- Wall Street opened slightly higher as investors awaited the publication of the FOMC Minutes.
- Although PPI data came in higher than expected, it didn't elicit a significant market reaction.
- ExxonMobil (XON.US) announced a merger with Pioneer Natural Resources (PXD.US) in an all-stock transaction.
Today's Wall Street activity began with a modest increase as investors prepared for the release of the FOMC minutes scheduled for 7:00 P.M. BST. Even with the publication of higher PPI data, US bond yields and the dollar have continued their downward trend, resulting in only a brief spike in safety assets. The main driving force of today's session is geopolitical uncertainty, particularly the escalating tension between Hamas and Israel. The market is concerned about the potential involvement of other parties and the possible impact on the oil market.
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In September, the U.S. PPI showed a 0.5% increase for the headline and a 0.3% rise for the core. This marked the third consecutive month of outperforming expectations following a series of misses between February and June. Analysts are predicting gains of 0.2% for both the headline and core in October and anticipate year-on-year increases of 2.0% and 2.7%, respectively. It's worth noting that March 2022 saw record highs of 11.7% and 9.7%. The latest PPI report also indicated a 1.0% jump on the old SOP basis, with the year-on-year measure rising from 2.1% to 2.5%. Should October's PPI SOP remain flat, the year-on-year rate might decline to 1.6%.
Hamas and Israel War Top News
- The combined death toll in the Israel-Hamas war topped 2,000.
- Antony Blinken travels to Israel today. Janet Yellen said the Biden administration hasn't ruled out new sanctions against Iran.
- UBS banned work travel for staff within the Middle East.
- Turkey's Recep Erdogan warned Israel over what he called "disproportionate" retaliatory attacks.
US500 technical outlook
The US500 is currently trading at 4405 points, marking a 0.30% increase today, which extends the streak of four consecutive gains since hitting a local low last week. The index got rejected from the resistance around the 4300 level but has now set its sights on the next zone at approximately 4500 points, indicating a potential back of bullish sentiment if it continues its upward trajectory. Source: xStation 5
Company News
Exxon Mobil (XOM.US) is set to acquire its competitor, Pioneer Natural Resources (PXD.US), in an all-stock transaction valued at $59.5 billion. This acquisition, the largest for Exxon since its $75.3 billion purchase of Mobil in 1999, comes amid surging energy prices that have bolstered Exxon's finances. This deal further cements Exxon's position in the fossil fuel sector during a period of increasing industry emphasis on renewable energy. With the addition of Pioneer's significant holdings in the Midland Basin, the combined entity will control an estimated 16 billion barrels of oil-equivalent resources in the Permian Basin, doubling Exxon's output to 1.3 million barrels daily. This consolidation represents a shift in the U.S. oil sector, moving from the era of smaller shale wells to potential large-scale mergers.
source: xSttion 5
CAVA (CAVA.US) - Morgan Stanley has upgraded its rating from Equal-weight to Overweight, indicating increased confidence in the company's prospects relative to other restaurants pointing to a favorable long-term growth narrative for CAVA, highlighting the brand's robust traffic trends, aided by new store performance, and potential margin improvements. Despite recent pressures on the stock due to a small early lockup expiration and increased short interest, Morgan Stanley sees these factors diminishing. They also recognize CAVA's advantage in offering healthier food options and attracting workday traffic, especially in the face of potential economic uncertainties. Although valuation remains on the higher side, Morgan Stanley's model suggests an pproximate 30% upside with a price target of $41.
Adobe (ADBE.US) is gaining over 2% as analysts are positive on the software company in the wake of a conference where it announced new versions of its generative artificial-intelligence model. Financial Institutions expect AI will be a long term growth tailwind for Adobe, even if it is less focused on pricing in the near term.
source: xStation 5
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