Mid-Morning Look: October 30, 2024

Mid-Morning Look

Wednesday, October 30, 2024

Index

Up/Down

%

Last

DJ Industrials

164.22

0.39%

42,397

S&P 500

11.94

0.19%

5,843

Nasdaq

52.69

0.28%

18,765

Russell 2000

22.31

1.00%

2,260

 

 

U.S. stocks putting in a strong start to the trading day, getting a quick bounce as NYSE breadth improved from the day prior amid a handful of key earnings results movers and economic data. So what did data economic show us this morning? The US economy grew at a 2.8% annualized clip in Q3, down from Q2’s 3.0% and below the expectation for a 2.9% growth (the first ‘miss’ since Q3 2023). Personal consumption surged more than expected (up 3.7% vs 3.3% expected and 2.8% in Q2). On the inflation side, the Core PCE slowed to 2.2% from 2.8% (but that was slightly hotter than the 2.1% expected). On the jobs side, ADP private payrolls showed strong growth, nearly doubling economist estimates ahead of the Nonfarm payrolls report this Friday. In stock movers, mega cap tech first earnings report a solid one as GOOGL rises 6% post earnings; chip stocks slide 2% behind weaker guidance from AMD, QRVO overnight and SMCI noting its accounting firm resigned; homebuilders bouncing after two days of selling pressure as Treasury yields have since eased to 4.22% for 10-yr from highs above 4.36% this week; restaurants active on results as SHAK, EAT, CAKE soar on results while CMG, WING tumble; diabetes/obesity drug makers weak after LLY tumbles on earnings miss and disappointing guidance. Communications, Materials, and Financials are outperformers among S&P sector ETFs, while Utilities, Technology, and Health Care lead the underperformers. More than halfway there for quarterly earnings in S&P 500 with another heavy dose tonight highlighted by mega cap tech MSFT and META among many others. Gold new record highs, oil prices rebound, Treasury yields/dollar slip, Bitcoin holding $72K. Smallcap Russell 2000 outperforms, rising over 1% amid the pullback in yields and the Nasdaq holding record highs!

Economic Data

  • ADP US Oct. Private employment climbs 233,000; above est. +111k
  • US Q3 GDP climbs annualized 2.8% q/q vs. est. +3.0%, Q3 core PCE climbs annualized 2.2% q/q vs. est. +2.1%, advance Q3 PCE price index +1.5%, advance Q3 PCE price index ex-food/energy/housing +1.6%, advance Q3 PCE services price index ex-energy/housing +2.6%, advance Q3 GDP deflator +1.8% (consensus +2.0%)
  • US mortgage market index -0.1% to 214.5 in latest week as per the Mortgage Bankers Assoc (MBA); the purchase index climbs 5.0% to 137.8 in latest week and the refinance index falls 6.3% to 630.0 as the average 30-year mortgage rate climbs 21 bps to 6.73% in Oct 25 week, highest since July 2024 – MBA
  • Sept Pending Home sales index +7.4% (vs. consensus +1.0%) to 75.8 and up +2.6% y/y.

 

 

Macro

Up/Down

Last

WTI Crude

1.02

68.23

Brent

0.98

72.10

Gold

9.90

2,791.00

EUR/USD

0.0029

1.0847

JPY/USD

-0.14

153.21

10-Year Note

-0.036

4.238%

 

Sector Movers Today

  • In Restaurants: CAKE reported Q3 EPS above consensus on better-than-expected Cheesecake same-store sales growth and UL margin. CMG shares slip as Q3 adj EPS $0.27 vs est. $0.25 on revs rising 13% y/y to $2.794B vs est. $2.799B, but Q3 Comp sales increased 6%, driven by 3.3% transaction growth and a 2.7% increase in the average check – but missed the 6.3% estimate; guided 2024 comp sales growth in the mid to high-single digit range, vs. est. 7.5% growth. EAT Q3 revs rose 13% y/y to $1.14B, above ests and co boosted its full-year earnings guidance to between $5.20 and 5.50 a share, up from $4.35 to $4.75. Consensus views were currently at $4.83 (EAT is owner of the Chili’s, Maggiano’s and It’s Just Wings restaurant chains). SHAK delivered a 47% jump in adj EPS to $0.25 topping $0.19 as Q3 sales rose 15% y/y to $316.9M just above consensus and same-shack sales rose 4%, just above expectations for a 3.6% gain, and accelerating from 2.3% growth last year. WING shares slumped as Q3 EPS of $0.88 missed the $0.96 estimate while revs of $162.5M topped consensus of $160.2M; said same store sales jumped 20.9%, well above estimates for an 11.4% gain, and sharply above from a 6% increase last year; reaffirms FY24 domestic same store sales view up 20%
  • In Auto Suppliers: LEA downgraded to Equal Weight from Overweight at Barclays and cut tgt to $120 from $140 saying the weaker than expected light vehicle production environment alongside customer mix headwinds has driven negative earnings pressure for the company more than offsetting any benefits from performance. DAN shares tumbled after Q3 results and cut its FY24 adjusted EPS view to 75c-95c from 80c-$1.30, and cuts FY24 revenue view to $10.2B-$10.4B from $10.45B-$10.95B saying lower end-market demand is driving reduced sales.
  • In Insurance: CB Q3 operating EPS of $5.72 beat consensus of $4.99 on better underlying results, low cats, higher PYD and investment income and the 83.4% underlying combined ratio beat consensus 84.1%; said P&C pricing in NA improved and was more than loss trend in the quarter. SIGI upgraded to Outperform from Market Perform at BMO Capital and raised tgt to $105 saying that following three quarters of meaningful reserving additions, it is now comfortable that Selective’s earnings bar is low enough that it can begin to exceed consensus expectations in the future quarters. UNM Q3 operating earnings came modestly ahead of the Street as favorable Group Life offset Supplemental & Voluntary.

 

Stock GAINERS

  • ATRC +22%; following better results/guidance; adj EBITDA $7.9Mm vs est. $6.61Mm on revs $115.9Mm vs est. $112.3MM; sees FY revs $459-462Mm vs est. $458.11Mm.
  • FMC +10%; after top and bottom line beat and mid-point of guidance topped consensus.
  • GOOGL +6%; shares advanced after Q3 results, Q3 EPS $2.12, tops consensus $1.84; Q3 revs Ex-tac $74.55B, above est. $72.88B; Q3 Google cloud rev. $11.35B, vs. est. $10.79B; Q3 Google advertising revenue $65.85B in-line with ests; YouTube ads revenue $8.92B vs. est. $8.89B and Gemini was a major focal point.
  • GRMN +21%; among top movers in the S&P 500 after Q3 EPS $1.99 topped ests $1.45 on better revs $1.59B vs. est. $1.44B and raised its outlook citing momentum they say they are experiencing as we enter the important holiday selling season.
  • RDDT +36%; delivered Q3 revenue coming in 11% above consensus and EBITDA coming in 57% above the high-end of guidance; continued user growth and engagement gains with DAUqs reaching 97M (+47% Y/Y); guided Q4 revs $385M-$400M vs. est. $357.9M.
  • SNAP +16%; results were a bit better than feared while the Q4 guide was modestly below Street with continued brand spend headwinds; Solid Q3 revenue growth of +15% y/y, active advertisers more than doubled year-over-year.
  • V +3%; reported Q4 revenue of ~$9.6B and adj. EPS of $2.71 above pre-print estimates while volume growth in the qtr. was stable across domestic and x-border, while Oct. MTD growth slightly accelerated. Visa guided to FY25 net revenue growth of high single to low double digits with adj. EPS growth at the high end of low double digits.

 

Stock LAGGARDS

  • AMD -8%; reported Q3 earnings that met expectations but guided Q4 revs of $7.5 billion at the midpoint of its range compared with estimates of $7.55 billion; on the positive side, AMD now expects data-center AI GPU revenue to “exceed” $5 billion in 2024, up from the $4.5 billion forecast she made in July.
  • AZN -4%; said its China president is under investigation and is cooperating with Chinese authorities, the company said.
  • CAT -2%; Q3 adj EPS $5.17 vs. est. $5.34; Q3 revs fell -4.2% y/y to $16.11B vs. est. $16.38B; Q3 miss comes as higher borrowing costs and sticky inflation led to a slowdown in machinery demand, forcing the company’s dealers to moderate product restocking; says outlook for Q4 rev sales and revenues to be slightly lower
  • CZR -7%; Q3 EBITDAR was -1% vs Street’s estimates, reflecting downside LV/Regionals and some offset from upside Digital. Wells’ Fargo key takeaway was that the regional EBITDAR inflection it had hoped for may not occur in 2025.
  • FSLR -7%; as Q3 EPS and revenue came in below estimates, driven by lower-than-expected module shipments and a $50M product warranty charge related to the manufacturing ramp of its Series 7 product. FSLR lowered its FY’24 volume guide, largely due to weakness in the India pricing environment
  • LLY -9%; as Q3 adj EPS $1.18 misses the $1.45 est. on lighter sales of $11.44B (vs. est. $12.1B); Q3 Mounjaro revenue $3.11B vs. Bloomberg est. $3.62B and Zepbound sales $1.25B vs. est. $163B; sees FY adj EPS between $13.02 and $13.52, compared with a $16.10-$16.60 forecast prior (weighs on obesity drug makers NVO, VKTX)
  • OI -4%; tumbles on disappointing results and guidance; Q3 adj EPS ($0.04) vs est. $0.04 on sales $1.7B vs est. $1.761B; sees FY adj EPS $0.70-0.80 below est. $1.13; said revised its guidance given softer than anticipated market demand.
  • QRVO -21%; reported better results but weaker guidance, sending shares plunging, driven by a shift from 5G Android mid-tier handsets toward entry-level models (results prompted at least three brokerage downgrades on Wall Street).
  • SMCI -27%; after the company revealed its Ernst & Young sent a letter of resignation as accounting firm and the company said it has begun process of identifying successor. SMCI said it doesn’t currently expect any restatements and disagrees with EY’s decision to resign (shares of DELL, HPE advanced in sympathy). Company did confirm earnings release date of November 5th
  • WING -16%; shares slumped as Q3 EPS of $0.88 missed the $0.96 estimate while revs of $162.5M topped consensus of $160.2M; said same store sales jumped 20.9%, well above estimates for an 11.4% gain, and sharply above from a 6% increase last year.

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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.