Macrosynthesis  

TLDR

• S&P 500 Hovers Near Record High
• Consumer Sentiment Rises in October
• Republicans Lead Early Voting
• NYSE Extends Trading Hours
• Tesla Rockets After Earnings
• Boeing Mulls Space Division Sale
• Bond Market Sees Increased Volatility
• Lilium Faces Insolvency Amid Air Taxi Growth
• Capri Stock Plummets on FTC Block

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S&P At All-Time Highs, Again

The S&P 500 has surged 40% over the past 12 months, a remarkable gain that surpasses any annual return since 1954. This growth is four times its historical average annual return of 10%, bringing the market’s value to $48.6 trillion. Historically, election years have not hindered performance, averaging an 11.3% return since 1928. Despite uncertainties like wars, inflation, and a delayed Fed pivot, the market defied expectations. The S&P 500 added $14 trillion in market capitalization, marking the largest 12-month gain in stock market history.

NVDA Earnings On The Horizon

The market’s impressive rally can largely be attributed to Nvidia and the AI boom. Nvidia is set to lead this earnings season, with its stock climbing 25% over the past three months. CEO Jensen Huang's remark about "insane" demand for the upcoming Blackwell chip has sparked further investor enthusiasm. With data center revenue surging 279% year-over-year, expectations are high for Nvidia's earnings report next month. Despite past volatility, Nvidia continues to dominate AI chip sales, supported by hyperscalers like Microsoft, Google, and Amazon. Investors are eagerly anticipating updates on the Blackwell chip rollout and potential supply constraints, along with earnings reports this week from other tech giants like Amazon, Meta, and Apple, which have been key drivers of the AI rally.

Consumer Sentiment Revised Higher

The University of Michigan's consumer sentiment for the U.S. was revised to 70.5 in October 2024, the highest in six months. Both economic conditions and expectations improved, with gains in durable goods buying conditions due to easing interest rates. Confidence in a Harris presidency fell to 57%, while Republican sentiment rose by 8%, expecting a Trump win. Inflation expectations remained at 2.7% for the year ahead, with five-year projections at 3%.

Israel Strikes Back Against Iran; Escalation and Oil Price Concerns Ease Some

An Israeli attack on Iran this weekend targeted facilities at two secretive military bases linked to Tehran’s past nuclear and ballistic missile programs, according to satellite images analyzed by the Associated Press. The attack caused damage at the Parchin military base, where Iran is suspected of having previously conducted tests related to nuclear weapons, and at the nearby Khojir base, believed to house underground tunnels and missile production sites. The strikes reportedly disabled three Russian-made S-300 air-defense systems, according to both Iranian and Israeli officials, and were deemed a "proportionate response" by the U.S. and Western Allies.

Israel's attack was a response to the 200 ballistic missiles Iran launched on October 1st into military and civilian targets. Iran said it attacked Israel as retaliation for the IDF’s elimination of the Iran-backed Hezbollah militia leader, Hassan Nasrallah. Hezbollah, a U.S.-designated terrorist organization with a stronghold in Lebanon, has fired 8,000 missiles at Israel since October 7, 2023, when Hamas also launched a surprise attack on Israel that left many civilians dead and 251 people as hostages.

Iran promised a proportionate retaliation for the Israeli retaliation, leaving many to wonder how this moderating tit for tat will end.  Recent files have also shown attempts by Iran to assassinate former President Donald Trump. Trump touts his policies as the reason, claiming they near bankrupted Iran. But it's more likely retaliation for the assassination of a top Iranian general under the Trump administration.

GOP Tallies in Early Voting Higher

Republicans have cast more early ballots than Democrats in key swing states like Arizona, Nevada, and North Carolina, raising GOP optimism ahead of the election. Despite this surge, it’s unclear if these early voters will translate to more votes for Trump. Early voting records are being broken in states like Georgia and Michigan, signaling high turnout as Election Day approaches. This comes as Trump has narrowed the race to its closest levels since August 1st-- trailing by just 1.4%. CNN has even said that Trump winning the popular vote is likely.

NYSE Plans to Extend Trading Hours

The New York Stock Exchange plans to extend its electronic trading hours to 22 hours a day, operating from 1:30 a.m. to 11:30 p.m. ET on weekdays, pending regulatory approval. This move aligns with increasing demand for extended trading in U.S. markets, particularly following Robinhood's introduction of "24/5 trading" in 2023.

Sector Recap: Mixed Performance Across S&P 500 Index

Over the past week, the S&P 500 sectors showed a mixed performance, with Consumer Discretionary (+0.9%) and Information Technology (+0.2%) being the only sectors to post gains. Most sectors faced declines, with Materials (-4%), Healthcare (-3%), and Industrials (-2.8%) experiencing the steepest drops. Financials (-2.1%), Real Estate (-1.5%), Utilities (-1.9%), and Consumer Staples (-1%) also saw notable losses. Energy (-0.6%) and Telecom (-0.1%) had relatively minor declines, reflecting broader market weakness across most sectors.

This week, Tesla (+22%) led the S&P 500 gainers, followed by strong performances from Molina Healthcare (+12%), Tapestry (+12%), Digital Realty Trust (+9%), and Philip Morris International (+8%). On the downside, Genuine Parts (-20%) was the biggest laggard, with Mohawk Industries (-19%), Newmont (-16%), Universal Health Services (-14%), and Walgreens Boots Alliance (-14%) also seeing significant losses.

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Upcoming Week

The upcoming week in the United States will be packed with key economic events as investors pay close attention to the preliminary estimate of Q3 GDP growth, alongside data on non-farm payrolls, the unemployment rate, and JOLTS job openings. Additional significant releases will include the ISM Manufacturing PMI, CB consumer confidence, the PCE inflation report, as well as figures on personal income and spending. Furthermore, several major companies, including Microsoft, Alphabet, Visa, Meta, Tesla, Coca-Cola, Apple, Amazon, Mastercard, Exxon Mobil, and AbbVie, are scheduled to release their Q3 earnings reports.

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Natural Gas

+13.56%  (1W Chg)

-6% (1M Chg)

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Gasoline

+3.39% (1W Chg)

+6.92% (1M Chg)

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Orange Juice

+3.8% (1D Chg)

+9.82% (1W Chg)

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Eggs

+34.92% (1W Chg)

+159% (YoY Chg)

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Company News

LevelFields AI Alert Highlights This Week

This week, LevelFields alerts delivered impressive returns. Upwork's announcement to layoff 21% of their workforce spurred a 26.67% gain in one day. MYND's buyback of nearly 25% led to a 15.94% gain. WST announced positive guidance and a dividend increase, resulting in a 15.4% daily gain. CHRO also announced a stock buyback, leading to an 13.1% one day return.

Boeing Looks to Sell Space Division, Cut Expenses

Following the explosion of a Boeing-made satellite that left customers without communication services this week, Boeing is considering selling its NASA-related business, including the Starliner space vehicle and operations supporting the International Space Station, as it aims to exit the space sector. This move comes as the aerospace giant continues to face financial challenges, with the new CEO reportedly leading efforts to explore potential buyers for these assets. Likely buyers include LockHeed Martin and Northrop Grumman.

Tesla Stock Rockets on Earnings Beat

Tesla shares rose almost 22% this week, bringing the stock to its highest level in over a year. The surge follows the company’s Q3 earnings report, which exceeded expectations with adjusted earnings per share of 72 cents, compared to the forecasted 58 cents. Tesla’s revenue reached $25.18 billion, slightly below estimates but up 8% year-over-year. CEO Elon Musk provided an optimistic outlook for 2025, predicting 20-30% vehicle growth driven by lower-cost models and advancements in autonomy. Despite the rally, Tesla's shares remain about 35% below their 2021 all-time high, with competitive risks lingering.

U.S. Bonds Become Volatile as Rates Rise

U.S. Treasury markets experienced a volatile week as the 10-year yield hit a three-month high of 4.2%, driven by investor uncertainty over Federal Reserve rate cuts and the upcoming election. The ICE BofA Move Index, measuring bond volatility, reached its highest level in 2024. Despite some technical indicators suggesting the selloff was overdone, rising inflation expectations and concerns about fiscal spending persist.

Lillium Not Ready for Takeoff

Lilium’s shares dropped 62% after the German air taxi startup revealed that its two main subsidiaries would file for insolvency due to an inability to repay debts. This comes as the FAA introduced final safety rules for the air taxi sector, a milestone for companies like Joby and Archer. The new regulations, covering pilot training and operations, are expected to accelerate the industry's commercial launch by the end of 2025. While this decision boosts competitors, Lilium's financial woes may hinder its ability to capitalize on the regulatory clarity that is expected to drive growth and investment in the air taxi market.

Not So Happy Meal at McDonalds Due to E. Coli

A McDonald’s E. coli outbreak linked to Quarter Pounders has expanded, affecting 75 people across 13 states. One person has died, and 22 have been hospitalized. The FDA suspects uncooked slivered onions as the contamination source. Taylor Farms, the onion supplier, issued a voluntary recall, and McDonald’s has pulled affected products from select locations. McDonalds stock dropped over 7% this week following a 29% rise over the past 4 months. Events change everything.

Starbucks Sinks on Preliminary Sales Stats

Starbucks shares fell 4.2% after CEO Brian Niccol admitted the company had “lost track” of its identity and called for a simplified menu. The company reported disappointing preliminary Q4 sales, with a 7% decline in same-store sales. Niccol emphasized that the turnaround “will take time” as customer traffic remains weak. Rival Dutch Brothers (BROS) stock is up 9% this month.

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• Northrop Earnings Top Estimates, Stealth Bomber Used
• Netflix Teases Squid Game 2
• 3 Stocks Owned by Amazon

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Upcoming Earnings:

Monday: Bank of Hawaii (BOH), Ford Motor (F)

Tuesday: American Tower (AMT), Comcast (CMCSA), JetBlue (JBLU), McDonalds (MCD), PayPal Holdings (PYPL), Tenet Healthcare (THC), Advances Micro Devices (AMD), Chipotle (CMG), Visa (V)

Wednesday: AbbVie (ABBV), Caterpillar (CAT), Eli Lilly (LLY), GlaxoSmithKline (GSK), Meta (META), Amgen (AMGN), Carvana (CVNA), GoDaddy (GDDY), Starbucks (SBX)

‍Thursday: ConocoPhillips (COP), LendingTree (TREE), Mastercard (MA), Uber (UBER), Amazon (AMZN), Apple (AAPL)

Friday: Dominion Energy (D)