Market Review: January 29, 2024

Closing Recap

Monday, January 29, 2024





DJ Industrials




S&P 500








Russell 2000













U.S. stocks surged, closing at new record highs on light news (and volume) following a bond rally late day, as the upside momentum stock buying party continued to kick off the week. U.S. stocks had managed a slow, steady grind higher all morning into a huge week of potential market moving catalysts that can determine the next big leg move higher (fresh new record highs) or lower (as Bears been waiting for any type of correction for 3-months now). Today generally felt like a day of watching paint dry (prior to the last hour fireworks) ahead of: 1) earnings as GOOGL, MSFT reporting tomorrow on 1/30, AAPL, AMZN and META all on 2/1 (other names include AMD, BA, CVX, PFE, XOM, QCOM); 2) the FOMC meeting on Wednesday (no rate cut expected but further dovish rate cut talk expected); 3) jobs data with JOLTS on 1/30, ADP private payrolls 1/31, and Nonfarm on Friday 2/2. Overall, a big week of earnings with 38% of the Nasdaq 100 index to report and over 20% of the S&P 500 index (SPX). Treasury yields edged lower all day as stocks climbed, with no major economic data. Stocks got a late day boost to new highs after the US Treasury announced a smaller than previously forecast borrowing estimate for Jan-March quarter. US listed China stocks extend 2024 losses, hurt after Chinese property developer Evergrande was ordered to liquidate by a Hong Kong court after failing to agree on a restructuring plan with creditors. On Friday, we saw the six session winning streaks come to an end for SPX and NDX on the lightest volume of the year, but still managed to make it a 12th winning week in the last 13, and off to a good start this week already. The list of 52-week highs in large cap growing by the day (ADBE AMZN CMG TEAM DASH DKNG META MSFT a few today). Can anything reverse the euphoric move we have seen over the last 3 months?


Economic Data

·     Dallas Fed Texas manufacturing index of general business activity -27.4 in January vs -10.4 in December; Dallas Fed Texas manufacturing output index -15.4 in January vs 1.2 in December.


Commodities, Currencies and Treasuries

·     WTI crude March futures settle at $76.78 a barrel, down $1.23, 1.58%, while Brent crude futures settle at $82.40/bbl, down $1.15, 1.38%. Crude oil futures finish lower after trading to a more than two-month high the previous week on escalating conflicts in the Middle East, weather-driven supply outages in the U.S. and better-than-expected U.S. economic growth. Over the weekend, three U.S. servicemen were killed, and dozens injured in a drone attack.

·     U.S. natural gas futures tumble as February contract expires amid warming in near-term temperature forecasts. Gas for February delivery settles down 8.2% at $2.490/mmBtu, compared with the Jan. 12 intraday high of $3.377/mmBtu, and gas for March falls 5.6% to $2.054/mmBtu. Gold prices rise $8.10 to settle at $2,025.40 an ounce.

·     The U.S. dollar index pares gains after US Treasury announces smaller than previously forecast borrowing estimate for Jan-March quarter. US Treasury notes January-march borrowing estimate assumes end-March cash balance of $750B. U.S. Treasury notes it expects to borrow $760B in January-March 2024, down $55B from October estimate.

·     Treasury yields a slow steady move lower all day with the 10-yr down over 6-bps under 4.08%.






WTI Crude















10-Year Note





Sector News Breakdown


Retail, Consumer Staples & Restaurants:

·     In Consumer Products: CL was upgraded from Market Perform to Outperform at Raymond James saying they view the company is still in the early innings of improved top and bottom-line growth, balancing contribution from volume vs price, emerging markets vs developed, and across the product portfolio.

·     In Beverages: BF was downgraded to Equal Weight from Overweight at Morgan Stanley and cut tgt to $58 from $68 saying while continues to view it as an attractive LT growth story, it no longer sees a catalyst for ST outperformance due to much weaker than expected spirits industry demand.

·     In Food: HSY was upgraded to outperform from market perform at Bernstein citing improving market share and volume trends as innovation picks up and it laps last year’s Mars candy recall; and continued strong top line growth due to cocoa and sugar-driven price increases.

·     In Dollar Stores: DLTR upgraded to Overweight from Neutral at JPMorgan and raise tgt to as sees the cumulative combination of the cost-of-living adjustment, gas prices, tax refunds and student loans providing a $70B lift year-over-year to consumer spending in 2024.

·     In Specialty Retail: IRBT shares tumbled after announced with AMZN that they have entered into a mutual agreement to terminate their previously announced acquisition agreement, originally signed on August 4, 2022, where Amazon would have acquired iRobot for cash consideration; IRBT to lay off 31% of workforce.


Autos, Leisure, Gaming & Lodging:

·     In Autos: Volvo (VLVOF) was downgraded to Market Perform at Bernstein saying growing risks at Polestar are creating near-term earnings and free cash flow headwinds for Volvo Cars.

·     In Gaming/Casino: FLUT – Flutter Entertainment, parent company of online sports betting platform FanDuel, made its New York Stock Exchange trading debut today. Shares of DKNG, CZR, MGM were active as well.



·     In Oil Equipment & Services: BE downgraded from Neutral to Underperform at Bank America and cut tgt to $10 from $16 with an expectation that 2023-2025 revenues will be approximately flat versus accelerating previously. BKR was downgraded from Outperform to Peer Perform at Wolfe. BOOM said they are considering a sale of its DynaEnergetics and NobelClad businesses, which account for more than half of the company’s sales. The firm said they will explore various strategic, business, and financial alternatives for the units, including a sale, merger, or other business combo.

·     In LNG Space: On January 26, Reuters reported U.S. President Joe Biden on Friday paused approvals for pending and future applications to export liquefied natural gas (LNG) from new projects, a move that could delay decisions on new plants until after the Nov. 5 election. The Department of Energy (DOE) will conduct a review during the pause that will look at the economic and environmental impacts of projects seeking approval to export LNG to Europe and Asia where the fuel is in hot demand.



·     In Consumer Finance: COF upgraded from Underperform to Peer Perform at Wolfe saying they now see clear evidence that delinquency rate formations are rolling over (follows earnings last week).

·     In Consumer Lending: SOFI Q4 EPS $0.02/revs $594.2M top consensus, while guides Q1 revs $550-560M below consensus around $580M and targets FY23-26 rev CAGR 20-25%, beyond FY26 EPS CAGR 20-25%; said total members 7.5M, +44% y/y. The data helped names like PYPL, SQ on the day.

·     In Insurance: HMN upgraded from MP to OP and raised tgt to $40 from $33 at KBW as expects improving underwriting margins and rising investment income to drive both earnings growth and multiple expansion over the next 12 months.



Biotech & Pharma:

·     ALVO said that its biosimilar candidate, AVT03, met the main goal in a study testing it against an approved bone disease drug; the co was testing AVT03 against AMGN’s Prolia, used for the treatment of bone disease.

·     CCCC upgraded to Neutral from Underweight at JP Morgan following a deeper look at December’s CFT7455 phase 1 update and having gained more comfort with the case for differentiation from key IMiD/CELMoD competitors.

·     RVNC was downgraded to Neutral from Buy at Mizuho and cut tgt to $9 from $16 saying with the stock trading at ~$6, Mizuho sees limited downside, but it also sees limited upside in the near term.

·     VIR downgraded to Neutral from OW at JP Morgan and cut tgt to $9 from $23, revisiting the SOLSTICE readout at AASLD (tobevibart + elebsiran for HDV) post conference, it is incrementally cautious on the breadth of the combination’s potential, particularly in cirrhotic patients constituting ~40% of the indication.

·     VSTM outlines key 2024 strategic priorities and upcoming catalysts for advancing avutometinib and defactinib and broader pipeline in RAS pathway-driven cancers.


Healthcare Services & MedTech movers:

·     In MedTech: PHG shares fall mixed Q4 23 results; revenue growth broadly in line, margin miss but strong FCF generation; Q4 comparable revenue growth declined by -0.6% in Q4 23, or +2.6% excluding the impact of provisions charged to sales in the quarter; reached an agreement with the FDA on the terms of a settlement linked to recall of its Respironics ventilators used to treat sleep apnea; PHG said it booked a 363M-euro ($394M) provision in Q4. Shares of PHG rival RMD advanced in reaction to the sleep apnea headlines.

·     Medical Research: CDNA shares extend Friday losses after reports that CareDx was found by a jury trial in Delaware to have infringed on one patent from NTRA where the damages were awarded very late last Friday, whereby the jury ordered CDNA to pay NTRA $96M in total.


Industrials & Materials


·     In Railroads: NSC was downgraded to Market Perform from Outperform at TD Cowen after results last week saying a Q4 beat was more than offset by 2024 outlook that came in well below TDCowen’s forecast and a 3-Year margin forecast that was disappointing. Stifel also downgraded NSC from Buy to Hold w/ $233 PT from $250 saying NSC has long been an underperforming self-help story that simply can’t figure out how to help themselves, and this quarter that trend looks to be continuing.

·     In Airlines: AAL was upgraded to Buy from Neutral at Citigroup saying North America’s network carriers’ diversified revenue streams and solid demand for premium cabin offerings appear to provide them with superior positioning in this post-pandemic environment. RYAAY said Q3 operating costs rose and led to a fall in adjusted after-tax profit as it narrowed its annual guidance for the metric; said revenue per passenger rose 9%, with ancillary revenue up 2% to around EUR23 and average fares up 13% to over EUR42.

·     In Shipping: ZIM upgraded to buy from hold at Jefferies saying the script has flipped as the shipping firm’s cash burn shifts to significant cash generation. OSG shares rose after receiving an unsolicited non-binding indication of interest from Saltchuk Resources.


Industrials, Aerospace & Defense

·     WSC said it will acquire MGRC in a deal with an enterprise value of $3.8 billion, confirming an earlier report by The Wall Street Journal; cash-and-stock deal will provide McGrath RentCorp investors with $123 a share or about 2.8 shares of WSC. .

·     Holcim Jumps after outlining plans to spin off its operations in North America into a separate US listed entity, seeking a valuation of more than $30 billion.


Materials, Metals & Mining

·     In Lithium sector: TD Cowen downgraded shares of ALB, PLL and LYC to Market Perform from Outperform, but remain Outperform on top pick, ALTM, LAC, LAAC, and MP in lithium/rare earths saying they continue to favor ALTM given the advantageous risk/reward setup amongst a murky macro backdrop. With spot lithium pricing down 80% from one year ago, the firm expects further estimate/guidance revisions and as a result lower its pricing forecasts. Also lowered price tgts for ALB to $130 from $220, ALTM $10 from $12, LAAC $6 from $14, LAC $8 from $13), MP to $22 from $26, and PLL to $20 from $55.

·     In chemicals: BAYRY was ordered to pay $2.25B in damages in its legal battle over its Roundup weed killer; Bayer confirmed that a jury in a Philadelphia court on Friday sided with a plaintiff and ordered it to pay $250M in compensatory damages and $2B in punitive damages.



·     PANW was downgraded to Hold from Buy at Westpark Capital on valuation and changing market trends saying for investors, buying Palo Alto shares at the current $340-$345 price range offers a far less attractive risk/reward opportunity at this stage.

·     RPD was upgraded to Buy at UBS and raised tgt to $70 from $53 saying the firm sees ~4pts of additional Operating margin expansion in CY24E to mid-teens following the 7pts+ in CY23E. Notes RPD has already executed well on the Q3 restructuring and UBS expects the company to meet the CY24 FCF target with high single digit opex growth.

·     ZI upgraded from Neutral to Buy at Bank America and raise tgt to $25 from $20 saying three reasons to get bullish: Better execution driving revenue growth reacceleration to high single digits, new AI products driving higher monetization and ending interest rate hike cycles are bullish for SMID cap stocks like ZI.

·     In Media: WBD was downgraded to equal weight from overweight at Wells Fargo saying it expects a flattish multiple and cuts estimates for 2024.



·     The Biden administration, eager to highlight a signature economic initiative as elections approach, is expected to award billions of dollars in subsidies to INTC TSM and other top semiconductor companies in coming weeks to help build new factories.

·     KLAC was downgraded to Neutral from Positive at Susquehanna and raise tgt to $675 while increasing estimates to reflect a bottoming in quarterly earnings by Mar-Q followed by a recovery…but notes updated PT of $675, 20x CY25 EPS of $34, already reflects a steep recovery.

·     SMCI expected to report earnings tonight (previously issued higher rev guidance over a week ago).

·     WDC advanced after reports Bain Capital is in talks with SK Hynix to restart negotiations to merge memory chip makers Western Digital and Japan’s Kioxia Holdings, Kyodo newswire reported on Saturday.


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.