U.S. stocks closed higher on Monday, overcoming a volatile session that began with geopolitical concerns. Positive remarks from Federal Reserve Vice Chair Philip Jefferson boosted equities, despite the escalating conflict in the Middle East between Israel and Palestinian military group Hamas. Investors flocked to safe assets like gold and the dollar, while oil prices and energy and defense stocks surged. The tech-heavy Nasdaq Composite (COMP.IND) reversed course in the late afternoon, settling 0.39% higher at 13,484.24 points. The S&P 500 (SP500) added 0.63% to end at 4,335.66 points, while the Dow (DJI) advanced 0.59% to finish at 33,604.65 points.
Sonos Inc. (SONO, Financial) shares fell 2.2% following a loss in its patent battle with Google (GOOGL, Financial). A judge ruled that two Sonos patents were unenforceable, leading to a significant drop in the company's stock. The ruling is the latest development in an ongoing patent dispute between the two tech giants.
The Justice Department's case against Google (GOOGL, Financial) over its search deal with Apple (AAPL) could potentially impact the iPhone maker negatively, according to investment firm Bernstein. The deal, known as the Information Services Agreement, is believed to be worth between $18B and $20B annually and could account for between 14% and 16% of Apple's operating profits.
Bank of America (BAC, Financial) CEO Brian Moynihan's long-held belief that the bank's large deposit base would pay off when interest rates rose has not panned out as expected. Despite the Federal Reserve raising its policy rate by 525 basis points since March 2022, the bank has seen large paper losses due to its investment in long-dated Treasurys and mortgage bonds at low rates.
Canoo (GOEV) disclosed that its SVP and chief accounting officer Ramesh Murthy sold 2.7K shares in the company at $0.49 per share. The transaction was part of a mandatory sale to cover tax obligations realized upon vesting of restricted stock units. Following the news, shares of the company fell 8.4% to $0.38.
Exxon Mobil's (XOM, Financial) potential acquisition of Permian shale giant Pioneer Natural Resources (PXD) may contain a significant amount of stock. The deal, which could be Exxon's biggest acquisition since buying Mobil in 1999, is expected to maintain price discipline, according to CNBC's David Faber.
XPeng (XPEV) shares fell around 12% less than two weeks after the Chinese EV maker made a large export of electric vehicles to Israel. The company has also expressed interest in expanding exports to other parts of the Middle East.
Deutsche Bank highlighted several similar indicators in present macroeconomic conditions to the 1973 oil crisis. The bank noted that inflation remains above target across major economies, and severe supply chain disruptions are causing price spikes.
Barclays outlined what has worked and hasn’t worked in Q3 and where markets may end up to close out the 2023 trading year along with what’s ahead in 2024. The financial institution noted that Q3 was supported by energy stocks as they strongly outperformed all other sectors while defensive names mostly lagged and info tech retraced after a stellar first half trading year.
PepsiCo (PEP, Financial) is scheduled to announce Q3 earnings results on Tuesday, October 10th, before market open. The consensus EPS estimate is $2.15 (+9.1% Y/Y) and the consensus revenue estimate is $23.44 billion (+6.7% Y/Y).
Fluor (FLR) announced that the U.S. Department of Energy extended its National Nuclear Security Administration contract for five years through 2028. The contract supports the Naval Nuclear Propulsion Program that is jointly part of the DoE's NNSA and the Department of the Navy.
Tigo Energy (TYGO) shares fell 25.2% after the company cut its Q3 guidance far below analyst consensus, now seeing revenues of $17M-$18M compared to its prior outlook for $41M-$45M and $43.3M consensus.
PagerDuty (PD) announced its intention to offer $350M principal amount of convertible senior notes due 2028 in a private placement. The company also intends to grant the initial purchasers of the notes an option to buy up to an additional of $52.5M principal amount of notes.
The average stock is roughly flat year-to-date in the S&P 500 (SPY), according to Morgan Stanley. Seven to 10 stocks hold the vast majority of the returns for the S&P 500 market cap-weighted index year-to-date, including Alphabet (GOOG), Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA).
