My top 10 things to watch Monday, Sept. 16
1. The S&P 500 is heading for a muted open Monday after a big comeback rally last week fueled in large part by technology stocks. In my Sunday column for Investing Club members, I explored what drove the wild reversal and my approach to the market from here.
2. Will the Federal Reserve cut rates by the traditional 25 basis points or opt for a larger 50-basis-point reduction? That’s a key question looming over the market ahead of the central bank’s decision, which we’ll get Wednesday afternoon. Either way, mortgage rates are trending lower, and that should lead to more business for companies levered to the housing market, including Club names Home Depot and Stanley Black & Decker.
3. Salesforce‘s annual Dreamforce conference this week will shine a light on useful artificial intelligence applications. I’m using my time in San Francisco for the event to catch up with a number of notable players in the tech world. That includes Broadcom‘s influential CEO Hock Tan and Arm Holdings‘ Rene Haas. We own Salesforce and Broadcom for the Club.
4. Nvidia shares are lower Monday. It looks like nothing more than profit-taking after the leading AI chipmaker surged nearly 16% last week. Elsewhere in chips, Citi lowered its price targets on once-darling semiconductor equipment makers Lam Research, Applied Materials and KLA Corp.
5. Industrial analysts at Citi initiated coverage of Club holding Eaton with a buy rating and price target of $348 a share, implying about 14% upside from Friday’s close. Analysts said the electrical equipment supplier is well-positioned for outsized earnings growth in the years ahead due to booming data center demand and other megaprojects. Internal actions have improved profitability as well, Citi said.
6. Barclays started energy company GE Vernova with a buy rating. The stock is coming off a nearly 14% surge last week, with some of the move being tied to the presidential debate being seen as positive for renewable energy. GE Vernova is the Kamala Harris stock and that’s the main reason why you would buy a windmill and natural gas company that really has underappreciated exposure to natural gas. Data centers need more power from nat gas.
7. Melius Research upgraded Oracle to buy from hold after last week’s strong AI-fueled earnings report and long-range guidance hike. Analysts acknowledged some might think it’s a late call for a stock up 54% year to date and 14% last week alone, but they countered by writing that “we could be just in the middle of a move.” The hyperscalers need Oracle.
8. A surprising downgrade at Wells Fargo: Analysts moved their rating on Colgate-Palmolive to a sell-equivalent underweight from equal weight. This has been a much-loved stock, up almost 33% this year. However, Wells Fargo is worried that organic sales growth is normalizing.
9. KeyBanc upped its price target on Spotify to $440 a share from $420 and kept its buy-equivalent overweight rating on the stock, which is up about 80% year to date. This is an anointed stock in the “can-do-no-wrong” pantheon. KeyBanc argued the music streaming giant’s earnings power is underrated.
10. Coca-Cola is emerging as perhaps the “cleanest” story among the big consumer staples companies, according to Wells Fargo. The firm raised its price target on the stock to $78 a share from $73, saying it should be able to grind higher thanks to sales catalysts, margin visibility and a still reasonable valuation.
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