Market Review: October 29, 2024

Closing Recap

Tuesday, October 29, 2024

Index

Up/Down

%

Last

DJ Industrials

-154.06

0.36%

42,233

S&P 500

9.56

0.16%

5,833

Nasdaq

145.56

0.78%

18,712

Russell 2000

-5.98

0.27%

2,238

 

 

 

 

 

 

 

 

 

U.S. stocks with another slow, steady climb all day as the Nasdaq Composite trades to new all-time intraday highs taking out 10/25 high of 18,690.01, rising for the 13th time in last 15 trading days and looking to make it an 8th straight week of gains ahead of several mage cap tech earnings this week, including GOOGL, AMD tonight (AAPL, AMZN, MSFT, META also this week). After snapping its 6-week win streak last Friday, the S&P is up the first two days of this week while the Smallcap Russell 2000 underperformed as Treasury yields climbed to highest since July (4.34%) before paring back. Homebuilders were among the worst sector performers following lower guidance from DHI this morning; retailers were weaker behind BOOT and CROX results though VFC rallied on results, while autos got a weaker outlook from Ford (F) as shares declined. Stock markets pushed higher despite only three of the eleven S&P sectors being in the green as tech (+1.6%) outperformed along with Communications (XLC), while Utilities (XLU) and Energy (XLE) were down over 1.5%. NYSE breadth more than 2:1 decliners leading advancers as 8 of 11. Economic data today showed the Labor Department’s JOLTS survey showed job openings were at 7.44 million in September, compared with estimates of 8 million, while confidence data surged, and the trade deficit widened. Today also saw a strong 7-year auction with pared Treasury yield gains.

Economic Data

  • The U.S. trade deficit in goods widened sharply in September amid a surge in imports, suggesting that trade remained a drag on economic growth in the third quarter. The goods trade gap increased 14.9% to $108.2 billion last month as exports fell. That would mark the third straight quarter that trade has subtracted from gross domestic product.
  • US August 20-metro area home prices +5.2% (consensus +5.1%) from year ago vs July +5.9%. US August home prices in 20 metro areas +0.4% seasonally adj (consensus +0.2%) vs July +0.3%. US August 20-metro area home prices non-adjusted -0.3% vs July 0.0% as per S&P CoreLogic Case-Shiller.
  • U.S. job openings fall to 7.443 million in Sept (mor than 3 ½ year lows) from 8.04 million prior month. Data for August was revised down to show 7.861 million unfilled positions instead of the previously reported 8.040 million.
  • Oct. Consumer Confidence 108.7, highest since January and tops est. 99.5. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—increased by 14.2 points to 138.0.
  • @charliebilello noted “Over the last 5 years, the US National Debt has increased by 56%, moving from $22.9 trillion up to $35.8 trillion.”

Commodities

  • December gold prices jump $25.20 or +0.91% to post a new record closing high of $2,781.10 an ounce (taking out prior record high of $2,772.60) as uncertainties surrounding the U.S. presidential election and the Middle East conflict, along with expectations of an interest rate cut by the Federal Reserve, boosted bullion’s appeal.
  • Oil prices finish lower, slipping -$0.17 or 0.25% to settle at $67.21 per barrel while Brent Crude futures settle at $71.12/bbl, down 30 cents, or 0.42% adding to recent declines.

Currencies & Treasuries

  • Bitcoin rallies to $73,000 for the first time since April, rising over 5%, picking up momentum over the last few weeks heading into the election. The dollar index (DXY) was strong early before paring gains and finishing little changed.
  • U.S. Treasury prices sold off, sending yields higher ahead of key inflation (PCE) and jobs data (ADP, nonfarm) later this week. Markets have recently noted the prospect of no Fed rate cut at the December meeting more seriously, but widely anticipate a 25bps cut at next week’s meeting. The 10-year yield rises to 4.322%, from 4.277% at Monday’s settle, and the 2-year yield reaches 4.166%, up from 4.142% to finish Monday.
  • U.S. Treasury sold $44B in 7-year notes at high yield 4.215%, below the 4.235% when issued prior with strong bid-to-cover ratio 2.74, as Primary dealers take 7.47% of U.S. 7-year notes sale, direct 20.57% and indirect 71.96%

 

Macro

Up/Down

Last

WTI Crude

-0.17

67.21

Brent

-0.30

71.12

Gold

25.20

2,781.10

EUR/USD

-0.0011

1.0803

JPY/USD

0.17

153.45

10-Year Note

0.018

4.296%

 

Sector News Breakdown

Retail, Consumer Staples & Restaurants:

  • BOOT shares fell; reported quarterly beat and raised guidance as now expecting sales of $1.874B-$1.907B (prev. $1.816B-$1.850B) and SSS of 3.0-5.0% (prev. -1.0% to +1.2%), but news of CEO changes rattled shares early.
  • BYON executive chairman Marcus Lemonis discloses purchase of ~71k shares; 2nd purchase this week.
  • CROX shares fall after guiding Q4 PS $2.20-$2.28 below est. $2.72 and said expects Q4 revenue to be flat to up slightly compared with last year and sees 2024 rev growth of about 3% compared to last year, at the lower end of prior guidance of 3% to 5% (followed strong Q3 EPS/sales beat).
  • KDP shares fell after top shareholder German investment firm JAB Holding to sell about 60M shares of KDP at $32.85 per share; the offer price is at ~3% discount to KDP stock as of Monday’s close.
  • MCD Q3 comp sales -1.5%, the biggest decline in 4-years vs. est. -0.67%, hurt by weaker traffic across its key markets of U.S., Europe and China
  • OLLI announced that it was the winning bidder in the latest bankruptcy sale process to acquire eight additional former Big Lot’s store leases. The eight stores were part of a bankruptcy auction for the second wave of Big Lots store closures, which included 170 stores.
  • VFC shares rose; Q2 showed progress, as upside featured better-than-expected metrics across nearly all key measures including 1) lesser Vans declines, 2) better-than-expected TNF declines, 3) gross margin, and 4) SG&A management.
  • SYY Q1 net sales rose 4.4% to $20.48B in-line with estimates but EPS of $1.09 missed the $1.13 estimate; gross profit margin fell 27 basis points to 18.3% in the first quarter; reiterated its 2025 forecasts, where it expects full-year sales growth of 4% to 5% and adjusted EPS growth of 6% to 7%.

Homebuilders, Building Products, Home Furnishing:

  • DHI shares slipped in homebuilders after forecast 2025 revenue and home deliveries below estimates as expects to deliver 90,000 to 92,000 homes vs. ests of more than 94,000 homedeliveries and guided FY25 revs $36B-$37.5B vs. est. $39.4B following a Q4 EPS and rev miss.
  • SKY Q2 adj EPS $0.93 vs. est. $0.81; Q2 revs rose 32.9% y/y to $616.9M vs. est. $602.12M topping consensus for the homebuilder; Q2 homes sold increased 31.3% to 6,357; Q2 total backlog increased 5.6% to $427M q/q; Q2 average selling price per U.S. home sold increased 4.5% to $92,400.
  • SWK shares slid in the tools sector after Q3 revs fell -5% y/y to $3.75B missing the $3.8B estimate citing tepid demand and challenges in the automotive market; tightens FY profit forecast range to $3.90-$4.30 from $3.70-$4.50.

Leisure, Gaming & Lodging:

  • Ford (F) shares fell; reported Q3 operating profit of $2.6B that matched expectations but said it expected full-year operating profit of about $10B, at the bottom of guidance provided in July of $10B-$12B; Q3 revs rose 5% to $46.2B; EV losses in the third quarter, however, were $1.2B; Q3 Adj. EBIT of $2.55B slightly missed consensus of $2.64B
  • CWH shares rose; delivered adjusted EBITDA -$0.4M vs consensus on revenue +$83.2M vs consensus via stronger vehicles (+$83.4M), CS&P (+ 9.4M), and F&I (+$6.7M), partially offset by PS&O (-$9.1M); shares outperformed after being one of the first in the towable/RV space this quarter with upside results.
  • RCL Q3 adj EPS $5.20 vs. est. $5.01; Q3 revs rose 17% to $4.89B vs. est. $4.89B; guides Q4 EPS $1.40-$1.45 vs. est. $1.58; Sees ADJ EPS $11.57 to $11.62, vs. prior $11.35 to $11.45 and est. $11.51.

Energy

  • BP reported Q3 underlying replacement-cost profit of $2.27B, down from $3.29B y/y but better than analysts’ estimates of $2.05B; said weaker realized refining margins and lower oil prices led to the quarterly earnings decline
  • CVI shares tumbled after the results and announced dividend suspensions; took shares of IEP down too as the decline is a ~10% hit to $IEP’s NAV, or~$390 million in a day.

Bitcoin, FinTech, Payments:

  • PYPL shares fell as Q3 EPS beat but revs of $7.85B missed the $7.89B estimate and forecasts Q4 revenue below estimates as it focuses more on its higher-margin businesses to boost profitability instead of aggressive expansion; said it expects revenue to grow by a "low single-digit" percentage vs analysts’ estimate of 5.4% growth. Q3 total payment volume up 9% and Q3 transaction margin dollars increased 8% to $3.7 billion
  • SOFI Q3 sales $697M topped est. $632M on better EPS $0.05 and GAAP Net Income $61M vs Est. $39M; Total deposits grew to $24.4 billion in the quarter; SoFi added more than 756,000 new customers and now has nearly 9.4 million customers.

REITs:

  • BRX reported 3Q24 FFO of $0.52, which is in line with consensus and our estimate, though results on a comparable basis likely exceeded expectations after excluding $2.4M of non-recurring G&A expense. In addition, management raised its FY24 FFO guidance by 0.7% at the midpoint to a new range of $2.13-$2.15 (from $2.11-$2.14).
  • KRC reported 3Q24 FFO of $1.17, which beat consensus of $1.05 as beat was largely driven by top line including higher rental revenue of $0.08, tenant reimbursements of $0.03, and other property income of $0.01; management increased its FY24 FFO guidance range to $4.38-$4.44 (from $4.21-$4.31), or ~3.5% at the midpoint.
  • REG reported a 3Q24 beat with NAREIT FFO of $1.07 exceeding consensus by $0.03, and management raised its FY24 FFO guidance by $0.05 (1.2%) at the midpoint to a new range of $4.27-$4.29; the low end of the revised guidance range is $0.03 above consensus of $4.24, which should put upward pressure on estimates.
  • WELL reported strong 3Q24 results, which included: a Normalized FFO beat (+2.7%); strong SSNOI growth of ~13%, including a ~23% increase in its SHO portfolio; and $1.2B of new investments. Management also increased 2024 Normalized FFO guidance by over 3% at the midpoint and nearly 3% above consensus.

Biotech & Pharma:

  • BIIB named Daniel Quirk as its new chief medical officer, reporting to Priya Singhal, its current head of drug development. Quirk joins Biogen from BMY.
  • GSK said it would buy a clinical-stage experimental antibody from biotech firm Chimagen Biosciences in an up to $850M deal, as the British pharmaceutical giant looks to expand its immunology pipeline.
  • INCY Q3 revenue better than expected ($1.14B vs $1.08B est.) driven by a Jakafi beat and raise. Q3 Jakafi net product revenue $741M vs $713M est. Sees FY Jakafi net product revenues $2.74B-$2.77B est. above prior view $2.71B-$2.75B est. and said R&D expenses $573.2 million, +53% y/y, estimate $514.9 million.   
  • NARI reported a beat-and-raise in Q3 with $153.4M (+21.4% Y/Y), driven by its core VTE market. Revenue beat CG’s estimate of $150.5M and the consensus $150.7M. Management raised its FY24 revenue guidance by $3.5M at the midpoint to a range of $601.5M-$604.5M, slightly ahead of pre-print.
  • NVS Q3 core EPS $2.06 vs $1.94 cons, net sales $12.82B vs $12.68B, raised FY outlook, sees core operating income growth in high teens. CEO Vas Narasimhan said it would be a “couple more years” before the company could submit to regulators an experimental drug for a rare bone marrow cancer that was the centerpiece of a nearly $3 billion deal for the biotech MorphoSys.
  • PFE raises full-year 2024 revenue guidance to a range of $61B-$64B from prior $59.5B-$62.5B and raises adjusted diluted eps guidance to a range of $2.75 to $2.95 after Q4 results easily topped consensus. Guidance for revenue includes $10.5B in anticipated revenues for Comirnaty and Paxlovid, approximately $5B and $5.5B, respectively.

Healthcare Services & MedTech movers:

  • EHC Q3 results look strong, highlighted by a 4% EBITDA beat driven by stronger SS volumes
  • THC shares jumped; Q3 profit easily topped views for the hospital operator and raised yearly profit view to $11.12-$11.73 from prior $10.41-$11.12 (est. $10.56); better results than peer HCA last week.
  • TMDX shares tumbled after Q3 revs miss ($108.8M vs. $115M est.) on weaker earnings while backed FY24 revenue view $425M-$445M, vs. consensus $444.36M.

Industrials, Transports and Aerospace

  • BA announced offering of 112.5M shares of company at a public offering price of $143.00 per share.
  • CECO Q3 results were short of estimates and company reduced outlook due to project delays. The 2025 outlook is positive and implies continued improved orders. Revenue of $135.5mm was below $151.5mm estimate.
  • HUBB pared early losses after results as company noted storms impacted 3 production facilities in the Southeast but are back up and running.
  • JBLU guides FY revs -4% to -5%, vs. prior view -4% to -6% and guides available seat miles -2.5%-4.5% from -2.5%-5%
  • LDOS shares advance after earnings amid strength this quarter in the defense IT sector (CACI, BAH).
  • WM Q3 exceeded expectations for revenue, AEBITDA and Adj FCF, pushing FY24 expectations to the high-end of WM guidance ranges provided in April and reaffirmed at the midpoint or better in July.

Materials, Metals & Mining

  • CE was downgraded to Sell from Hold at Vertical saying research suggests that fundamental pressure continues to mount in both of the company’s two segments of Engineered Materials and especially Acetyl Chain.
  • GPK cuts FY24 adjusted EPS view to $2.49-$2.61 from $2.65-$2.85 and below $2.61 consensus
  • US Steel (X) gains amid report about status of CFIUS review of Nippon Steel deal, Seeking Alpha reported.

Internet, Media & Telecom

  • GOOGL earnings tonight after the bell among most closely watched.
  • AMT missed Q3 revs in Tower sector as revenue of $2.52B was below an estimate of $2.76B and expects full-year 2024 total property revenue between $9.89B-$9.98B, down from its prior forecast of $11.1B-$11.28B; main customers include telecom giants such as AT and TMUS which account for a significant portion of revenue from its property segment in the U.S. and Canada last year.

Hardware & Software movers:

  • CDNS reported a solid Q3, beating revenue by $34M and tightened its 2024 revenue guide
  • CHKP shares tumbled in Internet security after Q3 results and guidance.
  • CVLT shares surged after boosting its annual revenue forecast between $952M-$957M from prior view of $915M-$925M and guided Q3 revs above consensus after Q2 beat.
  • FFIV Q3 top-line and bottom-line metrics come in ahead of consensus and the high-end of guidance as Software continues to outperform and management noted that hardware showed improving demand signals; initial FY/25 guidance came in ahead of expectations with revenue/EPS growth midpoint guidance at +4.5%/+6.0%.
  • GLW Q3 core EPS and sales topped consensus and guided Q4 EPS $0.53-$0.5 on sales about $3.75B vs. $0.52/$3.67B.
  • HLIT topped expectations in Q3 and guided to continued strength in Q4, but cautionary comments about some potential customer delays in 2025 around the availability of unified DOCSIS 4.0 components weighed on shares.
  • XRX lowered its 2024 rev forecast from a decline of 5% to 6% in constant currency to a decline of around 10% in constant currency to reflect additional reductions in non-strategic revenue and lower-than-expected equipment sales; the guidance follows weaker Q3 EPS results $0.25/$1.53B vs. est. $0.51/$1.63B

Semiconductors:

  • AMD, QRVO earnings after the bell tonight in chip sector.
  • AVGO rallied after Reuters exclusively reports that OpenAI is working with AVGO and TSM to build its first in-house chip designed to support its AI systems. OpenAI has been working for months with Broadcom to build its first AI chip focusing on inference.
  • AMKR reported a modest Q324 EPS miss but guided Q4 well below, resulting in a DD share price decline; the weak guidance primarily stems from the Communications end market, with AMKR citing a smartphone build schedule that is deviating from normal historical trends.

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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.