Levi's Trims Forecast, Stock Plummets

Good morning. Today is October 3rd, and we’ll take a look at Levi’s poor earnings, OpenAI’s move to hobble its competitors, and how holiday hiring is shaping up at major retail and e-commerce firms.

Previous Close 📈

Stocks faced a rough start to October, with investor sentiment dampened by escalating tensions in the Middle East. The key indices were flat at the close of the day yesterday after a major drop on Tuesday. Investors are now bracing for Friday's key September Payrolls Report, which could impact the Federal Reserve's rate decisions.

Futures

Futures are edging lower on Thursday as traders await the September Jobs Report. Dow futures are down 144 points, or 0.3%, with S&P 500 futures also falling 0.3% and Nasdaq 100 futures dipping 0.5%.

Gold

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What to Watch

Constellation Brands (NYSE: STZ) and AngioDynamics (NASDAQ: ANGO) will announce their quarterly earnings before the market opens.

On the economic calendar, the Initial Jobless Claims for September will be released at 8:30 a.m. Eastern. The S&P final U.S. Services PMI for September will follow at 9:45 a.m. Eastern, with the ISM Services Index and Factory Orders for August published at 10:00 a.m. Eastern.

Additionally, Minneapolis Fed President Neel Kashkari will moderate a discussion with Atlanta Fed President Raphael Bostic at 10:40 a.m. Eastern.

Technology

OpenAI Seeks Exclusive Investor Commitments Amidst $6.6B Fundraising Round

As part of its latest $6.6 billion investment round from global backers like Thrive Capital and Tiger Global, OpenAI is requesting that investors avoid funding five specific AI startups it considers close competitors.

Among the companies on the list are AI rivals developing large language models, including Anthropic and Elon Musk's xAI, as well as Safe Superintelligence (SSI), a new venture founded by OpenAI's co-founder, Ilya Sutskever.

The list also includes AI application firms Perplexity and Glean, suggesting that OpenAI plans to expand its offerings to enterprises and end users as it targets a significant revenue jump to $11.6 billion by 2025 from $3.7 billion this year.

Although the request is not legally binding, it highlights OpenAI's strategy to secure exclusive commitments from its investors in an increasingly competitive industry where access to capital is crucial. While it's common in venture capital to avoid funding direct competitors, OpenAI's specific list stands out.

This request does not apply to previous investors or their past investments, but it could impact future fundraising efforts for both OpenAI's investors and the five named competitors.

Clothing

Levi's Cuts Guidance as Dockers Drags Business, Shares Drop Over 11%

Levi Strauss & Co. has reduced its revenue outlook for the year and is exploring the sale of its Dockers brand as the khaki-focused label continues to underperform.

While Levi’s denim sales increased by 5% during the fiscal third quarter, overall revenue remained flat at $1.52 billion, missing Wall Street's expectations of $1.55 billion.

The company's stock is falling by more than 11% in premarket trading today.

Earnings per share for the quarter beat estimates, coming in at $0.33, higher than the expected $0.31. However, Levi's trimmed its full-year revenue guidance, now projecting a 1% increase, down from its previous range of 1%-3%.

Dockers, launched in 1986 as a khaki alternative to denim, saw a 15% drop in sales, pushing Levi's to consider selling the brand. Levi's finance chief Harmit Singh noted that offloading Dockers could improve margins and reduce volatility in the company's revenue growth.

On the upside, Levi’s Beyond Yoga brand saw 19% sales growth, and its focus on direct-to-consumer sales has led to a 4.4-percentage-point improvement in gross margins. Levi’s aims to grow its direct sales channel from 44% to 55% of total revenue.

Levi's European sales exceeded expectations, but the company faced challenges in the Americas and Asia, with issues ranging from cybersecurity breaches in Mexico to leadership changes in China.

Retail

Amazon and Target Lead Holiday Hiring Amid Retail Slowdown

Retailers are ramping up holiday hiring, though fewer seasonal employees are expected this year compared to previous seasons.

Amazon announced plans to hire 250,000 full-time, part-time, and seasonal workers for the busy shopping period, matching last year's numbers.

Bath & Body Works and Target also confirmed hiring 100,000 seasonal employees, with Target offering current staff the option to work additional hours.

However, some retailers are scaling back. Macy's plans to add 31,500 seasonal workers, down from 38,000 last year, while Walmart and Kohl's have remained quiet about their hiring strategies. The holiday season, the busiest time for online and in-store retailers, has already seen discount events launched to attract early shoppers.

Analysts project a modest increase in U.S. retail sales, with forecasts ranging from 2.3% to 3.3% growth between November and January, largely driven by price hikes due to inflation. Online sales are expected to see a stronger boost, with a projected 8.4% increase, hitting a record $240.8 billion.

Despite cautious optimism, the retail sector may face challenges filling open positions, given job demands and pay rates.

Pre-Election Market Moves

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Elevai Labs Inc. [ELAB] - Last Close: $0.09

Elevai Labs is surging 36% in premarket trading today.

Its subsidiary, Elevai Skincare Inc., will conduct a new clinical study to evaluate the impact of combining their flagship exosome skincare products with a medical aesthetic energy device for enhanced skin rejuvenation.

This clinical study comes at a time when the energy-based aesthetic device market is growing rapidly.

Conduit Pharmaceuticals [CDT] - Last Close: $0.09

Conduit Pharmaceuticals is rebounding after a sell-off.

The stock fell 10.4% yesterday and has lost nearly 27% of its value in the past month.

Its shares are recouping from the recent sell-off during the premarket today.

Shares are up 24.53% on a 4.1-million trading volume.

ALT5 Sigma Corporation [ALTS] - Last Close: $1.78

ALT5 Sigma's stock is falling by nearly 21% in premarket trading.

Yesterday, the company announced its strategic plan to separate into two independent publicly traded companies.

The separation will result in ALT5 maintaining its focus on fintech, while the newly formed entity, Alyea Therapeutics Corporation, will focus on non-addictive pain management therapies.

Investors appear to be concerned over the execution of the split and market uncertainty surrounding the biotech arm's future, causing the slump.

Stocks Set for Major Breakouts

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Everything Else

• Chagos Islands have reached a sovereignty deal, with the U.K. transferring control to Mauritius while retaining rights to the Diego Garcia military base.

• Starbucks expands global coffee innovation efforts with new farms in Guatemala and Costa Rica.

• Credit Suisse faces allegations from SoftBank over mishandling of Greensill's financial crisis in a $440-million legal battle.

• Softbank's Sebastian Siemiatkowski highlighted talent retention risks ahead of Klarna's public offering amid U.S. competition.

• Andrew Bailey's dovish comments on rate cuts led to a sharp decline in the pound against the dollar.

• Investors have questioned Stellantis’ dividends as shares drop over 4%, marking a 43% decline this year.

• Netanyahu vowed to continue the offensive against Hezbollah amid calls for a ceasefire and rising regional tensions.

That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.

Best Regards,

— Adam Garcia
Elite Trade Club

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