Mid-Morning Look: February 01, 2024

Mid-Morning Look

Thursday, February 01, 2024





DJ Industrials




S&P 500








Russell 2000






After posting the first 1% decline for the S&P 500 since December 20th and the largest one day drop since September 21st following comments from Fed Chairman Powell about a March rate cut “unlikely”, U.S stock are back to their winning ways, with investors “buying the dip” ahead of big earnings from AAPL, AMZN, and META tonight. A sharp decline in Treasury yields (the 10-yr at overnight lows below 3.9% after economic data, down from 4.159% closing level last Friday), has certainly boosted market sentiment, though the dollar index (DXY) remains steadily higher. Transports are mixed as weakness in truckers CHRW, LSTR offset by strength in NSC, KEX; Regional banks (KRE) extend losses on provision loss fears after NYCB disaster yesterday crushed shares; industrial stocks after flurry of earnings (HON, ETN, DOV, SWK); semi stocks lower behind QCOM, WOLF guidance but SMCI extends gains; insurance stocks fall behind MET, AFL earnings. A very, very busy day of earnings, and economic data (see list below) as stocks strength after FOMC policy meeting headline dust settles. Big night ahead with big tech and the nonfarm payrolls report tomorrow morning. Prices paid inflation data point from ISM came in hotter than prior month and estimates, but no concern in stocks thus far.

Economic Data

  • Weekly Jobless Claims climbed to 224K from 215K in the latest week and above est. 212K; the 4-week moving average climbed to 207,750 from 202,500 the prior week; continued claims climbed to 1.898M from 1.828M prior and vs. consensus 1.840M; the US insured unemployment rate climbed to 1.3% from 1.2%.
  • U.S. Q4 non-farm productivity rose +3.2% vs. consensus +2.5% and vs Q3 +4.9%; U.S. Q4 non-farm unit labor costs rose +0.5% vs. consensus +1.6% and vs Q3 -1.1% (prev -1.2%).
  • ISM U.S. manufacturing activity index 49.1 in January, above consensus 47.0 and prior 47.1 as prices paid index rises to 52.9 in January from 45.2 in December (above est. 46.9), while new orders jumped to 52.5 in January vs revised 47.0 in December and employment index 47.1 in January vs revised 47.5 in December (previous 48.1).
  • Construction Spending for December rises +0.9% vs. est. +0.5% and vs Nov +0.9% (prev +0.4%); Dec private construction spending +0.7%, public spending +1.3%.
  • S&P Global January final manufacturing PMI at 50.7 (vs flash 50.3).






WTI Crude















10-Year Note




Sector Movers Today

  • In Banks: Regional banks (KRE) extended Wednesday losses a day after NYCB shares cratered after recorded Q4 charge-offs of $185M, up from just $24M in prior quarter, driven by just two bad loans, including one on offices; also cut its dividend to $0.05 from $0.17 (the NYCB report raised fears in the sector).
  • Industrials: ETN (record highs) Q4 results top consensus and forecasts FY24 adj. profit in the range of $9.95-$10.35 above est. $10.06 saying higher investments in data centers boosted demand for co’s electrical components. HON lower revs and guide; Q4 adj EPS $2.60 vs. est. $2.59; Q4 revs $9.44B vs. est. $9.7B; sees FY24 adj EPS $9.80-$10.10, vs. consensus $9.96 and sees FY24 revenue $38.1B-$38.9B vs. est. $39.01B. ITW Q4 adj EPS $2.42 below last year ($2.95), but in-line with ests as revs $3.98B vs. est. $4.01B; forecasts 2024 rev growth 2 to 4%, organic growth 1 to 3%. LII downgraded to Underweight at JP Morgan and cut tgt to $330 from $370 given reinforced caution on the residential HVAC end market cycle outlook as detailed in its recent research. PH raised its sales and earnings outlook for the year after its aerospace segment boosted sales for the fiscal second quarter; Aerospace Systems segment, sales rose 15%, compared with a 1% decline in the Diversified Industrial unit.
  • In Managed Care (ALHC, HUM, ELV, CNC)/Dialysis sector (FMS, DVA): Overnight, CMS 2025 MA Advance Notice called for a proposed net rate update of -0.16%. RBC Capital said they believe the market expected an essentially flat rate update before risk score trend, reflecting an effective growth rate largely offset by risk-model revision and the absence of a significant Star ratings adjustment. The 2025 Advance Notice is ahead of 2024’s -1.12% update, though well below updates seen in 2022 and 2023. TD Cowen said, on 12/8/23 we previewed a 2025 MA rate increase 0.54%. Today CMS proposed a (-0.16%) cut – both figures reflect benchmarks ex-CMS estimates of plan coding creep. Since 2019 the April Final Notice has improved every year by an average of 100bp. If repeated the FN could land 0.84%. HUM has an incremental (-40bp) Star headwind that could place them at 0.44% vs their 2025 guidance of 0-1%.



  • ALGN +4%; after Q4 revs $956.7M tops est. $933.8M; Q4 adj EPS $2.42 vs. est. $2.18; guides Q1 revs $960M-$980M vs. est. $952.5M; 2023 operating margin of 16.7%, non-GAAP operating margin of 21.4%; Major 2023 milestones: 17M Invisalign patients, 4M Vivera retainers, and 100 thousand iTero scanner units.
  • CTVA +16%; reported a better-than-expected 4Q23 result across revenue, gross margin, SG&A, AEBITDA, and AEPS primarily on pricing in the Seed segment and cost reductions in Crop Protection.
  • ETSY +8%; shares rise after the company appointed Marc Steinberg, Partner at Elliott Investment Management, to the company’s Board, effective February 5, 2024.
  • NSC +6%; as the WSJ reported an investor group, led by Ancora Holdings, has taken a roughly $1 bln stake in Norfolk Southern (NSC) and nominated a majority slate of directors in a bid to oust CEO Alan Shaw.
  • NXT +16%; reported FQ3 results well above expectations and raised FY24 guidance for a third consecutive quarter and backlog reached a new record.
  • RACE +8%; posted a higher-than-expected Q4 after-tax profit at 294 million euros ($318.1 million) while reporting a record EUR1.26 billion for the full year.



  • AFL -8%; shares fall after earnings as Q4 adj EPS $1.25 vs. est. $1.45; Q4 revs $3.8B vs. est. $4.4B.
  • CHRW -9%; reported Q4 EPS $0.50 vs Street at $0.80 as Benchmark noted weak demand and continued high capacity continue to impact revenue and AGP results in NAS; said NAST TL and LTL volume declined 3.5% sequentially and truckload volume was down 1.5% y/y
  • HON -4%; lower revs and guide; Q4 adj EPS $2.60 vs. est. $2.59; Q4 revs $9.44B vs. est. $9.7B; sees FY24 adj EPS $9.80-$10.10, vs. consensus $9.96 and sees FY24 revenue $38.1B-$38.9B vs. est. $39.01B.
  • MXL -9%; shares fell on guidance; after four consecutive quarters of declining revenue that saw sales fall 50% from 1Q to 4Q, the company is guiding another 24% QoQ revenue decline as the inventory rebalancing and demand softness persists across most of the business.
  • PTON -20%; reported in-line Q2 results but guided Q3 revs $700-725M below consensus $750M and guides FY24revs $2.68-$2.75B below est. $2.98B; members 6.4M v 6.7M y/y.
  • QCOM -5%; reported a good DecQ and guided to MarQ top line of $9.3B (in line with Cons) down 6% q/q (est. down ~2%); sees Q2 revs $8.9-9.7B vs est. $9.3B and adj EPS $2.20-2.40 vs est. $2.25; said inventory levels to remain elevated in near-term (shares downgraded ay Citigroup after results).
  • WOLF -7%; shares fell on wider loss and weaker guidance; Q2 EPS loss (-$1.00) vs. est. loss (-$0.66); Q2 revs $208.4M vs. est. $206.4M; guides Q3 EPS loss (-$0.69-$0.57) vs. est. loss (-$0.63); sees Q3 revenue $185M-$215M, below consensus $224.0M.


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.