US OPEN: Mixed opening of Monday's session on Wall Street

• Wall Street opens mixed, with Nasdaq 100 trying not to lose ground
• EchoStar shares are down 10% following the announcement that it will sell video distribution business
• Chinese stocks continue to rally

US equities are set for a lower open, with the Dow Jones leading losses, down 0.4%. The S&P 500 is down by 0.1% with Nasdaq 100 remaining flat. Market participants may be awaiting Powell's speech later today.

In Europe, most indexes are in the red. The British UK100 and German DE40 are down 0.3%, while the Italian ITA40 and French CAC40 have dropped over 1.4%. The Polish WIG20 is the worst performer, with a nearly 2% loss.

Stellantis NV shares plunged 13% in premarket trading after the company drastically revised its fiscal 2024 guidance, citing plans to reduce production and increase promotional incentives amid a slowing and more competitive auto market. This adds to the negative news surrounding the global automotive industry.

Current volatility observed on Wall Street. Source: xStation 

Breakdown of the S&P 500 index by sectors. Source: Bloomberg Finance L.P

The Nasdaq-100 index, represented by the US100 contract, is struggling with resistance at the 78.6% Fibonacci retracement level. It has been in an uptrend since the end of July, forming higher highs and higher lows. However, the uptrend might be forming a bearish wedge, with levels around the 50% Fibonacci retracement potentially confirming a trend reversal. For bears to gain control mid-August highs of 19917.81 must be broken. This would lead to a support at 61.8%  Fibonacci retracement which has previously been strong resistance in uptrend. Currently, the RSI is consolidating just below oversold levels, showing higher highs and higher lows, indicating possible bullish momentum. The MACD is also making higher highs, further supporting this outlook. Additionally, the 100-day SMA recently crossed above the 50-day SMA, forming a Golden Cross, which is typically viewed as a bullish signal. Source: xStation 5

Company News:

• CVS Health Corp. (CVS.US) shares rose 3% in premarket trading after the Wall Street Journal reported that Glenview Capital Management plans to meet Monday with CVS management to propose ways for the health-care company to improve its operations. It is currently trading 1.5% higher. Glenview Capital, a major CVS Health shareholder, has established a sizable position in the company. The meeting could be a precursor to an activist push, though specifics about Glenview's proposals are not yet known. This isn't CVS' first encounter with activist investors; Sachem Head Capital Management and Starboard Value have previously engaged with the company. CVS shares are down 22% year-to-date, with investor confidence souring after three straight quarters of full-year guidance cuts. The company faces challenges from higher medical costs in its insurance segment and pressure in its retail pharmacy business. In response, CVS recently announced a plan to cut $2 billion in expenses over several years, involving streamlining operations and increasing the use of artificial intelligence.
• EchoStar (SATS.US) shares are down 10% today after the open following the announcement that it has entered into a definitive agreement for DirecTV to acquire EchoStar's video distribution business DISH DBS, including DISH TV and Sling TV, through a debt exchange transaction. DirecTV will acquire EchoStar's video distribution business for a nominal consideration of $1 plus the assumption of DISH DBS net debt. The combined company aims to better compete in the highly competitive video distribution industry, with DirecTV estimating cost synergies of at least $1 billion per annum, expected to be achieved by the third anniversary of closing. Upon transaction close, DirecTV expects to have a leverage position just over 2.0x, planning to reduce to under 2.0x within 12 months. EchoStar will reduce its total consolidated debt by approximately $11.7 billion and reduce its consolidated refinancing needs through 2026 by approximately $6.7 billion. TPG Angelo Gordon and certain Co-Investors, along with DirecTV, provided $2.5 billion of financing to fully refinance DISH DBS' November 2024 debt maturity. The transaction is subject to various closing conditions, including regulatory approvals. In a separate but related deal, TPG will acquire AT&T's remaining 70% stake in DirecTV. Bill Morrow will continue as DirecTV's CEO, and the combined company will be headquartered in El Segundo, California. The 10% drop in share price following the open suggests that investors may have concerns about the merger, possibly related to the complexity of the deal, potential regulatory hurdles, or the challenges of integrating the two businesses in a rapidly evolving media landscape.
• Stellantis NV (STLA.US/STLAM.IT) shares plunged 13% in premarket trading after the company drastically revised its fiscal 2024 guidance, citing plans to lower production and increase promotional incentives in a slowing and more competitive auto market.  Stellantis now projects a fiscal 2024 adjusted operating margin of 5.5%-7.0%, down from its prior double-digit growth expectations. The company expects fiscal 2024 industrial free cash flow to be negative 5 billion euros to negative 10 billion euros, versus previous positive cash flow expectations. Remediation actions include reducing North American shipments by over 200,000 vehicles in the second half of 2024, increasing incentives on 2024 and older model-year vehicles, and implementing productivity improvement initiatives. On a positive note, the U.S. Fed cut the lending rate by 50 bps, which analysts expect to drive growth in discretionary spending. Stellantis stock is down over 30% year-to-date.
• US-listed China stocks are rallying in premarket trading after three of the country's largest cities eased rules for homebuyers, following aggressive home stimulus measures unveiled by China's policymakers to prop up the beleaguered real estate sector. Notable gainers include Alibaba (BABA.US) +4%, Nio (NIO.US) +13%, and Bilibili +8%. Alibaba's American depositary receipts were up 5% in premarket, adding to a 19% gain over the past five days. JD.com (JD.US) ADRs were gaining 3%, while Baidu (BIDU.US) shares were up 3.3%. China's central bank directed commercial banks to lower mortgage rates for existing home loans, and the People's Bank of China lowered the reserve requirement ratio for banks and cut key policy rates. According to UBS, Chinese stocks currently trade at a 30% price-to-book discount compared to emerging market peers. The rally may also be influenced by traders rushing to lock in positions ahead of China's National Day celebrations, which will suspend trading in Chinese stocks from October 1 to October 7.