Closing Recap

Monday, February 26, 2024

Index	Up/Down	%	Last
DJ Industrials	-62.23	0.16%	39,069
S&P 500	-19.27	0.38%	5,069
Nasdaq	-20.57	0.13%	15.976
Russell 2000	12.34	0.61%	2,028

 

 

 

 

 

 

 

 

 

U.S. stocks bounced between small gains and losses, falling not far from recent all-time price levels last week for the S&P 500, Dow Jones Industrials, and Nasdaq 100 as investors position themselves ahead of key economic data later this week. Earnings are winding down with more than 450 of the SPX having been reported as attention turns back to inflation/data this week (2/26-3/1). Tuesday, we get Durable Goods and Consumer Confidence, Wednesday 2/28 GDP data for Q4 (2nd est.) and PCE data, Thursday the official PCE and core PCE index data (income/spending) and Friday ISM Manufacturing. We also get a handful of notable earnings in retail and technology this week including LOW, TGT, CRM, TJX, Macy’s, DELL, BBY, ADSK, HPE, URBN, NTAP and EBAY. Today was more of a “chop” day, with gains in Technology (XLK) and Energy (XLE), while utilities (XLU) fall about -2% and REITs (XLRE) drop -1%, adding to their 2024 leading sector losses (both down over -4% YTD) as rising Treasury yields again today make high dividend paying sectors less attractive. Smallcaps outperformed after falling last week while the S&P and Nasdaq finished down slightly.

• In Treasury auctions: The U.S. sold $63B in 2-year notes at high yield 4.691% vs. 4.689% when issued prior with the 2-year notes bid-to-cover ratio 2.49 as primary dealers take 14.73% of U.S. 2-year notes sale, direct 20.11% and indirect 65.16%. The US 10-yr yield moved higher along with the 2-yr after the auction results. The U.S. sold $64B in 5-year notes at high yield 4.320%, vs. 4.312% when issued prior with the U.S. 5-year notes bid-to-cover ratio 2.41, as primary dealers take 16.82% of U.S. 5-year notes sale, direct 19.66% and indirect 63.53%.

 

Macro	Up/Down	Last
WTI Crude	1.09	77.58
Brent	0.91	82.53
Gold	-10.50	2,038.9
EUR/USD	0.002	1.0847
JPY/USD	0.25	150.75
10-Year Note	0.035	4.295%

 

• DPZ shares rose after Q4 EPS $4.48 topped est. $4.38; Q4 revs $1.4B vs. est. $1.42B; Q4 U.S. same store sales growth of 2.8% vs est. 2.2%; lifts dividend by 25% to $1.51 and approves additional $1B share repurchase program; said a revamp of its loyalty program and its delivery partnership with Uber Eats boosted sales.
• FDP Q4 EPS loss (-$2.22) or adj EPS loss (-$0.25) missed ests. of $0.31 and revs fell -3% y/y to $1.01B vs. $1.04B last year; raises quarterly dividend to 25c per share; banana sales dropped 6% to $379.6 million and fresh and value-added product sales inched up 1% to $582.8 million.
• FRPT shares rise after forecasted better-than-expected net sales and adjusted Ebitda for 2024 and as earnings per share beat Wall Street estimates.
• WMT shares trade higher on the first day effective new 3-for-1 stock split.

• Aerospace: LUNR shares fell after officials said the American-made lander that touched down on the moon likely landed on its side. BA’s push to improve its safety culture after two 737 MAX crashes is falling short, according to a panel tasked with reviewing the plane maker’s practices after the accidents, Reuters reported.
• Industrials: ITRI shares jumped after Q4 sales rose 23% to $577M topping consensus and guided FY EPS well above consensus ($0.80-$0.90 vs. est. $0.57 and revs $575M-$585M vs. est. $542M).
• Industrial Metals: AA made a $2.2B all-stock buyout proposal for its Australian joint venture partner Alumina to give them greater upstream exposure and simplify its operations; under the proposed deal, Alumina shareholders would receive 0.02854 shares of Alcoa stock for each share held, giving them a 31% stake in combined company.
• Gold miners GOLD and NEM both downgraded at Argus noting GOLD shares have underperformed over the past quarter, falling 6% compared to an 11% return for the S&P 500, and a 6% advance for the U.S. Basic Materials ETF (IYM). NEM shares have also lagged returns of the broad market and its industry benchmark over the past year and the past five years. Given global economic uncertainty and geopolitics, gold — which is already trading near the top of its five-year range — is likely to remain in demand. That said, Argus doesn’t look for gold prices to move substantially above recent levels.

• In Payments: FIS says remains committed to shareholder returns and is increasing its goal to repurchase at least $4.0B of shares by the year end 2024 after in-line Q4 EPS but slight sales miss and mixed guidance.
• In Insurance: ROOT shares jumped after KBW upgraded to Outperform after taking its 2024-25 estimates up 20-40%, putting US 5-15% above consensus saying while they wish it called the stock’s bottom pre-earnings, it was waiting for more evidence of responsible/efficient CAC spend, which it got this quarter.
• In REITs: AVB was upgraded to OW from EW, and downgraded UDR to EW from OW in Apartment REITs saying AVB to OW given conservative ss-rev guide & job growth forecast that is below peers’, less risk from new supply and best earnings growth in ’24e-’26e. Downgrade UDR to EW w/ lower growth vs peers after a disappointing guide. In healthcare REITs, OHI upgraded, VTR downgraded at Wells Fargo, leaning into selective SMID names given improving fundamentals and external growth.

• AGTI said it had agreed to be taken private by THL Partners for $1.35 billion as a unit of THL will pay $10 in cash for each share of Agiliti, representing a premium of 31% to the stock’s last close. http://tinyurl.com/5y9w2pc2
• Boehringer Ingelheim and Zealand Pharma said their experimental drug for obesity also succeeded in a mid-stage study involving participants with the fatty liver disease called MASH (shares of ALT rose on news). Shares of MDGL, AKRO, ETNB dropped after Zealand Pharma Phase 2 survodutide data in Nash where a significantly greater number of patients treated with survodutide. Goldman noted more surprisingly, the secondary endpoint of improvement in fibrosis was also met, which the firm expects will pressure names within the Nash complex.
• BMRN received a subpoena from the U.S. Department of Justice seeking information about the company’s sponsored testing programs related to two treatments, it said in a filing.
• CLDX and SNY presented new data from mid-stage studies of their respective treatments for chronic hives.
• ELAN 4Q revs slightly ahead but EBITDA light ($165M vs. $173M est.), noting $18M in unexpected items, particularly the devaluation of the Argentinian peso; company guided 1Q results below street.
• GSK’s RSV vaccine, Arexvy, accepted for review by Health Canada for prevention of RSV disease in adults aged 50-59 at increased risk.
• MIST rises after saying plans to resubmit application to U.S. FDA seeking approval for its experimental drug to treat a condition leading to abnormal heart rhythm.
• MRNA downgraded to Hold from Buy at HSBC but lift tgt to $86 from $75 – says two INT Phase 3 data readouts in medium term; HSBC is skeptical, noting RSV vaccine efficacy concerns.
• RCM said private-equity firm New Mountain Capital, which owns a more than 32% stake, said it has proposed a buyout price of $13.75 a share in cash, a 24% premium to Friday’s closing price of $11.10. http://tinyurl.com/bd34mvpx
• TEVA and ALVO said the FDA approved Simlandi injection, a biosimilar of ABBV’s blockbuster rheumatoid arthritis drug Humira; they expect to launch Simlandi in the U.S. soon.

• PANW surges above $310, extending Friday gains and now more than $50 point bounces off 200-dma hit on 2/21 around $260 after the company disappointing forecast sunk shares.
• AVGO is selling its business which allows users to access desktops and applications from any device to KKR in a deal valued at about $4 billion, the private equity firm said.
• HCP was upgraded to overweight and raise tgt to $30 at Morgan Stanley saying their latest round of conversations show further improvement in the cloud demand environment which now appears to be benefitting HCP.
• MU shares jumped after saying has started mass production of its high-bandwidth memory chips for use in Nvidia’s next-generation H200 graphic processing units; the HBM3E (High Bandwidth Memory 3E) will consume 30% less power than rival offerings, Micron said.
• ATUS shares jumped after Bloomberg reported CHTR is noted to work with adviser on potential transaction; weighing a takeover of Altice USA. http://tinyurl.com/4b2csfmf

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Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.