Navigating the Shifting Tides: A Comprehensive Market Outlook for September 27

As the markets brace for the final trading days of September, a mixed bag of developments has emerged, setting the stage for a dynamic session on Friday, September 27. From the S&P 500's flirtation with record highs to the latest updates on key stocks, this comprehensive report delves into the factors shaping the investment landscape.

Unlocking the Potential: A Closer Look at the Market's Trajectory

Riding the Wave of S&P 500 Resilience

The S&P 500 is poised for a slightly higher open on Friday, building on its recent record-breaking performance. This resilience comes despite the historical challenges of September, a month typically known for its market volatility. Investors will be closely monitoring the 10-year Treasury yield, which has finally dipped lower following a tame reading on the Federal Reserve's preferred inflation gauge, the PCE price index. As the trading calendar winds down for the month, the S&P 500 is on track to deliver its first September gain in five years, defying seasonal trends.

Costco's Membership Fees: A Measured Approach

Club holding Costco has reported a solid fiscal 2024 fourth-quarter earnings result, but its shares are trading slightly lower. The wholesale retailer's long-awaited membership fee increase, which took effect on September 1, is expected to have a limited impact until the latter part of fiscal 2025 and into fiscal 2026, according to the company's executives. In response to this development, the investment club has raised its price target on Costco's stock.

Best Buy: A Compelling "Value Idea"

Best Buy has been added to JPMorgan's analyst focus list following a meeting with the electronics and appliance retailer's management team. The analysts, who have reiterated their $111 price target, have dubbed Best Buy a "value idea" that can capitalize on the computing replacement cycle and the anticipated growth in TV and appliance sales as existing home sales improve. This assessment closely aligns with the investment club's own investment thesis for the company.

Regulatory Approval Boosts Bristol Myers Squibb

The Food and Drug Administration has approved Bristol Myers Squibb's schizophrenia drug, Cobenfy, marking the first new treatment for the disorder in seven decades. This development has sent shares of the New Jersey-based drugmaker up by more than 3%.

Wynn Resorts: Navigating Macau's Challenges

Morgan Stanley has upgraded Wynn Resorts to a buy-equivalent rating, citing the casino operator's potential to command a higher valuation. Analysts point to stability in Las Vegas, more details around its project in the United Arab Emirates, and increased capital returns as factors driving this upgrade. However, Wynn's stock has struggled mightily since the spring, largely due to the challenges faced in the Chinese gaming hub of Macau.

Dollar General's Uphill Battle

Citigroup has downgraded Dollar General to a sell rating and slashed its price target on the stock to $73 per share, which is approximately $14 below its Thursday close. Analysts argue that Walmart is gaining market share, making a recovery for the dollar store retailer more difficult. This assessment echoes Jim Cramer's previous commentary, where he blamed Walmart for Dollar General's disappointing earnings report last month.

Dell Technologies: A Promising Outlook

Deutsche Bank has restarted coverage of Dell Technologies with a buy rating and a price target of $144 per share. The analysts expect Dell's revenue growth to accelerate into the double digits, driven in part by the growth of its AI server business. They also project the company's bottom line growth rate to reach double digits and praise its "clean and simple" capital return framework.

Caution Advised for PepsiCo Investors

Citigroup has placed PepsiCo on its 30-day negative catalyst watch, advising investors to be cautious ahead of the company's earnings report on October 8. Analysts expect an operational sales growth miss, driven by softness in PepsiCo's North American business, which includes its soda and snack divisions.

HP Inc.: Balancing Opportunities and Challenges

Bank of America has downgraded HP Inc. to a hold-equivalent neutral rating from a buy. Analysts expect the upside from the personal computer business to be offset by lower margins in the printer unit, leading to the downgrade.

Salesforce's AI Offering Boosts Investor Confidence

Wedbush Securities' Dan Ives has increased his price target on Salesforce to $325 per share from $315, citing positive customer feedback at the software maker's Dreamforce conference. As previously reported, Salesforce's new AI offering has helped to reinvigorate the stock.