The futures market is showing a downward trend this morning. The S&P 500 futures are down 24 points, the Nasdaq 100 futures have fallen 110 points, and the Dow Jones Industrial Average futures have decreased by 161 points.
Stocks are drifting lower after a strong jobs report last Friday that fueled a rally. The labor market news has led to a reevaluation of how the Federal Reserve might approach interest rate cuts.
Mega cap stocks are adding pressure to the Dow, S&P 500, and Nasdaq 100. Rising market interest rates are also playing a role, with the 10-year yield climbing two basis points to 4.00% and the 2-year yield rising six basis points to 3.99%.
Economic data for today includes the August Consumer Credit report, which will be released at 3:00 ET.
GEICO, a subsidiary of Berkshire Hathaway (BRK.A, BRK.B), has decided to cease offering insurance for Tesla's (TSLA, Financial) Cybertruck, citing that it does not meet their underwriting standards. The decision comes amid reports of various operational issues with the Cybertruck, such as a malfunctioning rear camera and other design flaws. Although some problems have been addressed through recalls, others remain unresolved. This move marks a significant development for Tesla as it continues to tackle these challenges.
Pfizer (PFE, Financial) saw its shares rise nearly 3% after Starboard Value, an activist investor, acquired a $1 billion stake in the company. Starboard is advocating for changes within Pfizer and has reportedly reached out to former executives Ian Read and Frank D'Amelio for assistance. The involvement of Starboard could indicate potential shifts in Pfizer's strategic direction, which investors are closely monitoring.
In a strategic shift, BP (BP, Financial) is planning to increase its oil and gas production, moving away from its previous target of reducing output by 2030. This decision reflects concerns over the profitability of renewable investments due to supply chain challenges and rising costs. BP is now focusing on new projects in Iraq and Kuwait, signaling a recalibration of its energy transition strategy.
Chevron (CVX, Financial) announced the sale of its interests in the Athabasca Oil Sands Project and Duvernay shale to Canadian Natural Resources (CNQ, Financial) for $6.5 billion. This transaction is part of Chevron's plan to divest $10-15 billion in assets by 2028, aiming to optimize its global energy portfolio. The deal is expected to close in the fourth quarter of 2024, subject to regulatory approvals.
Big Oil companies, including Exxon Mobil (XOM, Financial) and Occidental Petroleum (OXY, Financial), have expressed concerns over potential changes to President Biden's Inflation Reduction Act provisions under a possible Trump administration. These provisions offer incentives for low-carbon projects, which are crucial for the industry's transition efforts. The oil giants are advocating for the preservation of tax credits that support their investments in carbon-capture technologies.
Shares of Ciena (CIEN, Financial) fell 3.9% after J.P. Morgan downgraded the company due to valuation concerns. Despite a significant year-to-date increase in share price, the analyst believes the EPS upside is limited, with telecom spending still constrained. The downgrade reflects cautious sentiment regarding Ciena's growth prospects in the optical networking sector.
Apple (AAPL, Financial) experienced a 1.3% decline in premarket trading following a downgrade by Jefferies, which cited overly optimistic iPhone expectations. The analyst highlighted the need for smartphone hardware improvements to support AI capabilities, suggesting that current growth projections for iPhone units might not be met. This cautious outlook has prompted a reevaluation of Apple's near-term growth potential.
Sherwin-Williams (SHW, Financial) and Celanese (CE) were downgraded to Sector Weight by KeyBanc, citing high valuation concerns for Sherwin-Williams despite strong earnings expectations. For Celanese, the analysts pointed to weak global demand and pricing for specialty chemicals, which could impact the company's performance moving forward.
AerCap Holdings (AER) recapped its third-quarter transactions, including 160 lease agreements and 41 aircraft purchases. The company also signed financing transactions worth $10.5 billion and repurchased shares, reflecting its strong market position and strategic initiatives in the aviation sector.
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