Mid-Morning Look: January 22, 2025

Mid-Morning Look
Wednesday, January 22, 2025
Index |
Up/Down |
% |
Last |
DJ Industrials |
133.03 |
0.30% |
44,158 |
S&P 500 |
40.33 |
0.67% |
6,089 |
Nasdaq |
250.69 |
1.26% |
20,005 |
Russell 2000 |
-5.25 |
0.23% |
2,312 |
U.S. stocks are extending recent gains as S&P futures (Spuz) hit record high of 6,127 (topping prior ATH of 6,111 on 12/6/24), getting a big boost from tech behind AI investment news overnight on “Stargate” project (lifting AI names, semis, nuclear power stocks) and Netflix (NFLX) results as those shares surge to record highs. The S&P 500 (SPX) looking to top its prior intraday record high of 6,099.97 (again on 12/6), rising after the White House last night announced an artificial intelligence (AI) partnership with Oracle (ORCL), OpenAI (private), and Softbank (SFTBY). The project will include $100B of investment in US AI infrastructure for the first year and up to $500B over the next four years. The project is to be called “Stargate,” and it will start with a data center project in Texas. The headlines boost several names across the AI complex such as chips (NVDA, AVGO, ARM), data center names (DELL, VRT, ETN), and nuclear names on needs/demands for more power (VST, CEG, NRG, TLN, OKLO, SMR). Treasury yields steady with 10-yr at 4.58% while the US dollar also steady after tumbling over 1% on Tuesday (DXY at 108). President Trump threatened to impose 10% tariffs on China and target other major US trading partners – including the EU overnight. Several Dow components moving on earnings this morning including PG, TRV higher on results, JNJ lower. More earnings on deck, but sentiment positive and momentum back to the upside for major averages has market breadth positive again.
Macro |
Up/Down |
Last |
WTI Crude |
-0.20 |
75.63 |
Brent |
-0.16 |
79.13 |
Gold |
6.20 |
2,765.40 |
EUR/USD |
-0.0011 |
1.04.18 |
JPY/USD |
0.64 |
156.14 |
10-Year Note |
0.01 |
4.583% |
Sector Movers Today
- In Autos: Ford (F) was downgraded to Equal Weight from Overweight at Barclay’s and cut tgt to $11 from $13 as believes elevated volume headwinds in 2025 due to inventory destocking and continued modest price normalization will drive downside on earnings estimates. In Auto suppliers, APTV said it will spin off its electrical distribution systems (EDS) business into a new company. APTV’s shareholders will retain their current shares of Aptiv stock and receive a pro-rata dividend of shares of the new EDS company stock.
- In Restaurants: Bernstein said after a dismal 2024, the restaurants sector looks relatively inexpensive. The firm upgraded DRI to Outperform from Market Perform (tgt to $215 from $180) while downgraded YUM to Market Perform (tgt to $135 from $140). The firm said all the macro indicators that support food away from home demand are stabilizing or positively inflecting, with rise in Consumer Confidence improving the most for low-income consumers and restaurant inflation starting to close the Gap vs grocery inflation.
- In Utility & Power: GEV shares rise as Q4 revs rose 5.1% y/y to $10.56B but missed ests $10.7B; wind orders sank 41.2% to $2.031 billion, citing lower onshore wind equipment. The results don’t include the impact of President Trump’s executive order signed on Monday that temporarily withdraws leasing for wind projects. Nuclear/energy stocks (SMR, CEG, VST, TLN, OKLO, NRG, CCJ) after the WSJ reported South Carolina to reboot giant Nuclear project to meet AI Demand. Santee Cooper is working with bankers to solicit interest in V.C. Summer station https://tinyurl.com/z46866xw ; the sector also getting boost on news of AI investment last night and power needs.
- Semiconductors add to yesterday’s gains as Oracle, Softbank, OpenAI, and President Trump confirmed/announced the Stargate Project, a new company that intends to deploy $100B immediately and then invest up to $500B over the next four years building new AI infrastructure for OpenAI in the United States. Several sectors and names benefitting from the news overnight including AAOI, ARM, NVDA, SMCI, VRT, ORCL, MSFT and many others.
Stock GAINERS
- APH +5%; and TEL +5% in connectors and sensor sector after earnings from both this morning.
- APTV +5%; said it will spin off its electrical distribution systems business into a new company. APTV’s shareholders will retain their current shares of Aptiv stock and receive a pro-rata dividend of shares of the new EDS company.
- IBKR +6%; on results; Q4 EPS $2.03 tops consensus $1.86 on revs $1.387B vs. est. $1.37B; Q4 customer accounts increased 30% to 3.34M, customer equity increased 33% to $568.2B, total DARTs2 increased 61% to 3.12M, customer credits increased 15% to $119.7B and customer margin loans increased 45% to $64.2B.
- NFLX +12%; record highs following a massive subscriber beat in Q4, as global streaming paid net additions of 18.91 crushed ests of 9.6M, driven by broad strength across our content slate, improved product/market fit across all regions and typical Q4 seasonality (Q4 EPS/sales beat, raised guidance, raised prices and announced a buyback).
- ORCL +6%; after Oracle, Softbank, OpenAI, and President Trump confirmed/announced the Stargate Project, a new company that intends to deploy $100B immediately and then invest up to $500B over the next four years building new AI infrastructure for OpenAI in the United States.
- PG +3%; Q2 organic revenue +3%, est. +2.35%, Q2 EPS $1.88 tops est. $1.86 and revs $21.88B above est. $21.55B.
- STX +9%; after reported a strong DecQ at $2.33B/$2.03 (est. $2.31B/$1.87) and guided MarQ to $2.10B/$1.70 (in line vs cons $2.19B/$1.68), with DecQ GMs up 220bps q/q to 35.5% (positive for WDC); said nearline cloud revenue up ~2x y/y, enterprise/OEM demand remains strong.
- TRV +5%; reports Q4 core EPS $9.15 well above consensus $6.63 and revs $12B, consensus $10.75B; Net written premiums rose 7% in the quarter to $10.74B and hit a full-year record of $43.36B; Net investment income came in at $955 million pre-tax, up 23%.
- UAL +5%; earnings beat for Q4 (following lead of DAL recently) while guides Q1 adj. profit per share to be between $0.75-$1.25, vs analysts’ ests $0.54 as company says they enter 2025 with demand trends continuing to accelerate.
Stock LAGGARDS
- AGYS -20%; shares tumbled after Q3 results and FY25 guidance missed Street expectations, driven by a revenue shortfall from elongating cycles in the POS business and not enough Services resources.
- CELH -3%; was downgraded to Hold from Buy at TD Cowen and cut tgt to $29 from $40 saying data shows decline in sales growth in the last four weeks vs growth recovery in the energy drink category.
- CMA -4%; as Q4 adj EPS $1.20 misses est. $1.26 while said Net interest income fell to $575M from $584M but exceeded analyst expectations of $561M; provisions for credit losses were $21M up from $12M.
- F -3%; was downgraded to Equal Weight from Overweight at Barclay’s and cut tgt to $11 from $13 as believes elevated volume headwinds in 2025 will drive downside on earnings estimates.
- HAL -4%; shares fell as Q4 revs fell -2.2% y/y to $5.61B, below the consensus est. $5.65B; says expects 2025 to be sequentially softer in North America.
- TXT -5%; as Q4 revs $3.61B missed the $3.81B estimate and guided 2025 EPS $6.00-$6.20 vs. analysts’ estimates of $6.40 and revs ~$14.7B vs. ests $14.75B while noting they delivered 32 jets during Q4, down from 50 a year ago, and 38 commercial turboprops vs. 44 last year.
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.