Reddit Stocks: What meme stocks are trending today? – October 13, 2023

US futures

• Dow Jones Industrial Average is up 0.1%
• S&P 500 is down 0.1%
• Nasdaq 100 is down 0.2%

US futures are mixed as the third-quarter earnings season kicks-off, starting with major US banks that beat expectations but issued more cautious commentary on the economic outlook and continued to build provisions.

The economic calendar for today is headlined by Michigan consumer sentiment and a speech from the Federal Reserve’s Patrick Harker.

Oil prices pop over 3%

Oil prices are up over 3% today, with Brent trading at $88.50 and WTI climbing back above $85. Forecasts that demand will rise, extended production cuts by OPEC members, declining US inventories and the conflict in the oil-rich Middle East is driving a volatile week for the commodity.

That is also pushing oil stocks higher, with Exxon Mobil, Chevron and Occidental Petroleum all trading up 1.2% to 1.8% this morning.

Gold prices continue to climb

Meanwhile, gold prices continue to storm higher as appetite for safe havens and easing treasury yields provide support. The metal is up 1.6% today at $1898 an ounce, marking a fresh two-week high.

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. Visa
2. NVIDIA
3. Tesla
4. Apple
5. JPMorgan
6. AMC Entertainment
7. C3.ai
8. Microsoft
9. AMD
10. Dollar General

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. Nikola
2. Palantir
3. Plug Power
4. Tesla
5. Bank of America
6. Cassava Sciences
7. Wells Fargo
8. American Airlines
9. AMC Entertainment
10. JPMorgan

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.

JPMorgan delivers big beat

JPMorgan shares are up 1.1% after the largest bank in the US smashed expectations in the third quarter and said the boost from higher interest rates will be higher than previously expected.

Revenue grew faster than expected thanks to the addition of assets bought from First Republic and higher interest rates. JPMorgan said it is now targeting annual net interest income of $88.5 billion this year, up from its previous goal of $87 billion. However, JPMorgan conceded that this was helped from “over-earning” on net interest income and below normal credit costs, which it said will normalise over time. Adjusted EPS jumped 38.8% to $4.33, well above the $3.89 forecast.

“Currently, US consumers and businesses generally remain healthy, although, consumers are spending down their excess cash buffers. However, persistently tight labor markets as well as extremely high government debt levels with the largest peacetime fiscal deficits ever are increasing the risks that inflation remains elevated and that interest rates rise further from here,” said CEO Jamie Dimon. On average, loans were up about 17% in the quarter while deposits fell 4% as households burn through savings and lean more on financing.

“Additionally, we still do not know the longer-term consequences of quantitative tightening, which reduces liquidity in the system at a time when market-making capabilities are increasingly limited by regulations. Furthermore, the war in Ukraine compounded by last week’s attacks on Israel may have far-reaching impacts on energy and food markets, global trade, and geopolitical relationships. This may be the most dangerous time the world has seen in decades.”

Wells Fargo tops estimates

Wells Fargo shares are up 2.5% after earnings grew in the third quarter thanks to higher interest rates, although the bank warned it is starting to see the impact from the economic slowdown.

The bank said EPS rose to $1.48 from $0.86 the year before as net interest income climbed 8% to $13.1 billion, above the $12.8 billion forecast.

“While the economy has continued to be resilient, we are seeing the impact of the slowing economy with loan balances declining and charge-offs continuing to deteriorate modestly,” said CEO Charlie Scharf.

Citigroup defies odds as it avoids earnings drop

Citigroup shares are up 2.8% after managing to avoid a drop in earnings in the third quarter as it reaped rewards from higher interest rates and much better investment banking results.

The bank said EPS stayed flat from last year in the third quarter to $1.63. That was impressive considering Wall Street thought Citigroup would report the sharpest fall in earnings out of all major US banks this season and predicted profits would fall over 19%.

A 12% rise in revenue from its Institutional Clients Group was driven by a rise in investment banking fees, while higher interest rates also boosted income. Its trading arm also performed better than anticipated. Overall revenue was up 9% from last year.

BlackRock beat soured by softer conditions

BlackRock is down 2.5% after a massive earnings beat was soured by a sharp fall in net inflows as clients find attractive returns elsewhere and become more concerned about the uncertain economic outlook.

“For the first time in nearly two decades, clients are earning a real return in cash and can wait for more policy and market certainty before re-risking. This dynamic weighed on the industry and BlackRock third quarter flows,” said CEO Larry Fink. Net inflows fell to just $2.57 billion in the third quarter from $16.9 billion the year before.

That soured the mood as BlackRock reported adjusted EPS of $10.91, which smashed the $8.26 forecast by Wall Street. Revenue rose 5% thanks to positive movements in the markets, higher advisory fees and growth in assets under management.

“We have seen periods of uncertainty like this before – as recently as 2016 and 2018. Then, as now, BlackRock stayed connected with our clients and across our platform. When investors were ready to put money back to work, they came to BlackRock, leading to record flows and share gains,” Fink said, adding that more clients continue to consolidate their portfolios with BlackRock.

UnitedHealth stock hits 2023-highs

UnitedHealth shares are up 1.3% and at new 2023-highs after beating expectations in the latest quarter.

The health insurer had warned earlier this year that medical costs were rising as more people undertook non-vital surgeries that had been delayed during the pandemic. That saw its medical care ratio rise to 82.3% from 81.6% the year before, but this was a milder increase than expected as analysts thought it could hit 82.8%. Still, a 14% rise in revenue allowed UnitedHealth to keep growing its bottom-line, with adjusted EPS rising 13% to $6.56 and beating the $6.32 forecast.

The company said it is now anticipating annual adjusted EPS of $24.85 to $25.00, tightening from its previous range of $24.70 to $25.00.

Microsoft-Activision Blizzard deal clears final hurdle

Microsoft shares are down 0.4% and Activision Blizzard is up 0.1% after the pair cleared the last major regulatory hurdle, paving the way for the two firms to combine in a $69 billion deal.

The UK’s Competition & Markets Authority has now cleared the proposed deal. It had previously blocked it on concerns it would give Microsoft too much dominance in the gaming market, but has changed its tune since Microsoft committed to selling streaming rights for Activision games to French firm Ubisoft and offered other remedies.

The Federal Trade Commission in the US also objected to the deal but failed in its attempts to block it, while European regulators approved the deal back in May.

Microsoft is now racing to close its acquisition of Activision before the current deadline on October 18 expires.

Where next for the UAW strikes?

Ford, General Motors and Stellantis, the three companies currently being hit by strike action by the United Auto Workers, are all worth watching today. Ford and General Motors are both down, while Stellantis is up 0.7%.

As is becoming customary, UAW president Shawn Fain will provide a video address to union members later today to provide an update on how talks have progressed this week. We are still waiting for a breakthrough and therefore there is a risk that strike action could be expanded further.

Only around one-quarter of the UAW is on strike at the moment but that has been rising. A walk-out was staged at Ford’s largest and most profitable factory earlier this week after the UAW was unhappy about the latest offer.

US to tighten rules on chip exports to China

Chipmakers are down today amid reports that the US government is looking to expand restrictions that prevents US companies from supplying their most-advanced chips to China. NVIDIA is down 0.4% while AMD is down 0.6%.

American chipmakers have been banned from selling their most advanced chips needed for breakthrough technologies like AI to Chinese companies but there have been several loopholes that have kept sales flowing. Some Chinese companies have been getting around this by buying chips through entities they own overseas, but rules are expected to be tightened in an effort to close that loophole, according to Reuters.

That suggests the US government is struggling to enforce its export curbs. The chipmakers themselves have also tweaked their most advanced chips and making them less powerful specifically to ensure they don’t fall foul of the restrictions and can keep being sold in China. China is a huge market for many chipmakers, but we are yet to see a significant curtailment in sales to the country since the export rules have been introduced.

Dollar General brings back CEO Todd Vasos

Dollar General shares are up over 7% today at $109.15 and rebounding from six-year lows after announcing yesterday that Todd Vasos, who led the company between 2015 and 2022, is coming back as CEO in the hope of improving the retailer’s fortunes.

The company said Vasos has agreed to “return to lead the company for the foreseeable future”. He succeeds Jeff Owen, who has left after less than a year in the hot seat. Dollar General opened 7,000 new stores and grew annual revenue by 80% during Vasos’s last stint.

Dollar General also provided a new outlook for the rest of the year, largely narrowing the ranges issued a few months back. It is now expecting net sales to grow 1.5% to 2.5%, with same-store sales to be flat to down 1%. Its EPS range was tightened to $7.10 to $7.60, which would be down 29% to 34% from last year, from its previous range of $7.10 to $8.30.

A flurry of brokers lowered their target price this morning in response to the refreshed guidance, including Piper Sandler to $114, Jefferies to $135, JPMorgan to $107, Morgan Stanley to $125, Barclays to $124 and BofA Global Research to $100.

JD.com stock hits 4-year low

JD.com is down 5% at $26.44 and at its lowest level in four years after suffering its sharpest daily fall in over six months yesterday, as brokers raced to slash forecasts and price targets

A number of brokers lowered their view on JD.com over expectations that growth and margins will be negatively impacted by softer economic conditions, leading to earnings estimates being cut. Morgan Stanley downgraded JD ADRs to Equal-Weight and slashed its target price to $33 from $55. Citi cut its target to $43 from $64. Daiwa Capital Markets lowered its view on its Hong Kong shares to HKD162 from HKD185.

The warnings over a slowdown in spending is not just being contained to JD.com, with rivals also feeling the heat with Alibaba and Pinduoduo both trading lower in premarket trade.

Wall Street sees upside for Visa and Mastercard

Visa shares are broadly flat at $236.70 after HSBC initiated coverage on the payments giant with a Hold rating and a $266 price target, some 12% above the current share price. Mastercard is up 0.6% at $402.17 after HSBC also rated it at Hold and set its price target at $424, about 6% above current levels.

Wall Street’s view on both stocks has improved over the past three months. The current average target price across Wall Street for Visa is $278.50 while Mastercard’s sits at $455.60, according to a consensus compiled by Refinitiv.

Newcrest shareholders back Newmont takeover

Shareholders in Australian gold mining behemoth Newcrest have voted in favour of the proosed takeover by rival Newmont at a meeting today, which will bolster its position as the largest gold miner in the world.

That follows on from Newmont investors giving the green light earlier this week. With all regulatory and shareholder approvals received, there is just one major barrier left as it waits for court confirmation that should happen next week.

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