Mid-Morning Look: January 16, 2025

Mid-Morning Look
Thursday, January 16, 2025
Index |
Up/Down |
% |
Last |
DJ Industrials |
-118.72 |
0.27% |
43,103 |
S&P 500 |
-7.66 |
0.13% |
5,942 |
Nasdaq |
-45.22 |
0.23% |
19,465 |
Russell 2000 |
-7.03 |
0.31% |
2,256 |
U.S. stocks opened higher following yesterday’s strong stock market action that saw the S&P, Dow and Nasdaq post their biggest one-day gains since November but has since pulled back as investors digest a handful of key economic data and more bank earnings as we dive into heart of earnings season the next 3-weeks. Managed care stocks slip after UNH revs miss on worse MLR; semiconductors outperform early behind TSM earnings strength; bank earnings mixed with MS rising on results while PNC, MTB, USB slide on results; luxury retailers jump behind better revs from Richemont. Fed Waller in an interview on CNBC this morning says, “if numbers continue like this, is it reasonable to think rate cuts could come in first half of year”. The commentary comes on the heels of cooler than expected PPI and CPI inflation data this week of economist views (though both reports did see an uptick from the prior month). Rate futures traders move to price in near-even odds of Fed rate cut in May, from earlier June view, after Fed’s Waller’s comments. Treasury yields are steady at 4.65% for the 10-yr after tumbling Wednesday, the dollar also little changed while Bitcoin slips 2% and gold prices extend recent spike. Early strength in REITs, Utilities, Industrials and Financials while Healthcare, Consumer Discretionary and Consumer Staples early sector laggards.
Economic Data
- U.S. Dec import prices +0.1%, in-line with estimates and vs Nov +0.1% while export prices +0.3% vs. consensus +0.2% and vs Nov unchanged. Dec non-petroleum import prices +0.2%, year-over-year +2.4%
- Weekly jobless Claims climbed to 217,000 from 203,000 prior and vs consensus 210,000; the 4-week moving average fell to 212,750 from 213,500 prior week; continued claims fell to 1.859M from 1.877M prior week (vs. est. 1.871M) and the US insured unemployment rate unchanged at 1.2%.
- January Philadelphia Fed index surges to 44.3 vs. est. -5 in very strong print; the prices-paid index 31.9 vs 26.6, prices-received at 29.7 vs 5.6, employment index at 11.9 vs 4.8 and Fed new orders index at 42.9 vs -3.6
- December Retail Sales Ex-autos +0.4%, in-line with consensus and vs Nov +0.2% while overall retail sales rise +0.4%, slightly below consensus +0.6% and vs Nov +0.8%; Dec gasoline sales +1.5% vs Nov +0.2%; Dec cars/parts sales +0.7% vs Nov +3.1% and Dec Retail Sales Ex-autos/gasoline +0.3% vs Nov +0.2% (prev +0.2%).
- January NAHB Housing market index 47, above consensus 45 and vs. 46 in December; index of current single-family home sales 51 versus 48 in December; January index of home sales over next six months 60 versus 66 in December and January index of prospective buyers 33 versus 31 in December
- Nov Business Inventories +0.1%, in-line with consensus and vs Oct unchanged (prev +0.1%); Nov business sales +0.5% vs Oct unchanged (prev unchanged); Nov retail inventories ex-autos revised to +0.5% (prev +0.6%); Nov inventory/sales ratio 1.37 months’ worth vs Oct 1.37 months.
Macro |
Up/Down |
Last |
WTI Crude |
-1.02 |
79.02 |
Brent |
-0.76 |
81.27 |
Gold |
31.70 |
2,749.50 |
EUR/USD |
0.0013 |
1.0302 |
JPY/USD |
-0.91 |
155.56 |
10-Year Note |
-0.02 |
4.638% |
Sector Movers Today
- Luxury retailers rallied after Richemont (CFRUY) reported a 10% increase in Q3 sales, much better than the 1% increase expected by analysts as its core jewelry business, which includes brands such as Cartier and Van Cleef & Arpels, recorded a 14% rise in sales, compared to a 5% analyst consensus; said it saw double-digit sales growth in the Americas, Europe, the Middle East, Africa and Japan (EL, TPR, RL, BURBY, LVMUY, PPRUY were active).
- Application Software: Citigroup said they are turning more positive on application software/back-office software as upgrade BL, MNDY and PCTY to Buy ratings, downgraded INTA to Neutral and said new top picks are BL, PEGA, MNDY, and BOX with INTU top large-cap pick. Following improving software sentiment in Q4 and a recent valuation reset, Citi sees stable to improving demand and multiple thematic upside drivers supporting a more constructive view into ’25. BL upgraded to Buy citing compelling valuation on potential accel supported by SAP upgrade cycle with M&A potential likely limiting downside. MNDY upgraded to Buy on better risk/reward on pullback as see ’25 below cons guide as a risk but more than priced in. PCTY upgraded to Buy on improving SMB trends, differentiation in CFO G2M, and relative valuation vs peers. INTA downgraded on balanced risk/reward.
- Software outlook at Morgan Stanley shows BILL, OS, DOCN all upgraded to Overweight from Equal Weight; CFLT and DDOG both downgraded to EW from OW, MDB named to pick as replaces FTNT. The firm said after testing investor patience through CY24, GenAI-based solutions appear poised to move the needle in CY25. While a large opportunity exists ahead, the GenAI cycle comes with risk as well. Morgan sees larger consolidators best positioned to accrue the gains and navigate the risks.
- In Solar: FSLR was upgraded to Buy from Neutral at Seaport Research with a $274 price target calling it their favorite utility-scale solar name for 2025 with the best risk/reward profile specific to policy. ENPH was downgraded to Hold from Buy at Truist and cut its tgt to $65 from $100 as sees incremental growth headwinds persisting for the next several quarters and notes shares are “already trading at a meaningful premium to peers. While Truist ultimately expect policy revisions/pullbacks from the Trump admin to be less punitive than currently implied by group multiples, they stay highly selective ahead of/into the first 100 days, buying GEV for diversification/AI power demand & FSLR for U.S. manufacturing.
Stock GAINERS
- CFRUY +15%; after reported a 10% increase in Q3 sales, much better than the 1% increase expected by analysts as its core jewelry business recorded a 14% rise in sales, compared to a 5% analyst consensus.
- FTAI +4%; after being defended by BTIG, Stifel, Compass and DBAB after Muddy Waters short report the day prior.
- KLAC +4%; strength in semiconductor equipment names (LRCX, AMAT, ASML) following TSM earnings results.
- MS +1%; Q4 EPS $2.22 topped consensus $1.69 on better revs $16.22B vs. est. $15.03B as Q4 equities trading revs $3.33B beat est. $2.63B and Q4 wealth management revs $7.48B vs. est. $7.32B; Q4 investment banking revenue rose 25% to $1.64B (similar to GS, JPM strength day prior).
- NFLX +2%; was upgraded to Buy at Seaport Research, price target $955 citing the operational tailwinds that should support Netflix’s position with industry-leading original content accolades.
- SYM +16%; after the robotics warehouse automation agreed to acquire the Advanced Systems and Robotics business from Walmart.
- TSM +5%; logged record quarterly profit and said it expects robust revenue growth in the first three months of the year as demand surges for chips used in artificial intelligence processing; posted a 57% jump in net income to T$374.68B ($11.4B) for the quarter.
- UPS +1%; was upgraded to Buy from Neutral at Bank America with an unchanged price target of $150 as sees a potential end to the freight recession in 2025 and cites benefits from the company’s dynamic pricing model and cost initiatives (which will offset volume losses).
Stock LAGGARDS
- ATRA -42%; shares tumbled after the FDA declined to approve the company’s cancer therapy tabelecleucel based on observations made during an inspection of a third-party manufacturing facility for the therapy.
- CRL -6%; after Jefferies noted CITES, an int’l treaty governing trade of endangered species, released a statement recommending suspension of Cambodian NHP exports. The firm estimates that 32-49% of CRL’s NHP supply comes from Cambodia, which translates to $1.25 of EPS at risk.
- FUL -3%; mixed Q4 as EPS $0.92 vs. est. $1.00; Q4 revs $923M vs. est. $916.8M while guided FY25 revs to be up 1%-2% or $3.61B-$3.64B vs. est. $3.57B.
- LUV -4%; was downgraded to Sell from Neutral at Citigroup and cut tgt to $29.50 from $31.50 saying the airline now trades at a bigger P/E premium to the airline group than it did pre-COVID and over time, see Southwest’s valuation correcting to more normalized levels.
- UNH -4%; reported 4Q revenues of $100.8B (vs. $101.8B est.), with lower premiums and mixed Optum performance (worse OptumHealth + Insight vs. better Rx). MCR was 87.6% (vs. 86.5%, 110 bps higher) – with the company noting that previously cited headwinds continued at similar levels in 4Q.
- USB -6%; better Q4 EPS and revs; sees FY25 revenue up 3%-5% vs. $27.6B in FY24, vs. consensus $28.67B; provisions for credit losses rose to $560M in Q4 from $512M y/y; Q4 net interest margin fell to 2.71%, compared with 2.78% in the year-ago period.
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.