Big Down Day Kicks Off September, ZS Earnings, Jobs Report Friday, Europeanization Of America
The stock market got smashed to open September after the long Labor Day weekend. The S&P was -2.12% and the NASDAQ -3.26%. Nvidia (NVDA) led the way, dropping almost 10% as news that the DOJ is investigating it for antitrust violations broke after the close. All in all the S&P lost more than $1 trillion in market cap on the day. From a technical standpoint, the S&P broke down below the box that has defined the recent chopping around though it found support at its 50 DMA. While I’m not a huge believer in seasonality, it is worth knowing that September is by far the worst month of the year with an average decline of 1.2% and positive overall only 43% of the time since 1928.
Cloud security company Zscaler (ZS) reported 4QFY24 earnings after the close and the stock finished the after hours down 15% on weak FY25 guidance. Billings are forecast to grow only 19% to $3.110-$3.335 billion compared to 29% growth in FY24. Adjusted EPS is expected to decline year over to $2.81-$2.87 from $3.19 in FY24. When your stock trades with as high of a multiple as ZS these numbers are going to cause a lot of investors to head for the exits.
The focus this week is the August Jobs Report out Friday morning at 8:30am EST. This report will go a long way to determining whether the Fed cuts 50 or 25 basis points on September 18th. Right now Fed Futures markets are pricing in a 62% chance of a 25 basis point cut but that could change if Friday’s report is especially weak.
Shark Tank’s Kevin O’Leary ripped into the economic policies of the leading blue states – New York, California, Massachusetts and New Jersey – this morning on CNN. According to O’Leary, their policies are making these states uninvestable and impossible to do business in. While the CNN anchors did not like what he had to say, it was quite the tour de force and I’ve watched it a number of times. The larger concern here is that America – led by the leading blue states listed above – is following Europe down the road of statism which is an economic dead end. If Kamala Harris wins the Presidency, this process will be accelerated.