Early Look

Tuesday, January 16, 2024

After settling higher for the 10^th time in the last 11 weeks for the S&P 500, Nasdaq, and Dow Jones Industrial Average on Friday, U.S. futures are looking broadly lower as investors take risk off heading into earnings season with both the dollar (hits 1-month highs) and Treasury yields jump. For last week, the S&P 500 climbed 1.8%, the Dow climbed 0.3% and the Nasdaq climbed 3.1%. Treasury yields are moving higher after sharp declines last week when the two-year lost 25.3 bps to 4.136%, while the 10-year declined just 9.2 bps to 3.949%. This morning the 10-yr yield is back at 4% as hawkish remarks from central bank policymakers in Europe contributed to markets reducing bets that global interest rate cuts could come as early as March. In political news, former President Donald Trump secured a resounding win in the first 2024 U.S. Republican presidential contest in Iowa on Monday. Geopolitical concerns in the Red Sea, Gaza and Ukraine are also adding to market unrest. The S&P 500 index fell short of closing at an all-time high by roughly 13 points again on Friday, an elusive level to this point which has failed twice to start the year. In Asian markets, The Nikkei Index declined -282 points to 35,619, the Shanghai Index was up 7 points to 2,893, and the Hang Seng Index dropped -350 points to 15,865. In Europe, the German DAX is down over -100 points to 16,517, while the FTSE 100 is down -35 points to 7,560. Europe’s STOXX 600 index and MSCI’s broadest index of Asia-Pacific shares outside Japan both dropped to their lowest since mid-December.

• The Dow Jones Industrial Average fell -118.04 points, or 0.31%, to 37,592.98.
• The Nasdaq Composite gained 2.58 points, or 0.02%, to 14,972.76.
• The Russell 2000 Index declined -4.49 points, or 0.23% to 1,950.96.

• 8:30 AM ET                  Empire Manufacturing for January…est. (-5.0)
• 11:00 AM ET                Fed’s Waller Speaks on Economic Outlook and Monetary Policy

• Earnings After the Close: CVGW FULT HWX IBKR PNFP PRGS

• Needham 26th Annual Growth Conference, 1/16-1/19, in New York
• China Q4 GDP, December Retail Sales, and Industrial Output data

• Casey’s General Store (CASY) mentioned positively in Barron’s noting it is the third-largest convenience store in the U.S., with some 2,500 locations across 17 states and growth expectations make it an appealing buy.
• Hyundai plans to spend $845 million to get its second plant in India ready for operations after buying the mothballed factory from General Motors (GM) – Bloomberg reported.

• FMC Corporation (FMC) downgraded to Underperform from Neutral at Bank America.
• Maersk (ABMBY) has sent two container ships through the Red Sea carrying goods for the United States military and government, according to the Danish company and ship tracking data – Reuters.
• In paint stocks, Kelly-Moore Paints said it plans to cease operations and shut down, collapsed in part by years of asbestos lawsuits that have left the paint maker and retailer still saddled with some $170 million in liabilities. Watch shares of Sherwin Williams (SHW) and PPG Industries (PPG) which may benefit from news.

• First American Financial Corp. (FAF) said a previously reported cybersecurity incident will have a material impact on its fourth-quarter results of operations.
• PNC Financial (PNC) Q4 adj EPS $3.16 vs. est. $2.94; Q4 revs $5.35B vs. est. $5.29B; Q4 CET1 capital ratio 9.9%; Q4 tangible book value per share $85.08; incurred $525 mln of post-tax expenses related to FDIC special assessment and workforce reduction charges; qtrly average loans of $324.6B increased $5.1B, or 2% vs q/q.
• Banks will urge the U.S. Federal Reserve to completely overhaul a draft rule hiking bank capital. Comments on the Basel rule, and two other big bank capital and long-term debt draft rules that aim to boost banking system safety and soundness, are due on Tuesday.

• Apple (AAPL) is removing a blood-oxygen sensor from certain models of its smartwatches to get around a patent dispute related to the technology, according to a Masimo (MASI) filing on Monday. http://tinyurl.com/kcsk3326
• Baidu (BIDU) shares dropped in Asian market trading following an SCMP article on Friday the 12^th reporting a research paper published by a research lab at Strategic Support Force Information Engineering University had used Baidu’s large-language model Ernie.
• Disney’s (DIS) ESPN and the National Football League are in advanced talks that could result in the league taking an equity stake in ESPN, NY Post reported.
• Nvidia (NVDA) chips have been purchased in China by organizations linked to its military and state-backed artificial intelligence research firms over the past year, despite a U.S. export ban, according to a Reuters report citing publicly available tender documents. http://tinyurl.com/492fe2zy
• Tegna Inc. (TGNA) and AT&T’s (T) DirecTV and Tegna reached a new multi-year distribution agreement that covers Tegna’s 64 owned stations in 51 Nielsen designated markets.