing Chinese economy, which continues to keep oil prices below the $75 mark.

Darden Restaurants Inc (DRI) [+7.2%, +1.5B]
Darden Restaurants Inc reported its first-quarter results today, with adjusted earnings per share of $1.75, missing the consensus estimate of $1.83. Quarterly sales reached $2.76 billion, slightly above last year's $2.73 billion but below the expected $2.80 billion. The company declared a quarterly cash dividend of $1.40 per share, payable on November 1, with a record date of October 10. Darden reaffirmed its fiscal 2025 outlook, projecting earnings per share from continuing operations between $9.40 and $9.60, alongside revenue guidance of $11.8 billion to $11.9 billion. Following the earnings announcement, Darden's stock increased significantly, moving up by 10% shortly thereafter. Additionally, the company announced a multi-year partnership with Uber to introduce on-demand delivery services for Olive Garden, set to pilot in late 2024.

Toll Brothers Inc (TOL) [+3.5%, +565.4M]
Toll Brothers Inc (TOL) has experienced a price increase of 3.5%, aligning with significant upward movements in the broader market, notably a rise in the Direxion Daily Small Cap Bull 3x Shares and the Russell 2000 Index. This correlation suggests that TOL's performance is closely tied to overall market sentiment, particularly within small-cap stocks. Additionally, BofA Securities analyst Rafe Jadrosich has raised the price target for Toll Brothers from 160.00 to 165.00 while maintaining a Buy rating, reflecting an upward revision in expectations for the company’s performance.

DR Horton Inc (DHI) [+3.3%, +2.2B]
DR Horton Inc (DHI) has experienced a price increase of 3.3%, aligning with a broader market uptrend. The Direxion Daily Small Cap Bull 3x Shares has surged significantly, while the Russell 2000 Index has also seen notable gains. This movement reflects positive sentiment in the small-cap sector, which historically correlates with DHI's performance. Additionally, BofA Securities analyst Rafe Jadrosich has raised DHI's price target to $215.00 from $196.00, maintaining a Buy rating. This adjustment, made just over two hours ago, indicates a favorable outlook on the company's future performance.

Alibaba Group Holding Ltd (BABA) [+4.1%, +70.3B]
Alibaba Group Holding Ltd is experiencing an increase in share price, moving in tandem with the broader market. The company has announced the release of over 100 new open-source large language models from its Qwen 2.5 family, aimed at bolstering its position in the generative AI sector. These models support more than 29 languages and feature parameters ranging from 0.5 to 72 billion, designed for applications across various industries including automotive, gaming, and scientific research. Additionally, Alibaba introduced a text-to-video model as part of its Tongyi Wanxiang image generation family during Alibaba Cloud's annual event in Hangzhou, China. Following these announcements, shares of Alibaba saw a notable increase in premarket trading, with shares rising by approximately 3% in Hong Kong, nearing yearly highs.

BHP Group Ltd (BHP) [+4.7%, +13.1B]
BHP Group Ltd has reported concerns regarding the growth of artificial intelligence and its potential impact on copper supply. CFO Vandita Pant noted that the rise of data centers and AI technologies could increase global copper demand by 3.4 million tonnes annually by 2050. Currently, data centers account for less than 1% of copper demand, with projections suggesting this could rise to 6-7% by 2050. This highlights the critical role copper will play in the clean energy transition. In the broader market context, the Australian dollar has appreciated, which may correlate with BHP's recent price increase of 4.5%. Additionally, BHP has received several analyst upgrades, with the average rating now classified as a Moderate Buy. The company also announced an increase in its semi-annual dividend to $1.465 per share, reflecting a yield of 5.2%.

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