Morning in New York: investors are driven by optimism

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

Durable Goods Orders data for September will be in the focus of attention of the participants of the upcoming trades. The consensus assumes growth of the total indicator by 0.2% m/m after a jump of 2.9% a month earlier. According to average forecasts, the indicator excluding transportation will rise by the same 0.2%. If the actual results exceed expectations, it will be taken as a sign of economic stability, and weaker statistics will be another argument in favor of further easing of monetary policy.

The FRB Dallas will release its business activity index for October (consensus: -7.8 points).

The aforementioned releases take on special significance ahead of the Fed meeting starting this Tuesday.

The positive background for the markets is due to the progress in trade negotiations between the US and China. During the summit in Korea, the teams of leaders of both countries managed to agree on the preliminary framework of the trade deal, which allows avoiding an increase in import duties from November 1. This news returned investors on global platforms appetite for risk, which was especially evident in Asian trading: the Japanese Nikkei 225 index reached record levels on Monday. The signing of the agreement between Beijing and Washington will remove years of uncertainty for global supply chains and provide a basis for improving corporate earnings forecasts, especially for technology companies, industrial giants and exporters.

Keurig Dr Pepper (KDP) and Revvity (RVTY) will report quarterly results before the open. Cadence Design Systems (CDNS), Welltower (WELL), NXP Semiconductors NV (NXPI), Waste Management (WM), Brown & Brown (BRO), F5 Networks (FFIV ) and Rambus (RMBS ) will report after the end of the main session.

Futures on US indices demonstrate positive dynamics. We assess the balance of risks as moderately positive with an average level of volatility. We focus on S&P 500 fluctuations in the range of 6780-6850 points (from -0.2% to +0.9% to the previous session's closing level).

- SoftBank (SFTBY) has approved a final $22.5 billion investment package in OpenAI.

- Amazon (AMZN) plans to invest €1.4 billion in businesses in the Netherlands over the next three years. Part of the funds will be used to develop AI services for entrepreneurs selling goods on the online retailer's platform.

- HSBC (HSBC) has announced a $1.1 billion provision in connection with the judgment in the Bernard Madoff pyramid scheme case. The move will impact the bank's key capital adequacy ratio (CET1).

- Novartis (NVS) is buying biotech Avidity Biosciences (RNA) for $12 billion ($72 per share). This price implies a premium of 46% to the closing level on October 24. The deal will allow Novartis to strengthen its portfolio of drugs for rare muscle diseases amid patent expirations on its own blockbuster drugs.

- Toyota (TM) reported an increase in its global production for the fourth consecutive month. For September, this indicator grew by 11% y/y. The key positive driver is the strong demand on the American market. Here, production volumes increased by 29% and sales by 14%.

October 24 trading on the U.S. markets ended with four leading indices updating their historical highs. S&P 500 added 0.79%, Nasdaq 100 rose by 1.04%, Dow Jones rose by 1.01%, and Russell 2000 - by 1.24%. The optimistic mood of market participants was supported by inflation statistics, which indicated its slowdown. Against this background, the technology sector (XLK: +1.55%) led the way, as it includes a large number of "growth" stocks, for which price dynamics is especially important. The energy sector (XLE: -1.01%) was the outsider.

Shares of the "Magnificent Seven" showed multidirectional dynamics. Alphabet (GOOGL: +2.7%) recorded the most active purchases, while Tesla (TSLA: -3.4%) securities were under the most significant pressure.

The September CPI rose 0.3% mom and the core CPI rose 0.2% mom, both 0.1% below consensus. In annualized terms, both indicators added 3% with average expectations of 3.1%. Against this backdrop, the probability of a Fed interest rate cut before the end of the year is increasing.

S&P Global's composite business activity index (PMI) for October rose to 54.8 points (consensus: 53.5). The manufacturing sub-index totaled 52.2 and the service sub-index totaled 55.2 points (consensus: 52 and 53.5 points, respectively). Meanwhile, the final consumer sentiment estimate from the University of Michigan for October came in weaker than expectations at 54.5, coming in at 53.6 points. This signals the continued concern of the survey participants about inflation.

- Shares of Comfort Systems USA (FIX: +19%) soared on the back of a strong third-quarter report. The company beat earnings and revenue expectations, raised its dividend by 20%, and grew its order book to $9.38 billion. In addition, management noted "unprecedented demand" and announced two new acquisitions.

- General Dynamics ' (GD: +2.7%) aerospace segment sales for the third quarter increased by an impressive 30% YoY. Against this backdrop, the corporation beat earnings and revenue consensus. Management noted very strong business jet order activity.

- Alphabet (GOOGL: +2.7%) shares reacted positively to news of AI startup Anthropic's plans to expand its use of Google's cloud-based TPU chips. The partnership will give Anthropic access to 1 million chips as well as additional Google Cloud services.

-HCA Healthcare's (HCA: +1.6%) third-quarter Adjusted EBITDA and revenue outperformance, as well as an improved full-year outlook, boosted the stock. Analysts were positive on volume dynamics and cost control.

- Illinois Tool Works (ITW: -4.5%) was pressured by weak third-quarter results in the food equipment and instrumentation segments, as well as revenue that fell short of expectations. Despite this, the company reaffirmed its full-year guidance for the latter metric.

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