Mid-Morning Look: October 24, 2024
Mid-Morning Look
Thursday, October 24, 2024
Index |
Up/Down |
% |
Last |
DJ Industrials |
-85.66 |
0.20% |
42,428 |
S&P 500 |
17.69 |
0.31% |
5,815 |
Nasdaq |
116.84 |
0.64% |
18,393 |
Russell 2000 |
6.47 |
0.29% |
2,220 |
U.S. stocks are trying for their first day of gains this week after a slew of positive earnings surprises overnight and blowout results from Tesla Inc helped boost the S&P and Nasdaq. Big earnings day with lots of huge movers (with massive gains for TSLA, MOH, WST in the S&P and more than 5% declines in S&P for TER, WST, CARR, TXT, IBM). Gold recouping some of yesterday’s mild selloff, to $2,740 an ounce (off yesterday’s record highs still of $2,772.60). Treasury yields are down initially but bouncing following round of economic data (jobless claims, housing, manufacturing) but the dollar takes a breather. The Dow Jones Industrial Average underperforms behind the IBM weakness post guidance and BA weakness as factory workers voted to reject the company’s latest contract offer. Stocks have eased from record levels over the past few sessions due to a reassessment of bets on the Federal Reserve’s rate cuts, rising Treasury yields, corporate earnings and uncertainty surrounding the upcoming U.S. election. Around 32% of S&P 500 companies have reported quarterly results so far, according to data compiled by LSEG, with 79% beating earnings estimates.
Economic Data
- Jobless Claims fell to 227,000 from 242,000 the prior week (vs. est. 242,000) as the 4-week moving average climbed to 238,500 from 236,500 the prior week (previous 236,250) and continued claims climbed to 1.897M from 1.869M prior.
- S&P Global October flash manufacturing PMI at 47.8 (vs 47.3 in September); U.S. S&P Global October flash composite PMI at 54.3 (vs 54.0 in September); U.S. S&P Global October flash services PMI at 55.3 (vs 55.2 in September)
- Sept. New Home Sales rose 4.1% M/M to 738,000 annual rates; above est. 720k; US homes for sale at end of Sept 0.470M units vs Aug 0.468M units and Sept median sale price $426,300, unchanged from Sept 2023 ($426,100).
Macro |
Up/Down |
Last |
WTI Crude |
-0.09 |
70.68 |
Brent |
0.16 |
75.12 |
Gold |
10.90 |
2,740.30 |
EUR/USD |
0.0018 |
1.0802 |
JPY/USD |
-0.60 |
152.15 |
10-Year Note |
-0.018 |
4.224% |
Sector Movers Today
- Leisure product vehicles continue to disappoint as HOG lowered its 2024 revenue from motorcycles and related products to be down 14% to 16%, compared with its prior forecast of down 5% to 9% (follows weaker results/forecasts from WGO in RV space this week as well as PII in powersport vehicles). In the boating sector, BC was also weak as reported a Q3 EPS and revs miss and lowered its year EPS outlook to $4.50 from $5.00-$5.50 prior on lower sales view.
- In Telecom: TMUS added 865,000 postpaid phone customers in Q3, its highest for the period in a decade, surpassing estimates of 727,500 additions and now expects 2024 postpaid net customer additions to be between 5.6-5.8M vs prior view of 5.4-5.7M. VZ was downgraded to Sector Weight (from OW) at Keybanc noting results were below expectations and sees limited room for EBITDA acceleration in 2025 and likely declining FCF growth.
- In Rails: UNP Total operating revenue came in at $6.09 billion, an increase from $5.94 billion a year earlier, but was below analysts’ estimates of $6.14 billion while profit missed as well citing an unfavorable business mix and reduced fuel surcharge revenue that offset gains from higher shipments and price hikes. CP upgraded from Neutral to Positive at Susquehanna saying its favorable fundamental view toward CP is steady since its update 3 weeks ago, but shares are down 6% on cross-border regulatory fears (underperforming rails, XLI, S&P). Near-term headline risk creates a long-term opportunity to own what SUSQ sees as the best growth story in rails at a fair price.
Stock GAINERS
- CLS +13%; leading other EMS players higher as Q3 sales of $2.5B grew 22.3% y/y, with 42% growth from its hyperscale-heavy datacom segment (CCS), offsetting a 5% y/y decline in its industrial segment (ATS).
- LRCX +2%; reported better-than-expected F1Q(Sept) results and guided above consensus for F2Q(Dec). Overall, Lam CY24 revenue is on track to grow +13% YY, led by DRAM, China, and Foundry
- MOH +22%; on earnings beat as Q3 adj EPS $6.01 vs est. $5.81 on revs $10.34B vs est. $9.911B, says reaffirms FY earnings guidance, sees FY premium revs approx $38B and adj EPS at least $23.50 vs est. $23.24.
- NOW +5%; hits record highs after earnings as EPS of $3.72 tops consensus $3.46 on revenue of $2.80B (consensus $2.74B), up 22% y/y as reported, flat with last quarter on better subscription revs of $2.71B (consensus $2.66B), up 23% y/y as reported, flat with last quarter and cRPO of $9.36B (consensus 9.11B), up 23.5% y/y.
- SDRL +9%; rises after Bloomberg reported RIG was in talks to merge with its rival offshore drilling contractor. Discussions are ongoing about the potential structure of a combination, Bloomberg reported
- TMUS +4%; added 865,000 postpaid phone customers in Q3, its highest for the period in a decade, surpassing estimates of 727,500 additions and now expects 2024 postpaid net customer additions to be between 5.6-5.8M vs prior view of 5.4-5.7M along with quarterly beats.
- TSLA +16%; on earnings beat and upside guidance as Musk said that Tesla could see 20% to 30% “vehicle growth” in 2025, which would mark a significant improvement from this year, in which global deliveries are down nearly 6% for the first three quarters of 2024.
- UPS +4%; as Q3 adj EPS $1.76 vs. consensus $1.63; Q3 revs $22.2B vs. est. $22.14B; Q3 average daily volume increased 6.5%; cuts FY24 revenue view to ~$91.1B from ~$93B, vs. consensus $91.85B after the company completed the disposition of Coyote Logistics.
- VKTX +15%; after earnings last night and upbeat comments on conference call.
- WST +20%; 3Q revenue was $747M vs. $710M est., driven by Proprietary Products, EBITDA was solidly ahead as well, at $200M (vs. $172M cons); raised its guidance, expecting sales to $2.88B to $2.91B (from $2.87B to $2.9B prior) and EPS of $6.55 to $6.75 (from $6.35 to $6.65).
Stock LAGGARDS
- BA -2%; after its largest union rejected a new labor contract, extending a six-week strike that has crippled production. The International Association of Machinists and Aerospace Workers Union, representing about 33,000 Boeing employees in the Pacific Northwest, said that 64% of voting members checked “no” to the new labor deal.
- BYON -22%; shares tumble on earnings results; after the owner of Bed Bath & Beyond, Overstock, and Zulily logged a sharp decrease in Q3 revenue even as it invested millions in building out a physical retail presence. BYO lost $61M in Q3, slightly less than the $63M y/y while revs fell -17% to $311.4M.
- HON -4%; Q3 revs $9.73B vs. est. $9.9B and guides annual sales below consensus estimates to $38.6B-$38.8B (est. $39.2b) after weakness in its industrial automation business led to lower-than-expected quarterly sales.
- IBM -5%; shares slipped despite positive AI commentary as missed on Q3 revs, beat on EPS as software strength was offset by consulting and infrastructure weighing on results.
- ICLR -16%; tumbles as Q3 adj EPS $3.35 missed consensus $3.84 on lighter revs $2.03B (est. $2.13B); guided FY24 EPS $13.90-$14.10 below consensus $15.06 on revs $8.26B-$8.3B (est. $8.51B); said Q3 revenue shortfall was attributable to more material headwinds from two large customers undergoing budget cuts amongst other issues.
- NEM -6%; shares fall as earnings miss undermines profit surge; the earnings miss came even as Newmont posted its largest quarterly profit in five years.
- UBER -2%; slipped after TSLA said last night that it expects paid rides to start occurring in Texas and California by next year, pending regulatory approval – and later added it could target other markets by next year as well.
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.