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What the Club is watching Wednesday — October rally pause, Musk Twitter saga, mixed banks outlook

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What the Club is watching Wednesday, Oct. 5, 2022 U.S. stock futures point to a lower open Wednesday after a powerful two-day rally to start October. Bond yields are up. Oil prices are little changed ahead of the meeting of OPEC+, which includes Russia, that could result in a more than 1 million barrel-per-day production cut. That would be the oil cartel’s biggest supply reduction since the early days of Covid. American businesses added a better-than-expected 208,000 positions in September, according to the latest ADP private-sector jobs report . The government is out with its September employment report Friday. How it comes in versus estimates could have implications on whether the Federal Reserve goes for a fourth straight 75-basis-point interest rate hike or a less aggressive 50-basis-point move at its November meeting. Home loan demand dropped 14% last week compared to the week before as 30-year fixed rate mortgages surged to more than two-decade highs of 6.75% from 6.52%. Hurricane Ian also played a part in the mortgage application decline. In Florida, loan demand fell 31%. Shares of Twitter (TWTR) dip in the premarket. They surged 22% on Tuesday after Elon Musk said his agreement to buy the social media network was back on — at the original purchase price of $54.20 per share. Musk was trying to call the deal off and was set to have a court trial. Musk tweeted Tuesday that he wants to turn Twitter into “the everything app.” As we prepare for earnings season, make sure you check out our series on how to analyze quarterly financials. Part 1 was the income statement and Part 2 was the balance sheet. Atlantic Equities takes Club holding Morgan Stanley (MS) to neutral from overweight (hold from buy). It also downgrades Goldman Sachs (GS) to underweight from neutral (sell from buy); cites declining investment banking activity. The firm cuts prices targets on both. Bank of America lowers price target on Morgan Stanley to $36 per share from $40; but keeps equal weight (hold) rating. BofA also lowers Club holding Wells Fargo (WFC) PT to $59 from $62; but keeps overweight (buy) rating. Morgan Stanley lowers price target on Citigroup (C) to $44 per share from $46; keeps underweight (sell) rating. Morgan Stanley cuts JPMorgan (JPM) PT to $126 from $127, keeps sell-equivalent rating. Banks kick-off earnings season on Oct. 14. Morgan Stanley upgrades Club holding Ford (F) to overweight from equal weight (buy from hold), keeps $14 per share price target; says recent pullback offers attractive entry point. Morgan Stanley cuts price target on General Motors (GM) to $30 from $42; but keeps buy equivalent. Bernstein Research starts Airbnb (ABNB), a stock on the Club’s Bullpen watchlist, with an outperform (buy) rating, says it could soon become the biggest Western travel company; sets price target at $143 per share, more than 28% above Tuesday’s close. Ahead of earnings from Club holdings Meta Platforms (META) and Alphabet (GOOGL), Barclays looks at the digital ad business and says it’s heading to a bottom but not quiet there yet. However, the firm calls the online ad market “soft but stable.” Barclays rises price target on Snap (SNAP) to $21 per share from $15; keeps overweight (buy) rating. BofA said Tuesday Meta and Alphabet’s cost-cutting measures will boost earnings . Wells Fargo lowers Club holding Advanced Micro Devices (AMD) price target to $90 per share from $130. Analysts there see AMD as a market-share gainer but they’re “surprised” that investors are not getting on board at these stock levels. Citi lowers price target on Club holding Johnson & Johnson (JNJ) to $198 per share from $201; keeps buy rating. Church & Dwight (CHD) is upgraded to buy from hold at Deutsche Bank, which also lowers its price target to $85 per share from $90. Deutsche Bank says stock taking a break “but it’s not broken.” Citi cuts price target on Edward Lifesciences (EW) to $107 per share from $118; but keeps buy rating. Citi analysts say, “The best thing that could come out of the 3Q season is an in-line delivery, 2022 reiterations, and a level setting for 2023.” (Jim Cramer’s Charitable Trust is long MS, WFC, F, META, GOOGL, AMD and JNJ. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Traders on the floor of the NYSE, Sept. 29, 2022.
Source: NYSE

What the Club is watching Wednesday, Oct. 5, 2022

U.S. stock futures point to a lower open Wednesday after a powerful two-day rally to start October. Bond yields are up. Oil prices are little changed ahead of the meeting of OPEC+, which includes Russia, that could result in a more than 1 million barrel-per-day production cut. That would be the oil cartel’s biggest supply reduction since the early days of Covid.American businesses added a better-than-expected 208,000 positions in September, according to the latest ADP private-sector jobs report. The government is out with its September employment report Friday. How it comes in versus estimates could have implications on whether the Federal Reserve goes for a fourth straight 75-basis-point interest rate hike or a less aggressive 50-basis-point move at its November meeting.

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