Morning in New York: Trump and Xi will set the direction of trading

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

The vector of quotes movement in the upcoming session will be set by the phone conversation between US President Donald Trump and Chinese President Xi Jinping, scheduled for 9:00 a.m. ET. Top on the agenda is a potential agreement on TikTok, which would allow the app to continue operating in the U.S. under the control of U.S. investors. In addition, the two leaders will continue to discuss import tariffs and mutual trade relations in general. Making progress in these talks has the potential to reduce trade tensions and support positive sentiment in the technology sector. The absence of an agreement will increase uncertainty and volatility in the markets.

Donald Trump is wrapping up a state visit to the UK, where it was announced that American companies are investing a record amount of about $204 billion in the British economy. Blackstone, Microsoft and Nvidia are planning projects in the field of artificial intelligence and data centers. Their implementation will strengthen the global leadership of U.S. technology companies, increase exports of their services and create profits for investors. Increased international expansion will ensure long-term U.S. economic growth and support positive sentiment in the capital markets.

Since there are no significant macroeconomic releases and corporate reports scheduled for September 19, foreign policy and trade news will be of key importance during trading.

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 6600-6670 points (from -0.5% to +0.6% of the previous session's closing level).

- A strong quarterly report was a positive driver for FedEx (FDX) shares, which added about 5% after the end of the main session. The company beat analysts' expectations on both revenue and earnings per share. Market participants positively perceived the effectiveness of the cost-cutting program and improved margins, which helped offset the decline in international export volumes.

- The news about completion of negotiations on purchase of Mexican logistics operator Estafeta activated purchases of United Parcel Service (UPS) securities on the premarket. Investors interpret the rejection of the deal as a sign that the company is focusing on internal reforms and improving margins.

- The weak results caused a selloff in Scholastic (SCHL) securities, which are losing about 9% in extended trading. The issuer reported revenue and profit falling below consensus, which is explained by weakening demand for children's literature and educational materials.

- Quotes of Reviva Pharmaceuticals (RVPH) collapsed before the open after the announcement of an additional issue of common stock and warrants. Capital dilution and uncertainty about the terms of the deal caused a sharp negative reaction of the market.

- Shares of Jasper Therapeutics (JSPR) are down 13% amid the announcement of a follow-on offering. Although the funds raised will be used to fund clinical trials, investors have focused on diluting current shares.

September 18 trading on American stock exchanges ended in the plus. S&P 500 added 0.48%, Nasdaq 100 rose by 0.95%, Dow Jones rose by 0.27%, and Russell 2000 rose by 2.51%, having updated the historical maximum of November 2021. Positive dynamics was due to expectations of continued easing of monetary conditions, which particularly supported the shares of small capitalization companies. An additional driver of growth remains the increased interest in the technology segment. Quotes of the "Magnificent Seven" were predominantly moving upward. The main event in the sector was the news about Nvidia's (NVDA: +3.5%) plans to invest $5 billion in Intel (INTC: +22.8%) as part of its chip development cooperation. Against this backdrop, the technology sector emerged as the top gainer (XLK: +1.73%). The outsiders were suppliers of consumer staples (XLP: -0.87%).

The key macroeconomic factor of the day was strong statistics. The number of initial applications for unemployment benefits for the last week decreased from 263 thousand to 231 thousand with a consensus of 245 thousand, which eased concerns about the situation in the labor market. The FRB Philadelphia Business Activity Index for September rose to its highest level since January at 23.2 points (consensus: 1.5 points). The report showed an increase in new orders and shipments while price pressures eased, indicating a resilient industrial sector. The combination of easing labor market tensions and signs of recovery in manufacturing supported the bulls.

- News of the takeover by Swiss pharmaceutical company Roche for $2.4 billion at a premium of about 80% to the last closing price caused 89bio (ETNB: +85.2%) to soar.

- CrowdStrike (CRWD: +12.8%) provided a long-term outlook at the Fal.Con conference. Investors positively perceived the strong guidance on annual recurring revenue (ARR) growth by 2027 and management's comments on the deployment of Agentic AI technologies.

- A new study showing that Ozempic reduces the risk of serious cardiovascular events by 23% was a growth driver for Novo Nordisk shares (NVO: +6.3%).

- A weak first-quarter report, in which the company missed earnings expectations, as well as a lowered full-year revenue outlook led to a drop in the stock price of restaurant chain Darden Restaurants (DRI: -7.7%).

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