4:12pm: Tech stocks take off
A rebound in tech stocks from losses earlier this week saw the Nasdaq finish Tuesday’s session 1.5% higher at 18,182 points.
Leading the gains were Nvidia, which added 4.1% and Tesla, up 1.5%.
The S&P 500 added 1% at 5,751 points while the Dow Jones was up 0.3% at 42,080 points.
3:20pm: Hurricane damage looms over insurers
As Hurricane Milton gathers strength in the Gulf of Mexico, the prospect of significant damage to Florida’s Gulf Coast is weighing heavily on insurance companies. The hurricane, now a Category 4 storm, is expected to strike the Tampa Bay area later this week, causing fears of tens of billions of dollars in insured losses and sending insurance stocks plummeting.
According to Moody’s RMS Event Response, private market estimates for insured losses from Helene have risen to between $8 billion and $14 billion, with a best estimate of $11 billion—significantly higher than the $6.4 billion previously estimated by catastrophe modeling firm Karen Clark & Co.
The potential for even greater losses looms with Milton's approach. Early forecasts suggest that if Milton strikes the highly populated Tampa Bay region, it could lead to tens of billions of dollars in insured damages. This echoes the devastation caused by Hurricane Ian in 2022, which drove insurance losses up to $65 billion.
Local insurers with a strong presence in Florida have been particularly hard hit. Shares of American Coastal Insurance Corp., which wrote 95% of its gross premiums in Florida last year, dropped 15%, while Heritage Insurance Holdings Inc., which saw a third of its premiums originate from Florida, fell 23%.
Despite these losses, some insurers showed signs of recovery on Tuesday. The KBW Insurance Index, a measure of insurer performance, rebounded over 1% in midday trading.
2:45pm: Roblox targeted by shortseller Hindenburg
Hindenburg Research alleges that Roblox is intentionally conflating “people” with daily active users (DAUs).
“Our research indicates Roblox is lying to investors, regulators and advertisers about the number of ‘people’ on its platform, inflating the key metric by 25% to 42% plus,” Hindenburg Research said in its report.
“We also show how engagement hours, another key metric, is inflated by an estimated 100% plus.”
Hindenburg Research also alleged that Roblox is “compromising child safety to report growth to investors.”
It should be noted that Roblox rejected the financial claims made in the report, stating they are “simply misleading.”
But shares of Roblox were down around 3% on Tuesday afternoon.
1:40pm: Election outcome could shape housing policy, says UBS
The upcoming election could have a significant impact on housing policy, depending on the outcome.
According to UBS, the housing strategies of Vice President Harris and former President Trump differ in key areas, which could shape the future of housing in the US.
Harris aims to increase housing through tax credits and a $25,000 first-time homebuyer credit, but these would face challenges in Congress, especially with state control over zoning.
Trump supports easing zoning rules and using federal land for housing development, but this could face opposition at the state and federal levels.
A divided government would make passing housing legislation difficult, while a united government could improve the chances, though not guarantee success.
Ultimately, the election outcome will shape how housing challenges like affordability, availability, and regulation are addressed, with different strategies depending on who wins and whether there is unified control in Washington.
12:45pm: Pepsi sees lower sales ahead
PepsiCo Inc (NASDAQ:PEP, ETR:PEP) shares traded higher after it reported mixed quarterly earnings and lowered its full-year revenue forecast.
Earnings per share (EPS) of $2.31 narrowly beat estimates of $2.30 while revenue declined by 0.6% to $23.3 billion, below the $23.9 billion Wall Street consensus.
For the second quarter in a row, the company lowered its full-year organic sales forecast. Pepsi now expects a low-single-digit increase from approximately 4% growth, down from its earliest estimate of at least 4%.
The company continues to expect at least an 8% increase in core constant currency EPS for the full year.
This implies earnings per share of $8.15, above the Street forecast of $8.13.
11:30am: Dow makes up ground
Stocks were recovering nicely after starting out the week on the back foot.
By midmorning, the Dow had added around 0.1% at 41,986 points, while the S&P 500 was up a little over 0.7% at 5,738. The Nasdaq led the recovery, up more than 1.1% at 18.129, boosted by Nvidia's 3.4% gain.
11:10am: Lower possibility of rate cuts
More analysts are now considering the idea that the Fed may slow down the pace of rate cuts.
The recent jobs report has increased expectations for a 25 basis point rate cut at the upcoming FOMC meeting, with markets even considering a slower pace of cuts, according to Citi.
While 25 basis point reductions in future meetings are likely, the possibility of larger 50 basis point cuts remains if labor market data weakens. The minutes from the September FOMC meeting, to be released Wednesday at 2 PM, may provide insight into the criteria for officials to lower policy rates more rapidly, analysts noted.
9.55am: Wall Street mixed at open
Wall Street faced a mixed start on Tuesday as stocks looked to recover from Monday’s sell-off.
The Nasdaq and S&P 500 both gained as the market opened, climbing by 0.6% and 0.4% respectively, though the Dow Jones fell by 0.1%.
A jump in Treasury yields on Monday had pressured stocks as expectations for further steep rate cuts by the Federal Reserve were scaled back after Friday’s strong job data.
Further data on Tuesday showed the US trade deficit had fallen to a five-month low in August, in another positive sign for the economy’s future growth.
According to the US Bureau of Economic Analysis, the trade deficit within the world’s largest economy fell by 11% to US$70.4 billion.
This was as exports ticked up 2.0% to a record US$271.8 billion, while imports fell by 0.9% US$342.2 billion.
Exports of consumer and capital goods helped drive the increase, the Bureau of Economic Analysis reported, while imports of cars fell, alongside the likes of industrial materials.
7.59am: Stocks set for slight recovery
Wall Street appeared on course for a better start to the day after a sell-off on Monday hit stocks.
Futures had the Nasdaq climbing 0.5% ahead of Tuesday’s opening bell, while the S&P 500 and Dow Jones were seen 0.4% and 0.2% higher respectively.
Each had shed value on Monday as stocks came under pressure from a jump in Treasury yields on the back of falling expectations for further steep rate cuts by the Federal Reserve.
Rates remained above 4% on 10-year yields on Tuesday, though inched back as Fed member Adriana Kugler said she supported further cuts if inflation continued to fall back.
XTB analyst Kathleen Brooks noted the narrative around cuts, which had swung in favour of smaller reductions after last Friday’s expectation-beating non-farm payroll report, could well change again ahead of November’s Fed meeting.
“There is another payrolls report and a US presidential election before [then],” she pointed out.
“For now, there can be no denying the major shift in sentiment in recent days that has the potential to disrupt the risk rally that dominated markets in the third quarter.”
Among companies, attention was on PepsiCo Inc (NASDAQ:PEP, ETR:PEP)’s third quarter report, with shares falling in pre-market trading after the drink maker trimmed guidance on lower US sales.