🎃 Spooky (Earnings) Season

Plus, no more Starbucks secret menu?

October 31, 2024

Happy Halloween to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

  • 🟥 | US stocks fell Thursday on a volatile day of sharp gains and losses for many major companies, following a slew of mostly disheartening mega-cap earnings.

  • 📈 | One Notable Gainer: Peloton’s stock popped a whopping 28% on an earnings beat and news that the co-founder of Apple Fitness+ will helm the company starting next year.

  • 📉 | One Notable Decliner: Shares of Estée Lauder plummeted 21% on an ugly report from the beauty company. It also pulled back its annual forecast on uncertainty in China, one of its biggest markets.

  • 🎃 | Tomorrow's Trade: Next Week Could Get Spooky for These Stocks. Scroll down for more.

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S&P 500 Heatmap. Credit: Finviz

Full U.S. Heatmap. Credit: Finviz

Global ADR snapshot. Credit: Finviz

MARKET MOVERS

SMCI (-12%) Super Micro’s $50 billion stock collapse underscores risk of AI hype (CNBC)

MSFT (-6.1%) / META (-4.1%) Meta, Microsoft stocks tumble as Big Tech's AI splurge prompts investor caution (YF)

CVNA (+19.3%) Carvana Smashes Wall Street Earnings Estimates. The Stock Is Soaring. (Barron’s)

NCLH (+6.3%) Norwegian Cruise lifts profit forecast again after record ticket sales (Reuters)

COIN (-15.3%) Coinbase slumps 10% after missing key Q3 earnings targets (Forbes)

OVERHEARD ON THE STREET

Forbes: OpenAI launched ChatGPT search, in a challenge to Google’s internet search dominance.

WSJ: Microsoft and Meta don’t plan to pump the brakes on AI spending, stoking bubble concerns among investors.

CNBC: The 12-month inflation rate reached 2.1% in September, just 0.1 percentage point above the Federal Reserve’s target rate, per the PCE report.

MarketWatch: Last week, initial jobless claims fell for the third consecutive week to the lowest level since May.

TOMORROW’S TRADE IDEA, TODAY

Next Week Could Get Spooky for These Stocks

The Worst May Be Yet To Come

Nearly half of the S&P 500 has reported earnings for last quarter. And, in an unfortunate but fitting turn of events, the results so far have been a bit spooky.

But while Halloween only comes once a year, the scares might keep on coming, according to some analysts.

CNBC screened FactSet data to find S&P stocks that have yet to report and have seen their EPS estimates fall 10% or more over the past three and six months. Here are a couple of names reporting next week that might give investors more tricks than treats.

Archer-Daniels-Midland

ADM has seen its shares drop more than 23% YTD, and it might not have hit rock bottom yet. Analysts have slashed their earnings estimates by more than 21% over the last three months, and nearly 30% over the last six. 

Observers point to two events that have contributed to the food processing giant’s poor stock performance. First, it recently paused carbon dioxide injections at an Illinois plant due to leaks. On top of that, it faces a recent lawsuit for misconduct and poor safety protocols. 

The company is set to report earnings on Tuesday. It may be worth mentally preparing for another jump scare.

American International Group

AIG stock has actually looked pretty good this year, rising 14% YTD. But some believe a correction is on the horizon. Analysts have lowered their earnings estimates for AIG by 30% in the last three months and 24% in the last six. 

BMO Capital Markets’ Michael Zaremski recently downgraded the stock to Market Perform, stating that he is concerned about AIG’s position in relation to its insurance industry peers. He also cited a soft overall market, the financial giant’s new operating structure, and M&A as potential headwinds. 

AIG is set to report earnings on Monday. Buyers, beware.

Which stock do you think will outperform over the next 12 months?

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ON OUR RADAR

CNBC: Polling data expert Nate Silver doubts the momentum for former President Donald Trump shown in recent presidential polls.

BBC: Russia fined Google two undecillion roubles — more than the world’s total GDP —for restricting Russian state media channels on YouTube.

AP: Mark Cuban warned that Trump's proposed tariffs, if enacted in November, would increase holiday gift prices by 60%.

MarketWatch: Gold prices experienced their largest one-day decline since July today, and the U.S. election could mark a major pivot point for the precious metal.

WEDNESDAY’S POLL RESULTS

🟩🟩🟩🟩🟩🟩 🐂 Bullish

🟨🟨⬜️⬜️⬜️⬜️ 🐻 Bearish

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