The futures traded lower after the fourth consecutive risk-off day across Wall Street, when all the major indices again closed lower after opening trading higher. We start the last third of 2022, entering one of the worst months for stocks seasonally and historically. Over the past 25 years, the S&P 500 average monthly return for September is approximately −0.4%.
As we noted recently, it appears that the summer rally was a product of massive short covering, which included big momentum futures and options trading computers and algorithms that followed the markets off the June lows. Toss in the Reddit meme stock trading army returning to the game, and it all seems to add up to a classic bear market rally.
Wall Street will be focused on Friday’s August nonfarm payroll report. Currently, the consensus forecast calls for 318,000 in nonfarm payrolls additions for the month, as well as an unemployment rate of 3.5%. Note that July had a stunning 528,000 in nonfarm payrolls and a 3.5% unemployment rate.
Interest rates were modestly higher across the Treasury curve, as the focus remained on the two-year note, which again Wednesday hit a 3.50% yield, the highest since 2007. The inversion with the 10-year note stayed in place with the 3.13% Wednesday close. Many fixed income traders feel the inversion signals recession, which technically we are in.
Brent and West Texas Intermediate crude both closed lower, but off the early lows, as analysts continue to cite the threat of a weakening economy. Natural gas closed flat, while gold closed down. The only winner on the day was Bitcoin, which edged back over the $20,000 level.
24/7 Wall St. reviews dozens of analyst research reports each day of the week with a goal of finding fresh ideas for investors and traders alike. Some of these daily analyst calls cover stocks to buy. Other calls cover stocks to sell or avoid. Remember that no single analyst call should ever be used as a basis to buy or sell a stock. Consensus analyst target data is from Refinitiv.
These are the top analyst upgrades, downgrades and initiations seen on Thursday, September 1, 2022.
Ambarella Inc. (NASDAQ: AMBA): Baird reiterated an Outperform rating but cut its $125 target price to $90. The consensus target is $113.04 for now. The stock closed down almost 20% on Wednesday at $67.88 after the company gave a soft outlook despite beating expectations.
Amgen Inc. (NASDAQ: AMGN): Oppenheimer reiterated an Outperform rating with a $290 target price. The consensus target for the biotech giant is $253.12. Wednesday’s close was at $240.30.
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