Services Gauge Comes in Line with Expectations for September
The Institute for Supply Management (ISM) nonmanufacturing index for September came in at 53.6, slightly below the StreetAccount forecast of 53.7. This indicates a slight pullback in the rate of growth for the services sector compared to the August reading of 54.5. The slower growth is attributed to a decline in the New Orders and Employment indexes. Despite this, the majority of respondents remain positive about business conditions, although some expressed concerns about potential headwinds. Anthony Nieves, Chair of the Institute for Supply Management Services Business Survey Committee, stated that there has been a slight pullback in growth but overall conditions remain positive.
Utilities Experience Reversal, Signaling Market Sell-Off Exhaustion
Utility stocks experienced an intraday rally on Tuesday, suggesting that the market sell-off may have reached exhaustion, at least for now, according to Wolfe Research. The Utes sector posted a 3.5% intraday reversal, rallying from morning lows to close up 1.2%. This comes after the sector experienced a sell-off that hit historic levels on some technical metrics earlier in the week.
Stocks Open Slightly Higher on Wednesday
US stocks opened slightly higher on Wednesday, with the Dow Jones Industrial Average up 63 points (0.2%), the S&P 500 up 0.2%, and the Nasdaq Composite up 0.3%.
Bank of America Bullish on BlackRock’s Fixed Income and iShares Growth
Bank of America predicts that BlackRock will continue to make steady gains in fixed income and grow its iShares ETF segment. The bank expects BlackRock’s annualized organic growth rate to be between 4% and 5% in 2023, higher than the 4% growth expected in 2022, and 6% in 2024.
Gasoline Futures Fall to Five-Month Low
November RBOB gasoline futures fell to $2.30 a gallon in early Wednesday trading, the lowest level since May 4. This decline comes as November West Texas Intermediate futures contracts dropped to their lowest level since September 12. The American Automobile Association also reported a five-cent drop in the national average for a gallon of gas compared to a week ago.
Private Payroll Growth Slows in September
Private payrolls grew by just 89,000 in September, well below the estimate of 160,000 and down from 180,000 the previous month, according to ADP. The payroll processing firm also reported that wages accelerated at a 5.9% annual pace, marking the 12th straight monthly decline. Job growth was primarily seen in the services sector, particularly in leisure and hospitality, while other sectors experienced declines.
Intel Announces Plans for Programmable Chip Unit IPO
Intel announced that it will be operating its programmable chip unit as a standalone business and plans to conduct an initial public offering for the unit within the next two to three years. Following this news, Intel shares rose 2.5%.
Apple Shares Decline After Rating Cut by KeyBanc
iPhone maker Apple saw its shares drop 0.9% after KeyBanc cut its rating on the company to sector weight from overweight. The downgrade was due to Apple’s high valuation and an expectation of soft growth in the United States.
Cal-Maine Foods Plunges on Disappointing Sales Figures
Cal-Maine Foods saw its stock plunge 11.6% after reporting disappointing sales figures due to lower prices. The egg producer’s fiscal first-quarter earnings of two cents per share fell short of analysts’ expectations of 33 cents per share.
UBS Initiates Coverage of Freelance Services Stock
UBS has initiated coverage of a freelance services stock, projecting growth as job listings gain steam heading into 2024. The bank predicts that growth will begin reaccelerating in 2024, albeit at levels below historical seasonality through 2025.
Moderna Shares Jump on Positive Trial Results
Moderna shares gained 1.6% in premarket trading after the company announced positive interim results from the Phase 1/2 trial of its mRNA-1083 investigational combination vaccine against influenza and Covid. The pharmaceutical giant plans to start a Phase 3 trial for the combination vaccine in 2023, with potential regulatory approval targeted for 2025.
UBS Upgrades Construction and Engineering Stock, Forecasts 36% Upside
UBS upgraded a key construction and engineering company and believes it has reached a key inflection point. The firm forecasts that the next year will prove that the turnaround will translate into higher and more normalized earnings. The initial run-up in stock price reflected the risks to date, but UBS believes it does not fully reflect the company’s potential over the next 1-2 years.
Barclays Warns Stock Market Struggles Likely to Continue
Barclays strategist Emmanuel Cau believes that stock market struggles are likely to continue in the near term due to rising Treasury yields. He states that surging real rates and a stronger dollar are unfriendly to risk assets, prompting more de-risking and causing cash to be the only safe place. Cau suggests that central banks are unlikely to respond quickly unless something breaks, and that markets are starting to pay attention to fiscal risks, potentially leading to sustained pressure on sovereign yields.
Yen Strengthens After Hitting Weakest Levels
The Japanese yen strengthened against the US dollar after briefly touching 150 overnight. Japan’s Finance Minister stated that the government will take steps against any dramatic moves in the currency without ruling out any options. The last time Japan intervened to buy yen was in September and November 2022 when the currency reached a 32-year low.
Jeffrey Gundlach Warns of Recession Warning in Bond Market
DoubleLine Capital CEO Jeffrey Gundlach believes that the bond market is sending a recession warning. He points out that the spread between the 2-year and 10-year Treasury yields has tightened to 35 basis points, compared to 108 basis points a few months ago. Gundlach suggests that this “de-inverting” of the yield curve could be a sign of an imminent economic downturn and warns investors to be prepared.