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There is the potential that a U.S. government shutdown will be a headwind for investors next week unless a last-minute deal is worked out in Congress. BNP Paribas warned that the economic effects of a federal government shutdown could amount to 0.1% to 0.2% on annualized GDP growth each week the shutdown persists. Seeking Alpha analyst Chris Lau said government shutdown risk feeds the market’s hunger for bad news, with bulls looking for any excuse to take profits and bears betting on a stock market crash. A government shutdown could impact various sectors and even delay the release of the September jobs report, which is forecast to show 165K job additions for the month and a dip in the unemployment rate to 3.7%. During the middle of the week, OPEC+ will meet, although there are no major changes to the oil output policy anticipated. Tighter supply and rising demand continue to drive a rally in oil prices. The earnings calendar is light, with only Tilray Brands (NASDAQ:TLRY) and Constellation Brands (STZ) standing out as potential sector-rattling updates. However, the event calendar is loaded with Molson Coors (NYSE:TAP), Google (GOOG), Samsung (OTCPK:SSNLF), and Zoom Video (NASDAQ:ZM) all on the marquee. Meanwhile, the auto sector will be riveted by deliveries reports from Tesla (NASDAQ:TSLA), Rivian Automotive (RIVN), and NIO (NIO), as well as the latest drama with the UAW strike against General Motors (GM), Ford Motor (F), Stellantis (STLA).
Earnings spotlight: Tuesday, October 3 – McCormick (MKC) and Cal-Maine Foods (CALM).
Earnings spotlight: Wednesday, October 4 – Helen of Troy (HELE), Tilray Brands (TLRY), and Accolade (ACCD).
Earnings spotlight: Thursday, October 5 – Constellation Brands (STZ), Conagra Brands (CAG), Lamb Weston (LW), and Levi Strauss (LEVI).
Volatility watch: Short interest levels are elevated again on Novavax (NASDAQ:NVAX) and Wayfair (W). Options trading volume is higher than normal on Tilray (TLRY) and Relmada Therapeutics (RLMD).
Dividend watch: Companies projected to boost their quarterly dividend payouts include American Financial (AFG) to $0.69 from $0.63, RPM International (RPM) to $0.44 from $0.42, and Bank OZK (OZK) to $0.37 from $0.36. Meanwhile, T-Mobile (NASDAQ:TMUS) announced that its will make its first quarterly dividend payment of $0.65 per share on December 15. See Seeking Alpha’s list of Quick Dividend Stock Picks.
Data watch: A big week of data releases will include updates on Macau gaming revenue, Class 8 truck orders, FBI firearm background checks, discount broker DARTs, and airline traffic.
Spinoffs to watch: WK Kellogg is expected to start trading on October 2 after the business split from Kellogg Company (K). Shareholders of Kellogg (K) will receive one share of WK Kellogg Co for every four shares of Kellogg Company owned. Kellogg will then be renamed Kellanova. Uniform and workplace supply management company Vestis is expected to start trading after spinning off from Aramark (ARMK). Holders of Aramark will be entitled to receive one share of Vestis common stock for every two shares of Aramark common stock held on the record date. Sandoz is expected to start trading on October 4 after being spun off by Novartis AG (NVS). Shareholders of Novartis (NVS) will be eligible to receive one Sandoz share for every five Novartis shares they on the record date.
Spotlight on auto: The auto sector is set up for a big week as the UAW strike rolls on. Investors will have reports on sales and deliveries pour in all weeks. The highlight could be Tesla’s (TSLA) Q3 deliveries report. The electric vehicle maker had some production shutdowns in Q2 that are believed to have impacted deliveries. After the final tally is reported from Austin, a bigger concern for investors may be the deliveries outlook for 2024. Deutsche Bank recently lowered its base case estimate for Tesla (TSLA) 2024 deliveries to 2.1M units from the current estimate of 2.3M units. Other companies with key reports due out include Rivian Automotive (RIVN), NIO (NIO), XPeng (XPEV), Li Auto (LI), Lucid Group (LCID), Fisker (FSR), General Motors (GM), Ford (F), and Toyota (TM). As far as the U.S. auto sector as a whole, U.S. light vehicle sales in September are forecast to be relatively unchanged from the month-prior result, according to S&P Global Mobility, which projects sales volume of 1.30M units for the month, up 14% from a year ago. “For optimists, that auto sales levels remain steady in wake of still palpable affordability issues of rising interest rates and slow-to-decelerate new vehicle pricing levels are a good sign,” noted S&P. “For pessimists, the daily selling rate metric in September will reflect continued deceleration from the monthly readings realized from March to July,” noted the firm. Of course, the setup for Q4 is cloudy due to the ongoing United Auto Workers strike against General Motors (GM), Ford Motor (F), and Stellantis (STLA). Further, UAW strike actions could ultimately lead to cumulative losses reaching hundreds of thousands of units. J.D. Power noted that retail inventory levels in September are expected to finish around 1.3M units, to mark a 15.4% increase from last month and a large increase of 36.5% compared with September a year ago, but still well below pre-pandemic levels. Manufacturer discounts in September are expected to be relatively flat when compared with August, but have increased materially from a year ago, when incentives were at record lows. Meanwhile, elevated pricing coupled with interest rate increases continue to inflate monthly loan payments and add to worries about auto affordability.
Key events: Molson Coors (TAP) will hold a highly anticipated Strategy Day event on October 3. Zoom Video’s (ZM) annual Zoomtopia event will begin in San Jose, California on the same day. The company has laid out long-term targets at the event in past years. Google (GOOG) will hold its Made By Google hardware event on October 4. The company is expected to unveil the Pixel 8, Pixel 8 Pro, and Pixel Watch 2. Samsung Electronics (OTCPK:SSNLF) will hold a developer conference in San Francisco on October 5. The company plans to highlight platform innovation, including SmartThings, Bixby, Knox and Tizen. The week will also mark the unofficial launch of the holiday shopping season as Target (TGT), Walmart (WMT), and Best Buy (BBY) all run promotions just ahead of Amazon’s (AMZN) Prime Day shopping event scheduled for October 10-11. Read about all the key events scheduled for next week in Seeking Alpha’s Catalyst Watch.
Conference schedule: The conference schedule includes the Chardan Genetic Medicines Conference, UBS Mobility Virtual Conference, LD Micro Main Event XVI Conference, Deutsche Bank Leveraged Finance Conference, and Bernstein Healthcare Services Disruptors Conference.
Quant ratings: Stocks with recent quant rating changes include General Electric (GE) to Strong Buy from Hold, Humana (NYSE:HUM) to Buy from Hold, and CarParts.com (PRTS) to Sell from Hold. See the stocks with the very highest rated Seeking Alpha Quant Ratings.
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