September 26th Market Overview

Happy Friday

Give people any excuse to buy, and they will. The human need to act, beats the need to understand almost every time.

Markets hate uncertainty more than bad news. Today proved it. Inflation came in exactly as expected. After three days of selling, that counted as good news. Meanwhile, $50 billion buyouts and 100% tariffs hit the same day.

P.S. Big write up coming Sunday for the more active investors and traders.

Let's dig in...

Today's Big Picture

Inflation stayed calm, markets found their footing 
The Fed's preferred inflation measure hit Wall Street estimates → up 0.3% monthly and 2.7% yearly. Core inflation held at 2.9%. This keeps rate cuts on track. Consumer spending rose 0.6% in August. Markets snapped their three-day slide as fear chilled out turning into a Friday rally.

Electronic Arts attracts a $50 billion buyout bid 
WSJ reports Electronic Arts $EA ( ▲ 15.05% ) is close to a massive private buyout. Silver Lake and Saudi Arabia's sovereign wealth fund could announce next week. This would be the largest private equity buyout in history.

Wednesday's tariffs pick winners and losers 
Trump's new trade levies start in four days. Heavy truck imports face 25% tariffs, boosting domestic manufacturers like Paccar $PCAR.

Branded drugs get hit with 100% tariffs unless companies are building U.S. factories. Most major pharma already qualify for exemptions.

Market Overview

U.S. Stock indexes, past three sessions

Stock Spotlight

Electronic Arts $EA ( ▲ 15.05% ) 
jumped on reports of a $50 billion buyout from Silver Lake and Saudi Arabia's fund. This would be the largest private equity deal in history if it closes next week.

Paccar $PCAR ( ▲ 5.16% ) 
rose on Trump's 25% tariff on imported heavy trucks. The company builds Kenworth and Peterbilt trucks domestically while rivals like Daimler assemble in Mexico.

Intel $INTC ( ▲ 4.44% ) 
rallied on talks with Apple $AAPL and Taiwan Semiconductor about investments. Policy discussions on requiring 1:1 domestic chip production to imports added momentum.

Boeing $BA ( ▲ 3.66% ) 
gained after Turkish Airlines ordered 75 Boeing 787s and 150 737 MAX planes. The FAA also eased certification restrictions that had slowed deliveries since previous safety issues.

Costco $COST ( ▼ 2.92% ) 
fell despite beating earnings estimates. Same-store sales growth slowed for the second straight quarter, raising momentum questions.

Big Name Updates

Tesla $TSLA ( ▲ 3.5% ) 
got analyst upgrades from Deutsche Bank to $435 and Wedbush to $600. Deutsche Bank expects Q3 deliveries of 461,500 versus consensus of 433,000.

Meta Platforms $META ( ▼ 1.19% ) 
launched paid ad-free subscriptions for Facebook and Instagram in the UK, responding to new data regulations. Also in talks with Alphabet $GOOGL on using Gemini AI for ad targeting.

Apple $AAPL ( ▼ 0.55% ) 
got a target increase to $290 from Evercore. The company may face requirements to match chip imports with domestic production under new policies.

Oracle $ORCL ( ▼ 2.71% ) 
formalized its TikTok deal after Trump's executive order. Oracle will own 15% of the new entity alongside Dell $DELL and other investors.

Other Notable Company News

RH $RH ( ▼ 4.22% ) 
fell on exposure to 30% furniture tariffs while Wayfair $W gained as traders weighed its category mix and pricing flexibility.

Eli Lilly $LLY ( ▲ 1.34% ) 
Merck $MRK, and Pfizer $PFE rose on drug tariff exemptions for companies building U.S. manufacturing facilities. All three qualify.

Ciena $CIEN ( ▲ 3.47% ) was upgraded to Buy at Rosenblatt on wins connecting AI data centers with 800G technology.

AppLovin $APP ( ▲ 4.8% ) 
got a target hike to $810 at UBS with upside potential to $1,000 based on Axon 2.0 execution.

Six Flags Entertainment $FUN ( ▲ 4.27% ) 
faces activist pressure to spin out real estate assets and unlock value.

Sector Watch

Bond Market

The 10-year Treasury yield sits at 4.186% after rising on the day. Yields finished the week higher ahead of next Friday's employment report.

• The Mortgage Bankers Association expects rates to drift higher toward year-end even with Fed cuts, since mortgages track long-term yields rather than the policy rate

Policy Watch

Tariffs take effect Wednesday targeting specific import categories:

• 25% on heavy trucks

• 30% on upholstered furniture

• 50% on kitchen cabinets

• 100% on branded drugs from companies not building U.S. plants

Chip policy development: The administration is considering requiring U.S. chip production to match imports on a 1:1 basis or face tariffs. This could reshape semiconductor supply chains and benefit domestic foundries.

Fed independence concerns: The Supreme Court will hear arguments on whether the president can remove Fed Governor Lisa Cook. The DOJ told the Court markets wouldn't care, while the Bank of Canada flagged independence concerns as already affecting markets.

Market oversight: The SEC and FINRA are examining unusual trading ahead of crypto-treasury announcements by 212 companies this year.

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What to Watch

September jobs report next Friday 
Payrolls and unemployment will determine Fed policy. Weak numbers support duration trades and defensives. Strong data favors cyclicals and reduces rate cut odds.

Tariff implementation Wednesday
New levies hit trucks, furniture, and drugs. Buy domestic manufacturers like Paccar $PCAR. Short furniture retailers with import exposure like RH $RH.

S&P 500 at 50-day moving average 
BTIG sees a test of the 50-day MA around 6,446 as a healthy reset. Use any pullback as entry for year-end positioning.

Nike earnings Tuesday 
Watch China sales and gross margins. Tariff backdrop makes this a key read on consumer discretionary and China exposure.

Thanks for reading 🙂

- John