Mid-Morning Look: June 28, 2024

Mid-Morning Look

Friday, June 28, 2024





DJ Industrials




S&P 500








Russell 2000






U.S. stocks a strong start to the day and trying to close out another positive week/quarter in a broad-based rally following in-line PCE inflation data. Stock markets getting a big boost behind in-line May PCE inflation data and pushed further after the University of Michigan 1-yr and 5-yr inflation expectations index both came in below the prior reading (raising Fed rate cut hopes). Treasury yields a little dip following the data. The S&P 500 and Nasdaq are trying for their fourth-straight session of gains while entering the final trading day of the second quarter, the S&P 500 has climbed 15% year to date while the tech-heavy Nasdaq has advanced 19% while the Dow Industrials lag just up 3.8%. The Nasdaq topped 18,000 level for the first time with today rally/softer inflation up about 150 points. In stock news, apparel/footwear retailing giant (and Dow component) Nike (NKE) shares tumbled over -17% after projecting a 10% decline in revenue for the current quarter and said they now expect 2025 sales to fall mid-single digits, compared to estimates of a 0.9% increase. The results are pressuring retail/footwear/sportswear stocks. In other stock news, Tesla (TSLA) shares top $200 for the first time since February just a day after AMZN hit all-time highs, as Nasdaq leadership changing by the week since NVDA boosted it the last few months (AAPL and MSFT also recent leaders). But also see big gains in Industrials, Materials, and Healthcare.


After all the hoopla and waiting for the May PCE inflation data this week, numbers were exactly in-line with estimates across the board for PCE headline and core readings, slightly below the prior month. Personal Income rose slightly more than economists forecast, while spending came in a little light vs. estimates. San Francisco Federal Reserve Bank President Mary Daly said after the data she believes inflation is gradually cooling, saying the latest data showing inflation did not rise at all from April to May is “good news that policy is working.” “We are getting evidence that (policy) is tight enough,” Daly told CNBC in an interview. “It’s really challenging to look anywhere and not see monetary policy working. We have growth slowing, spending slowing, the labor market slowing, inflation coming down.”


The Presidential debate last night raising concerns for Democrats as Politico reported one House Democrat said he spoke for others in the wake of the president’s stunningly feeble debate performance on Thursday: “The movement to convince Biden to not run is real.” https://www.politico.com/news/magazine/2024/06/28/biden-democrats-replacement-intervention-column-00165705 . In Europe, France heads to the polls for its first round of voting on Sunday with Marine Le Pen’s far-right National Rally party continuing to widen its lead. President Emmanuel Macron’s group trails in third place. President Emmanuel Macron’s approval rating falls to the lowest level in three months just two days before voting starts in France’s election.


Will history repeat itself? @zerohedge tweets: “The first 15 days of July have been the best two-week trading period for the S&P since 1928.” Closing out the end of week, month, quarter, and 1H of year in strong fashion thus far.

Economic Data

  • May Personal Consumption Expenditures (PCE) data was reported in-line with estimates, as headline May PCE m/m was unchanged (in-line with ests) and down from +0.3% rise the prior month while y/y PCE rose +2.6% (in-line and down from +2.7% last month). May core PCE price index climbs +0.1% m/m (in-line with ests) and May core PCE price index climbs +2.6% y/y, also in-line with estimates (vs. +2.8% in April).
  • The May personal saving rate 3.9% vs April 3.7%. May personal income rose +0.5% (vs. consensus +0.4%) and vs April +0.3%, while May Personal Spending rises +0.2% (vs. consensus +0.3%) and vs April +0.1%. May real consumer spending +0.3% vs April -0.1% (previous -0.1%).
  • University of Michigan surveys of consumers 1-year inflation outlook final June 3.0% vs prelim 3.3% and final May 3.3% while the 5-year inflation outlook final June 3.0% vs prelim 3.1% and final May 3.0%.
  • University of Michigan surveys of consumers sentiment final June 68.2 (consensus 65.8) vs preliminary June 65.6 and final May 69.1; the current conditions index final June 65.9 vs prelim June 62.5 and final May 69.6; and the expectations index final June 69.6 vs prelim June 67.6 and final May 68.8.
  • Chicago PMI Manufacturing reported at 47.4 vs. est. 40.0 and well above the prior month reading of 35.4 as prices paid at a slower pace; new orders fell at a slower pace; employment fell at a slower pace.






WTI Crude















10-Year Note




Sector Movers Today

  • In Retail: NKE grabbed all the headlines after posting mixed Q4 results with EPS beating but revs falling short of consensus ($12.6B vs. est. $12.81B) as revs for North America and EMEA fell short and weak sneaker sales as Converse revenue of $480M, -18% y/y, missed estimates of $545.6M, while forecast a surprise drop in FY25 revenue (5th downward revision to consensus in six quarters now as per Stifel), hurt by faltering demand for its sneakers as expects a mid-single-digit percentage fall in annual revenue vs. Wall Street expecting a 0.91% rise (shares of other sneaker/retail names weak: ADDYY, UA, FL, DKS , etc.).
  • In Insurance: Citigroup downgrade TRV to Sell and cut HIG and AFG downgrade to Neutral while upgrading CINF to Buy in the insurance industry saying they are incrementally cautious on workers’ comp and expect medical inflation to begin to more negatively impact margins over the near-to-intermediate term. Workers’ comp has been a consistent source of reserve releases in recent years, and the product line has been overshadowed by social inflation/casualty conversations. In Life Insurance: Piper lowered estimates on several names (AMP, BHF, CRBG, HMN, LNC, MET, PFG, RGA) saying they continue to favor underwriting names because this is where lift from rates seen most with base NII stability and lower exposure to variable NII with stable underlying claims, which is favorable for AFL, CNO, GL, and particularly RGA
  • In Ride Sharing/Food Delivery: Wells Fargo previews space saying: for UBER, top Internet long into Q2 earnings season. Wells expects above-consensus Q2 results and Q3 guide to refute mobility GBs deceleration bear case. Wells expects Q3 gross bookings / EBITDA guidance of $40.5 – 42.0B / $1.60 – 1.68B, 2% / 4% ahead of consensus $41.3/1.62B at the high end, respectively. For LYFT, exited the constructive Lyft Investor Day with conviction that Q2 and ’24 EBITDA guides will prove conservative and see potential clearing event for rideshare in 8/08 Tesla AV event. However, enthusiasm somewhat tempered by softer volumes exiting Q2. For DASH, US restaurant growth improved through Q2 after a weak start to the quarter, but potential remains for volatility on the Q3 GOV guide, in WELLS’s view. More constructive on 2H outlook for EBITDA w/ multiple levers to drive a positive inflection.



  • GEO +4%; Wedbush noted yesterday (6/27), ICE announced an official RFP for a contract detention facility to support its Newark, New Jersey field office. GEO’s Delaney Hall facility, which is in Newark and currently sits idle, has been previously used for ICE detention in the past, and could be a strong fit for ICE’s request, in Wedbush’s view.
  • INFN +18%; to be acquired by NOK in a $2.3B deal to scale up optical network; deal price of $6.65 per share represents a premium of 26.4% to Infinera’s closing price of $5.26 on Thursday. NOK will pay 70% of the purchase price in cash and the rest in stock, expects to save 200M euros ($213.88M) in costs. https://tinyurl.com/y4jb2zp4
  • NVDA +2%; as semiconductors rebound, with the Philly semi-index (SOX) surging +2.6% to 5,561 (all time high stands at 5,792.86) with broad gains for QCOM, AMAT, AMD, LRCX, others.
  • PTGX +8%; will replace WIRE in the S&P SmallCap 600 index, effective July 3, S&P Dow Jones Indices said.
  • STLD +4%; amid early strength in industrial metals AA, CENX, CLF.



  • ACCD -40%; as Q1 results in-line while FY25 revenue guidance lowered from +16-20% to +11-15%, though no change to EBITDA (+$15-20mn) as customer acquisition costs have gotten too high, primarily in faster growing segments driven by usage fees (VPC/EMO/other).
  • APLS -6%; said CHMP, the drug-reviewing arm of the European Medicines Agency, recommended against approving Empaveli, its injectable for geographic atrophy. Apellis said it plans to appeal.
  • EL -5%; Beauty space remains weak as EL shares tumbled early for the 4th day of losses a day after L’Oreal (LRLCY) lowered its growth outlook in the beauty sector.
  • KRUS -23%; Q3 sales $63.1M vs. est. $65.4M & now sees FY24 sales $235M-$237M, down from prior view $243M-$246M; Q3 comp restaurant sales up about +0.6% and operating profit about 20% of sales.
  • NKE -18%; mixed Q4 results with EPS beating but revs falling short of consensus ($12.6B vs. est. $12.81B) as revs for North America and EMEA fell short and weak sneaker sales as Converse revenue of $480M, -18% y/y, missed estimates of $545.6M, while forecast a surprise drop in FY25 revenue.
  • RCKT -4%; after the FDA declined to approve its gene therapy to treat a rare and severe pediatric disorder that causes the immune system to malfunction. FDA issued a Complete Response Letter (CRL), asking for limited additional information related to certain processes for the gene therapy to complete its review.


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.