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11/01/24 Briefing

Stocks ended Thursday little changed despite spending most of the day in the red after data showed inflation ticked up in December, raising doubts the Fed will start cutting interest rates as soon as Wall Street had hoped.

The Dow Jones Industrial Average closed less than 0.1% higher, while the Nasdaq Composite ended the day flat and the S&P 500 slipped less than 0.1%.

Inflation ticked up to 0.3% in December from 0.1% the prior month, an acceleration driven by rising shelter, health care, car insurance, and electricity costs. That put the 12-month rate at 3.4%, up from last month's 3.1%. Core inflation held steady in December at 0.3%, bringing the 12-month rate to 3.9%, slightly above economists' estimates.

Treasury yields fell after jumping on Thursday's inflation data, with the benchmark 10-year Treasury yield dipping below 4%.

Cryptocurrencies briefly surged in early trading before paring gains after the Securities and Exchange Commission yesterday approved eleven spot Bitcoin ETFs, a major milestone for the industry in its efforts to gain mainstream credibility and attract new money.

Big banks will kick off earnings season tomorrow when JPMorgan Chase (JPM), Bank of America (BAC), and Citigroup (C) report before the bell.

Stocks gained ground yesterday as markets shook off last week's malaise.

Equity Indexes Wrap: Telecoms Tumble; Netflix Spared Streamer Carnage by Ad-Plan Growth

17 HR 20 MIN AGO

The Dow

Salesforce (CRM) shares rose 2.8% after Baird upgraded the stock to “outperform” from “neutral,” citing its historically low valuation and potential for upside from price hikes. 

Chevron (CVX) rose 0.6% as oil ticked up after Iran seized an oil tanker in the Red Sea, raising concerns about Middle East tensions and their threat to supply.

Microsoft (MSFT) shares edged up 0.5%, putting its market value just shy of Apple’s (AAPL), which fell 0.3% Thursday.

Verizon (VZ) stock sank 3% after the EPA called on telecoms executives to meet with the agency about lead-sheathed cables. Competitor AT&T (T) dropped 3.8%.

Boeing (BA) shares fell 2.3% after the Federal Aviation Administration said it was investigating whether Boeing failed to confirm the 737 Max 9 that lost a part of its fuselage last week was manufactured according to approved designs. 

JPMorgan Chase (JPM) shares slid 0.4% ahead of its quarterly earnings report tomorrow morning. 

The S&P 500

Netflix (NFLX) added 2.9% after its president of advertising said the company’s ad-supported plan, which it launched less than a year and a half ago, had surpassed 32 million monthly active users.

Oil refiners Valero Energy (VLO) and Marathon Petroleum (MPC) rose 2.6% and 1.7%, respectively, after getting a boost from rising oil prices. 

Paramount Global (PARA) led the index’s losers, falling 5.5% after Redburn downgraded the stock to “sell.” Redburn also downgraded peer Warner Bros. Discovery (WBD), which slipped 3.9%.

Alliant Energy (LNT) lost 3.5% after analysts at BMO Capital Markets expressed confidence in the company’s fundamentals, but downgraded its stock to “market perform” due to better risk-adjusted opportunities elsewhere. It was joined by fellow utilities AES Corp. (AES), down 4.5%, and WEC Energy Group (WEC), down 4.1%. 

Lithium miner Albermarle (ALB) lost 3.2% after Deutsche Bank downgraded its stock to “hold” and expressed concern about the lithium industry’s near-term prospects. 

The Nasdaq 100

Cybersecurity stocks outperformed for a second consecutive day. Palo Alto Networks (PANW) rose 2.3%, while ZScaler (ZS) and Fortinet (FTNT) both gained 1.4%.

Nvidia (NVDA) rose 0.9% to close at a record high for the fourth straight session.

Amazon (AMZN) shares inched up 0.9% despite the company missing a deadline to offer concessions to EU regulators concerned about its $1.4 billion acquisition of Roomba-maker iRobot (IRBT).

Tesla (TSLA) lost 2.9% amid reports it would raise wages for its factory workers across the U.S. as it seeks to fend off unionization efforts spurred by last year’s autoworkers strike. 

Shares of Biogen (BIIB) fell 2.8% after European regulators said they would consult outside experts before deciding whether to approve Leqembi, the drugmaker’s Alzheimer’s treatment developed with Japan’s Eisai. 

Alphabet (GOOGL) dipped 0.1% after it said it would lay off hundreds of employees in its Assistant and hardware units. 

KB Home Stock Falls Following Earnings But Says Demand Rising as Mortgage Rates Fall

KB Home (KB) on Thursday reported a decline in sales and profits in its fiscal fourth quarter as high mortgage rates cut into demand while lower selling prices, along with added concessions to buyers, cut into profit margins. However, the company said it's optimistic about a recovery in the new year.

KB Home posted net income of $150.3 million, or $1.85 per share, in the three months ended Nov. 30, a 31% decline from the same period in 2022. Revenue slid 14% to $1.67 billion, the company said in a press release.1

Home deliveries dropped 10% to 3,407 in the latest quarter, while the average selling price went from $510,400 to $487,300 as the company had to lower prices to attract buyers.

CEO Jeffrey Mezger said KB Home is experiencing “a meaningful sequential increase in our net orders for the first five weeks of our 2024 first quarter, as consumers are responding favorably to the recent decline in mortgage rates.” 

KB Home shares were down 0.9% at $61.75 at about 1:40 p.m. ET Thursday. Even with today’s losses, shares of KB Home have added 74% over the past year.

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