Morning in New York: Fed signals will determine the course of trading

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The main event for traders on Monday will be the speeches of Fed Vice Chairman Philip Jefferson and New York FRB Head John Williams, who also has the status of a permanent voting member of the FOMC. The investment community hopes that their comments will specify plans for the future course of monetary policy. The realization of these expectations would reduce uncertainty: at the moment, the probability of a rate cut at the December FOMC meeting is estimated to be almost 50/50. Investors will be looking for any hints as to what remains the regulator's priority goal - fighting inflation or preventing the economy from slowing down. "Hawkish" comments of the mentioned speakers may weaken expectations for further rate cuts, the soft tone of the statements will support buyers.

This Monday, the Empire State Index of business activity in the manufacturing sector of New York (Empire State Index) for November will be published (FactSet consensus - 0.25 points, October - 10.7 points). If the actual fall of the indicator will be even lower, it may be considered as an additional argument in favor of easing monetary policy, as it will indicate the cooling of the economy. On the contrary, a stronger report will support the position of "hawks", who are in favor of maintaining high rates. However, these statistics are likely to be of secondary importance against the background of speeches of the Fed representatives.

Reporting season is in full swing, with more than 92% of companies in the S&P 500 Index reporting quarterly results. According to FactSet, profit growth forecasts remain stable at 13.1%. XPeng (XPEV), Luckin Coffee (LKNCY), Aramark (ARMK), Full Truck Alliance (YMM) and H World Group (HTHT) will report before the open of trading on November 17, while Trip.com Group (TCOM) will release its results after the end of the main session.

Futures on US indices demonstrate positive dynamics. We assess the balance of risks for the upcoming trades as neutral with moderate volatility. We focus on S&P 500 fluctuations in the range of 6700-6800 points (from -0.5% to +1% of the previous session's closing level).

- Berkshire Hathaway (BRK.B) opened a new $4.3 billion position in Alphabet (GOOGL) and cut its $11 billion stake in Apple (AAPL), though it remains the largest in the fund's portfolio. The move is seen as a signal of high confidence in Alphabet's AI strategy.

- Alphabet (GOOGL) plans to invest a record $40 billion in a single state to build three new data centers in Texas to implement its AI initiatives and expand related infrastructure amid intensifying competition in the sector.

- YouTube TV and Disney (DIS) have reached an agreement to end a two-week blockage of the service and restore access for more than 10 million subscribers of Alphabet 's (GOOGL) video hosting service to leading TV channels such as ABC and ESPN.

- ConocoPhillips (COP) has discovered a new gas field off the coast of Australia. This was the first successful exploration result in the region in four years. The development of this area could provide an increase in supply for the country's east coast, where gas shortages are forecast.

- Quantum Computing (QUBT) reported third-quarter revenue growth of 280% YoY thanks to new contracts, including one with one of the five largest U.S. banks. The company also reported raising $750 million, increasing its liquidity position to more than $1.5 billion.

- Dragonfly Energy 's (DFLI) third-quarter revenue grew 26% YoY and gross margin increased by 710 bps. Management reported raising about $90 mln and debt restructuring, which significantly improved the issuer's financial position.

November 14 trading on American stock exchanges ended mixed. Indices tried to stabilize after the sell-offs. As a result, the S&P 500 fell by an insignificant 0.05%, the Nasdaq 100 rose by a symbolic 0.06%, the Dow Jones fell by 0.65%, and the Russell 2000 rose by 0.22%. On Friday afternoon, quotes recovered some of their morning losses, helped by drawdown buying and news regarding M&A deals.

The "Magnificent Seven" stocks traded without any dynamics. Nvidia (NVDA: +1.77%) was the best performer, while Amazon (AMZN: -1.22%) was the outsider. The energy sector (XLE: +1.7%) was the broad market's top gainer, while financial companies (XLF: -1%) were the top losers.

The tone of the trades was set by the desire to find a balance after a large-scale exit of investors from the most popular shares of the technology sector. At the same time "hawkish" comments of Fed representatives continued to restrain buyers. Thus, Jeffrey Schmid, President of the Federal Reserve Bank of Kansas City, once again spoke out against rate cuts, in which he was supported by his colleague from Minneapolis, Neel Kashkari, who questioned the need to ease monetary policy in December.

Uncertainty is exacerbated by the ongoing information vacuum. There is a risk that the October consumer inflation (CPI) and employment statistics, which were postponed due to the recent shutdown, will not be released. Last month's Labor Department report could come out in an abbreviated form. This deprives investors and the Fed of important benchmarks for assessing the state of the economy.

- News of a looming takeover by pharmaceutical giant Merck (MRK) for $9.2 billion (at a 109% premium to the previous day's closing price) sent shares of biotech company Cidara Therapeutics (CDTX) soaring 105.4%.

- Figure Technology Solutions (FIGR: +16.3%) successfully reported its third quarter results: its revenue grew by 55% YoY and net income by 227%. Investor interest in the company's shares was further fueled by the announcement of plans to publicly float innovative tokenized shares.

- Media reports about Netflix (NFLX) and Comcast (CMCSA) preparing an offer to buy the streaming and studio business of Warner Bros. Discovery (WBD: +4%) supported the issuer's quotations.

- The decision to discontinue a phase 3 clinical trial of milvexian, after analysis showed a low probability of meeting the primary efficacy target, pressured Bristol Myers Squibb securities (BMY: -4.1%).

- Alibaba Group 's (BABA: -3.78%) American depositary receipts fell after the Financial Times reported a White House memo indicating that the company is providing technological support to the Chinese military in operations against targets in the United States.

This article was AI-translated and verified by a human editor