Wall Street Lunch: Trading Volume Lower With Columbus Day Holiday – Technologist

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Evercore puts Apple on its Tactical Outperform list. (0:16) Wells Fargo bullish on Nvidia pricing. (0:53) Was Uber the big winner at Tesla’s robotaxi event? (3:01)

This is an abridged transcript of the podcast.

Our top story so far. Trading volume is lower with the Columbus Day federal holiday and the bond market closed. But Wall Street research shops are active, with plenty of calls on big names.

Evercore added Apple (NASDAQ:AAPL) to its Tactical Outperform list, noting that the company is well positioned to clear a lower bar. The firm maintained its Outperform rating and $250 price target on the stock.

Analyst Amit Daryanani said they think Apple is well positioned to outperform against low expectations in the September quarter and, more importantly, on December-quarter guidance.

He added that the sentiment on Apple has turned more bearish in recent weeks and buy-side expectations are likely lower than current consensus estimates.

Looking to another tech heavyweight, Wells Fargo says that Nvidia (NVDA) will price its DGX B200 systems at $500,000 or more as an “incremental positive.”

Analyst Aaron Rakers says: “While we think it is always important to consider that actual pricing can differ from list prices, and we continue to believe it is difficult to drive NVDA estimates solely on system price x quantity (e.g., NVIDIA’s expanding platform monetization a key/underappreciated input), we do think the 40%+ higher pricing of the DGX B200 vs. DGX H100 systems could be considered higher than expectations.”

“We think this level of pricing could also ease any concern over NVDA’s (gross margin percentage) dynamics.”

And Morgan Stanley cut Caterpillar (CAT) to Underweight from Equal Weight, lowering a price target to $333 from $349.

Analyst Angel Castillo says: “While we have been cautious on U.S. non-residential construction activity all year long and increasingly cautious on Caterpillar earnings, we now see rising evidence of a potential de-stocking downturn for U.S. construction equipment. We see even more risk of downward earnings revisions for Caterpillar.”

In today’s trading, Oil continues to retrace its rally with crude (CL1:COM) (CO1:COM) down about 2%.

OPEC cut its 2024 and 2025 global oil demand growth view for the third consecutive month, and China’s oil imports fell from a year ago for a fifth-straight month in September.

OPEC now expects demand to grow by 1.93 million bbl/day this year and 1.64 million bbl/day in 2025, compared to its previous growth outlook of 2.03 million bbl/day and 1.74 million bbl/day, respectively. Demand is still seen at healthy levels overall, though, well above the historical average of 1.4M bbl/day before the pandemic.

The cartel cut its growth forecast for China to 580,000 bbl/day this year from previous expectations of 650,000 bbl/day growth, accounting for the bulk of its 2024 downgrade.

Total world demand is estimated to reach 104.1M bbl/day in 2024 and 105.8M bbl/day in 2025.

In other news of note, was Uber (UBER) the big winner after Tesla’s (TSLA) much-anticipated robotaxi event?

Jefferies analyst John Colantuoni said the firm considers the event a best-case outcome for Uber, given the EV maker did not provide verifiable evidence of progress toward L3 autonomous driving or quantify the number of robotaxis planned.

“We believe this helps minimize the ongoing overhang on UBER’s stock from TSLA’s aspirations in the robotaxi space. In addition, TSLA appears committed to pursing the robotaxi opportunity w/o partnering with existing rideshare platforms,” he said. “We believe TSLA potentially underappreciates the obstacles to scaling a robotaxi fleet (technology, asset ownership, regulation, fleet management, demand, routing, pricing, utilization).”

He added that Tesla could struggle to scale fleet operations without offering access to demand via Uber (UBER) and Lyft (LYFT).

Three U.S. professors won the Nobel Prize for economics for their study of the importance of societal institutions in a country’s prosperity.

Daron Acemoglu and Simon Johnson, both MIT, and James Robinson of the University of Chicago were awarded the prize.

According to their work, one of the reasons that countries are prosperous and others are not stems from the types of institutions that were formed when Europeans colonized the region. In some places, the institutions sought to extract resources and exploit the indigenous population for the colonizers’ benefit. In others, inclusive political and economic systems were formed for the long-term benefit of European migrants.

And in the Wall Street Research Corner, Oppenheimer Asset Management has identified pockets of weakness for potential short positions, even as the broader market continues to see strength.

Technical analyst Ari Wald says: “Equities are behaving in a manner consistent with what we’d expect to see in an ongoing advance. While the saying ‘never short a dull market’ comes to mind, we highlight weakness within Health Care and Consumer Staples for relative shorts.”

We “think equal-weighted Health Care (RSPH) is positioned to break above multi-year resistance over the coming weeks, but the sector has fallen below multi-year support vs. the equal-weighted S&P 500 (RSP). This divergence between the sector’s absolute and relative trend speaks to the broadness of market breadth. Still, identifying, avoiding, and even selling the stocks driving sector weakness is an attractive risk/reward exercise,” Wald said.

He highlights Biogen (BIIB), Humana (HUM), Merck (MRK), and Zimmer Biomet Holdings (ZBH).

“Equal-weighted Consumer Staples (RSPS) has similarly fallen to a new multi-year relative low,” he added.

Potential relative shorts include Archer-Daniels-Midland (ADM), Estée Lauder (EL), Hershey (HSY), and Molson Coors (TAP).