Market Trends: U.S. stock futures experienced a slight downturn on Monday, setting the tone for a holiday-shortened week and giving back some of the impressive gains from the previous week. Investors are keenly awaiting the Federal Reserve’s preferred inflation metric, marking a cautious start to a week following a stellar performance by major indices.
Record Highs and Economic Indicators: The anticipation builds around the release of the core personal consumption expenditures price index, the Fed’s favored gauge of underlying inflation, which is set to be revealed during the market closure for Good Friday. This announcement comes after a month of significant growth, with the S&P 500, the Dow Jones Industrial Average, and the Nasdaq Composite all achieving all-time closing highs last week, amidst predictions of continuous monthly gains.
Federal Reserve’s Outlook: The financial community watches closely as the Fed maintains its projection for three interest rate cuts within the year, despite an upgraded economic growth forecast. The statement underlines a desire for more concrete signs of slowing inflation before considering easing measures. Fed Chair Jerome Powell, along with other Fed officials, is scheduled to speak in the coming week, potentially offering more insights into the central bank’s perspective.
Apple’s Strategic Moves in China: Apple finds itself under the spotlight following reports of negotiations with Baidu to integrate the Chinese firm’s AI models into iPhone software in China. This collaboration, potentially starting with the iPhone 16 and iOS 18, aims to navigate U.S. regulatory challenges and reinvigorate Apple’s smartphone sales in the competitive Chinese market.
Big Tech and Regulatory Challenges: The U.S. Department of Justice’s recent lawsuit against Apple for alleged monopolistic practices underscores the growing scrutiny of Big Tech’s influence. Concurrently, reports from the Financial Times highlight China’s initiative to replace U.S. technology, including microprocessors and software, in government PCs and servers with domestic alternatives, reflecting the ongoing tech rivalry.
Economic Projections and Oil Market Dynamics: Goldman Sachs has uplifted its year-end target for the S&P 500, citing an optimistic outlook on economic growth and potential central bank policy easing. Meanwhile, oil prices have seen an uptick amidst diminishing hopes for a Gaza ceasefire, raising concerns over global supply conditions and geopolitical tensions.
Global Equities and Geopolitical Unrest: As equities enter what Goldman Sachs describes as the “optimism phase” of the cycle, the global market balances heightened expectations against slowing profit growth. The geopolitical landscape, particularly in the Middle East, remains a focal point, influencing oil prices and investor sentiment as discussions for a ceasefire in Gaza unfold.
Investors and market watchers face a week filled with potential volatility, underscored by significant economic indicators, geopolitical developments, and the ongoing scrutiny of tech giants. The outcomes of these events could provide critical insights into the direction of U.S. and global markets in the coming months.
$SPY/SPX- price continues to trade within an intermediate-term range and a long-term uptrend. The main level on watch is last week’s low at 5157. If sellers can show acceptance below this level, it would signal the first change in character in months.” Monday’s action showed a gap higher and rally, which marked the low for the week. Sellers once again fumbled their opporutnity to show a change in character, and this market continues to be dominated by buyers.
For this coming week, the main watch will be the FOMC breakout point at 5255. If buyers can defend this prior breakout point, price can retest 5325, 5350, and 5400. If buyers fail to defend the prior breakout point at 5255, it would result in a failed breakout and price could test 5200 and 5165.
Upside levels of interest: 5325, 5350, 5400
Downside levels of interest: 5255, 5200, 5165
Notable Economic Data
- Monday: 2Y Auction
- Tuesday: 5Y Auction
- Wednesday: 7Y Auction
- Thursday: GDP
- Friday: PCE, Powell Speech
$BA- Boeing CEO Calhoun announces intent to step down as CEO at end of 2024
$RACE- RBC Capital raised the firm’s price target on Ferrari to EUR 463 from EUR 380 and keeps an Outperform rating on the shares. EVs reflect a significant opportunity for Ferrari to continue growing its revenue per unit, the analyst tells investors in a research note. Residual values are supporting this growth given the company’s ability to control its orderbook and, as a result, impacting the new car sale price and mix, the firm added. Ferrari’s personalization rate on deliveries further offers upside potential to margins without needing to boost volumes, RBC stated.
Nvidia (NVDA) has earned its $2.2T market cap by producing artificial intelligence chips that have become the “lifeblood” powering the new era of generative AI developers from startups to Microsoft (MSFT), OpenAI and Alphabet (GOOGL), but now a coalition of tech giants that includes Qualcomm (QCOM), Google and Intel (INTC) plans to loosen Nvidia’s “chokehold” on AI by going after the software that keeps developers tied to Nvidia chips as “part of an expanding group of financiers and companies hacking away at Nvidia’s dominance in AI,” according to Reuters’ Max Cherney. “We’re actually showing developers how you migrate out from an Nvidia platform,” Vinesh Sukumar, Qualcomm’s head of AI and machine learning, is quoted as having said in an interview with Reuters.
$AAPL- The Department of Justice, DOJ, recently issued a lawsuit against Apple, but the suit focuses on outdated issues and irrelevant points, Mark Gurman of Bloomberg reports. There are issues with Apple, some of which include Apple refused to bring its iMessage app to Android phones, makes developers user its in-app purchase system, shuns cloud gaming, and is reluctant to open up its tap-to-pay chip to outside apps, all of which are aspects the DOJ’s antitrust lawsuit could have focused on. Instead, the DOJ suit relies on outdated arguments and cites problems Apple is actively working to fix.
$NFLX- Citi analyst Jason Bazinet raised the firm’s price target on Netflix to $660 from $555 and keeps a Neutral rating on the shares. The company’s net subscriber additions have exceeded consensus estimates for three consecutive quarters, driven by the advertising tier and password crackdown, the analyst tells investors in a research note. Looking ahead, Citi expects Netflix to continue to see “healthy” subscriber growth. It sees scope for consensus subscriber estimates to move higher and increased the price target to reflect stronger subscriber growth.
$DIS- Barclays analyst Kannan Venkateshwar upgraded Disney to Overweight from Equal Weight with a price target of $135, up from $95. The recent “narrative reset” is likely to be followed by positive estimate revisions, which is still early in the cycle and should further support the stock’s valuation, the analyst tells investors in a research note. The firm says the “incessant Disney-related news flow” ahead of the proxy vote has dominated investor considerations since last quarter’s earnings and should continue helping the stock in the near term. This process and announcements, including better than expected free cash flow and earnings guidance for fiscal 2024, has helped investors gain more confidence about Disney’s earnings estimates having bottomed, says Barclays. The firm believes there may still be some sources of “upside narrative surprises” such as ESPN’s streaming partnerships.
$TSLA- Mizuho downgraded Tesla to Neutral from Buy with a $195 price target. The analyst remains constructive on the broader electric vehicle landscape with the long-term trend to electrification, but says near-term electric vehicle demand and tightening liquidity are creating challenges into 2025. The firm now sees 2024 EV growth up 15% year-over-year versus up 25% previously. Sales expectations are decelerating faster than expected, the analyst tells investors in a research note. As such, Mizuho downgraded Tesla (TSLA), Rivian (RIVN) and Nio (NIO) to Neutral from Buy, citing slowing demand and increasing inventory.
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