Markets Subdued Amid Middle-East Worries

Good morning. It’s October 8th, and today we will look at Pepsico’s below-par earnings outlook, Honeywell’s moves to spin off its Advanced Materials division, and Airbus’ growing struggles to meet its delivery commitments.

Previous Close 📈

Stocks started the week on a down note. Rising bond yields and oil prices weighed on the market, as the 10-year Treasury yield climbed above 4%, reaching its highest levels since August.

Futures

U.S. stock futures are lower Monday night, following the day’s losses. Dow futures are down 398 points, or 0.9%, while S&P 500 and Nasdaq 100 futures are also trading lower. Investors are concerned about rising oil prices and bond yields, as well as geopolitical tensions in the Middle East.

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What to Watch

The NFIB Optimism Index for September was released at 6:00 a.m. Eastern, providing insights into small business sentiment. Additionally, the U.S. Trade Deficit for August will be published at 8:30 a.m. Eastern, offering a look at the balance of trade during the month.

Earnings season restarts today as PepsiCo (NASDAQ: PEP) and Accolade (NASDAQ: ACCD) report their quarterly earnings before the market opens.

After the closing bell, IDT Corporation (NYSE: IDT) and Saratoga Investment (NYSE: SAR) will also announce their results.

Food & Beverages

PepsiCo Trims Revenue Outlook Citing Boycotts and Weaker Consumer Spending

PepsiCo Inc. is revising its full-year revenue outlook, citing challenges from financially strained consumers, geopolitical boycotts in the Middle East, and the lingering effects of a major product recall.

The company expects organic revenue to grow by a lower single-digit percentage, down from its previous forecast of 4%. This comes as third-quarter organic revenue growth reached just 1.3%, falling short of analyst expectations.

While PepsiCo still expects earnings to grow by at least 8% this year, its stock is falling by about 1% in premarket trading and is down 2% for the year.

Higher prices have led consumers to cut back on spending or switch to cheaper, store-brand alternatives, impacting PepsiCo’s food and beverage volumes across most divisions.

The company is expected to focus on managing costs in light of the subdued growth environment. Additionally, boycotts affecting American brands in the Middle East and disruptions from last year’s Quaker Oats recall have compounded the company’s challenges.

Despite these setbacks, PepsiCo reported modest volume growth in Europe and the Asia Pacific region. Core earnings per share for the third quarter rose by 5% to $2.31.

Advanced Materials

Honeywell Eyes Advanced Materials Spin-Off, Shares Jump in Early Trading

Honeywell International Inc. is reportedly planning a major strategic shift with the potential spin-off of its advanced materials division, valued at over $10 billion, according to a report from the Wall Street Journal.

This news has sparked investor enthusiasm, with Honeywell’s stock rising 1.7% in premarket trading today.

The advanced materials division, which serves industries such as retail, pharmaceuticals, and manufacturing, generated $3.65 billion in sales last year.

The spin-off is seen as part of CEO Vimal Kapur's broader efforts to streamline Honeywell's portfolio and focus on high-growth areas, particularly in aviation, automation, and energy sectors.

While Honeywell’s stock performance has been mixed, with a year-to-date return of -1.46%, the company's long-term growth remains positive, with a 1-year return of 12.57% and a 5-year return of 37.81%.

Investors will be watching for more details on this move in Honeywell’s upcoming earnings report in October 2024.

Aerospace

Airbus Delivery Target for 2024 Looks Increasingly Unlikely Due to Supply Issues

Airbus SE is facing increasing difficulties in meeting its reduced 2024 delivery goal of 770 aircraft, as ongoing supply chain issues continue.

As per reports, the company delivered approximately 50 jetliners in September, bringing the year-to-date total to around 500.

This leaves a gap of 270 deliveries to fill in the final three months, a number that will be challenging to achieve given the highest monthly total so far in 2024 has been well below that mark.

Airbus had already cut its delivery target from 800 to 770 in June, citing persistent shortages of critical components such as interiors and engines. The European aerospace giant will likely face further scrutiny over whether it can hit even the lowered target, with UBS analysts now modeling for just 750 deliveries for the year.

The supply chain disruptions, a lingering effect of the pandemic, have weighed on Airbus as it struggles to ramp up production.

This has forced airlines to keep older models in service longer or reduce routes due to delayed aircraft deliveries. Airbus’ rival, Boeing, is also contending with production delays, compounded by a strike affecting its 737 Max production line.

Airbus is expected to address its delivery outlook in its upcoming third-quarter earnings report in late October.

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Nature's Miracle Holdings Inc. [NMHI] - Last Close: $0.14

Nature's Miracle Holdings is up 76% in premarket trading.

Its planned merger with Agrify Corporation has been terminated.

The two companies mutually agreed to cancel the merger due to unfavorable market conditions.

Agrify and Nature's Miracle have also terminated a related debt purchase agreement, and both parties have issued mutual releases regarding the transaction.

Nuburu [BURU] - Last Close: $0.45

Nuburu’s stock is surging by 60% before the opening bell today.

The company received a $65 million financing package from Liqueous LP, a multi-strategy fund.

The funding includes a $15 million direct capital investment and a $50 million equity line of credit.

This capital injection is set to fuel Nuburu’s expansion across several key industries, including e-mobility, healthcare, defense, and consumer electronics.

Nuburu will receive an initial $3 million investment through pre-funded warrants, with weekly infusions of $1.25 million until an additional $10 million has been invested.

Bio-Path Holdings [BPTH] - Last Close: $0.85

Bio-Path Holdings is seeing its shares soar by more than 50% in premarket trading.

The firm is starting a new therapeutic program targeting obesity and related metabolic diseases, leveraging its DNAbilize® technology, which has been used for cancer treatments.

It will develop BP1001-A for non-cancer applications, with a focus on insulin resistance—one of the key factors in obesity and Type 2 diabetes.

In addition to this, Bio-Path has also completed enrollment in the third dosing cohort of its Phase 1/1b clinical trial for BP1002, aimed at treating refractory/relapsed acute myeloid leukemia (AML) patients, including those resistant to venetoclax-based treatments.

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Everything Else

• Amid a dip-buying spree, Indian mutual funds and insurers absorbed significant stock sales from global investors.

• Joachim Nagel indicated the potential for another interest rate reduction as German economic growth slows.

• Adani Group faces fresh challenges in Sri Lanka as the government pledged to reassess wind project approval.

• Mary Barra will address investor worries at GM's Spring Hill event, focusing on stability and EV growth strategies.

• Foxconn launched Hon Hai Tech Day, revealing plans for a massive GB2000 production line in partnership with NVIDIA.

• Investor optimism fades as China's economic planners offer limited details on growth support measures.

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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