Market Review: January 25, 2024

Closing Recap

Thursday, January 25, 2024





DJ Industrials




S&P 500








Russell 2000













US equity futures held fairly flattish overnight after the S&P 500 recorded a fourth consecutive record close yesterday. Better Q4 GDP growth, a more modest deflator and higher initial jobless claims provided a little something for everyone and stocks bounced into the open. In an optimistic market you can see moderating inflation, a soft landing or more aggressive Fed rate cuts so everyone wins, even small caps. IWM was up about 1.3% and outperformed early as it tested the intraday resistance pivot. As expected in an up tape, the Fear and Greed Index has held strong in the Greed territory at 77 and from 69 a week ago. Mid-morning breadth held a touch better than 2:1 in favor of advancers as small caps surrendered some early gains. Early sector leaders were Communications, Technology and Real Estate, while Health Care and Consumer Discretionary were laggards and both in the red.


Data-wise today, softer inflation was the initial market driver and expectations are growing for ongoing improvement. Per @bespokeinvest, for example, the Fed’s CPI Nowcast tool has January PCE, Core PCE and CPI all dipping into the 2s yr/yr. On a similar theme, the median price of a new home has declined 17% in the US from the 2022 peak. Per @charliebilello, the median fell 22% nationally before finding a bottom after the last housing bubble peak so we may not be quite done. On Fed cut expectations following this morning’s data, the implied probabilities have settled more in favor of cuts despite the initial reaction by stocks. March is now 46.2% implied cut versus 42.4% pre-data, while the implied rate for December dipped to 3.937% from 4.001% earlier. Expect the back and forth to continue with each data release.


Heading into the final hour of trading, stocks were off lows with the S&P 500 up modestly and the Nasdaq just crossing back to green after a mid-day dip. Breadth was holding right around 2:1 still in favor of advancers and small caps remained the outperformers with IWM up about 0.5%. Sector-wise, Health Care (XLV, -0.3%) and Consumer Discretionary (XLY, -1.4%, thank TSLA) remained the laggards and only decliners. Energy (XLE, +2.1%), Utilities (XLU, +1.6%) and Communications (XLC, +1.4%) had taken over leadership positions to the upside along with Real Estate (XLRE, +1.2%) as yields declined allowing gains in some of the more rate-sensitive groups. Growth and value split, as the Russell 1000 Value gained +0.7% to outperform its Growth counterpart which lagged at -0.1%.

Economic Data

  • The U.S. economy (GDP) grows at +3.3% annual rate, above the estimate +2.0% showing the economy remains strong, but the advance Q4 GDP deflator +1.5% well below the consensus +2.3% (and prior +3.3%); advance Q4 PCE price index +1.7% (down from prior reading +2.6%) and advance Q4 core PCE +2.0% (in-line with consensus and prior reading); Q4 consumer spending rose +2.8%, below last figure +3.1%.
  • Weekly Jobless Claims climbed to 214K from 189K in prior week and above the consensus 200K; the 4-week moving average fell to 202,250 from 203,750 prior week; continued claims climbed to 1.833M from 1.806M prior week and the U.S. Insured Unemployment rate unchanged at 1.2% Jan 13 week from 1.2% prior week (prev 1.2%).
  • New Home Sales for December climbed 8.0% M/M to 664K vs. 645K consensus and 615K in November (revised from 590K); new home supply 8.2 months’ worth at current pace vs Nov 8.8 months; median sale price $413,200, -13.8% from Dec 2022 ($479,500).
  • Durable goods orders were unchanged at $295.6B in December, compared with the 1.1% increase expected and +5.5% in November (revised from +5.4%). Dec Durables ex-transportation orders +0.6% (consensus +0.2%) vs November +0.5% (prev +0.4%). Dec Durables ex-defense orders +0.5% vs Nov +6.9% (prev +6.5%).
  • December Retail Inventories (Advance) rose +0.8% to $803.3B vs +0.1% prior (revised from -0.1%). On a Y/Y basis, retail inventories grew 5.3% in December.
  • The Chicago Fed National Activity Index fell to -0.15 in December from +0.01 in November (revised from +0.03).
  • British retail sales volumes slid in January at the fastest pace for three years, according to an industry survey as the Confederation of British Industry’s (CBI) monthly retail sales balance fell in January to -50 from -32 in December, the lowest reading since January 2021.
  • German business morale unexpectedly worsened in January, declining for the second month in a row as the Ifo institute said its business climate index fell to 85.2 from a slightly downwardly revised reading of 86.3 in December. Analysts had expected the indicator to improve in January to 86.7.


  • After a bit of a rollercoaster session, February gold futures settled +1.80/oz, or +0.09%, to $2,017.80 or pretty much flat. Gold’s early climb mirrored US equities as the market focused on lower inflation readings and yields slipped. Also, as with equities, gold faded back to about unchanged perhaps as investors also incorporated the reality that stronger GDP could still mean higher rates for longer. With competing forces at work and the economic data items a bit of a wash, it seems only fitting the market may be choosing to take more of a wait-and-see approach.
  • March WTI crude futures enjoyed a solid day of gains to settle with a gain of $2.27/bbl, or +3.02%, to $77.36. The move marked the highest settlement in WTI since late November. Brent similarly gained 2.99%, or +$2.39/bbl, to finish at $82.43. Ongoing attacks in the Red Sea continue to raise supply questions around shipping, while stepped-up attacks against Russian infrastructure by Ukraine has also become more of a factor on the geopolitical stage. Domestically, a dip in US output has also impacted the supply side views while today’s better GDP data has created more optimistic demand scenarios to push prices higher.





WTI Crude















10-Year Note




Sector News Breakdown

Retail, Consumer Staples & Restaurants:

  • In Retail: VFC downgraded from Hold to Sell at Williams Trading and cut tgt to $13 as well as cutting ests saying there are no indications that Vans will turnaround in the foreseeable future according to checks and that the Timberland business remains challenged. Puma (PUMSY) downgraded to Hold at Jefferies noting its profit warning was more extreme than the market had feared.
  • In Staples: IFF shares early bounce, helped by positive results from Givaudan (GVDNY) (Fragrance & Beauty like-for-like sales +7.6% vs. +5.5% y/y, estimate +6.68%).

Autos, Leisure, Gaming & Lodging:

  • In electric vehicles: TSLA disappoints as 4Q adj EPS $0.71 vs. est. $0.73; Q4 revs $25.17B vs. est. $25.87B; Q4 Free cash flow $2.06B vs. est. $1.45B; 4Q gross margins 17.6% vs, est. 18.1%; said Cybertruck deliveries and production to ramp thru out year; said 2024 vehicle vol growth may be notably lower than 2023.
  • In Car Rental: Deutsche Bank upgraded CAR to Buy from Hold with $248 tgt and downgraded HTZ to Hold from Buy with a $9 tgt saying they see an unreasonably wide risk/reward disconnect between the two stocks here. The firm also believes HTZ’s well-chronicled EV strategy leaves investors with little conviction in the company’s true run rate earnings power over the next few years. Separately, HTZ was downgraded to Neutral from Overweight at JP Morgan saying while the stock arguably trades inexpensively on normalized out-year earnings, it sees few near-term positive catalysts on the horizon after reducing its ests such that it now expects Hertz in 2024 to neither grow earnings nor to generate positive free cash flow.
  • In Boating/Leisure: HZO cuts FY24 adjusted EPS view to $3.20-$3.70 from $4.50-$5.00 (est. $4.87) and lowers FY adj EBITDA view to $190M-$215M vs. prior view of $225M-$250M after Q4 results missed expectations (shares of BC, MBUU, MCFT were volatile in sympathy).

Banks, Brokers, Asset Managers:

  • BFH posts big beat on higher revs (+$0.43/share), lower provisions (+$0.35/share), lower expenses (+$0.04/share), lower tax rate (+$0.73/share). Rev growth guide: Down low to mid-single digits (excluding portfolio sale gains) vs. our estimate of +3%
  • CATY EPS beat was driven by a lower-than-expected loan loss provision; net interest income declined -8% annualized; NIM for 2024 was guided to 3.15%-3.25% with a trough in Q324 which is below its prior forecast of 3.38%.
  • COLB downgraded from Strong Buy to Outperform at Raymond James following Q423 results, where funding challenges are weighing on estimates, and it simply sees less upside to its target based on the new valuation. More specifically, NIB migration and rising funding costs have weighed on the margin more than anticipated.
  • Other banking names active post earnings: AMAL, BANC, EGBN.
  • VIRT shares slid after Q4 adj Ebitda was $99M below the $116.8M estimate.
  • In Fintech: PYPL shares tumbled as it looks like the street wasn’t prepared for PayPal’s cashback announcement. In midday notes: BTIG said the pre-recorded mere 17-minute video w/ very underwhelming initiatives after the hype was a letdown. Mizuho said while AI moves are good, PYPL’s reliance on mkt share losing Branded Checkout "could be a regret." KBF said presentation was a swing & a miss, it was nice, but investors anticipated "specific catalysts."
  • In Lending: SLM Q4 EPS of $0.72 was below consensus of $0.88 but would have been $0.91 excluding a $56M goodwill write-down of trademarks associated with the Nitro business according to Jefferies who also said the quarter was constructive overall, with NII, opex, and NCOs better than expected.
  • In Alt Managers: BX Q4 results well received as distributable earnings of $1.39 billion, up 4% from last year, while KBW Inc. noted strong fundraising—particularly credit, expense discipline—FRE margin beat.
  • In Insurance: MMC Q4 EPS beat by 8c helped by higher consulting revs, higher consulting margins, higher corporate income, higher interest income and lower interest expense; partially offset by lower RIS revs but KBW Inc. said lower RIS organic growth should weigh on the stock.

Healthcare Services & MedTech movers:

  • In Managed Care: HUM shares tumbled as Q4 adjusted EPS loss (-$0.11) vs. est. loss (-0.05); Q4 revs $26.46B vs. est. $25.54B; forecasts 2024 adj EPS about $16.00, well below consensus est. $29.18; assumes higher Medicare advantage medical costs experienced in Q4 persist throughout 2024; no longer believes adj EPS target for 2025 is achievable (shares of CI, CNC, MOH, ELV, UNH were lower in sympathy).
  • In MedTech: RMD among top gainers in the S&P after results; Q2 EPS $1.88 vs. est. $1.79; Q2 revs rose 12% y/y to $1.2B vs. est. $1.15B, non-GAAP operating profit up 20%; Gross margin contracted 50 bps to 55.6%.


  • In Airlines: several earnings today: 1) AAL forecasts 2024 adj EPS $2.25 to $3.25, vs. est. $2.22 after Q4 adj EPS $0.29 beat the $0.11 estimate as revs fell -1% y/y to $13.06B vs. est. $13.01B; said load factor slipped to 83.6% from 83.9%, but beat expectations of 82.9% as capacity growth of 5.8% outpaced traffic growth of 5.4%; 2) LUV Q4 adj. EPS of $0.37 tops $0.12 est. on better revs ($6.82B vs. $6.74B) while saying expects to take fewer deliveries of Boeing’s 737 MAX aircraft and has left out the MAX 7 model; 3) ALK said expects slower growth this year and a financial hit of $150M after a midair accident led to the grounding of a portion of its Boeing 737 planes; warned flight capacity in 2024 will be at or below the low end of its prior expectation for 3% to 5% growth.
  • In Railroads: CSX Q4 EPS $0.45 vs est. $0.44 on revs $3.68B vs est. $3.629B; forecasts 2024 low to mid-single digit total vol. & rev growth; Q4 operating ratio 64.1%, vs. est. 62.9%. UNP Q4 EPS $2.71 vs. est. $2.56 and revs $6.16B vs. est. $6.06B while Q4 intermodal rev. $1.19B vs. est. $1.17B and qtrly operating ratio was 60.9%, an improvement of 10 bps; said 2024 volume outlook muted by international intermodal business loss, lower coal demand, and soft economic conditions.
  • In Trucking/logistics: KNX Q4 adj EPS $0.09 vs est. $0.44 on revs $1.9B vs est. $1.966B; guides Q1 adj EPS $0.37-0.41 vs est. $0.46 and Q2 adj EPS $0.53-0.57 vs est. $0.65. CVLG was upgraded to Outperform at TD Cowen and raised tgt to $66 from $51 noting the company finished ’23 on a strong note despite a challenged trucking market and remains poised to grow earnings in ’24 without help from the broader truck market.

Aerospace & Defense

  • In Aerospace: BA was downgraded to Neutral at Bank America and cut tgt to $225 from $255 following the ALK Flight 1282 incident and the subsequent 737 grounding. The FAA mandated 737 MAX production rates be frozen at current levels, which will likely prevent Boeing from reaching the 2025/2026 production, delivery, and free cash flow goals. Last night, the FAA paused Boeing’s planned expansion of its 737 MAX plane while paving the way for the plane maker’s MAX 9 jet to return to service (supplier SPR fell in sympathy). In aero parts, HXL shares stumbled after Q4 results missed ($0.43/$457.5Mm below consensus est. $0.49/$471.9Mm) and guides FY24 sales $1.925-2.025B vs est. $2.024B. CRS reported Q4 revs that missed consensus weighing on shares of ATI as well.
  • In Defense: busy week of earnings for sector closing out with NOC as Q4 revenue rose 6% y/y to $10.6B above consensus $10.44B and sees FY24 MTM-adjusted EPS $24.45-$24.85, consensus $24.23 and revenue $40.8B-$41.2B, vs. consensus $41.15B The White House sent a letter to members of Congress urging approval of a $20 billion sale of LMT F-16 aircraft and modernization kits to Turkey, four sources familiar with the letter told Reuters. RTX upgraded from Underperform to Neutral at Bank America and raised tgt to $100 to reflect better than expected execution in servicing contaminated powder-metal discs in Geared Turbo Fan (GTF) aircraft engines.

Materials, Metals & Mining

  • In Chemicals: DOW Q4 operating EPS $0.43 vs. est. $0.40; Q4 revs $10.62B vs. est. $10.37B (but below year ago $11.86B); reported a 10.4% drop in fourth-quarter sales as destocking trends persisted amid lower demand for its products across key markets.

Internet, Media & Telecom

  • In Cable: CMCSA board approves new $15B share buyback authorization and raises dividend 6.9% to $1.24/share on annualized basis while Q4 revs rose 2.3% to $31.25B (est. $30.5B) saying they lost 34K broadband customers in the quarter, less than estimated loss of 61,000K and revs at streaming service Peacock rose 56.5% y/y above $1B.
  • In Media: David Ellison has made a preliminary offer to buy National Amusements, the holding company of the Redstone family, to gain control of PARA, Bloomberg reported.
  • In Advertising, shares of OMC, IPG benefit by PUBGY results (Prelim North America revenue EU2.16B, estimate EU2.11B).

Hardware & Software movers:

  • IBM Q4 adj EPS $3.87 vs est. $3.78 on revs $17.4B vs est. $17.298B; adj op mgn 60.1%; sees FY24 revs in line with mid-single digit model vs est. +3% and FCF about $12B.
  • NOW Q4 adj EPS $3.11 vs est. $2.79 on revs $2.437B vs est. $2.398B, adj FCF $1.344B; sees Q1 subscription revs $2.51-2.52B and FY subscription revs $10.56-10.58B up from prior view $10.4B; says generative AI is injecting new fuel into already high-performing engine.
  • XRX forecasts declined in FY24 revenue of 3%-5% on headwinds from prior-year backlog reduction, while Q4 EPS and revs both fall short of views ($0.43/$1.77B vs. est. $0.52/$1.79B) noting steps taken to structurally simplify business impacted revenue in FY23.
  • HPE discloses suspected nation-state actors gained unauthorized access to cloud-based email environment.


  • LRCX reported an in-line DecQ and guided its MarQ top line in line, with better-than-expected margins and noted C24E is expected to be slightly higher at ~$88B up 6-7% y/y (vs C23E at ~$82B), and 1) domestic China likely stable in C24E, 2) DRAM strong up 100%+ y/y with HBM ramps with 100% share in Si Etch and Copper electroplating.
  • STX in-line Q2 revs $1.56B vs. est. $1.55B; sees Q3 EPS $0.05-$0.45 vs. est. $0.18 and revs $1.50B-$1.80B vs. est. $1.64B; GMs up q/q through F24(Jun) and F25E as pricing, underutilization with new Mozaic platform, and HAMR ramps according to Mizuho.
  • STM Q1 and FY revenue forecast missed estimates; Q1 revs fell -15.2% y/y to $3.6B vs. est. 44.1B and guides full-year revenue in a range of $15.9B-$16.9B vs. est. $17.2B.
  • PLXS delivered an in-line F1Q with its lowered guidance provided on Jan 16th but issued disappointing guidance as demand softness and inventory digestion in the Healthcare and Life Sciences segment headwinds persist.
  • AMSC Q4 EPS loss (-$0.06) vs. est. loss (-0.06) and revs $39.4M vs. est. $34M; sees Q4 revs $36M-$40M.


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.