Stocks opened lower and recovered briefly but slid through the afternoon to begin a big week for economic reporting and an even bigger one on the earnings front. With data distributed by the federal government starting to flow again, investors, traders and speculators are fixating on what the leader of the AI revolution will say about its most recently completed quarter.
The Census Bureau announced late Friday that it would publish August construction spending data today, as it updates its release calendar in the aftermath of the government shutdown. The agency will provide the release schedule as soon as it becomes available.
And we will update our economic calendar accordingly. Meanwhile, construction spending grew an estimated 0.2% in August, a third straight monthly gain reflecting a rise in residential home improvement spending over the summer even as nonresidential spending trended lower.
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“All told,” write Wells Fargo economists Charlie Dougherty and Ali Hajibeigi, “the modest upturn in total spending is an encouraging sign that activity might be starting to stabilize,” though they note that high interest rates and elevated building costs are still a “significant limitation” on upside from here.
The Census Bureau will follow up on Tuesday with the August factory orders report and on Wednesday with the August trade report. All three releases were due in early October. And the Bureau of Labor Statistics said the September jobs data will arrive on Thursday.
At Monday’s closing bell, the blue-chip Dow Jones Industrial Average was down 1.2% at 46,590, the broad-based S&P 500 had fallen 0.9% to 6,672, and the tech-heavy Nasdaq Composite was off 0.8% at 22,708.
GOOGL is a Warren Buffett stock
Berkshire Hathaway (BRK.B, -1.1%) bought $4.3 billion worth of Alphabet (GOOGL, +3.1%) during the third quarter, establishing a new position that accounted for 1.6% of its portfolio. This makes the Google parent Berkshire’s 10th-largest equity holding as of September 30 – and the newest Warren Buffett stock.
According to CFRA Research analyst Angelo Zino, “The move validates [Alphabet’s] strong fundamentals and provides Berkshire exposure to a leading AI provider through Google Cloud and Gemini expansion.”
Zino, who rates GOOGL a Buy with a 12-month target price of $330, cites the high free cash flow potential of Alphabet’s core advertising business and an attractive valuation of about 22 times estimated 2027 earnings per share “amid a healthy top-line growth trajectory” for Berkshire’s move.
Alphabet also announced a $40 billion investment in new AI-focused data centers and supporting infrastructure in Texas through 2027.
More Warren Buffett stocks
With the Oracle of Omaha retiring, their second-to-last 13-F filing as an active couple reveals Buffett and Berkshire also sold $10.6 billion worth of Apple (AAPL, -1.8%) stock. They’ve sold down their Apple position from approximately 900 million shares at the end of 2023 to 238 million as of September 30.
AAPL remains Berkshire’s largest holding at 22.7% of its portfolio. And Zino says the move merely reflects portfolio rebalancing ongoing for two years.
In addition to GOOGL, Berkshire bought $1.2 billion of Chubb (CB, +0.04%) stock, which now accounts for 3.3% of the holding company’s portfolio.
American Express (AXP, -4.5%) was not one of the stocks Buffett bought and sold in Q3, and it remains the holding company’s second-largest equity position at 18.8%. But AXP was at the bottom of the 30 Dow Jones stocks today.
Berkshire also maintained its position in troubled health care stock UnitedHealth Group (UNH, -0.4%) that it initiated in the second quarter. UNH was 0.65% of Berkshire’s portfolio at the end of Q3.
Berkshire sold $1.9 billion worth of financial stock Bank of America (BAC, -2.1%), which represented about 11% of the portfolio, though it is still the No. 3 holding. It also sold $1.2 billion worth of VeriSign (VRSN, -1.1%).
All about Nvidia and the earnings calendar
Economic data is incoming again. But it’s all about the earnings calendar and Nvidia (NVDA, -1.9%) this week. Come what may, you can track it all on our live Nvidia earnings blog.
“The key to a turnaround in the situation,” says Louis Navellier of Navellier & Associates, “will be Nvidia’s earnings this Wednesday. A positive surprise by NVDA and a recovery to new highs there, now down 12% from its all-time high, would re-energize the entire market.”
Navellier notes that major investors such as Softbank and Peter Thiel have sold their entire NVDA positions and have “put a chill on the shares.” He also cites “concerns about the circular financing agreements among the builders of the massive data center buildouts, which are the big buyers of Nvidia chips.”
But, if CEO Jensen Huang and his company report “strong beats and, more importantly, strong guidance, these concerns will be mitigated and the AI theme will be reaffirmed, leading the market higher.”
