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- October 18th Market Overview
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Happy Friday, everyone. The weekend is here.
Markets are heating up, and it's not just Netflix carrying the weight.
China's economy is flexing its muscles again.
CVS is throwing a curve ball by replacing its CEO. What’s with pharmacy/general stores constantly in chaos since I was a child? Does anyone else remember Eckerd’s?
Let's dig in...
Executive Summary
Nasdaq Composite surged 0.7%, led by $NFLX’s 10% rise post-earnings
S&P 500 and Dow Jones also gained, marking potential sixth consecutive week of positive returns
Strong earnings from $NFLX and mixed results from $PG reflect overall market resilience
China’s Q3 GDP growth of 4.6% beats expectations, boosting Asian markets
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Market Overview
A broad-based rally today, primarily driven by strong corporate earnings.
S&P 500 |  | +0.35% |
Nasdaq | | +0.64% |
Dow Jones | | +0.01% |
All three major averages are on track for their sixth consecutive positive week, marking the longest streak of weekly advances in 2024 for both the Dow and S&P 500.
Over 75% of S&P 500 companies that have reported earnings have exceeded analyst expectations, reinforcing overall market confidence.
Key Market Drivers
Strong corporate earnings, particularly from $NFLX
Better-than-expected China Q3 GDP growth of 4.6%
Continued optimism in the tech sector, especially AI-related stocks
Strong performance of small-caps, with the Russell 2000 outperforming larger indices
Stock Spotlight
$NFLX ▲10%: Exceeded Q3 expectations and reported a 35% jump in ad-supported memberships
$CVS ▼8%: Tumbled on CEO replacement news and weak Q3 guidance, expecting adjusted earnings between $1.05 and $1.10 per share
$LW ▲8%: Popped after activist investor Jana Partners built a stake to push for a potential sale
$PTON ▲9%: Recovered year-to-date losses, trading higher ahead of Q1 fiscal 2025 results on October 31
$AAPL ▲2%: Climbed on reports of strong iPhone 16 sales in China, up 20% compared to iPhone 15 in the first three weeks
Big Name Updates
$NVDA ▲1%: Testing the crucial $140 level, with Bank of America analyst Vivek Arya reiterating a buy rating and raising the price target
$GOOGL: Announced organizational changes, moving the Gemini APP team to DeepMind
$TSLA: Faces NHTSA investigation into FSD collisions across multiple models, including Model S, X, 3, Y, and Cybertruck
$AMZN: Announces Election Night live special on Prime Video, hosted by Brian Williams
$MSFT: Collaborating with OpenAI to determine equity stake in OpenAI’s conversion to a for-profit company
Other Notable Company News
$INTC: Seeking investors for a minority stake in its Altera Unit, potentially valued at $17 billion
$DDOG: Upgraded to Buy from Neutral at UBS, with a new price target of $150
$TSM: Under U.S. investigation for possible export violations related to dealings with Huawei
$STLA: Plans to close and sell its Arizona Proving Grounds as part of cost-cutting efforts
$ISRG: Reported strong Q3 earnings with 26% YoY growth in adjusted EPS and 17% YoY revenue growth
Sector Watch
Sector | Symbol | % Change |
|---|---|---|
Communication Services | XLC | +1.13% |
Consumer Discretionary | XLY | +0.65% |
Real Estate | XLRE | +0.58% |
Health Care | XLV | +0.51% |
Technology | XLK | +0.49% |
Utilities | XLU | +0.48% |
Materials | XLB | +0.39% |
Industrials | XLI | +0.17% |
Financials | XLF | +0.04% |
Consumer Staples | XLP | -0.01% |
Energy | XLE | -0.41% |
Bond Market
The bond market is reacting softly to favorable earnings reports and improved retail statistics. Nothing much to report on here.
Policy Watch
The U.S. Federal Reserve’s GDPNow forecast for Q3 has been raised to 3.4% from 3.2%, following strong retail sales numbers
ECB’s Lagarde signaled potential rate cuts in December, highlighting growth risks
Bank of Japan is reportedly considering changing its view on upside price risks, potentially adopting a more dovish stance
What to Watch
Upcoming earnings reports: With over 80 S&P 500 companies having reported so far, keep an eye on upcoming releases for market sentiment shifts
Federal Reserve statements: Watch for any comments from Fed officials that might hint at future monetary policy decisions, especially in light of the revised GDPNow forecast
China’s economic indicators: Monitor further economic data from China to gauge the strength of its recovery and potential impacts
Cryptocurrency developments: With Bitcoin testing long-term trend lines and increased focus on crypto in the upcoming election, watch for potential market-moving news in this sector
P.S.
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