Market Update: Insights from Recent Trends
On Thursday, the second day of the federal government shutdown, the S&P 500 showed little movement. It opened slightly higher, briefly approaching a new all-time high before settling near unchanged levels. Treasury Secretary Scott Bessent didn’t help matters, stating that the shutdown could negatively impact GDP. Generally speaking, we believe that shutdowns don’t really alter long-term market trends, so there isn’t a pressing need to make adjustments to our portfolio.
A highlight from the day was Nvidia, which saw its shares increase about 1%, reaching $189. The company achieved a new record close, marking its longest winning streak since June with six consecutive days of gains. For the first time, Nvidia traded above $190. This strength, alongside a 2% rise in the iShares semiconductor ETF, kept the tech-heavy Nasdaq in a conducive position during afternoon trading.
In terms of positive news, Bank of America noted that BlackRock’s net flow is expected to increase significantly in the third quarter, thanks to the strength in its bond and equity sectors. This “net flow,” representing the money invested minus withdrawals, is crucial for asset managers, as it directly impacts revenue and growth potential. This uptick comes after a somewhat disappointing quarterly revenue report from BlackRock, which fell short back in July. Interestingly, BlackRock’s stock has risen about 4.5% since that report and gained nearly 2% during Thursday’s session. With a new price target of $1,396 from Bank of America, there’s potential for over 22% growth from the previous day’s close. The previous target was $1,224. The club rates the stock at a price target of $1,200, showing optimism beyond just the upcoming quarter as they believe BlackRock is well-positioned to exploit trends in asset management, particularly with the growing interest in alternative assets.
Additionally, there are exciting developments regarding BlackRock’s recent acquisition of Global Infrastructure Partners, which may be nearing a $38 billion deal for the utility company AES. This acquisition could enable BlackRock to capitalize on rising power demands stemming from the boom in AI infrastructure investment.
Turning to Disney, the company is anticipated to announce a successor to CEO Bob Iger early next year. Consensus among corporate insiders is that Josh D’Amaro, the head of Disney’s parks, is the frontrunner, according to reports. It’s shaping up to be a “two-horse race” between him and Dana Walden, who co-chairs Disney’s entertainment division. Disney has yet to comment. Investors are hoping for a smoother transition this time, given Iger’s unexpected return to replace Bob Chapek after a brief retirement. The process is led by James Gorman, chairman of the Disney Board, who is respected for his leadership capabilities.
Further analysis from Jefferies pointed out that Disney’s brand value, especially concerning Disney+, seems to be a bit underwhelming, as highlighted by their recent consultations. They reaffirmed their purchase rating and set a price target of $144, while our target remains $135.
Looking ahead, while the federal government’s closure delays the Bureau of Labor Statistics’ non-farm payroll reports due Friday, there’s still important data to watch. The Supply Management Institute will release its Service Sector Activities report at 10 AM. In addition, Philip Jefferson, the Vice-Chair of the Federal Reserve, is set to speak at the Drexel Economic Forum later in the afternoon.
