Reddit Stocks: What meme stocks are trending today? – October 26, 2023

US futures

• Dow Jones Industrial Average is down 0.1%
• S&P 500 is down 0.3%
• Nasdaq 100 is down 0.5%

US futures are trading lower today as Big Tech stocks drag down markets, with Meta being the latest to disappoint, and digest a wave of economic data released this morning. Meanwhile, US treasury yields have spiked again, with the 10-year yield jumping back over 4.9% today and sapping energy out of equities.

We discovered this morning that US GDP grew 4.9% quarter-on-quarter in the three months to the end of September. That accelerated from the last reading of 2.1% and was ahead of the 4.3% forecast.

Initial jobless claims increased by 210,000 in the week to October 21. That a jump from the 198,000 rise we saw the week before and was above the 208,000 forecast.

Durable goods orders increased 4.7% month-on-month in October. That was a notable acceleration from the 0.2% rise we saw the month before and was much higher than the 1.7% forecast by economists.

Meanwhile, over the Atlantic, we found out that the European Central Bank left interest rates unchanged as expected today.

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. Meta
2. Visa
3. NVIDIA
4. Microsoft
5. Amazon
6. C3.ai
7. Alphabet
8. Tesla
9. AMD
10. Snap

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. Ford
2. Nikola
3. Tesla
4. Palantir
5. Meta
6. Marathon Digital
7. Carnival
8. Amazon
9. Apple
10. Alphabet

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.

Meta stock hit by uncertain outlook

Meta shares are down 3.5% and at two-month lows. The stock initially gained ground in after-hours trading amid signs that its core advertising business was on the rebound before reversing course after it warned the outlook for 2024 was “uncertain”.

The company beat expectations and Wall Street largely applauded the update, but investors have been spooked by the limited visibility going forward. Meta’s guidance for the fourth quarter was in-line with expectations but wider than usual, showing Meta is more uncertain about what lurks around the corner given the shaky economic landscape.

Find out everything you need to know, including our latest technical analysis, in Meta Stock Falls on “Uncertain” 2024 Outlook.

That followed from a mixed set of results out earlier this week from smaller social media rival Snap, which also initially surged higher after releasing its results before crashing back down and losing ground. Snap beat expectations and showed evidence its overhaul of its advertising business is reaping rewards, but analysts warned its recovery looks fragile given intense competition and a pullback in advertising spend. Snap shares are down 1.3% this morning.

Meta spending plans hit NVIDIA and Arista

NVIDIA is down 1% and Arista Networks is down 5%  and at a two-month low after Meta’s spending budget for 2024 came in lower than Wall Street expected, stoking fears that it will lead to less custom for the two companies.

Meta said it plans to spend $30 billion to $35 billion in capital expenditure next year as it invests in AI, the metaverse and its AR/VR ambitions. The midpoint of that range came in below the $33.8 billion forecast. Meta also lowered its 2023 budget.

Wells Fargo said the read-across for Arista is significant because Meta accounted for over one-quarter of its revenue last year, but said NVIDIA is more difficult considering the role it is playing in Meta’s AI projects.

That is the latest sign that the semiconductor market, excluding the eruption of interest in AI, remains challenging and other semiconductor stocks are trading lower today. AMD is down 0.8% and flirting with five-month lows today, while Intel is down and at two-month lows.

IBM delivers beat

IBM shares are up over 1% after beating expectations in the latest quarter.

IBM said revenue rose almost 5% in the quarter to $14.8 billion and that came in just ahead of the $14.73 billion forecast. Adjusted EPS of $2.20 was also ahead of forecasts. The company reiterated its full-year guidance.

IBM said it had gained ground in the consulting market after rivals like Accenture cited weakness in the market, and said it has seen increasing demand for AI that generated “low hundreds of millions of dollars” in bookings during the third quarter.

Amazon stock: Q3 earnings preview

Amazon shares are down 0.9% and at five-month lows. It will be the next member of Big Tech to update the markets when it releases results after the closing bell today. Easy comparatives will flatter results this quarter but Wall Street is expecting to see improving trends this quarter. However, mixed results out from other members of Big Tech and an uncertain economic outlook pose a threat.

Amazon Web Services, its cloud computing arm that generates the bulk of Amazon’s profits, will be a key focus. Wall Street is expecting growth to stabilise after 18 long months of the brakes coming down while investors are hoping AI will start to provide a tailwind. AWS needs to impress this season.

You can find out everything you need to know, including all the consensus numbers to look out for and our latest technical analysis, in our Amazon Q3 Earnings Preview.

Microsoft vs Alphabet: Cloud fortunes diverge

One of the reasons Amazon’s cloud-computing business will be under the spotlight is because we have had results out from rivals Microsoft and Alphabet this week, which saw the pair experience very different reactions based on their cloud businesses.

Microsoft popped to a three-month high before giving back some of those gains to close up over 3% yesterday after its cloud computing arm grew faster than expected as it reaps rewards from AI workloads, reinforcing its early lead in the breakthrough technology. The stock is down 0.2% this morning.

Wall Street was bullish on Microsoft’s results and said it establishes its strong position in cloud computing and AI. BMO Capital Markets said it believes the company’s AI growth expectations may be conservative. Barclays said the update “ticked all the boxes” and said Microsoft is “executing extremely well in this tough environment”.

Meanwhile, Alphabet plunged over 9% and experienced its biggest daily fall in three years yesterday and is down 2% in early trade, poised to open at a fresh three-month low this morning. That was because markets were left disappointed by Google Cloud, which grew slower than forecast. The fact Microsoft posted stronger cloud numbers is also worrying investors that Google Cloud is not benefiting from AI as much as its larger rivals and struggling to gain ground.

You can read more in Microsoft Impresses as Alphabet Disappoints.

UPS cuts sales outlook on ecommerce weakness

UPS shares are down 4% and at a three-year low after lowering its annual sales target as it suffers from weaker ecommerce demand and struggles to regain the confidence of customers it has lost whilst wrangling with unions.

The company said annual revenue will now be between $91.3 billion and $92.3 billion, down from its previous goal of around $93 billion. It also said adjusted operating margins will be 10.8% to 11.3% rather than around 11.8% as previously hoped. Adjusted EPS of $1.57 in the latest quarter came in ahead of the $1.52 forecast.

UPS said work it lost during disruptive labour talks “is starting to return” but conceded global demand for ecommerce is hurting its business.

Investors may want to keep that warning in mind ahead of Amazon’s results out later today.

UPS rival FedEx is at a four-month low before the bell.

Ford settles on 25% pay rise to end UAW strike

Ford shares are up 2.4% after reaching a tentative deal with the United Auto Workers union that it hopes will bring an end to strike action that has been disrupting its operations for weeks, albeit at a big cost.

Ford has offered a 25% hike in hourly wages over a four-year contract, taking the top-end of pay to $40 per hour. UAW leaders will now need to vote on the deal on October 29, but it could take weeks to be ratified by Ford’s UAW members. Details of conditions, such as working hours or whether it covers its new plants under construction, were not revealed. The UAW was originally pushing for a 40% pay rise and for working hours to fall from 40 hours to 32. Ford workers are now returning to work.

That will heap pressure on General Motors and Stellantis to strike an agreement with the UAW. Both are reported to be meeting with the union today. The UAW is likely to use Ford’s offer as a floor for negotiations.

Stellantis buys stake in Leapmotor

Stellantis is down 1% today after announcing it is buying a 21% stake in Chinese electric vehicle maker Leapmotor in a $1.6 billion deal.

Stellantis CEO Carlos Tavares said “the Chinese offensive is visible everywhere” and said the deal positions it so it can “benefit from it rather than being victims of it”.

Tesla stock flirts with 5-month lows

Tesla shares are down 1.5% and flirting with five-month lows this morning. The electric vehicle maker has lost over 12% since it released its quarterly results, when price cuts severely hammered margins and profitability at a time when markets are fearing more reductions could be needed to counter softer demand.

Northrop Grumman ups outlook on defence appetite

Northrop Grumman is up 1.4% after it said sales will be higher than previously expected this year as demand for weapons increase amid rising geopolitical tensions, reinforcing the ravenous appetite for defence stocks amid fresh conflict in the Middle East.

The company said revenue this year should now hit around $39 billion, up from its previous range of $38.4 billion to $38.8 billion. Its earnings and cashflow guidance was unchanged. Sales increased 9% in the third quarter to $9.8 billion and came in ahead of the $9.6 billion forecast, while EPS of $6.18 impressed versus the $5.79 forecast.

Lockheed Martin is up 0.1% and RTX is down 0.6%, with both having already posted their own quarterly results for this season.

Southwest Airlines descends after profit miss

Southwest Airlines is down 1.5% and at levels not seen since 2014 after becoming the latest major US airline to miss expectations this quarter as the industry struggles with rising costs, particularly for fuel and labour, and braces for slower growth.

Revenue hit a record $6.5 billion in the third quarter as demand for travel remains buoyant, but the strong demand is being overshadowed by pressured profitability. Expenses rose 10% in the quarter to $6.4 billion, leaving little profit. Adjusted EPS declined to $0.38 from $0.50 as a result and missed the $0.39 forecast.

Southwest said, moving into 2024, it will slow the increase of available seat miles as it tries to “absorb current capacity”, sparking fears that demand is softening.

Rivals American Airlines, Delta Air Lines and United Airlines – all of which have already reported results this season – are mixed in premarket trade today.

Kenvue trims outlook on weak flu drug sales

Kenvue is down over 3% and flirting with all-time lows after it trimmed its guidance for the year as foreign exchange headwinds weigh on its topline and because demand for its flu and cold medicines has not been as strong due to the weather.

Revenue came in slightly higher than expected in the third quarter but Kenvue warned organic sales growth will now be between 5.5% to 6.0%, having previously forecast 5.5% to 6.5%. Annual adjusted EPS will be between $1.26 to $1.28, tightened from its previous range of $1.26 to $1.31.

Adjusted EPS in the latest quarter of $0.31 was just shy of the $0.32 forecast.

Consumers swallow higher prices for Hershey

Hershey is up 0.6% after beating expectations in the third quarter, as volumes keep growing despite significantly higher prices for its chocolates and sweets.

Organic prices were up 9.8% from last year in the quarter and while this has tempered demand, volumes were up 0.9%. That saw net sales rise to $3.03 billion from $2.73 billion and come in ahead of the $2.95 billion forecast. Adjusted EPS of $2.60 beat the $2.45 forecast. Hershey reiterated its ambition to grow sales by 8% over the full year and deliver EPS of $9.46 to $9.54.

Mobileye rebounds from 10-month lows

Mobileye is up 2.5% after beating expectations in the latest quarter and raising its profit outlook, helping it rebound from 10-month lows hit after the Israeli company lost ground in wake of the conflict in the Middle East.

The tech company said revenue rose 18% from last year to $530 million and that came in just ahead of the $529 million forecast. Adjusted operating income – its headline figure – rose 27% to $182 million. Adjusted EPS jumped 48% to $0.22 and smashed the $0.17 estimate.

Mobileye trimmed the top-end of its revenue guidance range for the full year but upped its adjusted operating profit goal to $648 million to $665 million from the original range of $600 million to $631 million.

Comcast delivers mixed results

Comcast is down 2% and at their lowest level in over three months after the company beat expectations, although delivered mixed results as its streaming and theme parks performed better than its broadband business.

Revenue was up 0.9% from last year to $30.12 billion and came in ahead of the $29.68 billion. Its content and experiences segment grew 0.8% and countered weaker results elsewhere. Its broadband arm lost 18,000 subscribers and that was particularly disappointing as markets had hoped for mild gains. Its Peacock streaming service added 4 million subscribers but remained in the red, although losses were smaller than last year thanks to sub growth and price hikes.

Adjusted EPS rose 12.5% to $1.08 and came in ahead of the $0.95 forecast.

Hasbro and Mattel both drop on weaker outlook

Toy companies Hasbro and Mattel are trading lower as markets fret over the outlook.

Hasbro is down over 11% and at a seven-month low after the company lowered its annual revenue goal as demand for toys softens, while also adjusting its margin and earnings expectations. That appears to be spooking investors in Mattel, which is down 11% and at four-month lows despite raising its outlook and beating expectations thanks to the huge success of the Barbie film.

Morgan Stanley picks Pick to be new CEO

Morgan Stanley is trading marginally lower after announcing Ted Pick will become its new chief executive and replace James Gordon, who is reverting to the role of executive chairman and will stay on for a year to ensure a orderly handover.

Pick has been with the bank for three decades and currently leads the institutional securities division that deals in investment banking and trading.

Visa and Mastercard fall on threat of lower fee cap

Visa and Mastercard are both down over 1% this morning. The Federal Reserve is expected to table proposals that would lower the cap on the fees that payment companies and banks can charge merchants when consumers pay by debt cards, which could hinder revenue.

The proposal is for the current limit of 21 cents per transaction plus 0.05% lowered to 14.4 cents plus 0.04%, according to Bloomberg. The current limit was set more than a decade ago.

That comes in the wake of Visa’s well-received results earlier this week that showed consumer spending and cross-border volumes remain healthy.

Mastercard reported results this morning and delivered adjusted EPS of $3.39 in the quarter, beating the $3.23 forecast. Topline figures largely came in as expected. Mastercard said macroeconomic and geopolitical uncertainty remains elevated.

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