Mid-Morning Look

Friday, February 23, 2024

Index	Up/Down	%	Last
DJ Industrials	180.04	0.47%	39,251
S&P 500	19.14	0.38%	5,106
Nasdaq	30.93	0.19%	16,071
Russell 2000	-8.42	0.42%	2,005

 

 

U.S. stocks in unchartered territory, with the Nasdaq holding above 16,000 thanks to likes of NVDA, META, AMZN and other large caps, while the S&P 500 rises and holds the 5,100 level at new all-time highs. The Dow Jones Industrial Average also at record highs above 39K as the upside momentum continues after major averages snapped their 5-week winning streaks last Friday following “hotter” CPI and PPI inflation reports. The Smallcap Russell 2000 is underperforming, on track for weekly losses despite more than 2% gains WTD for the Nasdaq and S&P. Higher treasury yields (10-yr holding 4.3%) and an apparent pushout on timing of interest rate cuts per cautious comments from Fed speakers overnight have done nothing to dent this FOMO buying moment for U.S. stocks. Three top Federal Reserve officials said the US central bank is still on track to cut interest rates this year — just not anytime soon. Fed Vice Chair Philip Jefferson and Governor Lisa Cook said they are optimistic inflation is still cooling despite a blip in January but made clear they want more evidence. Federal Reserve Governor Christopher Waller said last night January’s jump in consumer prices warrants caution in deciding when to start cutting interest rates, though he still expects reductions to begin later this year. Earnings season is just about winding down and attention turns back to data next week with GDP and PCE inflation readings (Fed’s preferred measure).

 

 

Macro	Up/Down	Last
WTI Crude	-1.81	76.80
Brent	-1.69	81.96
Gold	5.20	2,035.90
EUR/USD	-0.0005	1.0817
JPY/USD	-0.09	150.42
10-Year Note	-0.026	4.301%

 

• In EV Sector: NIO was downgraded to Underweight at JP Morgan noting its share price slipped by 34% YTD, underperforming broader China autos’ – 18% or MXCN -5% as attributes to the weakness to the company’s slow sales in January and investor concern on the company’s sales and earnings momentum in 2024. RIVN was double downgraded from Buy to Sell at UBS and slash tgt to $8 from $24 as sees material risk to outer-year expectations.
• In Lodging/Travel: Online travel company BKNG shares tumble as reported Q4 nights +9%, the high end of guidance but shares slipped after guiding 1Q room-nights, +4–6% (3% below Street estimates) – also repurchased >$10B in shares in ’23 and added a dividend; topline guidance was affirmed with modest weakness in EBITDA. In Lodging, shares of SHO and Hyatt (H) were both active after quarterly results. Hyatt record highs.
• E&P Sector: EOG reported in-line Q423 earnings and a 2024 guide that came in slightly less capital efficient than it and the Street expected as announced $6.2B capital plan to grow oil production 3% and total production 7%. CTRA reported strong Q423 beat on all three production streams on materially lower-than-expected capex, 2024 guidance that features oil production slightly better than consensus on materially lower-than-expected capex. CVE was upgraded to Buy from Neutral at UBS as sees materially higher shareholder returns once CVE hits its net debt target of $4B in 2H24, for which it is not getting appropriate credit, in its view.

 

• CVNA +37%; upgraded from Market Perform to Outperform at William Blair after Carvana posted a healthy fourth quarter with profits exceeding consensus expectations.
• LUNR +16%; shares jumped after its lander, nicknamed Odysseus, reached the moon at 6:23 p.m., the first private spacecraft to land on the lunar surface intact.
• LYV +3%; reported record 4Q AOI of $117mm, compared consensus $114mm, with y/y improvement driven by Ticketing and Sponsorship/Advertising. Management noted that supply/demand is at record levels globally, and guided 2024 AOI to be up double digits with AOI compounding at a double-digit rate next several years.
• NVDA +2%; builds on yesterday record highs after earnings, breaking $2 trillion market cap for first time.
• PANW +5%; bounces after losing 25% of its value this week after earnings/guidance disappointment.
• RKT +9%; Q4 adj EPS topped consensus driven by higher revenue, GOS margins and lower expenses while the forward guide is modestly better than expectations.
• SQ +16%; after posted strong Q4 results, beating Street expectations on both gross profit and EBITDA as EPS beat was driven by much faster-than-expected cost reductions, underpinning a meaningful increase to 2024 guidance as Operating Income and EBITDA guidance was substantially ahead of Street expectations.

 

• AIRS -25%; shares tumbled after short seller Fuzzy Panda Research reveals short position in company.
• BKNG -9%; reported Q4 nights +9%, the high end of guidance but shares slipped after guiding 1Q room-nights, +4–6% (3% below Street estimates) – also repurchased >$10B in shares in ’23 and added a dividend; topline guidance was affirmed with modest weakness in EBITDA.
• FOXF -29%; shares tumbled after a disappointing Q4 print and initial ’24 guidance that came in well shy of its/Consensus expectations as sees FY net sales $1.53-1.68B vs est. $1.737B and adj EPS $2.30-2.60 vs est. $4.79.
• INDI -12%; reported Q4 results, which missed, and guided Q1 well below, citing broad-based weakness within the auto market resulting in inventory destocking across its auto customers. INDI also disclosed a program cancelation.
• MELI -12%; reported better-than-expected fourth-quarter sales but missed earnings expectations because of what the company described as a pair of one-off tax hits.
• PEN -6%; downgraded to Neutral at JP Morgan after Q4 results came below consensus, the first miss in the company’s history as a public company according to JPM, which came alongside guidance that fell short of some expectations (said sales of $284.7M missed the Street due to misses in both Neuro and Vascular).
• WBD -11%; reported Q4 revs $10.28B vs. est. $10.46B; said qtrly TV revs declined significantly mainly due to impact of WGA and SAG-strikes, some large licensing deals in prior year; Q4 advertising revenue at its networks segment declined 12% to $1.95B.

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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.