Mid-Morning Look: January 24, 2025

Mid-Morning Look

Friday, January 24, 2025

Index

Up/Down

%

Last

DJ Industrials

-103.74

0.24%

44,459

S&P 500

-4.38

0.07%

6,114

Nasdaq

-22.96

0.11%

20,030

Russell 2000

-6.12

0.26%

2,308

 

 

U.S. stocks are slightly lower after the S&P 500 (SPX) closed at an all-time high for the first time this year on Thursday, which follows 57 all-time closing highs in 2024, the 5th most of any year in history! Momentum clearly remains to the upside with investors excited about the prospects of a strong economy given upbeat comments by President Trump in his first week in office. The S&P 500 is looking to extend its winning streak to 5-straight days and is up 7 of the last 8 trading days coming into today in what has been a broad stock market bounce as ten of eleven S&P sectors are up this month (Consumer Staples only one lower). Stocks took a little dip lower after economic data at 10:00 am where investor confidence data showed a decline and inflation expectations as per University of Michigan limbed for both 1 and 5-yr views. Bitcoin volatile again rising 2% back above $106,000 while the dollar slips -0.45% to 107.56 as euro rallies after President Trump said he would ‘rather not’ have to use tariffs on China in an interview last night. In central bank news, the Bank of Japan (BOJ) raised interest rates by 25bps to 0.5% (as expected) while provided surprisingly hawkish commentary around prospect of future rate hikes after its “hotter” CPI forecasts. Gold prices nearing all-time highs.

Economic Data

  • S&P Global January flash manufacturing PMI at 50.1 (vs 49.4 in December), S&P Global January flash composite PMI at 52.4 (vs 55.4 in December) and S&P Global January flash services PMI at 52.8 (vs 56.8 in December).
  • Existing Home Sales for December rose 2.2% to 4.24M unit rate vs. consensus 4.19M and vs Nov 4.15M; Dec inventory of homes for sale 1.15M units, 3.3 months’ worth; national median home price for existing homes $404,400, +6.0% from Dec 2023; 2024 existing homes sales 4.06M units, lowest annual level since 1995.
  • University of Michigan surveys of consumers sentiment final Jan slips to 71.1 from preliminary Jan 73.2 and final Dec 74.0 (est. 73.2); expectations index final Jan 69.3 vs prelim Jan 70.2 and final Dec 73.3; current conditions index final Jan 74.0 vs prelim Jan 77.9 and final Dec 75.1
  • Inflation expectations rise as University of Michigan surveys of consumers 1-year inflation outlook final Jan 3.3% vs prelim 3.3% and final Dec 2.8% and the University of Michigan surveys of consumers 5-year inflation outlook final Jan 3.2% vs prelim 3.3% and final Dec 3.0%.

 

 

Macro

Up/Down

Last

WTI Crude

-0.13

74.49

Brent

-0.16

78.13

Gold

28.50

2,793.50

EUR/USD

0.0088

1.0503

JPY/USD

-0.14

155.90

10-Year Note

-0.005

4.631%

 

Sector Movers Today

  • In Chemicals: APD was upgraded to Overweight from EW at Barclays and raised tgt to $365 from $315 saying a shareholder vote for change helps turn the page back to the core business, which should drive compounding stock returns. CF was downgraded to Underweight from Neutral at JP Morgan and cut tgt to $75 from $82 saying they think there is more downside risk than upside appreciation potential in the shares at current price levels. SHW was upgraded from Hold to Buy at Berenberg and raised tgt to $420 from $321 saying they feel earnings growth is about to accelerate, and the same is true of its free-cash-flow generation noting PPG’s divestments of its US and Canadian architectural paint business and the 2024 shutdown of smaller competitor Kelly-Moore have brought structural changes to the US decorative paints market.
  • In Retailers: Luxury retail gets good news after Burberry (BURBY) shares rise after results, posting Q3 retail comparable sales -4% vs. -4% y/y and better than the expected -12.8% decline with smaller comp losses in Asia (-9% vs. est. -19.6%) and China (-7% vs. est. -18%) while America comparable sales rose an unexpected +4% vs. est. -9.4%; shares of other luxury retailers TPR, CPRI, RL, PPRUY, CFRUY, EL, LVMUY were active in reaction. PVH was downgraded to Neutral at JP Morgan and lower tgt to $114 while remove from its analyst focus list after lowering its FY25 reported revenues to a -1.4% decline (= 230bps below Street +0.9%), or +0.3% on a constant-currency basis (more/less matching its 2H24 constant-currency growth rate of +0.1%).
  • In Consumer Finance: AXP hits all-time highs and posts Q4 EPS $3.04 on revs rose 9% y/y to $17.18B vs. est. $3.03/$17.18B; increase quarterly dividend 17% to $0.82 from $0.70; Billed business, a measure of spending on AmEx cards, rose 8% to $408.4B in Q4; guides 2025 rev growth +8% to +10% and EPS $15-$15.50 vs. est. $15.23. MA and Visa (V) failed to stop their payment networks from laundering proceeds from child sexual abuse material and sex trafficking on the popular website OnlyFans, according to allegations in a previously undisclosed whistleblower complaint filed with the U.S. Treasury’s financial crimes unit – Reuters reported.
  • In Nuclear/Utility sector: OKLO price tgt raised to $45 from $26 at Wedbush saying confidence in the AI Revolution datacenter buildout is increasing under the Trump Administration and believe Project Stargate is the start of a much bigger AI initiative within the Beltway and US. GEV was downgraded to Neutral from Buy at Guggenheim after stock’s strong recent performance, and belief that the pace of upward revisions in financial model is likely to slow. NEE said requested NRC licensing change for Duane Arnold, its1st step to potentially restarting plant in 2028, while reported Q4 EPS of $0.58, down y/y and revs $5.39B vs. est. $7.07B.

 

Stock GAINERS

  • AFRM +2%; expanded partnership with Liberty Mutual saying the insurer’s asset mgmt arm Liberty Mutual Investments to upsize loan purchasing program and will buy up to $750M of AFRM’s loans through Jun 2027.
  • AVGO +2%; among upside movers with ANET after META guided 2025 CAPEX $60B to $65B well above consensus est. $51.31B.
  • BURBY +11%; after posting Q3 retail comparable sales -4% vs. -4% y/y and better than the expected -12.8% decline with smaller comp losses in Asia (-9% vs. est. -19.6%) and China (-7% vs. est. -18%) while America comps rose.
  • DDD +21%; after announcing a collaboration with Daimler Truck to facilitate remote spare-part production.
  • MIDD +11%; after the Wall Street Journal reported that Garden Investments has built an activist position in kitchen-equipment maker, citing people familiar with the matter. https://tinyurl.com/mr39sk55
  • NVO +7%; after announced new data for a new weight-loss drug which appeared to be more efficient than its blockbuster drugs currently on the market, Ozempic and Wegovy.
  • TWLO +22%; shares surged, as analysts raised price tgts after positive Investor Day commentary, and its direction. TWLO guided positive Q4 prelim results (11% growth vs 8% cons), attractive forward-looking margin targets (21%-22% in FY27 vs. est. 16%; $3B+ cumulative FCF in FY25-FY27), and $2B stock buyback through 2027.
  • VZ +1%; reported in-line Q4 EPS of $1.10 and slightly better revs of $35.7B (est. $35.34B) as higher prices helped revs; Verizon added 568K monthly bill-paying wireless subscribers in Q4, up from 449K y/y and above ests for roughly 488K adds.

 

Stock LAGGARDS

  • CF -7%; was downgraded to Underweight from Neutral at JP Morgan and cut tgt to $75 from $82 saying they think there is more downside risk than upside appreciation potential in the shares at current price levels; also downgraded at Scotia to Underperform.
  • CVLG -4%; shares fell on Q4 rev miss ($277.3Mm vs est. $284.91Mm) and noted in their dedicated markets, customers continue to experience greater than expected temporary customer shutdowns and volume pressure.
  • CSX -2%; shares slipped on in-line Q4 EPS of $0.42, while revs of $3.54B miss est. $3.576B as Q4 Operating income fell -16% y/y to $1.11B (est. $1.24B) and total carloads rose 1.3% y/y to 1.58M.
  • ERIC -9%; shares fell as Q4 adj operating profit expectations missed consensus reflecting a slowdown in India (profit was 9.8 billion crowns in the quarter, up from 7.4B a year earlier, yet fell short of the 10.3B crowns est.
  • HCA -4%; after Q4 EPS of $5.63 missed estimates of $6.14, while same facility admissions increased 3% and same facility equivalent admissions increased 3.1%.
  • ISRG -4%; reported Q4 results that topped consensus on both the top and bottom-line (EPS $2.21 vs. est. $1.81 while revs rose 25% y/y to $2.41B vs. est. $2.26B) while mgmt reaffirmed its initial ’25 procedure guidance provided earlier this month 13-16% y/y and issued margin guidance (67-68%) which disappointed.
  • TXN -4%; reported strong Q4 results, which were above expectations and provided mixed Q1 guidance, as revs were slightly higher, while EPS is lower due to lower GMs.

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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.