Mid-Morning Look: October 25, 2024

Mid-Morning Look
Friday, October 25, 2024
Index |
Up/Down |
% |
Last |
DJ Industrials |
170.58 |
0.40% |
42,544 |
S&P 500 |
49.95 |
0.86% |
5,859 |
Nasdaq |
267.09 |
1.44% |
18,681 |
Russell 2000 |
15.75 |
0.71% |
2,234 |
U.S. stocks rip roaring out of the gate on Friday led by large cap tech as the Nasdaq outperforms and goes positive on the week and the S&P 500 nearly erased its week-to-date losses. Technology (XLK +1.55%) is the big mover as mega cap stock jump ahead of huge earnings coming up next week (AAPL, AMD, AMZN, GOOGL, MSFT) and semiconductors (SOX +2.3%) jump behind broad strength (NVDA, QCOM, MU). Sector laggards include defensive consumer staples, financials, and utilities. Earnings results overnight lifting a handful of stocks/sectors including: managed care recovers behind CNC results, shoe retail names rise behind DECK/SKX results; WDC boosting HDD and semi names; DLR new highs on Ai demand for data centers REITs, and defense names a boost behind BAH. Not all roses for stocks as CPRI shares cut nearly in half after deal with TPR falls through as FTC wins judgement; hospital operators HCA, UHS tumble on results and NYCB declines after earnings in banks. With today’s rally (thus far) the Nasdaq has turned positive on the week and the S&P is nearly flat on the week. If both can stay up, it will mark an incredible 7-straight weeks of advances for both heading into the busiest earnings week of the quarter and the Presidential election in less than two weeks. Gold prices edged lower as investors locked in profits after the Middle East tensions and U.S. election jitters sent bullion on a record-breaking rally.
Economic Data
- Sept. Durable goods orders fall (-0.8%) m/m vs. est. (-1.0%). Sept Durables ex-transportation orders +0.4% (cons -0.1%) vs Aug +0.6% (prev +0.5%). U.S. Sept Durables ex-defense orders -1.1% vs Aug -1.3% (prev -0.2%). U.S. Sept gen. Machinery orders -0.2%, electrical equipment unchanged, defense aircraft/parts -23.7%. Us Sept nondefense cap orders ex-aircraft +0.5%, (cons +0.1%) vs Aug +0.3% (prev +0.3%).
- University of Michigan surveys of consumers sentiment final Oct 70.5 (consensus 69.0) vs preliminary Oct 68.9 and final Sept 70.1; the current conditions index final Oct 64.9 vs prelim Oct 62.7 and final Sept 63.3 and the expectations index final Oct 74.1 vs prelim Oct 72.9 and final Sept 74.4.
- University of Michigan surveys of consumers 1-year inflation outlook final Oct 2.7% vs prelim 2.9% and final Sept 2.7% while the University of Michigan surveys of consumers 5-year inflation outlook final Oct 3.0% vs prelim 3.0% and final Sept 3.1%.
Macro |
Up/Down |
Last |
WTI Crude |
1.00 |
71.21 |
Brent |
1.04 |
75.43 |
Gold |
-0.40 |
2,748.50 |
EUR/USD |
0.0003 |
1.0829 |
JPY/USD |
0.21 |
152.03 |
10-Year Note |
-0.002 |
4.20% |
Sector Movers Today
- In Hospitals: UHS shares fell despite reporting a good quarter that beat revenue, EBITDA and adjusted EPS estimate by 2%, 6%, and 10% respectively. Adjusted EPS beat consensus by 1%. Solid strong same-facility revenue per admission trends in both the acute and behavioral segments strong, which led to solid EBITDA growth in both segments. HCA Q3 profit of $4.88 missed consensus estimate of $4.97 per share and the hospital operator said expects some ongoing impact in 2025 from Hurricane Helene on its North Carolina facilities.
- In Homebuilders/Building Products: TOL was upgraded to Outperform from Neutral at Wedbush and raising its PT to $175 from $148 saying believes the recent pullback in the shares due to rising mortgage rates has created a buying opportunity in the name. Wedbush also upgraded TMHC to Outperform as thinks the better-than-expected gross margin in FQ324 and TM’s long term gross margin outlook (circa 24%, in line w/recent results) are catalysts to raise its EPS estimates and PT. Floor maker MHK shares tumbled on lower revs, falling -1/7% y/y to $2.72B citing weak demand for its flooring and ceramic products.
- In Chemicals: OLN guided Q4 adj EBITDA midpoint at $185M vs. $250M consensus after reported SepQ24 adj. EBITDA of $160M vs. $182M consensus (was inclusive of $110M one-time impact from hurricane Beryl disruptions, which were $9.4M more than earlier guided). TROX Q3 EBITDA missed by 7% & guided Q4 below estimates as $128M vs $159M consensus; reported Q3 adj. EBITDA up 23% Y/Y (on +12% TiO2 volume) to $143M vs. est. $154M consensus noting that Europe & Asia Pac were softer than expected in September.
Stock GAINERS
- APPF +18%; beat on top and bottom line as revenue growth of 24% during Q3 was better-than-feared resulting in a $6.6M top-line beat and cost mgmt contributed to even faster profit growth that rose by triple-digits y/y resulting in a $0.26 EPS beat; guided FY24 revenue $786M-$790M, vs. consensus $778.84M.
- BAH +12%; raised its FY revenue and earnings as now expects FY adj EPS of $6.10-$6.30 vs prior forecast of $5.80-$6.05 and rev growth of 11%-13% vs prior expectation of 8%-11% growth. The guidance followed earnings results as revenue rose 18% to $3.15 billion from growth in both the federal defense and civil markets (est. $2.97 billion).
- CNC +11%; shares popped as Q3 adj EPS of $1.62 topped expectations of $1.36 and the company said it remained confident in its full-year outlook for adjusted earnings of more than $6.80 a share.
- DECK +11%; raised its annual sales forecast to +12% from the prior +10% on the back of strong demand for its brands UGG boots and Hoka running shoes. DECK said Q2 Hoka sales jumped 35% in the quarter, while the UGG banner saw a 13% rise; gross margins rose to 55.9% compared to 53.4% a year earlier.
- DLR +13%; shares surged to record highs after reported better results and signaled artificial intelligence (AI) demand for data centers continues; boosted lower end of 2024 core FFO guide to $6.65-$6.75 from $6.60-$6.75 (the report boosted shares of comp EQIX which reports next week).
- WDC +9%; as posted upside F1Q25 results and guided to higher sales and earnings in the September quarter. The recovery in the data center continued fueled by strong demand for enterprise SSD products. Driven by record data center sales record revenue and margins were reported in the HDD segment
Stock LAGGARDS
- CL -3%; posted Q3 earnings that beat expectations on better sales which were driven by a ‘healthy balance’ of volume growth and higher pricing, Colgate said. The co lifted its full year guidance and now expects net sales growth of between 3% and 5%, versus 2% to 5% previously. Shares fell following its North American sales miss.
- COUR -5%; Q3 results top expectations on revenue, operating income/margin, and free cash flow, but disappointment was driven by a second guide down in 2024 revenue, offset by better adjusted EBITDA/profitability for the year.
- CPRI -46%; shares tumbled by nearly half after a federal judge blocked the pending $8.5 billion merger of U.S. handbag and accessories maker TPR, a victory for the U.S. Federal Trade Commission in an industry.
- EVLV -44%; after saying it is launching an internal investigation into its sales practices as it believes certain sales to one of its largest “channel partners” were subject to extracontractual terms and were withheld from co’s audit committee.
- MHK -9%; shares fall on lower revs, -1.7% y/y to $2.72B citing weak demand for its flooring and ceramic products.
- NYCB -11%; reported a larger than expected Q3 loss on higher net charge-offs.
- OLN -9%; guided Q4 adj EBITDA midpoint at $185M vs. $250M consensus after reported SepQ24 adj. EBITDA of $160M vs. $182M consensus (was inclusive of $110M one-time impact from hurricane Beryl disruptions, which were $9.4M more than earlier guided).
- PFG -8%; as insurance stocks among worst performers in the S&P 500, with HIG shares down as well after both reported earnings last night that well short of consensus views.
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.