Morning in New York: stock exchanges wait for a signal from consumers

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

The key macroeconomic event of the day will be the release of preliminary Consumer Sentiment Index data from the University of Michigan for October (consensus: 54.3 points, previous reading: 55.1), which will be released at 10:00 a.m. ET. With the ongoing shutdown and lack of official statistics, this report will be one of the few available indicators of the economy's health. We expect the consumer sentiment index to remain in a familiar range. Investors will be especially attentive to the inflation expectations component. Their decline would be taken by the market as a confident confirmation that the Fed can continue to pursue a dovish course, while an increase would complicate this task for the regulator, increasing pressure on quotes.

President Donald Trump the night before again threatened to use the current government shutdown to permanently cut government programs popular with Democrats. These threats increase political polarization and reduce the likelihood of a compromise being reached soon, which is a negative factor for market sentiment.

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

- Elastic (ESTC) shares are adding more than 10% in the premarket after announcing the acquisition of Jina AI platform, as well as the launch of a $500 million share repurchase program and a positive annual outlook update.

- Applied Digital (APLD) shares reacted by more than 23% to the publication of the quarterly report. The company's EPS was above the forecast, revenue increased by 84% year-on-year, which strengthened investment expectations and supported the positive trend in the segment of digital infrastructures and data centers.

- Apogee Enterprises (APOG) is gaining more than 2% as its quarterly earnings and revenue came in better than expected. At the same time, the management noted a decrease in major expenses and improved margins in key areas. Investors are positive about the company's restrained financial policy and demand stability.

- Levi Strauss (LEVI) loses nearly 7% before the start of main trading despite net income and revenue growth in the latest quarter. Exchange players are reacting negatively to management's conservative forecasts and declining margins due to import tariff pressure.

- Shares of Clover Health (CLOV) are falling more than 7% amid management's comments about expected Medicare Advantage Star ratings cuts that will directly affect future government payments.

- The announcement of a new share placement agreement for up to $51.6 million caused Tilray Brands (TLRY) stock price to drop by 4%. The prospect of dilution of existing shareholders' stakes caused their negative reaction.

Trading on October 9 on American stock exchanges ended in a slight negative. S&P 500 and Nasdaq 100 after reaching historic highs the day before corrected by 0.28% and 0.15% respectively. Dow Jones fell by 0.52%, Russell 2000 decreased by 0.61%. The trading dynamics was caused by profit taking amid absence of significant positive catalysts and persisting uncertainty. Shares of the "Magnificent Seven" traded multidirectionally. Purchases of Meta (META: +2.2%) and Nvidia (NVDA: 1.8%) failed to compensate for a noticeable decline in Apple (AAPL: -1.6%). The consumer staples sector (XLP: +0.32%) led the gains, supported by a strong report from PepsiCo (PEP). The industrial sector (XLI: -1.48%) was the outsider.

Investor sentiment is determined by the lack of progress in budget negotiations, due to which the shutdown continues for the tenth day. Initially the market ignored this problem, but now the anxiety of its participants is caused by the protracted nature of the government shutdown and the prospects of further delay in the release of data, as well as the negative impact on the economy of non-payment of wages to civil servants. These factors became the main reason for profit taking.

Additional uncertainty was introduced by comments of the Fed representatives, which again showed a divergence of opinions. Head of FRB New York John Williams spoke in favor of further rate cuts to support the labor market. At the same time, Michael Barr, a member of the Board of Governors, on the contrary, expressed concern about inflationary risks from duties. The market was expecting some clarification from the regulator's chairman Jerome Powell, but at the conference on banking communities he limited himself to formal welcoming words, without giving any signals on monetary policy.

The situation on the debt market also did not contribute to the growth of optimism. Another weak auction on placement of 30-year government bonds again pointed to the problems with demand and confirmed investors' concerns about the large volume of supply of government debt, which put pressure on quotations.

- PepsiCo (PEP: +4.2%) reported third-quarter revenue and earnings above average expectations and slightly raised its full-year guidance, citing improved momentum in its beverage segment in North America.

- News of a takeover by pharmaceutical giant Novo Nordisk (NVO) for $4.7 billion in cash, at a premium of about 16% to the closing price, sent Akero Therapeutics (AKRO: +16.3%) shares soaring.

- Successful results for the third quarter and an optimistic guideline for the current quarter became growth drivers for Delta Air Lines shares (DAL: +4.3%). Investors positively assessed the revenue dynamics in the premium segment, which offset its decline in the main class. Also, the market positively perceived the CEO's comments on the absence of negative impact from the government shutdown.

- A weak outlook for the upcoming quarter and the full year led Helen of Troy (HELE: -25%) stock price to collapse. Management cited pressure on margins due to tariffs and rising promotional costs.

- Ferrari (RACE: -15%) disappointed investors with its updated strategy. Management raised its full-year earnings guidance, announced a €3.5 billion share buyback program and increased dividends. However, its own revenue forecast was below average market expectations, and the target for the share of electric vehicles in the lineup by 2030 was revised from 40% to 20%.

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