Morning in New York: S&P 500 aims for a new high

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

In the center of investors' attention is the news about a possible resolution of trade contradictions between the US and India. According to media reports, the parties are close to a deal under which Washington may reduce duties on Indian goods from the current 50% to 15-16%, and New Delhi may agree to a gradual reduction in the purchase of Russian oil. Markets view these developments as a positive signal, as any de-escalation of trade tensions reduces global uncertainty and supports demand for risky assets.

After an active sell-off of precious metals the day before, the correction continued at the Asian session. Gold tested the $4000 mark: it was losing more than 2.5% of its value at the moment. Now there are signs of stabilization: gold and silver futures are recovering by about 0.5-1%. This may mean that yesterday's fall was caused by technical reasons, rather than marking the beginning of a trend to leave protective assets.

Quarterly reports from a number of financial companies helped to dispel recent investor concerns about credit quality, which supported the entire financial sector. Capital One (COF) was positively received in the post-market. The issuer managed to beat consensus and its key credit quality metrics were better than expected. Management at Zions Bancorporation (ZION) stated that the recent $50 million fraud-related charge-off was an isolated incident. Western Alliance (WAL) management reiterated stable credit metrics and low levels of problem loans. Combined, these results form a locally positive outlook for the Profile Regional Banks ETF (KRE).

In the absence of significant macro statistics, the upcoming trades will be guided by the publication of numerous reports and related expectations.

GE Vernova (GEV), Thermo Fisher Scientific (TMO), Vertiv (VRT), Boston Scientific (BSX), Amphenol (APH), AT&T (T) and Hilton (HLT) will report results before the open. Following the main session, Tesla (TSLA), Lam Research (LRCX), IBM (IBM), QuantumScape (QS), O'Reilly Auto Parts (ORLY), SAP (SAP) and Kinder Morgan (KMI) will report.

Futures on US indices demonstrate about zero dynamics. We assess the balance of risks for the upcoming session as neutral with average volatility. We focus on the S&P 500 movement in the range of 6690-6770 points (from -0.7% to +0.5% to the closing level of the previous session).

- Shares of Texas Instruments (TXN) are under heavy pressure, losing about 8% in the premarket after the release of a mixed quarterly report. The company's revenue beat average expectations at $4.74 billion, but the $4.4 billion forecast was 2.7% below consensus, which offset all the positivity.

- Intuitive Surgical (ISRG) shares are up more than 16% ahead of the open as the issuer reported a significantly better-than-forecast number of surgical procedures using its da Vinci robots. The data points to a recovery in demand from healthcare providers.

- Quotes of Netflix (NFLX) before the start of the main trading fall by 6% after the release of mixed quarterly results. On the one hand, the company's revenue rose 17% to $11.51 billion, in line with consensus, and for the advertising segment, the reporting period was the strongest in history. On the other hand, earnings per share (EPS) came in at just $5.87, with average forecasts of $6.97, largely due to an unanticipated tax expense in Brazil.

Trades on October 21 on American stock exchanges ended mixed. S&P 500 showed almost zero dynamics, Nasdaq 100 decreased by insignificant 0.06%, Dow Jones added 0.47%, and Russell 2000 lost 0.49%. The "Magnificent Seven" stocks also moved without a single direction. Quotes of Amazon (AMZN: +2.56%) looked better than others, Alphabet (GOOGL: -2.37%) was under pressure. Consumer staples (XLY: +1.22%) led the broad market growth, while the utilities sector (XLU: -1.02%) was the outsider.

October index of business activity in the non-manufacturing sector from FRB Philadelphia fell by 2 points to 3.6. At the same time, the key components of the report showed more pronounced deterioration: the index of new orders collapsed by 18 points to -17.4, and the revenue indicator collapsed by 20 points to -2.4. These indicators went into negative territory for the first time since June and Ma, respectively. Companies also reported a drop in employment.

Nevertheless, the market practically did not react to this negative data, as the focus remains on the generally successful reporting season. The focus on the eve was also on signs of vulnerability of one of the key market trends - betting on the growth of protective assets. Gold fell in price by 5.7% and silver by 7.2%, which was triggered by mass profit taking. However, most analysts consider these movements to be a technical correction caused by significant overbought and extreme investor positioning after the recent rally.

- The strong report was a driver of strong growth for General Motors (GM: +14.9%). The quarter was particularly successful for the North American division. The management of the auto giant raised its annual EPS and operating cash flow guidance, and lowered its estimate of the negative impact of import tariffs.

- RTX Corp. (RTX: +7.7%) reported revenue and earnings for the quarter above average expectations, posting double-digit organic sales growth. The company's own full-year guidance was improved.

- Revenue and earnings that beat consensus, as well as strong organic growth supported buying in Coca-Cola (KO: +4.1%). The corporation's management noted that September was the most successful month in the reporting quarter.

- The announcement of OpenAI's new Atlas web browser, powered by ChatGPT, was perceived as a direct competitive threat, which pressured Alphabet stock (GOOGL: -2.4%).

- A New York Times report about the company's plans to robotize 75% of its operations was received positively by Amazon (AMZN: +2.56%) investors. The market sees in this move the potential for a significant reduction in operating costs in the long term.

- Danaher (DHR: +6%) reported a better-than-expected quarter, with its management giving upbeat comments, although its fourth-quarter outlook was weak due to slowing growth in its Life Sciences segment.

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