US Open: Bears are trying to stop Wall Street bullish momentum

• Futures on US stock market indices loses slightly. US30 loses 0,1%
• Weaker macro readings from the US economy add pressure on yields
• Walmart (WMT.US) loses 7% - results beat expectations, but company warned of consumer activism
• Macy's (M.US) posts 8% gain after Q3 report
• Cisco Systems (CSCO.US) loses nearly 12% after lowering full-year revenue forecast 

A higher reading on unemployment claims and a larger-than-expected drop in industrial production, reassure markets that the Fed will not raise rates again, and will start cutting them around the middle of next year. The US100, US500 and US30 contracts are trading roughly similar in size and up a modest 0.1%. Unemployment claims rose more than expected to 231,000 versus 220,000 forecast and 217,000 previously, with continuing claims rising. Industrial production retreated 0.6% m/m against forecasts of a 0.4% decline and 0.3% previous growth. Capacity utilization was 78.9% vs. 79.4% expectations. Much of the decline was due to a 10% drop in auto and parts production, impacted by UAV strikes. 

Most U.S. company stocks are up today, the exception being the oil sector, which has come under pressure. Weaker sentiment also prevailed among biotechnology companies. Amgen (AMGN.US) and Regeneron (REG.US) are losing, while AbbVie (ABBV.US) stands out positively. Health and insurance sectors are doing great, Source: xStation5Looking at the MACD and RSI averages approaching overbought levels, and likely scenario for US30 may be a correction after a massive upward wave. Still, bulls are dominating on Wall Street, and US30 quotes are climbing to levels not seen since September 20. In the correction scenario, the first significant resistance may be the level of 34,500 points. Source: xStation5

Cisco (CSCO.US) disappoints on forecasts

Cisco's Q3 earnings per share rose more than 29% year-on-year to $1.11 per share. Revenue also rose 8% to $14.7 billion. Fact Set analysts had estimated $1.03 earnings per share and $14.63 billion in revenue, but Wall Street was disappointed with the company's estimates. For the January fiscal quarter of 2024, the company estimates earnings of $0.83 against analysts' forecasts of $0.99. What's more, the company also expects lower revenue of $12.7 billion, at a time when analysts were expecting $14.19 billion. The disappointing forecasts are likely due to slower order growth, through which the company must formulate more cautious estimates. Analysts at William Blair pointed out that the slowdown is expected to mainly relate to orders from large companies and service providers, with October having to be the key month in which Cisco saw a spike in product interest.

Cisco's stock loses today 12% and returned to May 2023 levels, with a bearish head-and-shoulders tehnical pattern visible on the chart. On the other hand, however, the RSI indicates an extreme oversold level, which has historically favored the buying side, the declines stopped near the so-called RGR neckline. Erasing today's downward gap could change the broader technical picture for the stock and point to a resurgent uptrend, which this time was reversed by a sharp drop below the SMA200 (red line). Source: xStation5

News from companies

• Alibaba ADR (BABA.US) shares are losing 9% after the China-based e-commerce giant indicated that it will abandon its plan to spin off its cloud computing segment, citing U.S. restrictions on high-tech chip exports. Its core business of selling goods to customers in China reported lower-than-expected sales amid concerns about the health of the economy.
• Catalent (CTLT.US) is gaining after Baird analysts upgraded the company to Outperform from Neutral, citing a number of improving variables for the drugmaker following first-quarter results.
• CommScope (COMM.US) gains more than 5.4% after analysts at Raymond James withdrew a previous pessimistic rating against it, citing its threatened bankruptcy debt. Analysts this time stressed that while the risk of collapse exists, the fundamentals are near the bottom, and the company can avoid a default scenario. This thesis seems to be supported by the prospect of expected Fed rate cuts next year
• Shopping mall operator Macy's (M.US) is gaining after releasing adjusted third-quarter earnings per share that exceeded Wall Street estimates. The retailer narrowed its full-year earnings-per-share forecast, beating analysts' average estimate for the holiday quarter, and cited an unexpected drop in inventories to improve the result.