Top 10 Things to Watch for Monday, Oct. 12
1. It’s a four-year anniversary for the current bull market. There are a lot of factors suggesting it may not continue, including geopolitical issues and high expectations for the upcoming earnings season. In my recent column for Club members, I discussed why I’m still invested despite these concerns.
2. Futures aren’t showing much movement this morning. Oil prices are on the rise due to a couple of developments. The “energy ceasefire” between Russia and Ukraine, announced by President Trump, appears to be quite fragile. Additionally, Houthi militants backed by Iran executed a deadly attack at a Saudi airport.
3. This week looks busy. Major banks will start releasing their earnings reports tomorrow morning. The September Consumer Price Index (CPI) report is set to be released Wednesday, followed by the Producer Price Index (PPI) report on Thursday. Also, we have our Monthly Meeting for October scheduled for noon ET on Thursday.
4. Some stocks sensitive to interest rates, including utilities and Club favorite Home Depot, have seen gains. It seems a bit odd, I think, since utilities are typically favored for their dividends and tend to suffer when bond yields rise. Nevertheless, this sector is up 5.5% since its low on September 28. Home Depot particularly needs lower borrowing costs to encourage housing activity; its shares have risen about 3.4% over the last four sessions.
5. Salesforce received a double upgrade from Bank of America, moving from sell to buy, and it’s up nearly 5%. Analysts acknowledged that their previous concerns about artificial intelligence disrupting the company might have been exaggerated. They now believe large enterprises will likely grow more dependent on platforms like Salesforce due to AI advancements. It seems the “SaaSpocalypse” was overstated.
6. UBS has lowered its price target for Western Digital, a hard drive manufacturer, from $525 to $470, while maintaining a hold rating. The analyst anticipates a strong quarter for September, as well as positive December results, but believes the market is underappreciating the cyclical nature of hard drives and the potential downturn anticipated in late 2028 or early 2029. This could impact the broader memory sector, which includes Club stock Micron. The Situational Awareness wake remains prevalent.
7. Capital One faced a couple of price target reductions: JPMorgan cut it from $246 to $227, and Morgan Stanley adjusted down to $267 from $273, yet both firms kept their buy ratings. Analysts share a similar outlook, expecting decent third-quarter results but indicating potential risks for lower-income consumers as inflation and rising rates might become more pressing by 2027. Our view on this stems from the Discover acquisition and the vertical integration aimed to resemble American Express.
8. Evercore ISI initiated coverage on Robinhood with a buy rating, describing the online trading platform as “very impressive” with a growing range of products aiming to be a “one-stop shop” for financial services. They started coverage of Schwab with a hold. I think Schwab will remain relatively immune to AI directing customers to higher-yield accounts and might be a solid buy.
9. Seaport Research upgraded Mattel from hold to buy with a $20 price target. This came after reports that Authentic Brands is considering a $20-per-share, or $6 billion, takeover bid. I still believe Mattel will likely be acquired by Authentic Brands, which owns several well-known names, including Reebok and Champion, along with lifestyle lines from Shaquille O’Neal and David Beckham. Interestingly, Mattel’s long-running CEO, Ynon Kreiz, left just last month to join David Ellison’s Skydance.
10. Melius Research increased its price target on Alphabet from $375 to $395. Analyst Ben Reitzes noted that Google Cloud is performing exceptionally well, but its stock gains are hindered by unclear performance in Search and Gemini. Google needs to regain a leading position in AI models if it wants to see a continued increase in stock value.
