NEW YORK, NEW YORK – OCTOBER 16: Traders and others work on the New York Stock Exchange (NYSE) floor in New York City.
U.S. stock futures fell slightly on Monday after the Dow Jones Industrial Average and S&P 500 notched their best weekly win streaks of 2024.
Dow futures slipped 97 points, or 0.2%. S&P 500 futures and Nasdaq-100 futures lost 0.3% and 0.6%, respectively.
The moves come after both the S&P 500 and 30-stock Dow registered all-time highs on Friday, cementing a sixth straight weekly advance for both benchmarks. The S&P 500 ended the week 0.85% higher, while the Dow closed up 0.96%. The Nasdaq Composite climbed 0.80%.
Whether stocks can sustain those gains may depend on whether companies can beat expectations this earnings season, which is set to ramp up this week. Roughly one-fifth of S&P 500 companies are set to report through Friday.
Thus far, the results have been mixed. Of the 14% of S&P 500 companies that have already posted third-quarter results, 79% have beaten expectations, according to FactSet's John Butters. However, the magnitude of those beats have been more lackluster, he noted.
The recent winning streak has investors optimistic equities still have further to run. Still, they are mindful that stretched valuations, ahead of the U.S. presidential election and amid rising geopolitical risks, could also mean further choppiness.
"If we're not really getting the kind of confirmation that the market is worth this elevated price, you know, then we could end up seeing a digestion of gains come fairly soon," said Sam Stovall, chief investment strategist at CFRA Research.
Money Report
Elsewhere, on the economic front, leading indicators for September are due out Monday, at 10 a.m. ET.
Bernstein lowers price target for ASML, still sees 13% upside
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Normalizing China demand could pose a near-term threat for ASML, according to Bernstein.
The firm reiterated its outperform rating on the Dutch semiconductor stock, but lowered its price target to $815 from $1,052. This revised price forecast is still approximately 13% higher than where shares of ASML closed on Friday.
ASML stock has slipped 4% this year. Analyst Sara Russo believes that investors have punished the stock unfairly.
"The recent de-rating has been more pronounced vs. history, with ASML now trading at a trough multiple1SD below historical average, which we believe is overdone," she said. "ASML is now trading at a discount to the SOX, which we find to be unmerited given our belief that the structural story remains strong."
While the firm has recently cut down its 2025 guidance after a "transitional" 2024, Russo wrote that normalizing China demand could mean investors still "need to exercise patience until the cyclical recovery is clearer."
"We had held concerns about the risk of an even more prolonged recovery in end demand resulting in delays to capacity expansion, and that's where we now seem to be going into 2025," she wrote.
On the bright side, Russo said that she models recovery for the stock in 2026.
— Lisa Kailai Han
Loop Capital upgrades JD stock to buy from hold
Loop Capital sees JD.com as a potential beneficiary of China's newly announced stimulus initiatives.
The firm upgraded shares of the Chinese e-commerce retailer to buy from hold. Analyst Rob Sanderson raised his price target to $49 from $48, corresponding to upside of about 23%.
JD will report its third-quarter earnings results after the market closes on Oct. 30. Sanderson thinks the firm will likely exceed all of its current estimates.
"We are comfortable with acceleration to 4% revenue growth for 3Q driven by a strong September with government-sponsored trade-in rebates boosting sales of home appliances and consumer electronics products. We expect an inline-to-better bottom-line result for 3Q," he wrote.
Sanderson also said his topline outlook will prove conservative and highlighted JD management's cost-savings efforts through the consumption spending downturn. Meanwhile, the analyst also cited the Chinese central bank's new stimulus efforts as an additional catalyst.
"We think that JD would likely be an outsized beneficiary of consumption stimulus," he wrote.
Shares of JD have soared 38% in 2024.
— Lisa Kailai Han
Barclays downgrades UPS on near- and long-term headwinds
Barclays is a no-go on UPS.
The bank downgraded the shipping stock to underweight from equal weight. Analyst Brandon Oglenski left his price target of $120 unchanged, implying that shares of UPS could slide 12% from their Friday close.
In the near term, Oglenski sees risks to UPS' earnings that could mean the company is unable to meet "management's rather aggressive back half 2024 guidance." Over the long run Amazon poses a sizable threat, since it still represents 12% of total UPS revenue.
"With the ecommerce provider operating a delivery network that rivals the size of UPS, we see insourcing risk remaining a large overhang in the years to come, especially as UPS attempts to extract higher pricing from the business," the analyst wrote.
Oglenski added that since UPS significantly increased its dividend during the pandemic, he sees a "limited ability" for dividend growth in the next few years. UPS' valuation could be further constrained due to mounting competitive pressures from the non-union FedEx.
"Investors should consider future competition from a merged FedEx US Express and Ground non-union operation, potentially rivaling or exceeding productivity of UPS, which will be constrained on a relative basis by union work rules as well as contracted wages and benefits," the analyst wrote.
Shares of UPS are down nearly 14% on the year.
— Lisa Kailai Han
European markets open slightly lower
European markets opened slightly lower on Monday.
The pan-European Stoxx 600 traded down 0.1% shortly after the opening bell, with most sectors in negative territory.
— Sam Meredith
Where earnings stand
Of the 14% of S&P 500 companies that have posted results thus far this earnings season, 79% of them have exceeded expectations, as of Friday's close, according to FactSet.
But companies are picking up the pace this week. Roughly one-fifth of S&P 500 companies are set to report results Monday through Friday.
— Sarah Min
Leading indicators due out Monday
Leading indicators for the month of September is due out Monday, at 10 a.m. ET.
Economists polled by FactSet expect it to show a 0.3% decrease last month, down from a 0.2% dip in the prior reading.
— Sarah Min
Stock futures open little changed
Stock futures opened little changed Sunday night.
Dow Jones Industrial Average futures rose by 36 points, or 0.08%. S&P 500 futures and Nasdaq 100 futures climbed 0.09% and 0.08%, respectively.
— Sarah Min
