S&P 500, Dow Fall From Records; Nasdaq Rises as Nvidia Surges to New High

Biggest S&P 500 Movers on Monday

16 hr 10 min ago

Decliners

• Concerns about the pace of interest-rate cuts weighed on stocks in the housing sector, with the likelihood of mortgage rates staying high dampening the outlook for real estate. Shares of construction materials supplier Builders FirstSource (BLDR) tumbled 5.2%, making the steepest loss of any S&P 500 constituent. Shares of homebuilders Lennar (LEN) and D.R. Horton (DHI) were down 4.4% and 4.2%, respectively, while numerous real estate investment trusts (REITs) also lost ground.
• Cigna (CI) shares fell 4.7% following reports about a resumption of merger negotiations with rival health insurer Humana (HUM). The two companies engaged in talks last year but failed to strike a deal, but according to Bloomberg, they are in the early stages of a new round of negotiations. Cigna announced in January that it plans to sell its Medicare Advantage business to Health Care Service Corporation, suggesting that the divestment could make a potential merger with Humana more palatable to regulators. Humana shares slipped 2.5% on Monday.
• Shares of Monolithic Power Systems (MPWR), a semiconductor maker specializing in power management solutions, lost 3.6%. Recent reports indicated that Monolithic Power insiders unloaded more than $300 million worth in shares of the company. Investors often interpret insider sales as a sign of limited confidence in a firm’s future performance.

Advancers

• Monday’s top performance in the S&P 500 belonged to shares of Kenvue (KVUE), the consumer health company that completed its separation from Johnson & Johnson (JNJ) in August, which surged 5.5%. The gains followed multiple reports that activist investor Starboard Value had accumulated a significant position in Kenvue, home to well-known brands like Benadryl and Band-Aid. According to The Wall Street Journal, the hedge fund aims to push for changes to help boost Kenvue’s stock price.
• Shares of AI semiconductor behemoth Nvidia (NVDA) added 4.1% in the wake of positive commentary from several Wall Street analysts. Bank of America and investment research firm CFRA boosted their price targets on Nvidia stock last week. Analysts at Bank of America highlighted Nvidia’s partnerships with companies like Microsoft (MSFT) and Accenture (ACN), solidifying Nvidia’s position as a go-to collaborator in the enterprise AI space. 

• Boeing (BA) shares jumped 3.1% after the company reached a tentative deal with the union representing its machinists, potentially ending a strike that has persisted for five weeks and constrained the aircraft maker’s operations. According to a statement released over the weekend, the union plans to vote Wednesday on the new deal, which includes a 35% increase in wages over four years—a step up from Boeing’s prior offers but still below the union’s stated goal of 40%.

–Michael Bromberg

Treasury Yields Rise to Highest Levels Since July

16 hr 57 min ago

Treasury yields climbed by the most in weeks on Monday as markets continued to recalibrate their interest rate expectations while assessing the likelihood of a soft landing for the U.S. economy. 

The 10-year Treasury yield was at 4.19% Monday afternoon, its highest level since late July. The 11 basis-point, or 0.11 percentage-point, increase was its biggest intraday rise since Oct. 4 when a stronger-than-expected jobs report assuaged Wall Street’s recession fears. 

There was no obvious catalyst for Monday’s rise, but yields have been trending upward ever since the Federal Reserve cut interest rates for the first time in more than four years last month.

The Fed went big in September, slashing its benchmark rate by 50 basis points amid a concerning uptick in the unemployment rate. The decision was a controversial one in some corners. Fed Governor Michelle Bowman favored a smaller cut, becoming the first Fed governor to dissent from a rate decision since 2005.

In the weeks since, economic data—including September’s inflation data—has generally provided positive surprises, supporting Bowman’s view that the Fed can take it slow and steady as it returns the federal funds rate to a neutral level. That data has also supported the stock market, which has risen to record after record in recent weeks.

Wall Street has dramatically curbed its expectations for upcoming rate cuts. On Monday, there was a 64% chance the Fed would cut rates by a total of 50 basis points over its next two meetings, according to federal funds futures trading data. Markets see no chance of bigger cuts. The inverse was true a month ago; then, Wall Street saw no chance that the Fed would cut its key rate by less than 50 basis points over the last two meetings of 2024. 

–Colin Laidley

Goldman Sees Lower Stock Market Returns Over Next 10 Years

18 hr 46 min ago

Analysts at Goldman Sachs on Monday forecast the S&P 500’s average annual return over the last decade of 13% will shrink to just 3% in the next 10 years.

The index’s extreme concentration, they say, is one key reason the S&P 500 will deliver such paltry returns.

Goldman estimates the equal-weight S&P 500 could outperform the capitalization-weight index by as much as 8 percentage points a year through 2034.

Read the full article here.

–Colin Laidley

Vans and North Face Owner VF’s Stock Plunges

20 hr 15 min ago

Shares of Vans and The North Face owner VF Corporation (VFC) slumped Monday as JPMorgan put the apparel giant on its “Negative Catalyst Watch” list and warned about its financial outlook.

JPMorgan analysts wrote in a note to clients that after “recent fieldwork and management access” they cut their fiscal 2025 earnings per share estimate to 65 cents, which they noted was 35% below the Wall Street consensus. The analysts based that on an 8% year-over-year decline in revenue, also worse than consensus forecasts.

JPMorgan warned of “continued wholesale challenges” at The North Face, noting management said retailers were reluctant to take inventory risks because of the warmer start to the fall and winter last year. The analysts added their research found “ongoing traffic headwinds globally across brands in the portfolio” affecting direct-to-consumer revenues.

The analysts maintained a “neutral” rating on the stock, with a price target of $16, implying about 12% downside from Monday’s intraday price of $18.25.

VF shares were down nearly 7% in intraday trading Monday, and they’ve moved into negative territory for 2024.

–Bill McColl

Boeing Leads Handful of Dow Gainers

20 hr 47 min ago

Boeing (BA) shares advanced 3% Monday afternoon after the plane maker and its 33,000-member machinists union struck a tentative agreement over the weekend that could end the five-week strike that has crippled the company.

The deal includes a 35% bump in wages over four years, a $7,000 ratification bonus, and a boost to members’ 401(k) plans, though it would not bring back the traditional pension plans workers wanted. The union said it would be putting the proposal up for a vote on Wednesday.

Boeing has been hammered by the walkout, which began Sept. 13. Since then, the company has announced significant cost-cutting steps, including plans to lay off about 17,000 employees. It also wrote in a regulatory filing it planned to raise up to $25 billion through the sale of debt or stock. 

Shares of Boeing hit a two-year low earlier this month, and despite a slight rally, they’ve still lost nearly 40% of their value this year.

Boeing was one of only five Dow components gaining ground on Monday.

–Bill McColl

Humana Levels to Watch After Report of Cigna Merger Talks

22 hr 43 min ago

Humana (HUM) shares rose Monday after Bloomberg reported late Friday that Cigna (CI) has resumed its efforts to merge with the struggling health insurer.

The stock broke down below a descending channel late last month, but promptly reversed course the following week to reclaim the pattern’s lower trendline, potentially indicating a bear trap.

The stock was up 0.3% at $267.95 in recent trading, after rising to above $275 early in the session.

Investors should watch key overhead levels on Humana’s chart around $300, $370 and $450, while also watching a crucial area of support near $230.

Read the full technical analysis piece here.

–Timothy Smith

Kenvue Stock Surges on Report of Starboard Stake

23 hr 6 min ago

Shares of Kenvue (KVUE) took off Monday morning on reports that activist investor Starboard Value has taken a large stake in the consumer health products maker.

The Wall Street Journal and Reuters report it’s unclear how big of an investment the hedge fund has made in the maker of Tylenol, Band-Aids, and Listerine.

The Journal, which first reported the news, said that Starboard has taken a “sizable stake” and wants the company to make changes to boost its stock price, while Reuters pointed out that the share price has fallen 18% since Kenvue began trading last year after it was spun off of Johnson & Johnson (JNJ).

The Journal noted that Starboard founder and Chief Executive Officer (CEO) Jeff Smith is expected to outline the firm’s plans for Kenvue at tomorrow’s 13D Monitor Active-Passive Investor Summit in New York.

Reuters added that Smith will also speak at the conference about Starboard’s plans for Pfizer (PFE) after it recently made an approximately $1 billion stake in the drug maker.

Kenvue shares were up about 6% in recent trading,

–Bill McColl

Spirit Airlines Soars as Debt Deadline Extended

23 hr 51 min ago

Spirit Airlines (SAVE) shares jumped in early trading Monday after the discount carrier said it has extended the deadline on a debt refinancing plan with credit card processors Visa (V) and Mastercard (MA).

The deadline for the refinancing originally was extended from September to Monday, but Spirit said in a filing late Friday that the deadline has been extended again to Dec. 23. Spirit also said that it has borrowed the entire $300 million available from a revolving credit line, and expects to end the year with at least $1 billion in liquidity.

Shares of the discount airline were up 38% at $2.02 in early trading but have lost nearly 90% of their value since the start of the year.

Legal challenges that eventually led Spirit and JetBlue Airways (JBLU) to abandon their attempted merger; cost-cutting maneuvers like delaying jet deliveries and furloughing pilots amid warnings of lower revenue; and a recent report that Spirit is considering filing for bankruptcy have sent the stock plummeting this year.

–Aaron McDade

Gold Continues to Glitter

October 21, 2024 08:42 AM EDT

Gold (GOLD) is on the rise again early Monday, trading at record-high levels.

The yellow metal, which has posted four consecutive days in the green through Friday’s close, has received a boost in recent trading sessions from escalating tensions in the Middle East, uncertainties surrounding the upcoming U.S. presidential election, and expectations of further interest rate cuts before the end of the year. 

Typically, investors flock to the safe-haven asset during periods of geopolitical uncertainty, while lower rates reduce the opportunity cost of holding the metal, making it more attractive as a store of value.

The relative strength index confirms bullish price momentum in the commodity, but also cautions of overbought conditions that increases the chances of short-term pullbacks.

Investors should monitor a bars pattern upside target on the gold chart around $2,890 an ounce, while also watching important support areas at $2,605, $2,530, and $2,430.

Read the full technical analysis piece here.

–Timothy Smith

Futures Point to Lower Open for Major Indexes

October 21, 2024 08:00 AM EDT

Futures tied to the Dow Jones Industrial Average were down 0.2%.

S&P 500 futures were off 0.3%.

Nasdaq 100 futures were down 0.6%.