US OPEN: Is the 'Meme Stock' Season Kicking Off?

The S&P 500 and Nasdaq 100 indices ceded ground in yesterday's session, but from levels very close to historical highs. Futures also lost ground during today's trading amid uncertainty surrounding US-China trade policy. Donald Trump indicated yesterday that a meeting between himself and Chinese President Xi Jinping might not occur, which heightened concerns about the potential for significant tariff increases on China from the beginning of November. However, some news agencies suggest that preparations for the US President's trip to the APEC summit in South Korea are still underway, implying the meeting may still take place.

Sharp declines were observed yesterday not only in gold, which lost more than 5% of its value and continues its sell-off today. Gold producer indices experienced a decidedly larger pullback. As reported by Bloomberg, the VanEck Gold Miners ETF dropped almost 10% yesterday, marking its largest decline since 2020.

The earnings season continues, though initial results from US technology companies have, at this point, been underwhelming. Netflix reported significantly lower-than-expected profits, attributed to a margin decline and a one-off tax expense. The company, however, showed decent revenues, suggesting a potential future improvement. Texas Instruments primarily delivered lower-than-anticipated guidance for future quarters, disappointing the market.

While market conditions appear increasingly unstable, investor attention is turning towards so-called 'meme stocks'. Beyond Meat, the meat substitute producer, a company that had lost nearly 95% of its value, has gained more than 360% in the preceding five days, and in today's pre-market trading, it gained as much as 100%, reaching levels near $7.

Technical Outlook for US500

The US500 is hovering close to yesterday's close, showing minor changes at the start of the session. Index futures are approximately 0.5 per cent away from historical peaks. It is worth noting that the sell-off in the precious metals market is not spilling over into the equity market. The VanEck Gold Miners ETF (GDX.UK) has suffered severe losses in recent days. Many important earnings releases from US technology companies lie ahead, which will determine the further trajectory of US indices. A clear wick at the $6800 level would be a strong bearish signal, but a candle closing with a substantial body above this level would provide a further pro-growth signal. We will receive results from Tesla and Amazon today and tomorrow, respectively, which could be crucial for the index's future.

Company News

• Shares of the meat substitute producer Beyond Meat (BYND.US) have soared from around $0.5 to nearly $4 per share on Tuesday and to a  nearly $7 level in pre-market trading on Wednesday, following positive news. One factor is a distribution agreement with Walmart, the largest US retail chain. The other is its inclusion in a meme stock ETF. According to commentators on the meme stock market, there is speculation that the company could turn a profit on an annual basis and potentially reach $6 per share. However, it is important to remember that this surge is not yet justified by fundamental data.
• Netflix (NFLX.US) shares are down almost 7% at the open after quarterly results were published. The company's profit fell significantly short of expectations due to a tax dispute with Brazil.
• Texas Instruments (TXN.US) is trading down about 9% at the open due to significantly weaker future quarterly guidance than expected. The company suggests that demand for semiconductors may be peaking soon, linked to a slowdown in orders for the company.
• Warner Bros (WBD.US) gains for a consecutive day, up almost 3%  today, following reports of potential bidders for parts of the company's business. Netflix and Comcast are reportedly interested in certain segments. The company previously rejected a takeover proposal from Paramount.
• Alphabet (GOOGL.US) gains about 2% t amid ongoing negotiations with Anthropic, which seeks to purchase additional compute capacity in data centres, potentially worth tens of billions of dollars. The company is known for its Claude AI model, which has been rapidly gaining popularity recently.
• Shares of Intuitive Surgical (ISRG.US), a producer of Da Vinci medical robots, surge 18% at the open after raising its sales forecasts.
• AT&T (T.US) shares gained in after-hours trading following the release of strong financial results for the previous quarter but are down about 2% t at the start of the session. The company reported higher-than-expected subscriber growth, partly attributed to promotions on Apple smartphones. The company added 405,000 subscribers for the quarter against an expected 334,000. EPS came in at 54 cents per share, with revenues slightly below expectations at $30.7 billion.