Market Performance
The Dow Jones Industrial Average jumped more than 200 points, settling at a fresh record high. The S&P 500 rose 0.1%, closing 0.6% below its all-time high. The Nasdaq Composite registered a 0.5% decline.
Sector and Stock Movements
Mega cap names and semiconductor shares, which outperformed last week, trailed the broader market and clipped the Nasdaq’s performance. Apple (AAPL, Financial) was a standout amid speculation that iPhone16 Pro demand has been weaker than expected. NVIDIA (NVDA), Amazon.com (AMZN, Financial), and Broadcom (AVGO, Financial) were also among the influential decliners.
The S&P 500 information technology sector fell by 1.0% due to losses in the aforementioned names. Consumer discretionary was the only other sector to log a decline, settling 0.3% lower.
Broad buying activity elsewhere left nine sectors higher than Friday. The financial sector, which comprises 13.0% of the index, was the top performer with a 1.22% gain. The energy sector was the next best performer, jumping 1.2% amid rising oil prices. WTI crude oil futures settled 2.2%, or $1.54, higher at $70.22/mmbtu.
ETF and Market Breadth
The Invesco S&P 500 Equal Weight ETF (RSP) closed 0.7% higher, and advancers had a 2-to-1 lead over decliners at the NYSE.
Rate Cut Expectations
Increased expectations of a 50 basis points rate cut at this week’s FOMC meeting supported the underlying positive bias in equities through the session. This view followed a weekend article from The Wall Street Journal’s Greg Ip arguing for a larger cut and a Bloomberg column penned by former FOMC Vice Chair Dudley calling for a 50 basis points decrease to the fed funds rate.
The fed funds futures market now sees a 65.0% probability of a 50 basis points cut on Wednesday, up from 50.0% yesterday and 30.0% one week ago, according to the CME FedWatch Tool. The Treasury market and US dollar also reacted to this development. The 10-yr yield settled three basis points lower at 3.62% and the 2-yr yield settled two basis points lower at 3.56%. The U.S. Dollar Index fell 0.4% to 100.76.
Year-to-Date Performance
- S&P 500: +18.1% YTD
- Nasdaq Composite: +17.2% YTD
- Dow Jones Industrial Average: +10.4% YTD
- S&P Midcap 400: +9.8% YTD
- Russell 2000: +8.0% YTD
Economic Data
Reviewing today’s economic data:
- September NY Fed Empire State Manufacturing: 11.5 (consensus -4.1); Prior -4.7
Looking Ahead
Looking ahead to Tuesday, market participants receive the August Retail Sales report at 8:30 ET. Other data include:
Today’s News
Intel (INTC, Financial) announced a strategic partnership with Amazon (AMZN, Financial) to produce custom artificial intelligence chips, marking a significant expansion of their existing relationship. This multi-year, multi-billion-dollar agreement will see Intel manufacturing AI fabric chips using its 18A foundry process technology and custom Xeon 6 chips for Amazon Web Services. Intel’s stock surged over 8% in extended trading following the announcement.
Additionally, Intel (INTC, Financial) shares rose 6% after confirming it would receive up to $3 billion in direct funding under the CHIPS and Science Act for its Secure Enclave program. This funding is separate from the $8.5 billion previously announced and will support semiconductor manufacturing and R&D projects in various U.S. states. Intel’s foundry is set to begin chip production next year.
Oracle (ORCL, Financial) saw its shares increase by more than 6% after reporting strong fiscal Q1 results, with accelerating growth in Oracle Cloud Infrastructure (OCI). The company also updated its revenue expectations, forecasting $66 billion by 2026 and $104 billion by 2029. Oracle’s remaining performance obligations soared 53% to $99 billion, reflecting robust demand for its cloud services.
Tupperware (TUP, Financial) is reportedly preparing to file for bankruptcy as soon as this week due to ongoing financial struggles and breached debt terms. The company has enlisted legal and financial advisers to navigate the process, although plans are not yet final. Tupperware’s stock plummeted 60% to 48 cents following the news.
Amazon (AMZN, Financial) CEO Andy Jassy announced that employees are expected to return to the office five days a week, citing improved collaboration and productivity in an in-office environment. This shift marks a return to pre-pandemic work arrangements, aiming to strengthen company culture and teamwork.
Edwards Lifesciences (EW, Financial) edged higher by 0.7% amid speculation of a potential takeover. Reports suggest that the medical device maker has attracted interest from several parties, including Johnson & Johnson (JNJ). Edwards Lifesciences has hired financial and legal advisors in response to the interest.
Several semiconductor companies in Apple’s (AAPL, Financial) supply chain, including Broadcom (AVGO, Financial), Skyworks Solutions (SWKS, Financial), Qorvo (QRVO, Financial), and Cirrus Logic (CRUS, Financial), fell sharply due to concerns over lower-than-expected demand for the iPhone 16 series. TF International Securities reported that pre-order shipments were down 12.9% year-over-year.
MicroStrategy (MSTR, Financial) announced plans to offer $700 million of convertible senior notes due 2028 in a private offering to institutional buyers. The company also expects to grant an option to purchase up to an additional $105 million of the notes within a 13-day period.
Revance Therapeutics (RVNC) dropped 9% as Crown Laboratories missed a deadline to start a tender offer for the company. The deal, initially announced last month, included an 88% premium at the time but has faced delays in execution.
ONEOK (OKE, Financial) shares rose by 2.5% after Morgan Stanley upgraded the stock to Overweight, citing strong execution in recent acquisitions and a positive outlook for growth and synergy realization in the Permian Basin.
High Tide (HITI) reported Q3 GAAP EPS of $0.01 and revenue of $131.69 million, a 5.9% increase year-over-year, beating estimates by $39.22 million. The company also saw a record cash and cash equivalents of $35.3 million as of July 31, 2024.
