Market Overview

There might not have been a lot of buying conviction in today's market, but more importantly, there was no real selling conviction either. There was some buy-the-dip interest that coursed through NVIDIA (NVDA 120.87, +4.61, +4.0%) and the mega-cap space. Additionally, there was an appreciation for a wave of policy stimulus measures announced in China that coursed through the materials (+1.4%) and industrials (+0.7%) sectors.

China's Policy Stimulus

The People's Bank of China announced several policy measures:

• 7-day reverse repurchase rate lowered by 20 basis points to 1.50%
• Required reserve ratio cut by 50 basis points
• Down payment requirement for second-home buyers reduced to 15% from 25%
• CNY800 bln ($113 bln) liquidity support facility for stocks

China's Shanghai Composite surged 4.2% on the news. This move led to significant gains in Chinese ADRs, such as Li Auto (LI 24.72, +2.52, +11.4%) and Alibaba (BABA 97.19, +7.10, +7.9%), and the iShares China Large-Cap ETF (FXI 30.40, +2.72, +9.8%).

Commodities Market

The hope that China's stimulus measures will boost the Chinese economy spilled over to the commodities market. Additionally, the market was eyeing the formation of Hurricane Helene in the Gulf of Mexico and the heightened military conflict between Israel and Hezbollah. Copper futures jumped 3.0% to $4.49/lb, while WTI crude futures increased 1.7% to $71.56/bbl.

Top Performers

Freeport McMoRan (FCX 48.72, +3.58, +7.9%), a leading gold and copper producer, was the best-performing S&P 500 component. Other top performers included:

• Estee Lauder (EL 91.98, +5.28, +6.1%)
• Las Vegas Sands (LVS 44.38, +2.25, +5.3%)
• Wynn Resorts (WYNN 84.16, +3.96, +4.9%)
• Caterpillar (CAT 385.93, +14.76, +4.0%)

These gains contributed to the relative strength in the consumer discretionary (+0.8%) and industrials (+0.7%) sectors.

Sector Performance

NVIDIA (NVDA, Financial) was a big contributor to the strength in the Philadelphia Semiconductor Index (+1.3%) and the information technology sector (+0.8%). NVIDIA found support after briefly trading below its 50-day moving average (115.73) this morning. Barron's reported that CEO Jensen Huang completed a preplanned stock sale several months ahead of schedule, which investors presumably viewed positively.

Financial Sector

There was an overhang on the financial sector (-0.9%) today, undercut by weakness in bank stocks. The SPDR S&P Bank ETF (KBE) and SPDR S&P Regional Banking ETF (KRE) declined 1.3% and 1.4%, respectively.

Treasury Yields

Treasury yields declined following a weaker-than-expected Consumer Confidence Report for September. The 2-yr note yield settled at 3.55%, down three basis points from yesterday's settlement. The 10-yr note yield finished unchanged at 3.74%. The Treasury market also digested a $69 billion 2-yr note auction that saw the high yield match the when-issued yield of 3.52%.

Market Indices

• Nasdaq Composite: +20.4% YTD
• S&P 500: +20.2% YTD
• S&P Midcap 400: +12.1% YTD
• Dow Jones Industrial Average: +12.0% YTD
• Russell 2000: +9.7% YTD

Economic Data

• July FHFA Housing Price Index: 0.1% (prior 0.0%)
• July S&P Case-Shiller Home Price Index: 5.9% (consensus 6.0%, prior 6.5%)
• The Conference Board's Consumer Confidence Index fell to 98.7 in September from 105.6 in August (consensus 102.9)

The key takeaway is that consumers' views of the current labor market situation continued to soften, becoming more pessimistic about future labor market conditions. This sentiment could weigh on consumer spending activity.

Upcoming Economic Events

• 07:00 ET: MBA Mortgage Applications index (prior +14.2%)
• 10:00 ET: August New Home Sales (consensus 695K; prior 739K)
• 10:30 ET: EIA crude Oil Inventories (prior -1.63M)
• 13:00 ET: $70 billion 5-yr note auction

Overseas Markets

• Europe: DAX +0.8%, FTSE +0.3%, CAC +1.3%
• Asia: Nikkei +0.8%, Hang Seng +4.1%, Shanghai +4.2%

Commodities

• Crude Oil: +1.19 @ 71.56
• Nat Gas: -0.06 @ 2.79
• Gold: +23.00 @ 2675.90
• Silver: +1.27 @ 32.36
• Copper: +0.13 @ 4.49

NVDA,LI,BABA,FXI,FCX,EL,LVS,WYNN,CAT,KBE,KRE

Guru Stock Picks

Private Capital has made the following transactions:

• Reduce in BBSI by 5.96%

Today's News

The U.S. Department of Justice has filed a civil antitrust lawsuit against Visa (V, Financial) on Tuesday, accusing the payments network giant of maintaining an illegal monopoly in the debit card market. The lawsuit claims Visa penalizes merchants and banks that choose alternative payment processing technologies, leading to higher fees for consumers and businesses. Shares of Visa fell 5.4% following the news.

Nvidia (NVDA, Financial) shares rose 4% as the company prepares to begin shipping its highly anticipated Blackwell GPU in the fourth quarter. Nvidia's CEO Jensen Huang confirmed the ramp-up of Blackwell production during the Goldman Sachs Communacopia + Technology Conference, highlighting significant demand and a potential revenue opportunity exceeding $10 billion for 2024.

China's central bank announced a fresh round of economic stimulus measures, including cutting a key short-term interest rate and reducing the reserve requirement ratio for banks. This move led to gains in Chinese stocks, ETFs, oil, and commodities, and positively impacted U.S.-listed companies with China ties. Notable movers included JD.com (JD, Financial), PDD Holdings (PDD, Financial), and Li Auto (LI, Financial), all surging over 7%.

Citi Research analysts identified five stocks with the highest-ranking short crowding scores within each of the 11 sectors. In the communication services sector, Bumble Inc. (BMBL, Financial) and Cable One Inc. (CABO, Financial) topped the list. In consumer discretionary, Choice Hotels International (CHH, Financial) and Kohls Corp. (KSS, Financial) were highlighted.

Rithm Capital (RITM, Financial) announced a public offering of 30 million shares of its common stock, with an option for underwriters to purchase an additional 4.5 million shares. The company intends to use the proceeds for general corporate purposes.

McKesson (MCK, Financial) was downgraded to neutral from outperform by Baird, citing concerns over the company's upcoming investor event. The downgrade followed two disappointing quarterly reports and a reduction in the price target to $531 from $603 per share.

Global Payments (GPN, Financial) stock slid 5.6% after announcing efforts to streamline business units and identify potential divestitures. The company aims for mid-single-digit percentage growth in adjusted net revenue and around 10% adjusted EPS growth by 2025.

Celsius Holdings (CELH, Financial) has seen a 42% decline in its stock value from last year despite strong growth in Q2 profit and sales. Analysts from Morgan Stanley and Piper Sandler have turned cautious, with both firms cutting their estimates and price targets.

KB Home (KBH, Financial) reported Q3 GAAP EPS of $2.04, missing the consensus estimate by $0.02. Revenue of $1.75 billion beat expectations, but net orders were flat, and the average home selling price fell from the previous quarter. The stock sank 6.1% in after-hours trading.

Vistra Corp. (VST, Financial) continued its upward trend, closing 0.71% higher and extending gains for twelve straight sessions. The stock has surged 195.4% year-to-date, driven by the company's acquisition of the remaining equity interest in its Vistra Vision subsidiary.

Microsoft (MSFT, Financial) plans to invest $1.3 billion in Mexico over the next three years to enhance AI and cloud infrastructure and promote digital skills. The investment aims to improve connectivity and AI technology for small- and medium-sized businesses and train up to 5 million residents.

Freeport-McMoRan (FCX, Financial) surged 7.1%, leading the S&P 500, as China's stimulus measures boosted commodities, including copper and iron ore. The People's Bank of China's actions are expected to improve demand in top consumer China, lifting commodity prices.

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