Markets News, October 3, 2024: Stocks Slip Ahead of Jobs Report; Oil Jumps on Middle East Concerns
· InvestopediaMajor U.S. stock indexes closed lower Thursday as investors await tomorrow's highly anticipated jobs report, while oil prices continued surging amid concerns about conflict in the Middle East.
The Dow Jones Industrial Average and S&P 500 fell 0.4% and 0.2%, respectively, while the Nasdaq Composite finished the session fractionally lower. The major indexes have been in something of a holding pattern the past two days after starting the month with a sharp downturn.
Weekly jobless claims data released early Thursday came in largely as economists had expected, and investors will now turn their attention to the release of the September employment report on Friday morning. Investors are closely following the data releases as they look for continued signs that the economy is headed for a soft landing and indications of how aggressive the Fed will be in cutting interest rates, after the central bank made its first cut to its benchmark rate in four years last month.
Among stocks on the move Thursday, shares of Nvidia (NVDA) gained 3.4% after CEO Jensen Huang said late yesterday that demand for the company's next-generation AI chips is "insane."
Other mega-cap technology stocks were mostly lower, with Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL) and Amazon (AMZN) losing ground. Meta Platforms (META) was a notable exception, gaining 1.7% to hit a new all-time high.
Tesla (TSLA) fell 3.4% as the company announced a Cybertruck recall, extending the previous session's sharp decline that followed the release of delivery numbers that disappointed the most optimistic Wall Street expectations. Constellation Brands (STZ), the maker of Corona and Modelo beers, shed 4.7% and was the biggest decliner in the S&P 500 after reporting weaker-than-expected revenue numbers.
Levi Strauss (LEVI) was also down sharply, with shares falling 7.7% after the company reported lower-than-expected revenue, cut its sales outlook and said it was considering a sale of its Dockers brand.
Crude oil futures were up more than 5%, adding to a rally that's been fueled by concerns that conflict in the Middle East that could disrupt production. Shares of oil and oilfield services companies, including Valero Energy (VLO), Marathon Petroleum (MPC), Diamondback Energy (FANG), Occidental Petroleum (OXY) and Halliburton (HAL) all registered solid gains Thursday.
Gold futures were up slightly at around $2,680 an ounce, while bitcoin was little changed at around $60,800.
Biggest S&P 500 Movers on Thursday
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Decliners
- Shares of beer, wine, and spirits maker Constellation Brands (STZ) dropped 4.7%, losing the most of any stock in the S&P 500 on the day after the company released mixed results for its fiscal second quarter. The company behind the Corona and Modelo brands reported strong beer sales during the period but pointed to macroeconomic challenges affecting the alcoholic beverage industry.
- Bio-Techne (TECH) shares sank 4.4% on Thursday. In its most recent quarterly report, released in August, the provider of reagents and other health care diagnostics products missed earnings per share (EPS) expectations. A year-over-year jump in selling, general, and administrative (SG&A) costs weighed on results. According to analysts, Bio-Techne also faces stiff competition in an industry that requires rapid innovation.
- Telsa (TSLA) shares lost 3.4% after the carmaker recalled around 27,000 of its Cybertrucks because of an issue with the vehicles' rearview camera. When the Cybertruck is put in reverse, the rear-facing image can appear blank for up to eight seconds, according to a filing from the National Highway Traffic Safety Administration (NHTSA). This marks the fifth recall for the Cybertruck since its release last year.
Advancers
- Shares of MarketAxess Holdings (MKTX), which operates an electronic trading platform for fixed-income securities, notched Thursday's top performance in the S&P 500, popping 7.5% higher after the company reported record levels of trading volume across its platforms in September. The company highlighted strong year-over-year volume growth in U.S. high-grade, emerging markets, Eurobonds, and municipals.
- Crude oil futures prices jumped more than 5% to reach their highest level since August amid escalating tensions in the Middle East. The latest uptick in oil prices helped boost numerous stocks in the energy sector. Shares of refiner Valero Energy (VLO) jumped 6.2%.
- Shares of Texas-based energy generator Vistra Corp. (VST) surged 5.7% to an all-time closing high after Sundar Pichai, CEO of Google parent Alphabet (GOOGL), said the tech giant is exploring ways to power its artificial intelligence (AI) data centers using nuclear energy.
- Constellation Energy shares were up 4.5% on Thursday following reports that the company aims to secure a $1.6 billion federal loan guarantee to help fund the Three Mile Island project. According to The Washington Post, Constellation submitted a request for the government-backed loan to the Department of Energy in May, and after passing an initial review, the application is now in a negotiation stage.
Vistra Surges to Another Record on AI Demand Optimism
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The gains keep coming for shares of independent power producer Vistra Corp. (VST), which jumped more than 5% on Thursday to notch one of the best performances in the S&P 500 and set a new record closing high.
The Texas-based electricity provider has ridden a wave of enthusiasm about using nuclear capacity to power energy-intensive artificial intelligence (AI) processes. These AI-driven expectations have helped Vistra surpass Nvidia (NVDA) as the top-performing stock in the S&P 500 in 2024, up a whopping 244% year to date.
The most recent push higher for the red-hot Vistra stock came after Sundar Pichai, CEO of Google parent Alphabet (GOOGL), said the tech giant is exploring ways to power its data centers using electricity from nuclear plants.
Vistra shares gained 5.7% on Thursday to close at $132.45, bucking the broader downturn for U.S. stocks.
Read the full story here.
Oil Keeps Rising as Middle East Concerns Grow
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Growing concerns that Israel could attack Iranian oil production facilities pushed crude oil futures more than 5% higher Thursday, to their highest levels since late August.
Israel had vowed retaliation after a missile attack on its soil by Iran earlier this week. Any Israeli action against Iran could potentially disrupt oil supply from the world's ninth-largest oil producing nation.
"There have been suggestions that Israel could target Iranian oil facilities, which would have the potential to push oil prices significantly higher depending on the scale of the attack," Warren Patterson, ING's Head of Commodities Strategy wrote in a note Thursday.
Goldmans Sachs analysts said that investors will be looking out for of supply disruptions beyond the "potential downside risks to Iran supply" affecting oil prices. That could include disruptions in oil supply coming through the Red Sea and interruption of trade through the Strait of Hormuz.
Oil-related stocks have been surging in line with the increase in crude oil prices.
The S&P 500 Energy (SPN) sector was up 1.5% Thursday afternoon and was among the few sectors rising on an otherwise down day for stocks. It's risen nearly 6% this week and is on track for its best week of the year.
Stellantis Shares Tumble After Big Drop in US Sales
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Stellantis (STLA) shares fell Thursday after the automaker's U.S. unit reported a big drop in sales as all but one of its brands declined. The stock was also downgraded by Barclays.
The company's third-quarter U.S. vehicle sales decreased 20% from a year ago to 305,294. Chrysler sales sank 47%, Dodge sales lost 43%, Alpha Romeo sales fell 29%, and Ram truck sales were down 19%. Even the popular Jeep brand saw a 6% decline. Only Fiat was in positive territory, with sales jumping 118%, but only to 316 units.
Matt Thompson, head of U.S. retail sales, said the company introduced "an aggressive incentive program" at the beginning of the quarter, which helped lower inventories by more than 50,000 units, or 11.6%. He noted the incentives will continue through the rest of the year.
Following the news, Barclays cut its rating on the stock to "equal weight" from "overweight," and slashed the price target to 12.50 euros ($13.79) from 23.00 euros ($25.38). Barclays analysts said that "we got wrong-footed" on the automaker, conceding they were too slow to acknowledge its U.S. inventory issue and eroding European Union (EU) and U.S. market shares.
They also pointed to the company's warning on Monday that full-year profit would be below previous guidance. The analysts added that they see no real proof of a recovery for Stellantis until at least the first half of 2025.
Shares of Stellantis fell 4% Thursday afternoon to their lowest level in nearly two years.
Constellation Brands Falls as Wine and Spirits Sales Slump
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Constellation Brands (STZ), the maker of Corona and Modelo beers, posted mixed second-quarter results as wine and spirits sales sank. Shares were down 4% in recent trading, leading S&P 500 decliners.
The company reported second-quarter fiscal 2025 diluted earnings per share of $4.32, above estimates from analysts surveyed by Visible Alpha. However, revenue was short of forecasts, rising 2.9% to $2.92 billion.
Sales of Modelo Especial, the top selling beer in the U.S., rose 5% and those of Pacifico surged around 23%. But wine and spirits sales fell 12%.
CEO Bill Newlands said “the current macroeconomic backdrop has weighed on demand for beverage alcohol,” as well as overall consumer packaged goods.
The company said it sees full-year net sales growth in the range of 4% to 6%, with beer sales up 6%-8% and wine and spirits sales down 4% to 6%.
Tesla Shares Down as EV Maker Recalls Cybertrucks
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Tesla (TSLA) shares moved lower again Thursday morning after the company recalled more than 27,000 of its Cybertrucks because of a rearview camera issue. The stock had fallen sharply yesterday after the electric vehicle maker's third-quarter deliveries failed to impress.
A notice from the National Highway Traffic Safety Administration said that under certain conditions, the Cybertruck system may not boot up immediately after being commanded. In that case, the rearview camera image may not display within two seconds of the driver putting the vehicle in reverse, as required by law. It added that a delay in the availability of the camera display “may affect the driver’s rear view and increase the risk of a collision.”
The recall involves vehicles manufactured between Nov. 13, 2023, and Sept. 14, 2024 that "are or were operating with a specific software logic for low voltage hardware."
Tesla said that starting on or shortly after Sept. 19, it sent an over-the-air software remedy to the affected Cybertrucks, and that all those in production will receive the fix as well. This was the fifth recall of the Cybertruck since Tesla began delivering them last November.
Tesla shares were down about 2% in late-morning trading Thursday. After gaining 32% in the third quarter, the stock is down 7% so far in October and has slipped into negative territory for the year.
Levi Stock Sinks as Company Mulls Sale of Dockers Brand
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Shares of Levi Strauss (LEVI) plunged in early trading Thursday after the jeans maker announced it may sell its Dockers brand as it delivered mixed third-quarter results.
While Levi's adjusted earnings per share of 33 cents beat consensus estimates of analysts polled by Visible Alpha, its revenue of $1.52 billion came up short. Sales of Dockers were down 15% year-over-year, prompting executives to "evaluate strategic alternatives" for the unit.
For the full fiscal year, Levi's said it expects total revenue to grow 1% compared to fiscal 2023, a more modest projection than the 1% to 3% growth it forecast when it reported its second quarter results.
Levi's also said it has "initiated a formal review of strategic alternatives for the Dockers brand," which could lead to the famous khaki brand being sold, though the review wasn't given a specific timeline.
The company's shares were down 7% in recent trading. The stock has gained 18% since the start of the year.
Nvidia CEO Points to 'Insane' Demand for AI Chips
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Nvidia (NVDA) shares were up 2% in premarket trading Thursday after CEO Jensen Huang said during a CNBC interview late yesterday that demand for the company’s next generation Blackwell AI chips is “insane.”
The stock has oscillated within a symmetrical triangle, a chart pattern that indicates a period of consolidation, typically followed by a new trending move in the direction of a breakout and longer-term trend, which in Nvidia’s case, signals further bullish price momentum.
The measuring principle and bars pattern technique forecasts upside targets on Nvidia's chart at $180 and $210, respectively.
A breakdown below the symmetrical triangle would likely see the shares find support around $97, near a trendline linking the twin March peaks with the upward sloping 200-day moving average.
Read our full technical analysis piece here.
Futures Pointing to Lower Open for Major Indexes
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Futures tied to the Dow Jones Industrial Average were down 0.2%.
S&P 500 futures were down 0.1%.
Nasdaq 100 futures were down 0.2%.