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Market Dip: Shutdown Fears Play Second Fiddle to September Slump

As Wall Street nervously eyes the looming government shutdown, it’s worth noting that September is no stock market sweetheart, according to Jeffrey A. Hirsch, the brain behind Hirsch Holdings and the Stock Trader’s Almanac.

But hold onto your stock portfolios, folks, because there’s a parade of other mischievous market influencers out there. The rogues’ gallery includes the menacing specters of rising interest rates, impending student loan payments, the United Auto Workers strike, surging oil prices, and more, as eloquently pointed out by Howard Silverblatt, the senior index analyst for S&P Dow Jones Indices.

As Silverblatt succinctly puts it, there are a “lot of other items going on” that are affecting the market, including higher interest rates, looming student loan payments, the United Auto Workers strike, rising oil prices and more.

And what about the history of market mayhem during shutdowns? Well, there have been six shutdowns since 1990, some shorter than a catnap, while the latest in late 2018 and early 2019 felt like a never-ending siesta. Surprisingly, when you look at the S&P 500’s performance one month after the shutdown compared to a month before, the benchmark seems to have a rebellious streak. It averaged a cheeky 5.5% gain, flashing positive returns in five out of six shutdowns, as revealed in a recent note from Bespoke Investment Group’s Paul Hickey.

In a nutshell, as the government shutdown drama unfolds, it’s more of a headline-grabbing spectacle than a wallet-draining affair, echoing the sentiment of the iconic Shakespearean phrase, “sound and fury signifying nothing.”

Dow ends higher as dip buyers target tech amid easing yields

The Dow jumped Thursday, as investors bought the recent weakness in tech stocks just as the rally in Treasury yields paused ahead of key inflation data slated for Friday.

The Dow Jones Industrial Average gained 0.4%, 116 points, Nasdaq rose 0.8%, and the S&P 500 rose 0.6%.

Big Tech rebounds as Treasury yields pause rally ahead of inflation data

Big tech including Alphabet Inc Class A (NASDAQ:GOOGL) and Meta Platforms Inc (NASDAQ:META) helped the broader market rebound from its recent malaise as U.S. Treasury yields eased from recent highs.

Apple (NASDAQ:AAPL), meanwhile, ended the day marginally higher, as sentiment on the stock continues to be challenged by reports that users of its newly launched iPhone 15 are experiencing multiple issues including overheating.

Fed Chair Jerome Powell is set to deliver a speech at a town hall meeting with educators at 4pm ET. The chief will be fielding questions from the audience, with investors eager to see whether he may walk back his hawkish comments from a week ago.

Powell’s remarks will arrive just a day ahead of key inflation data, expected to show that core inflation remained steady last month, and continued to slow in the 12 months through August.

AMD pushes chips higher to shrug off Micron slump

Chip stocks also supported the broader move higher in tech following a rally in Advanced Micro Devices (NASDAQ:AMD) that offset a slump in Micron.

Micron Technology (NASDAQ:MU) fell more than 4% after its forecast for bigger losses for its fiscal first quarter overshadowed better-than-expected fourth-quarter results.

Analysts, however, continued to back the memory chipmaker amid signs that the supply glut overhang is easing.

“More broadly though, we think the path of least resistance is clearly to the upside here as demand, pricing, and profitability are all turning,” {{0|USB said as it maintained its buy rating and $76 price target on the stock.

NVIDIA Corporation (NASDAQ:NVDA), meanwhile, closed more than 1% higher even as reports suggested that its offices in France were raided by French antitrust regulators.

CarMax feels pain from waning used car demand; Peloton, Lululemon team up

CarMax Inc (NYSE:KMX) fell more than 13% after the used-car retailer reported second-quarter earnings that fell short of Wall Street estimates as pressure on consumers hurt demand for used cars.

The company flagged ongoing “vehicle affordability challenges” as a headwind amid “widespread inflationary pressures, higher interest rates, tightened lending standards.”

Peloton Interactive (NASDAQ:PTON), meanwhile, struck a partnership with Lululemon (NASDAQ:LULU) to supply its fitness-related content to athletic apparel company.  Under the partnership, Lululemon will become Peloton’s primary athletic apparel partner.

The deal furthers Peloton’s goal to simplify its business, UBS says, by outsourcing the apparel business.

Peloton would also be able to leverage its content library, gaining access to a “targeted pool of potential members, as the partnership gives LULU’s Studio members access to Peloton content,” it added.


Morgan Stanley’s Bullish Take on Cyient: Flying High in the IT Midcap Skies

In a recent analysis that reads like music to investors’ ears, Morgan Stanley has put its money where its optimism is, elevating Cyient, the IT midcap sensation, to an ‘Overweight’ status. This upgrade isn’t just a leap of faith; it’s grounded in a symphony of compelling factors that are turning heads and raising eyebrows.

Engineering Excellence & Booming Clientele: Cyient’s star is on the rise, thanks to its unwavering focus on the engineering sector and a burgeoning client base. The aerospace industry and the resurgent rail vertical are the maestros orchestrating this crescendo.

Stock Soars, Yet Sky’s the Limit: Cyient’s stock has been on a meteoric rise, boasting a jaw-dropping 100% annual gain. It’s like watching a rocket launch, and guess what? It’s not running out of fuel anytime soon. The secret sauce is the portfolio vertical consistently outperforming the company’s overall average.

Price Targets that Sparkle: Morgan Stanley isn’t playing it safe here; they’ve set a conservative base target of Rs 2,000 and an even more dazzling scenario of Rs 2,700 for Cyient. These numbers dance to the tune of Cyient’s bottomed-out EBIT margin for the fiscal year 2023.

The Numbers That Matter: Hold on to your hats, because the financial wizards predict a robust 16.4% Compound Annual Growth Rate (CAGR) in services revenue and an astonishing 31.2% CAGR in EBIT from 2023 to 2025. These aren’t just numbers; they’re the rhapsody of substantial wins in large deals.

The Cost of Faith: Morgan Stanley’s predictions incorporate a cost of equity pegged at 10.5%, a metric that reflects investor expectations. A higher cost of equity is the drumroll of confidence or the prelude to robust growth.

In a nutshell, Morgan Stanley’s ‘Overweight’ rating for Cyient isn’t just a standing ovation; it’s a declaration of faith in the company’s resilience and growth potential. Cyient is on a journey of expansion and value creation that has investors lining up for a front-row seat. So, fasten your seatbelts, because Cyient is soaring to new heights, and the applause is only getting louder!

Nike’s Earnings Tango: Impressive EPS Twirls, but a Revenue Stumble Takes the Lead

Nike’s earnings report was the ultimate financial tango: they wowed the crowd with their impressive first-quarter earnings, but there was a little stumble on the revenue dance floor, all thanks to North America’s shaky moves and China’s sudden economic slowdown. Nike Inc. (NYSE:NKE) even decided to kick up its heels, rising more than 2% in after-hours trading after the show.

In the earnings spotlight, Nike strutted its stuff with an EPS of $0.94, flaunting $12.94 billion in revenue. Meanwhile, the analysts polled by were left with their jaws dropped, expecting an EPS of just $0.75 and dreaming of $13.02 billion in revenue. Talk about an earnings performance that’s better than a perfectly executed slam dunk!

Sure, North America may have tripped over its own shoelaces, with a 2% sales decline, but over in China, Nike’s key market, they were still making moves with a 5% sales increase, though they missed the fancier StreetAccount estimates. So, while Nike may not be sprinting, it’s still the star of the sneaker show, and investors are happily tapping their toes to its financial rhythm.

Investing on a Friday is like buying a ticket to the weekend wealth party. You’re not just putting your money to work; you’re giving it a front-row seat to the financial fiesta. While others are planning their Friday night escapades, you’re busy strategizing for a future of financial freedom. So, whether the market is red or green, remember, Fridays aren’t just for casual Fridays; they’re for serious investors who know how to dress their portfolios for success. Cheers to Friday investing – where the only hangover you’ll have is from counting your gains, not cocktails!