What happened in the markets : 16 September - 20 September 2024

23 Sept

Aries Yuangga, Wakil Penasihat Berjangka

Last week was a pivotal moment in the financial markets as the Federal Reserve kicked off its first rate-cutting cycle in four years. The larger-than-expected 0.5% rate reduction signaled a significant turning point, impacting everything from stock performance to bond yields. Investors responded by pushing the S&P 500 to new record highs, and the Dow Jones Industrial Average closed at 42,063, up 1.6% for the week. However, not all sectors shared the same enthusiasm, with some key stocks falling behind. Let’s review the highlights from the past week and look ahead at what’s on the horizon.

Last Week at a Glance

The Federal Reserve's decision to cut rates by 0.5% was the focal point of last week's market activity. This aggressive move took the policy rate down to 4.75%-5.0% from 5.25%-5.5%, marking the start of what many expect to be a multi-year easing cycle. The decision was driven by a combination of cooling inflation—down to 2.5% from a peak of 9.1%—and a rise in unemployment to 4.2%. Chair Jerome Powell emphasized that the U.S. economy is in a "good place" and the rate cut was designed to ensure continued economic expansion, even as the labor market shows signs of softening. The markets reacted with optimism, and the S&P 500 gained 1.4% for the week, bringing its year-to-date performance to 19.6%. Investors embraced the news, betting that the Fed's actions will successfully avoid a recession while paving the way for economic reacceleration in 2025. However, not all was rosy, as concerns about elevated valuations surfaced, particularly in sectors that had previously benefited from higher interest rates.

Top movers & shakers🎢

Several individual stocks made headlines with significant price movements driven by a variety of factors, including quarterly earnings reports, analyst ratings, and strategic announcements. Among the notable movers were:

Constellation Energy (CEG) ⚡: Constellation Energy surged 22.29% following a high-profile deal with Microsoft to restart a nuclear unit at the Three Mile Island plant. This partnership enables Microsoft to power its data centers with carbon-free energy, providing a significant boost to the utility sector.
Nike (NKE) 👟: Nike jumped 6.84% as the company announced a CEO transition, with John Donahoe stepping down and Elliott Hill stepping in. The company aims to refocus on product innovation to strengthen its competitive edge.
FedEx (FDX) 📉: FedEx plummeted 15.23% after reporting weaker-than-expected earnings and issuing a disappointing forward outlook. The stock decline raised concerns about the impact of slower economic growth on both consumer and business demand.
Intel (INTC) 💻: Intel saw gains as reports surfaced that Qualcomm might be considering a takeover bid. This speculation helped push Intel’s stock higher, despite a mixed performance from other semiconductor players.
Tesla (TSLA) 🚗 and Nvidia (NVDA) 🖥️: Both stocks showed signs of profit-taking following recent rallies. Despite strong long-term fundamentals, they experienced slight pullbacks in light of investor concerns about short-term overvaluation.

The Week Ahead: September 23 - 27, 2024

Looking ahead, the upcoming week will feature critical economic data releases and central bank meetings that could significantly influence market movements.

Tuesday, September 24: The Conference Board’s consumer confidence report for September will offer insights into how optimistic consumers are about the economy, particularly in light of the recent rate cut.
Wednesday, September 25: New home sales data for August will be released, providing a snapshot of the housing market's health.
Thursday, September 26: The final estimate of Q2 GDP will be published, along with durable goods orders for August. Both reports will be closely watched for signs of economic resilience or potential weakness.
Friday, September 27: The Personal Consumption Expenditures (PCE) price index for August, the Fed's preferred inflation gauge, will be released. Any deviation from expectations could recalibrate investor sentiment on the likelihood of further rate cuts in the coming months.

Key Earnings Reports

The earnings season is heating up, with several key companies set to release their reports, offering insights across various industries. Here's a summary of the major reports:

September 23, 2024

AAR Corp. (AIR) 🛠️ – AAR Corp., with a market cap of $2.45B, is set to release its earnings post-market. The company is expected to report a normalized EPS of $0.82, with a YoY growth of 19.90%. Last quarter's EPS came in at $0.26, beating estimates by $0.03.
Red Cat Holdings, Inc. (RCAT) 🚁 – Red Cat, a drone technology company with a $212.02M market cap, will post its earnings, expecting a normalized EPS of -0.08. Last quarter, the company missed estimates by $0.02.

September 24, 2024

AutoZone, Inc. (AZO) 🚗 – AutoZone, with a market cap of $51.93B, is scheduled to release pre-market earnings. The company’s current EPS estimate is $53.55, with a YoY growth of 18.41%. Last quarter, AutoZone beat its EPS estimate by $0.44, posting a GAAP EPS of $36.69.
KB Home (KBH) 🏡 – Post-market, KB Home, a leading homebuilder with a market cap of $6.74B, will announce earnings. Analysts expect an EPS of $2.07, with a YoY growth of 42.00%. Last quarter, the company beat by $0.34.

September 25, 2024

Micron Technology, Inc. (MU) 💾 – Micron, with a market cap of $98.96B, will release its report during market hours. Analysts predict a normalized EPS of $1.11, though last quarter the company beat by $0.09, with a GAAP EPS of $0.62.
Cintas Corporation (CTAS) 👔 – Cintas, valued at $82.12B, is expected to report a normalized EPS of $1.00 with a YoY growth of 9.02%. Last quarter, the company slightly beat by $0.05, reporting a GAAP EPS of $1.00.

September 26, 2024

Costco Wholesale Corporation (COST) 🛒 – Costco, one of the retail giants, will release its post-market earnings. The company, with a market cap of $399.33B, is estimated to report an EPS of $5.07. Last quarter, Costco narrowly beat expectations with an EPS of $3.78, exceeding by $0.02.
Accenture plc (ACN) 💼 – Pre-market, Accenture, with a $209.99B market cap, will release its earnings. Analysts expect an EPS of $2.78, with a YoY growth of 5.48%. Last quarter, Accenture missed by $0.03, posting a GAAP EPS of $3.13.

September 27, 2024

Uranium Energy Corp. (UEC) ☢️ – Uranium Energy, with a market cap of $2.17B, will release its pre-market earnings. The company is expected to report 0.00 GAAP EPS for the current quarter, compared to a GAAP EPS of -0.05 last quarter.
FONAR Corporation (FONR) 🧠 – FONAR, valued at $112.33M, will report earnings during the market session. The company has not provided specific EPS estimates for the current or previous quarters.

Conclusion

Last week marked a significant shift in the market narrative as the Federal Reserve's 0.5% rate cut sparked optimism about a potential soft landing for the U.S. economy. While the stock market soared, some concerns about elevated valuations and slower earnings growth tempered the enthusiasm. The week ahead offers key economic data releases that could either sustain or disrupt this newfound bullish sentiment. Investors should focus on the Fed's next moves, while keeping a close eye on earnings reports and macroeconomic data that could shape market direction in the weeks to come.

Source:

https://www.schwab.com/learn/story/schwab-market-update

https://www.edwardjones.com/us-en/market-news-insights/stock-market-news/stock-market-weekly-update

*Disclaimer:

This information is provided for general information purposes only. Consider your investment objectives, financial resources and other relevant circumstances carefully before investing. This is not an invitation or an offer to invest, nor is it financial advice or a recommendation to buy or sell any investment.

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