2023 Oct 31, US Market
A busy day for corporate earnings reports ended with major stock indexes higher, though not enough to prevent them from a third-straight monthly decline.
The S&P 500 climbed 0.6% on Tuesday, to end October 2.2% lower. Every industry segment in the benchmark index rose, with real-estate companies, banks and utilities leading the way. Arista Networks paced the index, gaining 14% after the networking equipment company beat quarterly sales and profit expectations.
But the broader index was weighed down by earnings-related selloffs, including in heavy equipment manufacturer Caterpillar, down 6.7%, and contract drugmaker Catalent, which lost about 14%. Vans shoe owner VF Corp. also dropped 14% in its worst day since 1987’s Black Monday stock market crash.
The tech-heavy Nasdaq Composite climbed 0.5% and the Dow Jones Industrial Average added 0.4%, or 124 points. For the month, they lost 2.8% and 1.4%, respectively.
The three-month slide in stocks has coincided with a three-month pause in interest-rate increases, the longest since the Federal Reserve began boosting borrowing costs in March 2022 to slow inflation.
Fed officials are likely to hold interest rates steady at this week’s policy meeting, which concludes Wednesday. Still, they have left the door open to further increases in the coming months if progress stalls in slowing wage and price growth.
Yields on longer-dated Treasurys ticked lower Tuesday. The benchmark 10-year yield declined to 4.874%, down from as high as 5.021% last week.
investors are sticking with big allocations to cash. Christian Chan, chief investment officer at AssetMark, said the firm has been trimming its stock exposure, content to earn the highest yields in years on safe investments.
“We see a fair bit of stress on the consumer side of things and that makes us more cautious than we were this summer,” Chan said. He pointed to data showing that all but the wealthiest Americans have spent their pandemic stimulus money while credit-card spending has surged.
The Conference Board on Tuesday said consumer confidence fell in October for a third straight month.
In commodities markets, benchmark U.S. oil futures shed $1.29 a barrel to end Tuesday at $81.02, down 11% in October. December natural-gas futures jumped 6.7% on forecasts for cooler weather.
Gold prices dropped back below $2,000 per troy ounce, having Monday settled above that mark for the first time since July. Gold still had its best month since March, when bank failures sent the precious metal to near record highs. Bitcoin held near its highest level in a year Tuesday.
MoffettNathanson upgraded Roku (ROKU) to Neutral from from Sell with an unchanged price target of $55. After a "ridiculous surge" in expense growth in 2021 and 2022, as revenues slowed, the company is now aiming to grow Q4 expenses in the single digits and achieve adjusted EBITDA profitability in 2024, the firm tells investors in a research note.
BofA upgraded Pinterest (PINS) to Buy from Neutral with a price target of $37, up from $32. The company's position versus peers is "much improved" as quarter-over-quarter underperformance shifts to outperformance, as expected in Q4, the firm tells investors.
JPMorgan upgraded AutoNation (AN) to Neutral from Underweight with a price target of $145, down from $150. The firm views AutoNation's current valuation as appropriately reflecting its balanced risks relative to peers.
Susquehanna upgraded Saia (SAIA) to Positive from Neutral with a price target of $420, down from $450. The firm believes Saia's path to 20%-plus 2024 earnings growth remains viable and sees the recent cooling in post-Yellow bankruptcy enthusiasm creating "an attractive entry point in this high-quality growth story."
Morgan Stanley upgraded Arista Networks (ANET) to Overweight from Equal Weight with a price target of $220, up from $185. The firm views Arista as the best way to play artificial intelligence networking's eventual move to ethernet.
MoffettNathanson downgraded Lyft (LYFT) to Sell from Neutral with a price target of $7, down from $10. The firm, which forecasts Lyft to be a single digit adjusted EBITDA margin business, believes any long-term guidance provided by management will "likely disappoint."
Oppenheimer downgraded Sarepta (SRPT) to Perform from Outperform after the company Sarepta Phase 3 results from pivotal trial EMBARK for SRP-9001 and followed up with an investor presentation on 10/30.
Baird downgraded ON Semiconductor (ON) to Neutral from Outperform with a price target of $60, down from $120, citing on supply/demand normalization.
JPMorgan downgraded Lithia & Driveway (LAD) to Neutral from Overweight with a price target of $295, down from $395. The firm came away from the company's Q3 results with diminished confidence in its differentiated earnings trajectory in the near-to medium-term.
BofA downgraded Ferguson (FERG) to Underperform from Neutral with a price target of $138, down from $160. U.S. residential demand, which accounts for more than half of group sales, could be at risk of a "double dip next" year, while U.S. non-residential construction could also turn softer and the firm sees some downside risks to pricing, the firm tells investors.
Wells Fargo initiated coverage of PayPal (PYPL) with an Equal Weight rating and $55 price target. Wells sees PayPal's "reign as the unquestioned leader fading."
Wells Fargo initiated coverage of Block (SQ) with an Equal Weight rating and $45 price target. The firm struggles to find "sufficient evidence to call for consistent beats and raises" despite what it views as Block's "impressive record of innovation."
Bernstein initiated coverage of Riot Platforms (RIOT) with an Outperform rating and $15.60 price target. Bitcoin miners are evolving from unorganized mining to an industrial scale enterprise mining model, with North America gaining share over China, the firm tells investors in a research note. The firm also started coverage of Marathon Digital (MARA) with a Market Perform and CleanSpark (CLSK) with an Outperform rating.
Wells Fargo initiated coverage of Toast (TOST) with an Underweight rating and $16 price target. While the firm "typically gives the benefit of the doubt to market leaders with leading tech," it suspects Toast is "likely to disconnect from on-the-ground success."
Wells Fargo initiated coverage of Affirm (AFRM) with an Equal Weight rating and $17 price target. The firm says buy now pay later buzz "has quieted considerably" from its 2020 peak, as rising rates squeezed unit economics, and consumer credit outlook "became cloudy."
Caterpillar (CAT) beat top and bottom expectations but gave a guarded outlook
Pfizer (PFE) reported upbeat Q3 results and affirmed its FY23 outlook
Apple (AAPL) unveiled a new MacBook Pro and new 24-inch iMac
Pinterest (PINS) reported better-than-expected Q3 results
Denbury (DEN) shareholders approved the company's takeover by Exxon Mobil (XOM)
Panasonic (PCRFY) is planning to cut its domestic electric battery production by 60%, Nikkei Asia reports
New U.S. export controls may push Nvidia (NVDA) to cancel about $5B in orders to China, WSJ reports
Sony's (SONY) Bungie unit has laid off an undisclosed number of workers, Bloomberg says
MRC Global (MRC) is exploring a sale, Bloomberg reports
Tesla (TSLA) has prevailed in a jury trial over a fatal autopilot crash, Bloomberg says
Verve Therapeutics (VERV) increases after announcing an expansion of its relationship with Eli Lilly (LLY)
Wolfspeed (WOLF) and Two Harbors (TWO) gain after reporting quarterly results
Cameco (CCJ) higher in New York after reporting quarterly results and raising its FY23 revenue view
Lattice Semiconductor (LSCC) falls after reporting quarterly results and providing guidance for Q4
VF Corp (VFC) and Tetra Technologies (TTI) decline after reporting quarterly results
ZoomInfo (ZI) reported Q3 results and provided guidance for Q4 and FY23, with CEO Henry Schuck commenting, "In a more challenging operating environment, our team is executing well"
JetBlue (JBLU) reported Q3 results, announced guidance for Q4, and provided its outlook for FY23
Chegg (CHGG) reported Q3 results and provided guidance for Q4, with BMO Capital commenting the results "beat expectations"
AB InBev (BUD) reported Q3 underlying EPS that beat consensus
Amgen (AMGN) reported Q3 results and narrowed its FY23 guidance, with CEO Robert Bradway commenting "We are excited about our pipeline progress and our operating performance in the third quarter"
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