Morning in New York: market sentiment is dictated by uncertainty in the Fed's plans

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

The U.S. government has reopened after the longest shutdown in history, a 43-day shutdown. The agreement on financing government agencies has been extended until January 30, 2026, which temporarily relieves political uncertainty. At the same time, deep divisions between the parties remain. According to estimates by the Congressional Budget Office, the shutdown has delayed about $50 billion in spending and slowed U.S. GDP growth by 1.5 pp. At the same time, up to $14 bln of lost economic activity will not be restored.

More and more representatives of the Fed's leadership are doubting the expediency of a rate cut at the December meeting. San Francisco FRB President Mary Daly called it premature to make a decision four weeks before the meeting. Her Boston counterpart Susan Collins said the bar is "relatively high" for additional easing of the MPC in the near term. Head of FRB Cleveland Beth Hammack expressed concern about the state of the labor market and noted that high inflation may persist longer than the regulator initially expected.

Market participants reduced the probability of further easing of the MPC from 67% at the beginning of the week to 47%. This reflects the growing uncertainty about further actions of the regulator. Continued tough rhetoric of the Fed can put pressure on "growth" shares and support the dollar.

Hedge funds begin to publish information about their positions in the third quarter (13F), which may lead to high dispersion in dynamics of quotations of separate assets. Scholar Rock (SRRK), Twist Bioscience (TWST) and Sigma Lithium (SGML ) will present their quarterly results before the opening of trading. Quantum Computing (QUBT) and Dragonfly Energy (DFLI) will report after the end of the main session.

Futures on US indices demonstrate about zero dynamics. We assess the balance of risks for the upcoming trades as neutral with moderate volatility. We focus on the S&P 500 fluctuations in the range of 6650-6820 points (from -1.3% to +1.2% of the previous session's closing level).

- A US federal court has denied Apple's (AAPL) and OpenAI's motion to dismiss an antitrust lawsuit by Elon Musk's X Corp and xAI, which accuse Apple of illegally exclusively integrating ChatGPT into its ecosystem, limiting access to competing AI chatbots including xAI's Grok.

-Amazon (AMZN) and Microsoft (MSFT) have backed the GAIN AI Act bill restricting exports of Nvidia's (NVDA) advanced chips to China, the Wall Street Journal reports. The legislation requires prioritization of domestic orders before shipments to foreign customers. NVDA shares are down 1% on the premarket.

- Brazilian digital bank Nubank's (NU) third-quarter net income rose 39% YoY to $783, against a consensus of $757 mln. This result was achieved by scaling its home market operations and expanding its loan portfolio in Mexico. Return on equity reached a record 31%. Quotes of the fintech company before the opening of trading add about 3%.

- Online ticketing platform StubHub (STUB) reported revenue of $468.1 million for the second quarter of its current fiscal year, beating analysts' expectations. The company's management refrained from forecasting for the current quarter, attributing it to unpredictable demand due to varying launch dates for ticket sales. StubHub shares collapsed by 15% before the start of the main session.

Trading on November 13 on American stock exchanges ended in a noticeable minus. S&P 500 lost 1.66%, Nasdaq 100 fell by 2.05%, Dow Jones fell by 1.65%, and Russell 2000 fell by 2.77%. This dynamics was due to the sell-off in the technology sector and profit taking in popular stocks after the recent rally. Quotes of the "Magnificent Seven", except for Meta (META: +0.14%), went down. The deepest correction was demonstrated by Tesla (TSLA: -6.64%) and NVIDIA (NVDA: -3.58%).

The energy sector (XLE: +1.63%) was the leader of the growth on the background of the US announcement of the launch of the military operation "Southern Spear" to combat drug cartels in the entire Western Hemisphere. The technology sector (XLK: -2.49%) and cyclical consumer goods producers (XLY: -2.5%) were the outsiders.

The volatility of sentiment around artificial intelligence determined the course of the past trades. The market faced profit taking in technological shares against the background of stretched positions of investment funds and signs of reduced activity of retail investors. Additional pressure on quotations was exerted by an increase in the yield on U.S. Treasury bonds by 3-5 bp. after a series of hawkish comments of the Fed representatives and against the background of revision of the probability of a rate cut in December to 47%.

- BioNTech (BNTX: -7%) fell amid Bloomberg reports about Pfizer's plans to fully exit its shares by selling its stake for about $500 million.

- Walt Disney (DIS: -7.8%) securities came under pressure, although its earnings per share in the fourth fiscal quarter exceeded the consensus. The corporation's revenue fell short of average expectations mainly due to weak linear television performance. At the same time, growth in the number of Disney+ subscribers quarter-on-quarter and beat forecasts.

- Sealed Air (SEE: +16.8%) reacted positively to news of privatization talks with private equity fund Clayton Dubilier & Rice.

-Flutter Entertainment (FLUT: -14.3%) lowered its full-year revenue and EBITDA guidance as its third quarter earnings came in below expectations due to unfavorable U.S. sporting event results for the company.

- Verizon's (VZ: +0.8%) new CEO Dan Schulman plans to cut about 15,000 jobs as part of the company's largest-ever restructuring.

- More than 1,000 Starbucks (SBUX: -0.9%) employees went on an indefinite strike on Red Cup Day, which fell on Nov. 13.

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