Market Overview
The stock market experienced a decline throughout most of the week, primarily due to profit-taking following a strong third quarter and geopolitical tensions after Iran's missile attack on Israel. This incident increased oil prices, with WTI crude oil futures rising from $68.15 per barrel last Friday to $74.40 per barrel this Friday. This surge boosted the S&P 500 energy sector, which saw a 7.0% increase this week.
Despite these challenges, the major indices closed slightly higher than last Friday, driven by a rally following the September Employment Situation Report. The report indicated stronger-than-expected hiring, a decrease in unemployment, and an increase in average hourly earnings. This supported the market's soft landing narrative and reduced expectations for aggressive rate cuts by the Federal Reserve.
Interest Rate and Economic Developments
The probability of a 50 basis points rate cut at the November FOMC meeting dropped to 0.0% on Friday, from 32.1% on Thursday and 53.3% a week ago, as per the CME FedWatch Tool. The market was also initially concerned about growth due to the East Coast and Gulf Coast dockworkers strike, which was resolved by the end of the week.
Treasury yields rose significantly, with the 10-year yield increasing by 23 basis points to 3.98% and the 2-year yield rising by 37 basis points to 3.93%.
Today's News
Semiconductor sales surged in August, reaching a record $53.1 billion, marking a 20.6% increase year-over-year. This growth was driven by a 43.9% increase in sales to the Americas. Companies like Intel (INTC, Financial), Nvidia (NVDA, Financial), and AMD (AMD, Financial) are likely to benefit from this trend as demand for semiconductors continues to rise across various regions, despite a decline in Europe.
Air Products and Chemicals (APD, Financial) saw a 2.7% rise in after-hours trading following news that activist investor Mantle Ridge has acquired a stake worth over $1 billion. Mantle Ridge plans to influence the company's succession planning and strategic direction, viewing APD as undervalued compared to its peers.
Spirit Airlines (SAVE, Financial) faced a significant decline in stock value amid bankruptcy fears, as the company struggles with a $3.3 billion debt load. The airline is in discussions with creditors and has a looming deadline to refinance or extend payments, exacerbated by increased competition and a halted merger with JetBlue (JBLU).
B. Riley Financial (RILY, Financial) experienced a wave of broker departures, with nearly half of its Boca Raton office moving to Kestra Advisory Services. This exodus represents 8% of the firm's brokerage roster, amid speculation of potential sell-offs to raise cash.
UnitedHealthcare (UNH, Financial) has filed a lawsuit challenging the Medicare Advantage Star Ratings system, alleging unfair downgrades by the Centers for Medicare & Medicaid Services. The lawsuit seeks revised ratings before the upcoming open enrollment period, reflecting ongoing disputes over the evaluation process.
Exxon Mobil (XOM, Financial) reached an all-time high despite warnings of potential Q3 earnings reductions due to lower oil prices and refining margins. The company's performance is buoyed by rising crude prices, driven by geopolitical tensions in the Middle East.
Technology stocks have underperformed recently, with companies like Super Micro Computer (SMCI, Financial), STMicroelectronics (STM), and Intel (INTC, Financial) experiencing significant declines over the past three months. Despite this short-term downturn, the sector remains up 45.7% from a year ago.
Capricor Therapeutics (CAPR, Financial) saw its stock rally 20% as it announced plans to present promising long-term data from its HOPE-2 study on Duchenne muscular dystrophy. The presentation is set for the World Muscle Society Congress, highlighting the potential of its lead drug, deramiocel.
A potential quartz supply constraint looms as Hurricane Helene disrupts production in North Carolina, where the world's purest quartz is mined. This could impact semiconductor manufacturing, affecting companies reliant on this critical component.
Williams (WMB, Financial) gained 2.2% after Morgan Stanley upgraded the stock, citing strong growth prospects and favorable contract environments in the natural gas sector. The company's assets are increasingly vital for power grid stability and new demand sources.
SilverCrest Metals (SILV, Financial) jumped after Coeur Mining (CDE) announced an all-stock acquisition deal valued at approximately $1.7 billion. This acquisition includes the Las Chispas mine, enhancing Coeur's silver and gold production capabilities.
Bitcoin (BTC-USD) is on track for a weekly decline amid geopolitical tensions affecting financial markets. The digital currency's price fell below the $60K threshold, reflecting broader asset volatility.
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