Reddit Stocks: What meme stocks are trending today? – September 25, 2023

US futures

• Dow Jones Industrial Average is down 0.2%
• S&P 500 is down 0.3%
• Nasdaq 100 is down 0.4%

US markets came under pressure last week thanks to the ‘higher for longer’ interest rate narrative from the Federal Reserve, which signalled we could see another rise this year, and fears about a recession. In fact, it was the heaviest weekly selloff in US equities in six months and indices slid to new lows. The Nasdaq 100 and Dow Jones Industrial Average are at six-week lows, while the S&P 500 has sunk to its lowest level in over three months.

What to expect from the Week Ahead

With the last week’s busy calendar now digested, this could be a big week for markets.

“The most notable reaction following the latest FOMC meeting was the reaction of bond markets, which continued to plunge and send yields higher. Not even the US dollar could extend its rally meaningfully despite the rise of yields. But global stock markets certainly took notice and fell in tandem as investors finally took the Fed seriously that interest rates are likely to remain higher for longer. So whilst we have US PCE inflation, consumer sentiment, GDP, retail sales and the likes of China PMIs and Australian CPI, it is likely to be how bond yields behave next week as to how important these economic data points become,” said our analyst Matt Simpson.

The yield on US 10-year government bonds hit its highest level since 2007 at 4.5%, pressuring growth stocks.

You can find out what to expect from the macro side of the calendar this week, including analysis on bond yields, US inflation figures and China PMIs, in the Week Ahead.

As for the corporate calendar, US markets will be focused on earnings out from athleisure giant Nike, retailer Costco, memory chipmaker Micron, and IT outfit Accenture. You can find our earnings calendar and previews on the biggest updates in Earnings This Week.

Oil prices hold steady

The rally in oil prices may have tempered over the past week but they are holding steady. Brent is trading at $92.80 a barrel this morning while WTI is at $89.30.

Extended production cuts by Saudi Arabia and Russia, falling stockpiles in the US and hopes of rising demand as the Chinese economy finally shows some signs of rebounding have fuelled fears that the market will remain tight for the rest of this year. A temporary ban on diesel and gasoline exports from Russia has also lifted fuel prices, adding to fears that higher prices may revive inflation.

Can bitcoin hold above $26,000?

Bitcoin tumbled along with the markets last week in the wake of the Fed meeting and is trading at its lowest level in a week-and-a-half, although holding above $26,000. With markets now anticipating interest rates will be higher for longer, there is less attraction to putting money into riskier bets like bitcoin, especially as catalysts are lacking.

Most discussed Reddit stocks

Below is a list of the top 10 most mentioned US stocks on the WallStreetBets thread on Reddit over the last 24 hours, according to data from Quiver Quantitative. Exchange-Traded Funds (ETFs) and other instruments have been excluded:

1. Tesla
2. NVIDIA
3. C3.ai
4. Apple
5. Genpact
6. Visa
7. AMD
8. Amazon
9. Nike
10. Toronto Dominion Bank

Most active US stocks before the bell

Below are the most active stocks with a valuation of at least $500 million before the bell, based on trading data taken from Bloomberg:

1. MSP Recovery
2. Nikola
3. Tesla
4. Palantir
5. Lucid Group
6. Marathon Digital
7. IonQ
8. Plug Power
9. SoFi
10. Riot Platforms

US premarket winners and losers

Here are the stocks worth at least $500 million experiencing the sharpest movements in premarket trade, according to data from Bloomberg:

Top US stocks to watch

Let’s have a look at the top stocks to watch today.

UAW strike is expanded amid deal deadlock

General Motors and Stellantis are both down 0.3% after the United Auto Workers union expanded its strike action to 38 of their hubs that distribute parts around the country after they failed to meet a deadline to strike a new deal on pay and conditions for their members last week.

The UAW has been on strike at three plants – one owned by GM, another by Stellantis and a third owned by Ford – since September 25 and has now escalated industrial action against two of the companies. No further action has been taken against Ford, for now, after the UAW said “real progress” has been made in negotiations, although both Ford and the UAW said there is more work to do to close the gap between the two sides. Ford is down 0.3% today.

Have Hollywood writers ended their strike action?

Disney, Netflix, Comcast and Warner Bros Discovery are up as much as 1.3% today after the union representing writers in Hollywood reach a tentative deal with major studios on Sunday, raising hopes that it will bring an end to strikes that have halted content being made for months.

The three-year deal has been signed with the Writers Guild of America but still needs to be voted on and ratified. However, separate strike action being taken by the SAG-AFTRA, which represents actors, continues and will prevent Hollywood from getting back on track.

Apple iPhone 15 seeing strong demand

Apple shares are down 0.3% this morning despite signs the new iPhone 15 that only hit the shelves on Friday is in strong demand.

The most basic version of the iPhone 15 is taking almost twice as long to reach customers than the iPhone 14, according to figures from Counterpoint Research reported by Bloomberg, signalling that the latest upgrades have been well-received. The figures also reinforced hopes that customers have continued to opt for the priciest Pro Max that was injected with the most upgrades, with waiting times at a record high. However, wait times for its two other models, the Plus and Pro, are thought to be shorter than this time last year, suggesting the middle ground has faltered as customers opt for either the top-end or most basic handsets.

Wait times in China have quadrupled, the report said, which will be welcomed considering the fears about a ban in the country and fierce competition from Huawei’s latest model.

Meanwhile, iPhone production in India has been disrupted after supplier Pegatron temporarily ceased assembling the handsets following a fire at one of its factories in the south of the country, according to unnamed sources speaking to Reuters. Pegatron said there has been no harm to anyone or any property and that regulators are now investigating. The first two shifts were cancelled today and it is unclear when operations will resume.

Amazon to invest up to $4 billion in AI firm Anthropic

Amazon shares are up 0.4% and rebounding from their lowest level in almost two months after announcing it will invest up to $4 billion into one of its customers Anthropic, which it hopes will bring more generative AI applications to its cloud-computing customers.

Anthropic will be using Amazon chips to build and train its models and Amazon Web Services will be its primary cloud provider. Anthropic will release its new products to AWS customers early and they will be accessible through Amazon’s new Bedrock service that pools together useful tools from different platforms.

That is seen as an escalation in the AI arms race as Amazon tries to catch-up to the early winners, and as a big win for Amazon’s chip business by demonstrating its own semiconductors can be used to train complex AI models.

TSMC sees influx of orders from NVIDIA, AMD and Amazon

TSMC shares on the NYSE are in play today amid news that NVIDIA has increased its orders for the company’s advanced packaging products it needs for AI chips and that others like AMD and Amazon are rushing to place orders, according to Economic Daily News.

TSMC is buying more machines capable of producing CoWos (chip on wafer on substrate) to deal with the influx of orders and has asked suppliers to deliver in the first half of 2024. The report said TSMC is looking to grow capacity from 12,000 pieces a month today to up to 30,000. The packaging has now become the bottleneck of the supply chain, the report said, and TSMC has said previously that it hopes things will improve in the second half of 2024 as new capacity comes online.

That sends a strong signal that demand for AI chips remains strong, but also stokes fears that a lack of components could also lead to a shortage in supplies over the next six to 12 months.

NVIDIA is down 1% before the bell while AMD is trailing 0.8%.

Tesla showcases Optimus robot

Tesla shares are down 1.9% in premarket trade and set to open at a four-week low.

The company posted a video on X that showcased the development of its humanoid robot named Optimus, which demonstrated its ability to complete delicate yoga moves and complete tasks such as sorting and unsorting blocks based on colour. The neural network is trained fully end-to-end using the same one that powers cameras and autonomous control in its cars.

CEO Elon Musk responded to chatter by highlighting a focus on safety. “We will definitely aim to maximize local safety of Optimus. It needs to be easy to pause using a remote or your phone with no centralized override”, he posted on X over the weekend.

We are probably far away from Tesla’s robot, launched only two years ago, from taking off. However, the news has shown the swift progress made to date and reinforced the concept that Tesla is about more than just selling electric vehicles.

Bar is high ahead of Costco earnings

Costco continues to shine at a tough time for the retail sector, with sales and profits continuing to grow as its membership model and focus on value resonates with customers, and this trend should continue when it reports results tomorrow. The stock is up 0.2% this morning.

Costco should see inflationary pressures ease going forward and is likely to be among the first to lower prices to solidify its value offering, which should keep memberships and sales growing. Renewal rates across the world remain at all-time highs and new memberships are rising at a high single-digit rate.

Costco shares are up 22% in 2023, slightly outperforming the wider retail sector. However, further gains could be hard to come by despite its impressive performance considering the premium on its valuation multiple, which is trading at 36x forward earnings – representing an 80% premium to the industry average!

You can find out what you need to know, including all the consensus figures to look out for and our latest technical analysis, in our Costco Q4 Earnings Preview.

Nike stock hits 11-month lows ahead of earnings

Nike shares are down 1.6% today and the athleisure giant is grabbing attention ahead of its first-quarter results due out on Thursday. Nike has said it expects to deliver another year of “profitable growth” but it may be a tough start to the year, and this is reflected in the fact Nike shares are trading at their lowest level in 11 months!

Revenue is forecast to rise 2.5% from last year to $13.00 billion, which would represent the slowest growth in over a year, while adjusted EPS is expected to decline for a third consecutive quarter, this time by 20% to $0.74.

However, Wall Street believes this will be the worst quarter and expects revenue growth to accelerate, fuelled by the recovery in China and its direct-to-consumer business. North America remains soft, so keep an eye on commentary here, but it appears China and other markets like Latin America are keeping the growth engine running.

Analysts also believe its bottom-line will rise by double-digit percentages over the next three quarters. Nike says it is on the “front foot” and competing from a “position of strength” amid the uncertain economic outlook.

Nike is aiming to deliver mid-single digit revenue growth over the full year as its digital business powers ahead and gross margins should improve as cost pressures subside. That suggests the weakness in the first quarter could provide an opportunity should investors grow confident that this will be another year of progress. Nike still trades at a premium to its rivals and, while well-earned, this may prove a limiting factor.

Notably, Nike was downgraded to Hold by Jefferies, which lowered its view on the stock, as well as Foot Locker, due to concerns over the more challenging outlook for consumer spending.

Visa and Mastercard hit 2-month low

Visa and Mastercard are down 0.3% today and both set to open at their lowest level since late July, having lost ground for three consecutive weeks as markets become more concerned about the health of the economy and consumer spending as recession fears creep back into markets.

Mastercard shares broke below the 50-day moving average on Friday and could sink back toward $400, in-line with the rising trendline that has been in play for six months, if it remains under pressure.

Visa plunged below both the 50-day and then the 100-day moving average last week but could also lose further ground, potentially $233, while keeping the rising trendline (which traces back further to late 2022) intact.

How low can C3.ai stock go?

C3.ai shares are down 1.4% and set to open at their lowest level in over four months, having been losing ground since the AI rally started to unwind at the beginning of August. The stock is down around 45% since the start of August but is still trading more than twice as high than the start of 2023.

The company was a winner as AI excitement ripped through Wall Street but investor’s patience has been tested following big promises but little in terms of tangible results.

Plug Power gets upgrade

Plug Power shares are flat at $7.43 before the bell after HSBC initiated coverage on the electric vehicle charging firm with a Buy rating and a target price of $11. The stock hit its lowest level in over three years on Friday.

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