US Stock Futures Steady Amid Inflation Concerns and Bank Earnings
US stock futures were relatively flat early Friday as investors braced for key earnings reports from major Wall Street banks and processed the latest inflation data. On Thursday, the markets closed lower after the Labor Department reported a hotter-than-expected rise in prices for September. Additionally, initial unemployment claims exceeded expectations, adding to concerns about the strength of the labor market.
The Federal Reserve remains focused on achieving a “soft landing,” where inflation is brought down without severely impacting the job market or overall economic activity. After last month’s 50 basis point rate cut, traders are now expecting a more modest 25 basis point reduction at the November meeting, with an 86% probability according to the CME Group’s FedWatch Tool. However, there remains a 14% chance that the Fed will hold rates steady at 4.75%-5.00%.
Bank Earnings in Focus
Earnings season kicks off with reports from JPMorgan Chase and Wells Fargo, which are expected to show declines in third-quarter profits due to lower net interest income amid falling borrowing costs. While this decrease in interest income could weigh on results, banks may benefit from increased debt issuance, IPOs, and trading activity, fueled by recent market volatility. Investors will be paying close attention to these earnings, especially as the Fed moves toward potential further rate cuts.
Tesla Unveils New Robotaxi
Tesla shares dipped in premarket trading after the company revealed its long-anticipated “Cybercab” robotaxi. The vehicle, set for production by 2027 and priced under $30,000, is designed without a steering wheel or pedals and seats two passengers. CEO Elon Musk emphasized the safety of autonomous vehicles but provided few details about regulatory challenges that lie ahead. Tesla also introduced a prototype of the “Robovan,” a vehicle seating up to 20 people, and an updated version of its humanoid robot, “Optimus.” Despite these innovations, Tesla faces pressure from slowing sales in key markets like China and increased competition globally.
Buffett Trims Bank of America Stake
Warren Buffett’s Berkshire Hathaway reduced its stake in Bank of America below 10%, selling 9.5 million shares valued at over $382 million. This brings Berkshire’s holdings below a key SEC threshold, meaning fewer immediate disclosures on further stock sales or purchases. Investors now await Berkshire’s quarterly reports to gain insight into its future decisions regarding Bank of America stock.
Oil Market Update
Oil prices remained volatile Friday but were on track for a second straight weekly gain, driven by hurricane damage in the US and tensions in the Middle East. Hurricane Milton’s impact across Florida is expected to weigh on US fuel consumption, while concerns of escalating conflict between Israel and Iran have heightened trader anxiety about potential disruptions in the global oil supply.
$TSLA – Tesla’s “We, Robot” Event Highlights AI and Robotics Expansion
Following Tesla’s “We, Robot” event in Los Angeles, the company showcased its latest innovations, including the “Cybercab” robotaxi, the “Robovan,” and the updated “Optimus” humanoid robot. Participants had the chance to test-drive the Cybercab and interact with Tesla’s AI-driven robotics. Bank of America noted that the event “lived up to the hype,” with Tesla outlining key target dates for Full Self-Driving in California and Texas by next year. However, BofA raised concerns about Tesla’s capital needs as the company invests heavily in robotaxis, robotics, and AI while facing headwinds in its core electric vehicle business. They anticipate Tesla may raise capital soon, which the company has historically done at low costs compared to its competitors. BofA reiterated its Buy rating with a $255 price target, although Tesla shares are down nearly 7%, trading at $222.91 in pre-market.
$UBER – Tesla Robotaxi Event Clears Overhang on Uber
Citi analyst Ronald Josey believes Tesla’s robotaxi event removed some uncertainty around Uber Technologies ($UBER). Tesla’s clarified vision and timeline for its robotaxi projects allowed Citi to remain incrementally positive on Uber, noting that Uber is well-positioned to benefit from autonomous vehicles due to its global scale and driver network. Citi reaffirmed its Buy rating on Uber, with a $98 price target.
$AMD – Strong AI Prospects and Raised Price Target
Piper Sandler raised its price target on Advanced Micro Devices ($AMD) to $200 from $175 following AMD’s AI event. The event introduced AMD’s latest MI325 GPU and Turin CPU, with the company increasing its AI total addressable market (TAM) expectations to $500B by 2028. Piper remains bullish on AMD’s potential to capture significant market share in the AI and data center markets. AMD continues to be Piper’s top large-cap pick, as the firm believes the company is well-positioned for growth.
$NFLX – Netflix Price Target Raised Amid Strong Growth Potential
Guggenheim raised its price target on Netflix ($NFLX) to $810 from $735, citing ongoing global subscriber growth, accelerating ad revenue, and margin expansion. The firm raised its Q3 net member addition estimate from 2.5M to 5.2M, noting that investor expectations are slightly higher than the current sell-side consensus of 4.4M. Netflix shares have surged 56% year-to-date, with further growth expected as Q3 earnings approach.
$NVDA – Nvidia’s Competitive Edge in AI
Goldman Sachs raised its price target on Nvidia ($NVDA) to $150 from $135, following investor meetings with CEO Jensen Huang. Goldman Sachs highlighted Nvidia’s strong competitive moat and the projected rise in complexity of AI workloads. Goldman increased its FY26/27 revenue and EPS estimates for Nvidia by 7% and 8%, reflecting higher cloud capex and robust order trends from AI server OEMs. Nvidia remains on Goldman’s “Americas Conviction List” with a Buy rating.
$WYNN – Strong Las Vegas Demand; Morgan Stanley Ups Price Target
Morgan Stanley raised its price target on Wynn Resorts ($WYNN) to $112 from $104, citing stable Las Vegas demand trends and rational promotions. During last month’s Live Stream with Greg, we bought WYNN in the $70s, and the stock has performed well since. Morgan Stanley continues to see Wynn benefiting from the growth in both physical and digital betting markets.
$DPZ – Domino’s Price Target Lowered Amid Slower Growth
Piper Sandler lowered its price target on Domino’s Pizza ($DPZ) to $422 from $429 following weaker-than-expected Q3 same-store sales (SSS) growth and net unit growth in its International business. Despite the softer top-line outlook, Domino’s maintained an 8% adjusted operating income growth projection for next year.
$DE – Deere Price Target Raised Following Management Meetings
JPMorgan raised its price target on Deere ($DE) to $420 from $360 after management meetings, expecting the company to introduce fiscal 2025 guidance in line with current consensus estimates. JPMorgan believes the fiscal 2025 outlook will be achievable, contingent on stabilization in Brazil and steady performance in North America.
Live Market Analysis Recording
If you missed yesterday’s LIVE market analysis, you can catch the full recording here: Click Here.
Responses