Mid-Morning Look: January 25, 2024

Mid-Morning Look

Thursday, January 25, 2024





DJ Industrials




S&P 500








Russell 2000






U.S. stocks open firmly higher, building on the latest string of all-time high record closes for the S&P (4-straight and +5 days overall) as investors took this mornings GDP report as another sign of possible aggressive cuts by the Fed in 2024. Fourth-quarter GDP from the Commerce Department slowed to 3.3%, above the 2% estimate, vs. third-quarter growth of 4.9%. Personal consumption expenditure slowed to a 2.8% rise, above the 2.5% estimate, and down from the third quarter’s 3.1% increase. But the report also indicated mild inflation as the Fed’s primary gauge, the core personal consumption expenditures or PCE index rose 2%. That’s in line with Fed targets and is the second straight quarter of 2% annualized inflation. The decelerating inflation results overshadowed the hotter economy view. Treasury yields dipped after the report with the 10-yr down below 4.13%. Still another round of inflation data tomorrow morning, as well as income/spending figures and heavy dose of more earnings tonight for investors. Still no Fed speakers until next week FOMC meeting.


Consumer Discretionary (XLY) -1.1% (hurt by TSLA earnings/commentary) and Healthcare (XLV) -0.3%, the only two S&P sectors in the red, as NYSE breadth strong out of the gate with advancers leading 4:1 margin. Dow Transports +1.7% above 16,000 led by airlines (AAL, ALK, LUV after earnings from all lead shares higher (rails UNP, CSX also active post earnings). The Philly semi-index (SOX) +1% back above 4,500 (yesterday ATH 4,541.75) and up over 8.5% MTD to kick off the New Year. The Dow Jones Industrial Average was boosted by shares of IBM, DOW on earnings, overshadowing weakness in BA, UNH. Managed care stocks tumble behind HUM Q4 miss and sharply lower guidance. The ECB held rates unchanged as expected and the commentary did not spook US markets.

Economic Data

  • The U.S. economy (GDP) grows at +3.3% annual rate, above the estimate +2.0% showing the economy remains strong, but the advance Q4 GDP deflator +1.5% well below the consensus +2.3% (and prior +3.3%); advance Q4 PCE price index +1.7% (down from prior reading +2.6%) and advance Q4 core PCE +2.0% (in-line with consensus and prior reading); Q4 consumer spending rose +2.8%, below last figure +3.1%.
  • Weekly Jobless Claims climbed to 214K from 189K in prior week and above the consensus 200K; the 4-week moving average fell to 202,250 from 203,750 prior week; continued claims climbed to 1.833M from 1.806M prior week and the U.S. Insured Unemployment rate unchanged at 1.2% Jan 13 week from 1.2% prior week (prev 1.2%).
  • New Home Sales for December climbed 8.0% M/M to 664K vs. 645K consensus and 615K in November (revised from 590K); new home supply 8.2 months’ worth at current pace vs Nov 8.8 months; median sale price $413,200, -13.8% from Dec 2022 ($479,500).
  • Durable goods orders were unchanged at $295.6B in December, compared with the 1.1% increase expected and +5.5% in November (revised from +5.4%). Dec Durables ex-transportation orders +0.6% (consensus +0.2%) vs November +0.5% (prev +0.4%). Dec Durables ex-defense orders +0.5% vs Nov +6.9% (prev +6.5%).
  • December Retail Inventories (Advance) rose +0.8% to $803.3B vs +0.1% prior (revised from -0.1%). On a Y/Y basis, retail inventories grew 5.3% in December.
  • The Chicago Fed National Activity Index fell to -0.15 in December from +0.01 in November (revised from +0.03).






WTI Crude















10-Year Note




Sector Movers Today

  • In Airlines: several earnings today: 1) AAL forecasts 2024 adj EPS $2.25 to $3.25, vs. est. $2.22 after Q4 adj EPS $0.29 beat the $0.11 estimate as revs fell -1% y/y to $13.06B vs. est. $13.01B; said load factor slipped to 83.6% from 83.9%, but beat expectations of 82.9% as capacity growth of 5.8% outpaced traffic growth of 5.4%; 2) LUV Q4 adj. EPS of $0.37 tops $0.12 est. on better revs ($6.82B vs. $6.74B) while saying expects to take fewer deliveries of Boeing’s 737 MAX aircraft and has left out the MAX 7 model; 3) ALK said expects slower growth this year and a financial hit of $150M after a midair accident led to the grounding of a portion of its Boeing 737 planes; warned flight capacity in 2024 will be at or below the low end of its prior expectation for 3% to 5% growth.
  • In Aerospace: BA was downgraded to Neutral at Bank America and cut tgt to $225 from $255 following the ALK Flight 1282 incident and the subsequent 737 grounding. The FAA mandated 737 MAX production rates be frozen at current levels, which will likely prevent Boeing from reaching the 2025/2026 production, delivery, and free cash flow goals. Last night, the FAA paused Boeing’s planned expansion of its 737 MAX plane while paving the way for the plane maker’s MAX 9 jet to return to service (supplier SPR fell in sympathy). In aero parts, HXL shares stumbled after Q4 results missed ($0.43/$457.5Mm below consensus est. $0.49/$471.9Mm) and guides FY24 sales $1.925-2.025B vs est. $2.024B. CRS reported Q4 revs that missed consensus weighing on shares of ATI as well.
  • In Defense: busy week of earnings for sector closing out with NOC as Q4 revenue rose 6% y/y to $10.6B above consensus $10.44B and sees FY24 MTM-adjusted EPS $24.45-$24.85, consensus $24.23 and revenue $40.8B-$41.2B, vs. consensus $41.15B The White House sent a letter to members of Congress urging approval of a $20 billion sale of LMT F-16 aircraft and modernization kits to Turkey, four sources familiar with the letter told Reuters. RTX upgraded from Underperform to Neutral at Bank America and raised tgt to $100 to reflect better than expected execution in servicing contaminated powder-metal discs in Geared Turbo Fan (GTF) aircraft engines.
  • In Car Rental: Deutsche Bank upgraded CAR to Buy from Hold with $248 tgt and downgraded HTZ to Hold from Buy with a $9 tgt saying they see an unreasonably wide risk/reward disconnect between the two stocks here. The firm also believes HTZ’s well-chronicled EV strategy leaves investors with little conviction in the company’s true run rate earnings power over the next few years. Separately, HTZ was downgraded to Neutral from Overweight at JP Morgan saying while the stock arguably trades inexpensively on normalized out-year earnings, it sees few near-term positive catalysts on the horizon after reducing its ests.
  • In Semiconductors: LRCX reported an in-line DecQ and guided its MarQ top line in line, with better-than-expected margins and noted C24E is expected to be slightly higher at ~$88B up 6-7% y/y (vs C23E at ~$82B), and 1) domestic China likely stable in C24E, 2) DRAM strong up 100%+ y/y with HBM ramps with 100% share in Si Etch and Copper electroplating.  STX in-line Q2 revs $1.56B vs. est. $1.55B; sees Q3 EPS $0.05-$0.45 vs. est. $0.18 and revs $1.50B-$1.80B vs. est. $1.64B; GMs up q/q through F24(Jun) and F25E as pricing, underutilization with new Mozaic platform, and HAMR ramps according to Mizuho. STM Q1 and FY revenue forecast missed estimates; Q1 revs fell -15.2% y/y to $3.6B vs. est. 44.1B and guides full-year revenue in a range of $15.9B-$16.9B vs. est. $17.2B. PLXS delivered an in-line F1Q with its lowered guidance provided on Jan 16th.



  • AAL +9%; along with gains in LUV, ALK after earnings in all three airlines this morning.
  • AMSC +26%; after results as Q4 EPS loss (-$0.06) vs. est. loss (-0.06) and revs $39.4M vs. est. $34M; sees Q4 revs $36M-$40M.
  • CMCSA +2%; board approves new $15B share buyback authorization and raises dividend 6.9% to $1.24/share on annualized basis while Q4 revs rose 2.3% to $31.25B (est. $30.5B) saying they lost 34K broadband customers in the quarter, less than estimated loss of 61,000K and revs at streaming service Peacock rose 56.5% y/y above $1B.
  • IBM +10%; Q4 adj EPS $3.87 vs est. $3.78 on revs $17.4B vs est. $17.298B; adj op mgn 60.1%; sees FY24 revs in line with mid-single digit model vs est. +3% and FCF about $12B.
  • NOW +2%; Q4 adj EPS $3.11 vs est. $2.79 on revs $2.437B vs est. $2.398B, adj FCF $1.344B; sees Q1 subscription revs $2.51-2.52B and FY subscription revs $10.56-10.58B up from prior view $10.4B; says generative AI is injecting new fuel into already high-performing engine.
  • PARA +6%; after David Ellison has made a preliminary offer to buy National Amusements, the holding company of the Redstone family, to gain control of Paramount Global (PARA), Bloomberg. http://tinyurl.com/47fwbkrk
  • RMD +6%; among top gainers in the S&P after results; Q2 EPS $1.88 vs. est. $1.79; Q2 revs rose 12% y/y to $1.2B vs. est. $1.15B, non-GAAP operating profit up 20%; Gross margin contracted 50 bps to 55.6%.
  • URI +13%; near record highs after earnings and guidance results.



  • BA -5%; was downgraded to Neutral at Bank America and cut tgt to $225 from $255 following the ALK Flight 1282 incident and the subsequent 737 grounding. The FAA mandated 737 MAX production rates be frozen at current levels, which will likely prevent Boeing from reaching the 2025/2026 production, delivery, and free cash flow goals.
  • COLB -19%; downgraded from Strong Buy to Outperform at Raymond James following Q423 results, where funding challenges are weighing on estimates, and it simply sees less upside to its target based on the new valuation. More specifically, NIB migration and rising funding costs have weighed on the margin more than anticipated.
  • HUM -12%; shares tumble as Q4 adjusted EPS loss (-$0.11) vs. est. loss (-0.05); Q4 revs $26.46B vs. est. $25.54B; forecasts 2024 adj EPS about $16.00, well below consensus est. $29.18; assumes higher Medicare advantage medical costs experienced in Q4 persist throughout 2024; no longer believes adj EPS target for 2025 is achievable.
  • HXL -5%; after Q4 results missed ($0.43/$457.5Mm below consensus est. $0.49/$471.9Mm) and guides FY24 sales $1.925-2.025B vs est. $2.024B.
  • HZO -16%; cuts FY24 adjusted EPS view to $3.20-$3.70 from $4.50-$5.00 (est. $4.87) and lowers FY adj EBITDA view to $190M-$215M vs. prior view of $225M-$250M after Q4 results missed expectations.
  • TSLA -9%; 4Q adj EPS $0.71 vs. est. $0.73; Q4 revs $25.17B vs. est. $25.87B; Q4 Free cash flow $2.06B vs. est. $1.45B; 4Q gross margins 17.6% vs, est. 18.1%; said Cybertruck deliveries and production to ramp thru out year; said 2024 vehicle vol growth may be notably lower than 2023.
  • VIRT -9%; shares slid after Q4 adj Ebitda was $99M below the $116.8M estimate.


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.