US Open: Wall Street extends positive sentiment after PPI inflation 📌

• Wall Street gains at the market open
• Dollar continue to edge lower easing 
• Target (TGT.US) opens 17% higher after strong quarterly earnings

Wall Street extends its gains, breaking through key levels following positive PPI data from the USA. Investors are returning to euphoric growth, speculating that the Fed has already finished hiking interest rates. At the opening of the cash session, indices gain about 0.30%, the dollar slightly loses against most currencies, while yields on 10-year US bonds are rising.

Macro update:

• The latest PPI report was a surprise, similar to yesterday's CPI report. The data came in lower than expected and confirmed a positive downward trend for inflation in the producer sector. In October, PPI in the US indicated a notable shift towards disinflation. The PPI fell by 0.5% in October, a decrease from the previous +0.4%, bringing the year-over-year rate down to 1.3% from 2.2%. Core PPI remained flat compared to the prior 0.2%, with its annual pace moderating to 2.4% from 2.7%. A significant drop in final-demand energy prices by 6.5% largely drove the decline in goods prices, while prices for final-demand services remained unchanged after six consecutive increases. 

• In October, US retail sales slightly declined by 0.1%, marking the first decrease in seven months and falling short of the 0.2% drop forecasted by economists. This decline, primarily influenced by a 1% reduction in auto sales and lower gasoline station receipts, suggests a potential slowdown in consumer spending as the holiday-shopping season approaches. Despite this, a modest 4% increase in holiday sales is still anticipated, reflecting a tapering off from the substantial gains of recent years. 

US500

The US500 index has broken through new levels after recent strong gains. Since the end of October, the index has recorded nearly a 9% increase, initially halted at the 4430 point level. This resistance level coincided with the 61.8% Fibonacci retracement of the last downward move. Initially, the index consolidated below this zone, but following yesterday's CPI data, there was another upward impulse. The price broke above 4500 points and currently remains at these levels. After such sharp increases, a correction in the index is expected, with a possible retraction below 4500 points. However, the heated emotions of investors could just as well maintain the upward trend. Source: xStation 5

Company News:

SpaceX is considering an initial public offering (IPO) for its rapidly expanding Starlink satellite business, potentially as early as late 2024, to leverage the growing demand for space-based communications. Preparations include transitioning Starlink's assets into a wholly owned subsidiary for a possible spin-off in the IPO. However, decisions are not final, and SpaceX might retain the unit or delay the listing to 2025. Elon Musk, SpaceX’s CEO, has hinted at a Starlink IPO for years, stating it would occur once the company can reliably forecast cash flow. Starlink, which has over 5,000 satellites providing high-speed internet in more than 60 countries, is expected to generate about $10 billion in sales next year, surpassing SpaceX's rocket launch business. This growth marks a significant turnaround from previous financial struggles, with Musk recently announcing that Starlink has reached cash flow breakeven.

Target Corporation (TGT.US) gained over 17% at the market open after the company reported third-quarter results that surpassed Wall Street expectations. Adjusted earnings per share (EPS) for the third quarter were $2.10, compared to $1.54 year-over-year (y/y), exceeding the average analyst estimate of $1.47. For the fourth quarter, Target forecasts an adjusted EPS of $1.90 to $2.60, with the midpoint slightly above the $2.23 estimate. The company anticipates a mid-single digit decline in comparable sales for the quarter. Target is on track to invest nearly $5 billion in the business this year, focusing on team development, tools, technology, and capabilities to enhance the customer experience.

source: xStation 5

JD.com (JD.US) gained over 6% after a prominent e-commerce company reported a quarterly earnings report. Company sales exceeded recently lowered expectations. For the third quarter, JD.com reported a net revenue of 247.70 billion yuan, a 1.7% increase y/y, slightly above the 246.59 billion yuan estimate. Adjusted earnings per American depositary receipt were 6.70 yuan, compared to 6.27 yuan y/y, surpassing the 5.87 yuan estimate. Overall, JD.com's results indicate resilience in a challenging market, with strategic shifts and a focus on profitability amidst competitive pressures.

source: xStation 5

Global-e Online (GLBE.US) experienced a significant drop of up to 25% after reducing its annual revenue and gross merchandise value (GMV) forecasts. The company now expects revenue between $563 million and $571 million, down from the previous forecast of $570 million to $596 million, and below the Bloomberg consensus estimate of $588 million. Adjusted EBITDA projections are set at $89.1 million to $94.1 million, slightly adjusted from the earlier range of $85 million to $93 million. The GMV forecast has been revised to $3.49 billion to $3.54 billion, down from the initial $3.48 billion to $3.64 billion. For the fourth quarter, Global-e anticipates revenue between $178 million and $186 million, adjusted EBITDA of $31.5 million to $36.5 million, and GMV of $1.13 billion to $1.18 billion.