Closing Recap

Tuesday, January 30, 2024

Index	Up/Down	%	Last
DJ Industrials	133.99	0.35%	38,467
S&P 500	-2.96	0.06%	4,924
Nasdaq	-118.15	0.76%	15,509
Russell 2000	-15.11	0.74%	1,996

 

 

 

 

 

 

 

 

 

The waiting game is almost over as the big reveal of key earnings in the tech space are upon us! U.S. stocks finished lower, but off their worst levels of the session into the biggest night thus far for the technology sector in this young earnings season with MSFT, GOOGL and AMD results on deck. The S&P 500 (SPX) finished little changed after breaking out to new record highs the day prior, while the Nasdaq lagged on some light profit taking. Financials (XLF) were market leaders, with shares of JPM hitting record highs along with 52-week highs for ALLY, AIG, BK, C, MA, WFC, and others. Energy (XLE) also outperformed behind a bounce in oil prices. Transportation stocks declined behind a weak earnings result and guidance from UPS and the Smallcap Russell 2000 underperformed. The FOMC began its 2-day meeting today with its interest rate decision expected tomorrow after at 2:00 PM (Fed widely expected to be on hold with the 5.25% to 5.50% band left intact). Fed officials are widely expected to remove the hawkish phrase from the December statement "in determining the extent of any additional policy firming" and replace it with something more neutral, consistent with the end of the tightening cycle. Treasury yields slipped; gold rose as we await the Fed/Powell. The International Monetary Fund (IMF) raised its forecast for global economic growth, upgrading the outlook for both the U.S. and China on faster-than-expected easing of inflation. The IMF said it expects the US Federal Reserve, European Central Bank and Bank of England to keep interest rates at current levels until the second half of 2024 before gradual decline. IMF lifts China GDP forecast to 4.6% in 2024 vs 4.2% in October; leaves 2025 forecast unchanged at 4.1% and raises 2024 global GDP growth outlook to 3.1% from 2.9%.

• Consumer Confidence index for January rose to 114.8 (best levels since Dec 2021) from December revised 108.0 (vs. est. 115.0); Present Situation Index surged to 161.3 from 147.2 last month and the Expectations Index improved to 83.8 in January, up from a revised reading of 81.9 in December.
• November 20-metro area home prices +5.4% y/y vs. consensus +5.8% and compared to +4.9% in October according to S&P CoreLogic Case-Shiller, while November home prices in 20 metro areas +0.1% seasonally adj (consensus +0.5%) vs +0.6% in October. U.S. November home prices +0.3% from October.
• While inflation has eased, and jobs remain strong, bespoke invest tweeted that: "Regional Fed Manufacturing reports in January: Dallas: Huge miss, KC: Miss, Richmond: Miss, Philadelphia: Miss, Empire: Huger than huge miss – noting January is just the fourth time since 2012 that all 5 regional Fed reports were negative and weaker than expected."

• Gold prices rise $6.30 to settle at $2,050.90 an ounce as we roll to April contract. Gold prices ticked up supported by a slightly weaker dollar and lower Treasury yields as investors primed for the U.S. Federal Reserve’s policy meeting for updates on the timing of its interest rate cuts. The Fed’s policy decision is due on Wednesday, having made a dovish tilt in the December meeting. Markets are widely expecting the U.S. central bank to leave rates unchanged at the end of the two-day meeting.

 

Macro	Up/Down	Last
WTI Crude	1.04	77.82
Brent	0.47	82.87
Gold	6.30	2,050.90
EUR/USD	0.0008	1.0841
JPY/USD	0.13	147.62
10-Year Note	-0.03	4.061%

 

• In Retail: FIVE downgraded from Outperform to Perform at Oppenheimer and cut tgt to $200 from $235 saying they are starting to fret that underlying growth dynamics for FIVE are slowing, at least somewhat, given a now larger base of units, waning remodeling opportunities, and stepped-up reinvestment requirements. COST hits record highs approaching $700 per share.
• In Appliances: WHR Q4 results topped consensus but forecast full-year sales and profit below analysts’ estimates (guided FY sales $16.9B vs. est. $17.68B and EPS to be between $13-$15 vs. est. $15.48 per share).

• In Leisure: PII Q4 adj EPS $1.98 vs. est. $2.57; Q4 revs $2.29B vs. est. $2.24B; expects 2024 sales to be down five to seven percent versus 2023 and expects adj diluted EPS from continuing operations to be down 10%-15% versus 2023. In Boating, MBUU the latest name to disappoint as Q2 sales -38% y/y to $211.1M vs. est. $219.7M and anticipates fy24 adjusted ebitda margin down 800 to 900 basis points, y/y (follows recent HZO warning).
• In Travel: BKNG removed from the Best ideas list at Wedbush saying while expects Booking will continue to execute well in the current travel environment, shares of Booking have appreciated ~20% over the past six months, versus a 9% increase in the Nasdaq index.
• In Lodging: MAR tgt to $270 from $215 and HLT to $215 from $170 at TD Cowen saying they see a favorable setup for MAR & HLT into Q4 earnings despite richer multiples given strong unit growth momentum; higher pricing; potential US acceleration on better corp. travel & int’l inbound/outbound balance.
• In Education Services: ATGE shares tumbled following a short report from Safkhet Capital, saying they believe the co has serious issues to contend with in the near-term http://tinyurl.com/57sfwarm

• In Refiners: MPC shares jump over 6% following Q4 rev beat $36.82B above est. $34.9B (bit down from $40.09B y/y), helping boost shares of refiners all day PSX, PBF, VLO on day.

• Regional bank: WAL downgraded to Equal Weight from Overweight at Wells Fargo saying current results and guidance leave little room for error. Wells notes they have been vocal supporters of WAL through the past year, but risk/reward scenarios at this stock price level seem skewed to the downside.
• In Payments: SQ upgraded to Outperform from Neutral at Wedbush and raised tgt to $90 from $70 as now has increased conviction in the company’s ability to post improving performance in its weak merchant segment (47.7% of Q3/CY24’s gross profits). SQ was also upgraded to Buy at BTIG with $85 tgt. PYPL announced it will reduce its global workforce by 9% in 2024.

• PFE said on track to deliver at least $4 billion in annual net cost savings by end of 2024; reaffirms full-year 2024 guidance of revenues of $58.5B-$61.5B and adj EPS of $2.05-$2.25; said 4Q Paxlovid revenues declined $5.0 billion, to $3.1 billion, compared with the prior-year quarter.
• RCUS announced a $320M equity investment from GILD along with multiple Phase 3 program updates; the two companies are jointly developing an anti-TIGIT antibody for cancer.
• REGN announced the formation of Regeneron Cell Medicines based on an agreement with TSVT to acquire full development and commercialization rights to its pipeline of investigational novel immune cell therapies, along with its Discovery and clinical manufacturing capabilities.
• VRTX said VX-548, significantly outperformed placebo in studies enrolling patients with acute pain following surgery. The drug missed its secondary goal of proving superior to a combination of acetaminophen and hydrocodone, a commonly prescribed opioid.

• In Life Sciences: DHR said it expects 2024 core revenue will be down low-single digits y/y while posted Q4 EPS and revs that topped consensus ($2.09/$6.41B vs. est. $1.91/$6.12B).
• In Medical Equipment: MASI was downgraded from Buy to Hold at Jefferies while raise tgt to $121 from $107 saying they think the worst is behind the company following a challenging ’23 that included multiple downward revisions. The firm now sees a lot of good news baked in and is moving to the sidelines based on valuation.

• In Airlines: JBLU forecast a fall in revenue and higher costs in Q1 as it grapples with uneven travel demand; said it will defer about $2.5 billion in planned aircraft capital expenditure to 2028 and later.

• CACI gets $81M order to support defense intelligence agency.
• JCI lowered its full-year profit expectations to $3.60-$3.75 from $3.65-$3.80 prior; Q1 revs of $6.09B missed.
• NOC announces $1B accelerated share repurchase agreement.
• PLOW shares fall as reports Q4 adj EPS $0.19/$134M below the $0.59/$178.8M consensus; sees 2023 adjusted EPS $1.01, below consensus $1.41 and revs $568M vs. est. $612.7M.
• WWD shares jumped after boosted its full-year profit and sales outlook; Q1 profit and sales also beat estimates.
• Home builders MDC, PHM, and NVR all reported quarterly results in the homebuilder sector.

• In Media: SPOT was upgraded from Neutral to Buy at UBS and raised tgt to $274 from $170 as thinks efficiency initiative remains the focus and have increased conviction on sustainable margin expansion and stronger bottom-line trends in the coming years.
• In Hardware: AAPL shares weaker after influential analyst Ming-Chi Kuo said latest supply chain survey indicates that Apple has lowered its 2024 iPhone shipments of key upstream semiconductor components to about 200 million units, or down 15% year-over-year. Apple may have the most significant decline among the major global mobile phone brands in 2024.
• In the EMS Sector: shares of CLS and SANM both jump following better earnings and guidance; CLS Q4 adj EPS $0.76 vs. est. $0.68; Q4 revs $2.14B vs. est. $2.08B; sees Q1 adj EPS $0.67-$0.77 vs. est. $0.60 and sees Q1 revenue $2.025B-$2.175B above consensus $1.99B; raises FY24 adjusted free cash flow view to $200M or more. SANM Q1 adj EPS $1.30 vs es.t $1.22 on revs $1.875B vs est. $1.87B, adj pre-tax ROIC 22.7%; guides Q2 revs $1.825-1.925B vs est. $1.803B and adj EPS $1.20-1.30 vs est. $1.09 (shares of FLEX, JBL, BHE were active in sympathy).
• In Comm and Networking: CALX shares tumbled after softer guidance offset Q4 beat; sees Q1 EPS $0.17-$0.23 below consensus $0.38 and revs $225M-$231M vs. est. $267.57M. FFIV shares a better fate, rising after quarterly results and guidance topped consensus expectations. HLIT reported 4Q results last night with beats on the top and bottom line driven by the Broadband segment which hit a record sale of $115.2M but ’24 guidance came in well below the Street’s view implying that Comcast and Charter will be softer going forward as per Jefferies.
• In Electrical Equipment & Parts: GLW reported in-line quarterly results while Q1 core EPS and sales came in slightly below consensus; ST upgraded to Outperform at Oppenheimer and introducing $50 PT which focuses on significant ramp in new business wins over the past several years, capital allocation pivot to debt reduction, and solid positioning for margin performance.

• SLAB announced it is delaying its earnings results by a week to next Wednesday, February 7, as it has determined there is a material weakness in internal control related to the documentation of certain inventory controls.
• SMCI shares jumped as delivered modest upside to the notable beat they preannounced earlier this month, while guided for significant sequential growth through the end of their fiscal year (~8% Q/Q in Q3 and 23% in Q4) to get to the midpoint of guidance.

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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.