Morning in New York: market cautious after record shutdown ends

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

President Donald Trump has signed the budget bill, officially ending the longest shutdown in US history. The document, previously passed by the House of Representatives and approved by senators, provides funding for government operations through the end of January, cancels federal employee layoffs, restores their benefits and guarantees the continuation of the SNAP program for 42 million citizens. The Democratic faction of the upper house of Congress compromised in exchange for a guarantee of a vote on extending the ACA's enhanced tax credits in December. The Department of Transportation froze further reductions in the number of flights, which had reached 6% at the time the shutdown ended. Market participants are counting on the release of macro data delayed during the government shutdown. However, the White House warned that the publication of statistics on inflation and labor market for October may not take place.

The heads of FRB Cleveland and St. Louis Beth Hammack and Alberto Musalem will make comments on the current situation on Thursday. The resumption of the monetary policy easing cycle remains part of the positive expectations of the market, but disagreements on this issue in the leadership of the regulator remain. The likelihood of a rate cut at the December meeting was revised down to 54% from 67% as of Nov. 11.

Walt Disney (DIS), Bitfarms (BITF ), JD.com (JD), Bilibili (BILI ), Nice (NICE ), Canadian Solar (CSIQ), Ballard (BLDP) will report financial results before the opening of the main session. Applied Materials (AMAT), Nu Holdings (NU), Red Cat Holdings (RCAT), Figure Technology (FIGR ), JBS NV (JBS), Globant SA (GLOB) will report after the main session.

Futures on US indices show moderately negative dynamics. We assess the balance of risks as neutral with moderate volatility. We focus on S&P 500 fluctuations in the range of 6800-6900 points (from -0.7% to +0.7% to the previous session's closing level).

-Cisco (CSCO) reported $1 earnings per share (EPS) and revenue of $14.88 billion for the quarter, with consensus estimates of $0.98 billion and $14.77 billion, respectively. Against this backdrop, the company's shares added more than 7% in the post-market. The network segment made a significant contribution to the overall result. Sales in this segment increased by 15%, and the portfolio of liabilities (RPO) grew by 7% YoY to $42.9 bln. The company's own guidance for the current quarter was raised: EPS is expected to be in the range of $1.01-1.03 on revenues of $15-15.2 bln. The company's 2026 guidance for these indicators was also revised upward to $4.08-4.14 and $60.2-61 bln, respectively, which exceeds the market consensus.

- Firefly (FLY) stock soared 18% after the close of the main session on November 12 on the back of the release of its quarterly report. The company's adjusted loss narrowed to $0.33 per share versus the forecast of $0.41, while revenue reached $30.8 million versus the consensus of $27.7 million, mainly due to the spacecraft division and launch orders. The company raised its full-year revenue guidance to $150-158 million (consensus: $135 million) based on new contracts, including a $176.7 million agreement with NASA for the Blue Ghost 4 mission and an additional $10 million contract. The completed acquisition of SciTec strengthens the company's position in the national security segment and opens access to the Golden Dome program.

- Ascendis Pharma (ASND) generated a loss per share of €1 in the third quarter, with a consensus of €0.24, which put pressure on its stock price. The issuer's revenue only slightly exceeded average market expectations at €213 million, reaching €214 million. At the same time, in the reporting period, the company reached a positive operating income of 11 million euros, reduced R&D expenses and increased cash reserves to 539 million euros. The management also notes the success of the TransCon platform and the growth in sales of YORVIPATH.

November 12 trading on the U.S. stock exchanges again ended mixed. S&P 500 rose by a symbolic 0.06%, Nasdaq 100 fell by the same amount, Dow Jones added 0.68%, and the Russell 2000 lost 0.3%. The equal-weighted S&P index outperformed the benchmark for the sixth time in seven sessions, indicating that the rally is expanding.

In the "Magnificent Seven" only Microsoft (MSFT: +0.48%) and Nvidia (NVDA: +0.33%) remained in positive territory. Representatives of the health care (XLV: +1.42%) and finance (XLF: +0.86%) industries were the leaders of growth. Energy (XLE: -1.40%) and Real Estate (XLRE: -0.79%) were the outsiders.

Head of FRB Atlanta Raphael Bostic said that he would prefer to leave the rate unchanged until there are convincing signs of slowing inflation, noting the ambiguity of signals on the labor market. FRB of New York President John Williams allowed bond purchases to resume once "sufficient reserve levels" are reached. Board of Governors member Stephen Miran reiterated his support for a 50bp rate cut or at least a 25bp cut in December.

We assume that the resumption of publication of macroeconomic statistics after the end of the shutdown is unlikely to quickly resolve the divergence in the positions of FOMC members.

-On Holding (ONON: +18%) reported strong third-quarter growth in direct and wholesale sales and increased gross margin, although its fourth-quarter guidance was conservative.

- DraftKings (DKNG: +3.3%) top managers Gregory Wendt and Harry Sloan acquired stakes of 10k and 25k of its shares, respectively, which supports the market's confidence in the company's prospects.

- Circle Internet's (CRCL: -12.2%) EBITDA and revenue for July through September were above average expectations. Circle Internet's own margin and other revenue guidance for fiscal 2025 was improved. However, the market negatively perceived the increase in the operating expenses plan and "other income" guidance for the current quarter.

-Polestar Automotive (PSNY: -15.4%) reported third-quarter revenue and profit declines. Its margins deteriorated due to impairment on the Polestar 3 model and increased pricing pressure. An additional negative was the announcement of a planned reverse stock split.

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