Market Review: October 30, 2024
Closing Recap
Wednesday, October 30, 2024
Index |
Up/Down |
% |
Last |
DJ Industrials |
-91.45 |
0.22% |
42,141 |
S&P 500 |
-19.18 |
0.33% |
5,813 |
Nasdaq |
-104.82 |
0.56% |
18,607 |
Russell 2000 |
-5.06 |
0.23% |
2,233 |
U.S. stocks finish lower following a late day pullback, ending near the lows, on a day that saw some wide sector moves on earnings results and key economic data. Data showed a strong jump in private payrolls as per ADP data (ahead of Friday nonfarm payroll report) and stronger housing data, while the GDP report was slightly below estimates with mixed inflation readings and strong consumption. Tomorrow morning, we get the Fed’s preferred inflation reading with October core PCE results due at 8:30 AM. Today saw new record highs for gold topping $2,800 an ounce, a pullback in Treasury yields and the dollar, as well as Bitcoin. Sector movers included: semiconductors (SOX) fell -3% led by weakness in AMD, QRVO on earnings and SMCI due to accounting issues; restaurants in focus with CAKE, EAT, SHAK rising on results while CMG, WING tumbled on results; LLY missed earnings weighed in the pharma complex/obesity sector. Market breadth showed a slight edge to advancers over decliners after yesterday’s negative market breadth led by strength in Communications, Financials, Materials and REITs, while Technology and Healthcare lagged. Smallcaps outperformed behind lower yields. Interesting stat of the day: @RyanDetrick tweeted “Today could be the 29th consecutive trading day the S&P 500 doesn’t close up or down at least 1%. That would tie the longest streak since late ’21. Right before the election we are seeing virtually no volatility.” In another interesting stat, “@Marlin_Capital tweets: “Institutional investors sold US stocks at the fastest pace in 9+ years last week, according to BOFA. It was the 2nd largest weekly net selling by institutional investors since 2008 (trailing only Sep 2015).”
Economic Data
- ADP US Oct. Private employment climbs 233,000; above est. +111k
- US Q3 GDP climbs annualized 2.8% q/q vs. est. +3.0%, Q3 core PCE climbs annualized 2.2% q/q vs. est. +2.1%, advance Q3 PCE price index +1.5%, advance Q3 PCE price index ex-food/energy/housing +1.6%, advance Q3 PCE services price index ex-energy/housing +2.6%, advance Q3 GDP deflator +1.8% (consensus +2.0%)
- US mortgage market index -0.1% to 214.5 in latest week as per the Mortgage Bankers Assoc (MBA); the purchase index climbs 5.0% to 137.8 in latest week and the refinance index falls 6.3% to 630.0 as the average 30-year mortgage rate climbs 21 bps to 6.73% in Oct 25 week, highest since July 2024 – MBA
- Sept Pending Home sales index +7.4% (vs. consensus +1.0%) to 75.8 and up +2.6% y/y.
Commodities
- Brent crude futures settled $1.43, or 2.01%, at $72.55 a barrel. U.S. West Texas Intermediate crude rose $1.4, or 2.08%, to $68.61 as oil prices rebounded after falling more than 6% last week. Data showed U.S. crude and gasoline inventories fell unexpectedly last week and on reports that OPEC+ may delay a planned oil output increase.
- OPEC+ could delay a planned hike in oil production scheduled to take effect in December by a month or more, three sources from the grouping told Reuters on Wednesday, citing concern about soft oil demand and rising supply. OPEC and the Saudi government communications office did not immediately respond to requests for comment.
- U.S. weekly crude stocks off 515,000 bbls to 425.51M, vs forecast of 2.3M bbl build; U.S. weekly gasoline stocks off 2.7M bbls to 210.87M, vs forecast of 0.6M bbl build; U.S. weekly distillate stocks off 977,000 bbls to 112.86M, vs forecast of 1.6M bbl draw as per weekly EIA Data.
- Gold prices touched another fresh record high, rising above $2,800 an ounce for the first time ever, rising $19.70 or 0.71% to finish at $2,800.80 an ounce. Gold was helped by a weaker dollar today as the DXY falls -0.25% and the euro advances as well as further rotation into the precious metal heading into the Presidential election in less than 7-days.
- After hitting lows just below 4.2% after morning economic data, the 10-yr has pushed back to new highs above 4.28% late into inflation data tomorrow; Treasury yield on the 10-yr rose 1 bps but off weekly high above 4.36%.
Macro |
Up/Down |
Last |
WTI Crude |
1.40 |
68.61 |
Brent |
1.43 |
72.55 |
Gold |
19.70 |
2,800.80 |
EUR/USD |
0.0041 |
1.0859 |
JPY/USD |
0.05 |
153.40 |
10-Year Note |
0.012 |
4.286% |
Sector News Breakdown
Autos:
- In Chinese EV, China tells automakers to pause investing in EU countries that voted for additional EV tariffs, Reuters reported. China encourages automakers to invest in EU members that opposed additional EV tariffs. China advises automakers to be united and hold collective investment talks with European govts.
- In EV Charging Sector: Stifel lowered forecasts in EV charging for BLNK, CHPT and lower ests for WBX (PT to $1.50 from $3 and downgrade) and raising ests on EVGO (PT to $10 from $6) ahead of earnings to reflect recent data points on EV sales, as well as company-specific events.
- In Auto Suppliers: LEA downgraded to Equal Weight from Overweight at Barclays and cut tgt to $120 from $140 saying the weaker than expected light vehicle production environment alongside customer mix headwinds has driven negative earnings pressure for the company more than offsetting any benefits from performance. DAN shares tumbled after Q3 results and cut its FY24 adjusted EPS view to 75c-95c from 80c-$1.30, and cuts FY24 revenue view to $10.2B-$10.4B from $10.45B-$10.95B saying lower end-market demand is driving reduced sales.
Retail, Food, Consumer Staples
- GO shares fell as the CEO steps down after two years in the role and earnings/guidance results.
- KHC Q3 revs $6.38B slightly below the $6.42B estimate while forecasted annual organic net sales to be at low end of its earlier range of flat to down 2% and sees annual adj EPS to be at low end of prior forecast of $3.01 to $3.07.
- MDLZ posted higher Q3 revs but lower profit in Q3; Sales fell by 7.7% and 0.7% in Latin America and North America, respectively. These losses were offset by a sales gain of 7.7% in Europe and 3.4% in Asia, the Middle East and Africa.
Restaurants:
- CAKE reported Q3 EPS above consensus on better-than-expected Cheesecake same-store sales growth and UL margin.
- CMG shares slip as Q3 adj EPS $0.27 vs est. $0.25 on revs rising 13% y/y to $2.794B vs est. $2.799B, but Q3 Comp sales increased 6%, driven by 3.3% transaction growth and a 2.7% increase in the average check – but missed the 6.3% estimate; guided 2024 comp sales growth in the mid to high-single digit range, vs. est. 7.5% growth.
- EAT Q3 revs rose 13% y/y to $1.14B, above ests and co boosted its full-year earnings guidance to between $5.20 and 5.50 a share, up from $4.35 to $4.75. Consensus views were currently at $4.83 (EAT is owner of the Chili’s, Maggiano’s and It’s Just Wings restaurant chains)
- SHAK delivered a 47% jump in adj EPS to $0.25 topping $0.19 as Q3 sales rose 15% y/y to $316.9M just above consensus and same-shack sales rose 4%, just above expectations for a 3.6% gain, and accelerating from 2.3% growth last year.
- WING shares slumped as Q3 EPS of $0.88 missed the $0.96 estimate while revs of $162.5M topped consensus of $160.2M; said same store sales jumped 20.9%, well above estimates for an 11.4% gain, and sharply above from a 6% increase last year; reaffirms FY24 domestic same store sales view up 20%
Leisure, Gaming & Lodging:
- In Casino/Gaming: CZR shares fell as Q3 EBITDAR was -1% vs Street’s estimates, reflecting downside LV/Regionals and some offset from upside Digital. Wells’ Fargo key takeaway was that the regional EBITDAR inflection it had hoped for may not occur in 2025.
- In Online travel: BKNG shares hitting all-time highs ahead of earnings results tonight
Energy
- In utility sector shares of EXC, FE, NI among movers after earnings results.
- FSLR shares fell as Q3 EPS and revenue came in below estimates, driven by lower-than-expected module shipments and a $50M product warranty charge related to the manufacturing ramp of its Series 7 product. FSLR lowered its FY’24 volume guide, largely due to weakness in the India pricing environment.
- EXE reported adj EPS/EBITDA of $0.16/$365m ahead of consensus of ($0.05)/$359m as beat was on production as both Marcellus and Haynesville volumes exceeded our expectations.
- OKE Q3 results were in line with Consensus and raised stand-alone EBITDA guidance & provided guidance including partial quarter contributions from ENLC & Medallion.
Banks, Brokers, Asset Managers:
- BAC said it was evaluating potential litigation over an inquiry into the bank’s processing of funds through the Zelle payment app. The Consumer Financial Protection Bureau (CFPB) staff has initiated discussions with the bank to pursue a resolution of the inquiry or to file an enforcement action. The increase of fraud and scams on Zelle has attracted attention from several U.S. lawmakers.
- SCHW said to expand 24-hour trading to S&P 500, and Nasdaq 100. Schwab Introduces new Thinkorswim features alongside 24/5 trading expansion, including positions on charts, options chain gadget, index monitor, analyst ratings access, remote check deposit, and upcoming walk limit orders for enhanced trading experience across desktop, web, and mobile platforms
- UBS topped analysts’ expectations, helped by its wealth management division while warning markets are set for heightened volatility in Q4; posted a 31% increase in its pre-tax profits, to $1.9B vs. est. $1.7B and the bottom line was lifted by a 30% increase in pre-tax profits from its global wealth management division, to $1.3B.
Bitcoin, FinTech, Payments:
- Visa (V) reported Q4 revenue of ~$9.6B and adj. EPS of $2.71 above pre-print estimates while volume growth in the qtr. was stable across domestic and x-border, while Oct. MTD growth slightly accelerated. Visa guided to FY25 net revenue growth of high single to low double digits with adj. EPS growth at the high end of low double digits.
Insurance & Services:
- CB Q3 operating EPS of $5.72 beat consensus of $4.99 on better underlying results, low cats, higher PYD and investment income and the 83.4% underlying combined ratio beat consensus 84.1%; said P&C pricing in NA improved and was more than loss trend in the quarter.
- RDDT delivered Q3 revenue coming in 11% above consensus and EBITDA coming in 57% above the high-end of guidance; continued user growth and engagement gains with DAUqs reaching 97M (+47% Y/Y); guided Q4 revs $385M-$400M vs. est. $357.9M.
- SIGI upgraded to Outperform from Market Perform at BMO Capital and raised tgt to $105 saying that following three quarters of meaningful reserving additions, it is now comfortable that Selective’s earnings bar is low enough that it can begin to exceed consensus expectations in the future quarters.
- UNM Q3 operating earnings came modestly ahead of the Street as favorable Group Life offset Supplemental & Voluntary.
REITs:
- CTO upgraded to Strong Buy from Outperform at Raymond James after another beat and raise quarter and more importantly, an active Q3 of higher-than-expected accretive external growth and a meaningful increase to the company’s market cap.
- ROIC downgraded to Market Perform at Raymond James based on valuation (ROIC shares currently trade at premium 19.6x consensus 2025 AFFO multiple).
Biotech & Pharma:
- AZN shares declined after its China president is under investigation and is cooperating with Chinese authorities, the company said.
- BIIB Q3 adj EPS $4.08 beats $3.79 est. and sales $2.47B top the $2.43B estimate; Q3 LEQEMBI global in-market sales $67M, U.S sales $39M; raised its full-year guidance and now expects adjusted EPS to range from $16.10 to $16.60, up from prior guidance of $15.75 to $16.25.
- BMRN Q3 top line was a modest beat driven by the base business benefiting from a few one-offs. Voxzogo was in line and Valrox continues to struggle. Guide essentially reiterated for top-line and modestly increased on margins
- GSK reported an in-line sales print, while beating bottom-line owing to lower-than-expected operating expenses (mainly COGs and SG&A), and lower finance costs, as well as reiterating its FY24 group guidance.
- EXEL reported 3Q Cabo revenues of $478.1M, ahead of FactSet consensus (~+4.7%) driven by increased Cabo market share and new patient starts and raised and narrowed FY24 net product revenue and total revenue guidance by 5.6% and 7.4%, respectively, at the midpoint.
- LLY shares fell as Q3 adj EPS $1.18 misses the $1.45 est. on lighter sales of $11.44B (vs. est. $12.1B); Q3 Mounjaro revenue $3.11B vs. Bloomberg est. $3.62B and Zepbound sales $1.25B vs. est. $163B; sees FY adj EPS between $13.02 and $13.52, compared with a $16.10-$16.60 forecast prior.
Healthcare Services & MedTech movers:
- BSX announced the results of the primary endpoint of the ACURATE IDE clinical trial, which evaluated the ACURATE neo2 Aortic Valve System in the treatment of patients with severe, symptomatic aortic stenosis at low, intermediate, high and extreme risk of open-heart surgery.
- CVRX Q3’24 revenue of $13.4M exceeded the street at $13.2M while guidance was tightened ~$0.5M lower at the midpoint; all focus is on finalized OPPS, expected in the coming day
- GEHC flagged Positive Rev Growth in US and PDx balanced by continued market softness in China (elevated focus since PHIA), Book-to-Bill 1.04x, 1% organic order growth, Guidance pointing rev growth to lower end of 1% to 2% range given China market softness, EBIT margins 10 bps higher and EPS $0.05 higher at low end
- HIMS shares dropped after the lowest dose of NVO’s weight-loss drug, Wegovy, was listed as available on U.S. FDA’s website. The FDA website now shows all five dose strengths of Wegovy and all three dose strengths of Ozempic.
- SYK reported a +2% Q3 sales surprise, led by MedSurg, and a +4% EPS surprise, driven by revenue drop-through and raised its 2024 guide with organic sales now 9.75% at the midpoint (range: 9.5-10.0%) vs prior 9.5% (range: 9.0-10.0%) and EPS now $12.05 at the midpoint (range: $12.00-12.10) vs prior $12.00 (range $11.90-12.10), ahead of the Street.
- TXG Q3 revenue of $152mn came in below Consensus of $163mm; gross margin for 3Q24 was 70% compared to gross margin of 62% in 3Q23. EPS was ($0.30) which compares to consensus ($0.35). TXG lowered their FY24 revenue guidance to $595mn to $605mn from the previous $640mn to $660mn.
Industrials & Transports
- ALSN shares jumped following quarterly results that topped expectations.
- BA downgraded to market perform from outperform at Bernstein saying while Boeing should eventually recover to its long-held industry position, they are more skeptical on when it will happen. After Q3, they lack confidence that Boeing shares can outperform the market in the next 12 months.
- CAT Q3 adj EPS $5.17 vs. est. $5.34; Q3 revs fell -4.2% y/y to $16.11B vs. est. $16.38B; Q3 miss comes as higher borrowing costs and sticky inflation led to a slowdown in machinery demand, forcing the company’s dealers to moderate product restocking; says outlook for Q4 rev sales and revenues to be slightly lower
- ENVX reported Q324 revenue of $4.3mm, slightly below consensus of $4.4mm; a second contract with a leading smartphone OEM was announced, with a goal for high-volume production in late 2025, subject to hitting customer qualification milestones; IoT production is set to begin in 2025.
- LSTR shares dipped after the trucking and logistics firm provided a 4Q profit forecast range with a midpoint that’s short of estimates following a disappointing Q3 result.
- OSK Q3 adj EPS and sales come in just above consensus while guides FY EPS $10.00, down from prior view $10.45.
- RSG reported Q3 results that were ahead of RBC/Street expectations, while 2024 Adjusted EBITDA is now expected to reach the high end of the previous guidance range.
Materials, Metals & Mining
- FMC was among the top gainers in the S&P 500 after the chemicals company reported a top and bottom line beat and mid-point of guidance topped consensus.
- OI tumbles on disappointing results and guidance; Q3 adj EPS ($0.04) vs est. $0.04 on sales $1.7B vs est. $1.761B; sees FY adj EPS $0.70-0.80 below est. $1.13; said revised its guidance given softer than anticipated market demand.
- GOLD downgraded to Neutral from Buy at UBS saying although gold price momentum remains positive and UBS expects further upward revisions to consensus gold prices, it sees downside risk to volume & cost assumptions.
- NEM downgraded to Neutral at UBS and cut its price target to $54 from $67 in gold miners as it has limited conviction in NEM’s ability to hit guidance and restore market confidence.
Internet, Media & Telecom
- GOOGL shares advanced after Q3 results, Q3 EPS $2.12, tops consensus $1.84; Q3 revs Ex-tac $74.55B, above est. $72.88B; Q3 Google cloud rev. $11.35B, vs. est. $10.79B; Q3 Google advertising revenue $65.85B in-line with ests; YouTube ads revenue $8.92B vs. est. $8.89B and Gemini was a major focal point.
- SNAP results were a bit better than feared while the Q4 guide was modestly below Street with continued brand spend headwinds; Solid Q3 revenue growth of +15% y/y, active advertisers more than doubled year-over-year.
- META and MSFT report earnings after the close tonight.
- LUMN announced an agreement with AMZN’s AWS to strengthen data center connectivity and optimize network delivery of cloud technologies for hundreds of millions of customers across the United States.
Hardware & Software movers:
- DBX announces 20% global workforce reduction; continues to forecast softening demand & macro headwind
- EA delivered a solid beat-and-raise in F2Q25 against elevated expectations as strength in sports titles offset underperforming Apex Legends.
- GRMN traded at all-time highs after Q3 EPS $1.99 topped ests $1.45 on better revs $1.59B vs. est. $1.44B and raised its outlook citing momentum they say they are experiencing as we enter the important holiday selling season; guides year EPS to $6.85 above prior view of $6.00.
- GPRO discloses updated restructuring plan, including ~26% reduction in force.
- VRNS Q3 results surpassed expectations across both ARR and FCF, though guidance lacked the follow-through to this momentum that many had hoped for, with Q4 NNARR implying a steep deceleration in growth.
Semiconductors:
- AMD reported Q3 earnings that met expectations but guided Q4 revs of $7.5 billion at the midpoint of its range compared with estimates of $7.55 billion; on the positive side, AMD now expects data-center AI GPU revenue to "exceed" $5 billion in 2024, up from the $4.5 billion forecast she made in July.
- QRVO reported better results but weaker guidance (Q4 EPS $1.10-$1.30 vs. est. $1.92), sending shares plunging, driven by a shift from 5G Android mid-tier handsets toward entry-level models. Advanced Cellular Group (ACG) revenue was weaker than expected in CQ3, primarily driven by this Android mix dynamic, which SUSQ thinks will further impact revenue and margins in 2HF25 and early F26 (results prompted three brokerage downgrades).
- SMCI shares tumbled after the company revealed its Ernst & Young sent letter of resignation as accounting firm and the company said it has begun process of identifying successor. SMCI said it doesn’t currently expect any restatements and disagrees with EY’s decision to resign (shares of DELL, HPE advanced in sympathy).
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.