Here is a comprehensive 1000+ word report on the top stock market news, stocks to watch, and expected market movement for October 1st:

Daily Stock Market Report: October 1, 2024

Top Stock Market News

1. Futures Down After Record-Breaking September

Stock futures are indicating a lower open for the major U.S. equity indexes to begin October. As of 3:24 a.m. EST, Dow futures were down 0.23%, S&P 500 futures were 0.2% lower, and Nasdaq futures had declined 0.17%. September proved to be a stellar month for the stock market, with the S&P 500 rallying over 9% for its best September performance since 2013. However, traders appear to be taking some profits off the table to kick off the new month and fourth quarter.

2. Traders Scoop Up Crash Protection Ahead of Volatile October

An unusual trading pattern that emerged in the stock market last week suggests traders were purchasing protective put options to hedge against potential volatility in October. Cboe data shows elevated demand for put options, which give the buyer the right to sell the underlying asset at a specific price in the future. Historically, October has been one of the most volatile months for stocks, with notable market crashes occurring in 1929 and 1987.

3. Nike's Brutal Quarter Sets Tone for Consumer Earnings

Nike's disappointing fiscal Q1 earnings report last month, which included a 10% drop in quarterly revenue and a gloomy sales outlook, could be a harbinger for other consumer-facing companies reporting in October. The athletic apparel giant cited higher product costs, elevated inventory levels, and softening demand as headwinds. With consumer spending being a key driver of the U.S. economy, Nike's struggles raise concerns about the broader retail sector's health heading into the holiday season.

Top Stocks to Watch

1. CarGurus (CARG)

The online automotive marketplace gets top billing as a growth stock to watch. CarGurus sports a Zacks Rank #1 (Strong Buy) and has witnessed positive earnings estimate revisions for the current fiscal year. With used car sales expected to remain robust, investors will be paying close attention to CarGurus' ability to capitalize on favorable industry trends.

2. CrossAmerica Partners (CAPL)

This fuel distribution and retail company is one to keep an eye on for income investors. CrossAmerica boasts a Zacks Rank #2 (Buy) and offers an attractive 8.4% dividend yield. As a master limited partnership, CAPL is a solid option for generating income in an environment of higher interest rates.

3. Microsoft (MSFT)

All eyes will be on the tech behemoth when it reports fiscal Q1 earnings in the second half of October. As a leader in cloud computing, productivity software, and gaming, Microsoft's results could set the tone for the rest of big tech earnings. Investors will scrutinize the company's cloud growth trajectory, as well as any commentary about enterprise software demand amidst economic uncertainty.

4. JPMorgan Chase (JPM)

The largest U.S. bank by assets kicks off big bank earnings for the third quarter on October 11th. JPMorgan's report will offer insight into how higher interest rates have impacted lending profits versus potential recessionary headwinds. The firm's trading and investment banking revenues will also be under the microscope given market volatility in Q3.

5. Nike (NKE)

Fresh off its dismal fiscal Q1 report in September, Nike will be looking to regain investor confidence when it releases fiscal Q2 results on October 1st. Shareholders will want to see signs that inventory levels are being brought under control and that demand is stabilizing, particularly in key markets like North America. Any outlook toward a turnaround will be heavily scrutinized.

Stock Market Expected Movement

Based on futures trading this morning, U.S. stocks appear poised to kick off October on a down note as traders book some profits after a stellar September rally. The Dow Jones Industrial Average is flirting with a 200-point decline at the open.

Much of the expected selling pressure can likely be attributed to traders hedging their portfolios against potential October volatility by purchasing protective put options. Historically, October has been a tumultuous month for equities due to notable market crashes in the past.

However, any weakness could be viewed as a buying opportunity by dip buyers, especially if it brings stock valuations down to more attractive levels. Upcoming earnings from consumer giants and big banks will help shape investor sentiment on where the economy stands amidst recession fears.

The overall market trajectory in October could ultimately hinge on incoming economic data points like the monthly jobs report and consumer price inflation readings. Signs that inflation is cooling without severely hampering employment could bolster confidence that the Fed can orchestrate a so-called "soft landing" and avoid a deep recession.

But if data continues to come in hot, suggesting the Fed might need to extend its aggressive rate hike campaign, volatility could persist. Headwinds like higher borrowing costs, lingering supply chain issues, and softening consumer demand present risks that could weigh on corporate profits in the coming quarters.

While a decisive directional move seems unlikely given the conflicting cross-currents, October will undoubtedly keep traders and investors on their toes. Elevated volatility appears to be par for the course, underscoring the importance of maintaining a well-diversified portfolio and investing with a long-term mindset.