Stocks closed lower Monday, giving back gains posted during the previous session's post-jobs-report surge, as expectations for big interest rate cuts subsided and oil prices continued rising on concerns about Middle East tensions.
The Dow Jones Industrial Average fell 0.9%, while the S&P 500 and Nasdaq Composite shed 1% and 1.2%, respectively. The major indexes closed sharply higher on Friday after a better-than-expected September jobs report reinforced the idea that the U.S. economy is headed for a soft landing. The Dow finished last week at an all-time closing high, while the S&P 500 was just shy of a record of its own when trading kicked off this week.
Mega-cap technology stocks were mostly lower Monday. Shares of Apple(AAPL) dropped 2.3% following a downgrade from Jefferies, which cited overly optimistic expectations for sales of the new iPhone, while Amazon (AMZN) fell 3.1% after Wells Fargo cut its rating on the stock amid concerns about growth. Microsoft (MSFT), Meta Platforms (META) and Alphabet (GOOGL) also lost ground, while chipmaker Nvidia(NVDA) gained 2.2% amid ongoing investor optimism about AI demand.
Among other noteworthy movers, Super Micro Computer (SMCI) shares jumped 16%, leading S&P 500 gainers, as the server maker reported strong shipments of its graphics processing units, driven byAI demand. Shares of power generator maker Generac (GNRC) gained 8.5%, hitting a two-year high, as Hurricane Milton intensified on its way to the Florida gulf coast. Shares of Pfizer (PFE) rose 2.2% following a report that activist investor Starboard Value has taken a roughly $1 billion stake in the struggling drugmaker.
Energy was the only sector to gain in the S&P 500 as crude oil futures rose 4%, extending a rally that picked up steam last week amid growing concerns about conflict in the Middle East possibly disrupting oil production. Shares of oil major ExxonMobil (XOM) gained 0.4% and hit a new all-time high on Monday, while Diamondback Energy (FANG) gained 2.5%.
The economic data calendar was light on Monday but picks up significantly later in the week with the release of closely watched inflation data and the latest reading on consumer sentiment. Investors will be watching the numbers closely for further confirmation that the economy is on sound footing, while also looking for clues about how aggressive the Federal Reserve will be as it cuts interest rates. The Fed cut its benchmark fed funds rate for the first time in four years last month.
Following the strong jobs repot on Friday, market expectations for the Fed to make deep cuts in the coming months fell significantly. Market participants now believe it's likely the Fed will make two quarter-percentage-point cuts in the benchmark rate before the end of the year, according to fed fund futures trading data. Before the jobs report, markets were pricing in the likelihood that the central bank would announce a half-point cut at the Fed's next policy meeting in November, as well as a cut in December.
The yield on 10-year Treasurys, which is sensitive to expectations around where interest rates are headed, moved above 4% on Monday for the first time in two months. The 10-year yield was at 4.03% recently, up from 3.98% on Friday.
Gold futures were little changed at around $2,660, while bitcoin was up 1% around $63,300.
Biggest S&P 500 Movers on Monday
October 07, 2024 06:03 PM EDT
Decliners
- The prospect of significant damage from Hurricane Milton, which is expected to reach Florida's Gulf Coast this week, weighed on insurance stocks. Shares of Everest Group (EG), which provides insurance and reinsurance policies, plunged 8.5%, the biggest drop of any S&P 500 stock. Shares of fellow Bermuda-based insurer and reinsurer Arch Capital Group (ACGL) lost 6.2%, while auto, lifestyle, and housing insurer Assurant (AIZ) was down 5.5%.
- Shares of Texas-based power generator Vistra (VST) fell 5.2%. The downturn on Monday marked a reversal from aseries of record highsposted by the stock last week amid optimism about the company's opportunity to provide nuclear-generated electricity to artificial intelligence data centers. Vistra stock remains the S&P 500's top performer in 2024, up more than 240% on the year.
- Deckers Outdoor (DECK) shares sank 4.8% after Seaport Research downgraded the stock to "neutral" from "buy." Analysts said interest in the company's Ugg and Hoka footwear brands had softened during the recent back-to-school shopping season as competing brands took market share.
Advancers
- Shares of server and data storage provider Super Micro Computer (SMCI) skyrocketed 15.8%, notching Monday's top performance in the S&P 500. Supermicroreported strong deliveriesof its graphics processing units, boosted by robust demand for artificial intelligence products. The company also launched new direct liquid cooling products for servers that could help AI companies lower their energy costs.
- Air Products and Chemicals (APD) sharessurged 9.5%amid reports that activist investor Mantle Ridge has accumulated a stake worth more than $1 billion in the industrial gas maker. The investment firm reportedly plans to push for a variety of changes at Air Products, including to its capital allocation strategy and succession plan.
- Shares of Generac Holdings (GNRC), a maker home generators and other emergency power products, jumped 8.5% toreach a two-year highas Hurricane Milton approached the Southeastern U.S. The stock saw similar price boosts as the country braced for the impact of Hurricanes Helene and Beryl earlier this season.
-Michael Bromberg
Exxon Prices to Watch as Stock Hits Another Record High
October 07, 2024 04:48 PM EDT
Shares in ExxonMobil (XOM) set another record high on Monday as investors bid up energy stocks over mounting concerns that escalating tensions in the Middle East could disrupt global oil supplies.
Exxon shares rose 0.4% to close Monday at $125.37, after moving as high as $126.34 during the session.
The stock broke out above the top trendline of a symmetrical triangle last week on increasing trading volume.
Investors should watch key upside targets on Exxon's chart around $134 and $138, while keeping an eye on important support areas near $118 and $112.
Read the full technical analysis piece here.
-Timothy Smith
Generac Jumps to Two-Year High as Hurricane Milton Intensifies
October 07, 2024 03:51 PM EDT
Shares of Generac Holdings (GNRC), a producer of home generators and other emergency power products, surged again Monday as another hurricane approaches the Southeast U.S.
Hurricane Milton rapidly progressed to a Category 5 storm Monday and is expected to make landfall in Florida by Wednesday, according to the National Hurricane Center.
Generac stock was up more than 9% late Monday, trading at its highest levels since October 2022. The stock has gained 35% so far in 2024.
The generator maker experienced a similar stock-pricebump due to Hurricane Helenea few weeks ago, jumping about 10% the week that storm made landfall.
-Andrew Kessel
Wall Street Scales Back Bets on Big Rate Cuts
October 07, 2024 02:45 PM EDT
Investors on Monday continued to scale back their interest rate cut expectations after Friday's better-than-expected jobs report.
Market participants were even pricing in a small chance that the Fed will leave rates unchanged at its next meeting in November, an outcome that wasn't thought to be on the table just last week.
Last week's jobs report could increase the importance of this week's consumer inflation report in the eyes of both the Federal Reserve and Wall Street.
Read the full story here.
-Colin Laidley
Super Micro Computer Soars on Strong AI Demand
October 07, 2024 01:17 PM EDT
Super Micro Computer (SMCI) shares soared Monday as the server maker reported strong shipments of itsgraphics processing units (GPUs), driven byartificial intelligence (AI)demand.
The company said it recently deployed 100,000 GPUs with its liquid cooling technology to “some of the largest AI factories ever built.” Super Micro Computer also announced a new lineup of direct liquid cooling products for servers that it said could help AI firms cut their energy costs.
CEO Charles Liang said the company’s liquid cooling solutions “are now cooling massive, state-of-the-art AI factories, reducing costs and improving performance.” Liang added that data center operators are coming to Super Micro Computer “to meet their technical and financial goals for both the construction of greenfield sites and the modernization of existing data centers.”
Super Micro Computer shares were up nearly 15% in recent tradingand have gained about 67% in 2024. Shares of AI chipmaker Nvidia (NVDA), a partner of Super Micro Computer, also got a boost Monday, rising more than 3%.
-Bill McColl
Duckhorn Doubles on PE Takeover News
October 07, 2024 12:16 PM EDT
Shares of The Duckhorn Portfolio (NAPA) doubled Monday after the Napa Valley winemaker agreed to be taken private byprivate-equityfirm Butterfly for $1.95 billion.
Duckhorn, whose brands include Decoy and Paraduxx, said the agreement gives investors $11.10 in cash for each share they own, which represents a 106% increase from its closing price on Friday.
The company also reported fourth-quarter adjustedearnings per share (EPS)of $0.14, with revenue up 7.3% year-over-year to $107.4 million.Both topped consensus estimates of analysts polled by Visible Alpha.
The Duckhorn Portfolio shares hit an all-time low on Friday, and with today's huge gains they've moved into positive territory for the year.
-Bill McColl
Pfizer Rises on Report of Starboard Stake
October 07, 2024 11:10 AM EDT
Shares of Pfizer (PFE) rose Monday following a report that activist investor Starboard Value has taken a roughly $1 billion stake in the struggling drugmaker.
According toThe Wall Street Journal, Starboard has approached Ian Read, a former Pfizer chief executive, and ex-finance chief Frank D’Amelio to aid its plans to improve the company's performance.
The hedge fund sees Pfizer under currentCEOAlbert Bourla, who took over from Read in 2019, as lacking the M&A discipline of his predecessor, the report said.
Pfizer has spent billions of dollars on buying companies involved in producing cancer drugs, including biotech Seagen for$43 billion last year, since Bourla took over.
Shares of the company were up nearly 3% Monday morning and were among the big gainers in the S&P 500.
Pfizer's shares have almost halved since their pandemic peak in 2021 as demand for its COVID-19 vaccines slumped. They are little changed this year, versus a 21% jump in the S&P 500.
-Nisha Gopalan
Jefferies Downgrades Apple to Hold
October 07, 2024 10:52 AM EDT
Apple (AAPL) shares lost ground in early trading Monday after Jefferies downgraded the stock, arguing that the anticipated sales of iPhones are too high.
The bank cut Apple's rating to "hold" from "buy," although it raised its price target to $212.92 from $205.00.
The analysts wrote in a note to clients that "smartphone hardware needs rework before being capable ofseriousAI, withlikely timeline of 2026/27."
They added that "high expectations for iPhone 16/17 are premature."
The analysts pointed out that their outlook for Apple's fiscal 2024 fourth-quarter net sales is less than the Wall Street consensus, and that the tech firm's 33 times full-year estimated adjustedprice-to-earnings (P/E)ratio is near an all-time high.
Apple shares were down 0.6% in recent trading. The stock has gained 17% in 2024.
-Bill McColl
SPDR Dow ETF Levels to Watch
October 07, 2024 09:53 AM EDT
The SPDR Dow Jones Industrial Average ETF Trust (DIA) opened slightly lower Monday, in line with the Dow's decline, after posting a record close Friday following a strongSeptember jobs reportthat reinforced investor confidence in the strength of the economy.
The fund's price trades within an ascending channel, though lackluster volumes potentially indicate waning upward momentum.
Investors should monitor crucial support levels on the ETF's chart around $377, $350, and $325, while also watching a measured move price target above the ascending channel at $483.
Read the full technical analysis piece here.
-Timothy Smith
Major Indexes Poised to Open Lower Monday
October 07, 2024 08:36 AM EDT
Futures tied to the Dow Jones Industrial Average were down 0.4%.
S&P 500 futures were also down 0.4%.
Nasdaq 100 futures were down 0.5%.
CORRECTION—Oct. 7, 2024: This article has been corrected to reflect Super Micro Computer reported it deployed 100,000 graphics processing units (GPUs).