On Thursday, Wall Street was poised for a higher open, building on the previous day’s record-high close for the S&P 500. While the morning’s inflation and jobless claims data did not significantly impact expectations for a 25-basis-point interest rate cut by the Federal Reserve at its upcoming meeting, the likelihood of a half-point cut seemed to increase. Bond yields were trending lower, signaling market confidence.
In the wake of a cooler wholesale inflation report, the August consumer price index revealed unexpected month-over-month retail inflation. Additionally, weekly jobless claims exceeded forecasts, highlighting signs of labor market deterioration. These developments raised the odds of a total of three Federal Reserve rate cuts by the end of the year.
In stock news, Nvidia received an upgrade to “buy” from “neutral” at DA Davidson. The firm, previously skeptical of the stock, has become increasingly optimistic about demand for AI computing, overshadowing past concerns regarding competition in custom chips. Notably, Nvidia announced a new chip tailored for running daily AI workloads, named Rubin CPX. This advancement has been described as a significant leap forward, reinforcing Nvidia’s competitive edge over AMD and custom chip manufacturers like Broadcom.
Conversely, DA Davidson downgraded Apple from “buy” to “neutral,” citing an “uninspired” new iPhone lineup. Analysts believe that the substantial integration of AI necessary for a major refresh cycle is unlikely in the near future. Reflecting on this sentiment, an investment philosophy was reiterated: “own it, don’t trade it.”
Meanwhile, Bank of America downgraded UPS to an underperform “sell” rating, reacting to the end of the de minimis exemption that allowed small packages to enter the U.S. duty-free. Concerns were raised regarding the sustainability of the company’s dividend, currently yielding 7.8%, given the need to conserve cash.
Thermo Fisher received an upgrade to “overweight” from “equal weight” at Barclays, with analysts raising the price target to $550 from $490. The firm expressed confidence in the company’s attractive valuation and stable end market demand. There was also a positive outlook for Thermo’s peer, Danaher.
AutoZone was highlighted for its strategic investments in stores and supply chains, positioning it to capture additional market share. UBS raised its price target on AutoZone from $4,260 to $4,925 while maintaining a “buy” rating.
Morgan Stanley maintained a “hold” rating on Robinhood but expressed a more optimistic view after attending the brokerage’s Las Vegas summit, where new products were announced, including a social networking feature. Analysts see these innovations as crucial to capturing more users and supporting long-term earnings growth.
Mizuho Securities also increased its price target for several real estate investment trusts (REITs), including Realty Income, lifting its target from $60 to $63 while retaining a neutral rating.
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