Morning Preview: July 25, 2024

Early Look

Thursday, July 25, 2024

Futures

Up/Down

%

Last

Dow

-49.00

0.12%

40,061

S&P 500

-16.25

0.29%

5,456

Nasdaq

-88.50

0.46%

19,114

 

 

U.S. stock futures are looking lower, adding to yesterday declines (where markets finished on lows), after the S&P 500 and Nasdaq 100 and Composite recorded their worst daily returns of 2024 as markets took out key technical support levels. The S&P 500 fell -2.31%, snapping its 356-session streak without a daily decline of at least 2%, the longest streak since 2007 and posted its biggest one-day percentage fall since December 2022. The CBOE Volatility index (fear index) topped the 18 level to its highest since April 22nd following the market rout and is around the 19 level this morning. The Nasdaq Composite broke below its 50-day moving average to plunge 3.64%, its biggest 1-day drop since October 2022 led by a steep decline in semiconductors (SOX) and large cap tech TSLA, GOOGL after earnings, along with others. Another round of earnings overnight/this morning impacting several names this morning with toy maker HAS rising on results as well as IBM, NOW, PI in the tech space, while chemical maker DOW falls on results, as does HON in industrials, Ford (F) and STLA in autos and TER, MXL in tech. Treasury prices rise as yields fall after the 2s10s spread touching just -14bps yesterday, its steepest since October 2023. In Asian markets, The Nikkei Index tumbled 1,285 points or 3.28% to settle at 37,869, the Shanghai Index dropped -15 points to 2,886, and the Hang Seng Index plunged -306 points, or 1,77% to 17,004. In Europe, the German DAX is down -245 points or 1.34% to 18,141, while the FTSE 100 is down -60 points to 8,093. The Japanese yen surges toward 152 against the dollar amid unwinding of crowded carry trades ahead of next week’s BOJ meeting. U.S. Treasuries rise as haven demand persists, with 10-year yield down 5bps to 4.23%. Markets brace for some key economic data with Q2 GDP at 8:30 AM.

 

Market Closing Prices Yesterday

  • The S&P 500 Index tumbled -128.61 points, or 2.31%, to 5,427.13.
  • The Dow Jones Industrial Average tanked -504.22 points, or 1.25%, to 39,853.87.
  • The Nasdaq Composite plunged -654.94 points, or 3.64%, to 17,342.41.
  • The Russell 2000 Index declined -128.61 points, or 2.13% to 2,195.37.

Economic Calendar for Today

  • 8:30 AM ET                  Weekly Jobless Claims…est. 238K
  • 8:30 AM ET                  Continuing Claims…est. 1.86M
  • 8:30 AM ET                  Gross Domestic Product (GDP), Q2 advance…est. +2.0% (prior +1.4%)
  • 8:30 AM ET GDP Consumer Spending, Q2-advance…est. +2.0%
  • 8:30 AM ET GDP Price Deflator, Q2-advance…est. +2.6% (prior +3.1%)
  • 8:30 AM ET GDP PCE Prices Index, Q2-advance…
  • 8:30 AM ET GDP Core PCE Prices, Q2-advance…est. +2.7% (prior +3.7%)
  • 8:30 AM ET                  Durable Goods Orders for June…est. +0.3%
  • 10:30 AM ET                Weekly EIA Natural Gas Inventory Data
  • 11:00 AM ET                Kansas City Fed Manufacturing for July…est. (-5)
  • 1:00 PM ET U.S. Treasury to sell $44B in 7-year notes

Earnings Calendar:

  • Earnings Before the Open: AAL ABBV AMAL ARCH BC BFH CARR CBRE CFR CMS CNX COOP CRS DAR DOV DOW DTE EME FCFS FCN FRME HAS HFWA HNI HOG HON IBCP ITGR KDP LAZ LEA LKQ LUV MAS MPX NDAQ NOC NTCT NYCB ORI PCG POOL R RES RPM RS RTX SBSI TPH TRU TSCO TW ULBI UNP VC VLO VLY WEX WST WTBA XPRO
  • Earnings After the Close: ABCB AEYE AJG ALEX ALSN APPF ASB ATR BJRI BKR BY BYD CINF COLB COLM COUR CTO CUBI CUZ DECK DLR DOC DXCM EIX EMN ERIE EXPO FBIN FFBC FIBK FISI GLPI GSIT HIG JNPR KNSL LHX LPLA MHK MTX NOV NSC OLN OPTT PECO PFBC PFG ROG SAM SBCF SIGI SKX SKYW SPSC SSNC TBBK TREE TXRH UCTT ULH VLTO VRSN WSBC WSFS WY ZYXI

 

 

Macro

Up/Down

Last

Nymex

-1.39

76.19

Brent

-1.45

80.26

Gold

-42.10

2,373.60

EUR/USD

0.001

1.0849

JPY/USD

-1.53

152.34

10-Year Note

-0.063

4.223%

 

World News

  • The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was 11.5 vs 29.3 last week. Bulls fall to 43.2% from 52.7%, Neutrals rise to 25.1% from 23.8%, Bears rise to 31.7% from 23.4%.
  • German business morale unexpectedly fell in July as the Ifo institute said its business climate index sank to 87.0 in July from 88.6 in June, compared with a reading of 88.9 forecast by analysts. The current conditions index fell to 87.1 from 88.3 in the previous month.
  • Japan PPI Services index rose by a lot quicker than expected 3.0% in June from a year earlier (est. 2.6%; prev. 2.5%). The key contributors to the reacceleration remained hotel services of which price rose by 26.9% compared with 12.9% previously on continued tourism recovery.
  • The PBOC unexpectedly lowered the one-year policy loan rate 20 basis points to 2.3%.

Sector News Breakdown

Consumer

  • Chipotle Mexican Grill (CMG) Q2 adj EPS $0.34 vs. est. $0.32; Q2 revs $3B vs. est. $2.94B; Q2 comparable restaurant sales increased 11.1% vs. est. 9.2% and 7.4% y/y; authorized repurchases of common stock with a total aggregate purchase price of $400M; sees FY24 comparable restaurant sales growth mid to high single digits; exec notes expects margins will be under pressure for the next couple of quarters.
  • Churchill Downs (CHDN) Q2 adj EBITDA $444.8Mm vs est. $409.2Mm on revs $890.7Mm vs est. $858.7Mm.
  • Ford Motor (F) Q2 adj EPS $0.47 vs. est. $0.68; Q2 revs $47.8B vs. est. $44.02B; Q2 adjusted EBIT $2.8B; backs expectations for FY24 adjusted EBIT of $10B-$12B while raises FY24 adjusted free cash flow outlook by $1B, to between $7.5B-$8.5B; said capex for the year are still anticipated to be between $8B-$9B.
  • Las Vegas Sands (LVS) Q2 adj property EBITDA $1.07B vs est. $1.064B on revs $2.761B vs est. $2.803B.
  • Meritage Homes (MTH) Q2 EPS $6.31 vs. est. $5.18; Q2 revs $1.69B vs. est. $1.57B; orders of 3,799 homes for the second quarter of 2024 increased 14%; said 4,118 deliveries this quarter combined with home closing gross margin of 25.9% and SG&A leverage of 9.3% contributed to diluted EPS of $6.31; raises FY24 EPS view to $19.80-$21.00 from $19.20-$20.70 and boosts FY24 revenue view to $6.1B-$6.3B from $6B-$6.2B.
  • Nestle SA (NSRGY) lowered its sales outlook for the year saying now expects sales to grow at least 3%, lower than the roughly 4% previously targeted.
  • O’Reilly Automotive (ORLY) Q2 EPS $10.55 vs est. $10.98 on revs $4.27B vs est. $4.318B, comps +2.3%; guides FY revs $16.6-16.9B vs est. $16.877B, EPS $40.75-41.25 vs est. $41.86, sees FY net new stores +190-200 and Free cash flow (FCF) $1.8-2.1B.
  • QuantumScape (QS) Q2 EPS ($0.25) vs est. ($0.23), adj EBITDA ($72.51Mm) vs est. ($81.92Mm); sees FY adj EBITDA ($300Mm) – ($250Mm) vs est. ($352.97Mm).
  • Royal Caribbean (RCL) Q2 adj EPS $3.21 vs. consensus $2.75; Q2 revenue $4.11B vs. est. $4.04B; raises FY24 adjusted EPS view to $11.35-$11.45 from $10.70-$10.90; cited stronger pricing on close-in demand and continued strength in onboard revenue for quarterly results.
  • Whirlpool (WHR) Q2 adj EPS $2.39 (in-line with ests) on revs $3.99B vs. est. $3.96B; cuts FY24 adjusted EPS view to ~$12.00 from $13.00-$15.00 (vs. consensus $12.54) and guides FY revs $16.9B vs. est. $16.77B.
  • Wyndham Hotels (WH) Q2 adj EPS $1.13 vs. est. $1.03; Q2 revenue $367M vs. consensus $370.57M; said Q2 global RevPAR grew 2% in constant currency and system-wide rooms grew 4% y/y; boosts FY24 adj EPS view to $4.20-$4.32 from $4.18-$4.30 and sees FY24 y/y global RevPAR growth approx. flat vs. prior view of 2%-3%.

Energy, Industrials and Materials

  • Dow Inc. (DOW) Q2 operating EPS $0.68 missed consensus $0.71 on revs $10.92B below consensus $11.01B; said sees an uptick in sales in Q3 at $11.1B, but still lower than estimates of $11.35B.
  • Honeywell International (HON) Q2 adj EPS $2.49 topped $2.42 consensus and sales climbed to $9.57B from $9.146B a year ago, and ahead of the $9.41B consensus; raised full-year sales to range from $39.1B-$39.7B, up from prior guidance of $38.5B-$39.3B but cut FY adj EPS to a range of $10.05-$10.25, down from prior guidance of $10.15-$10.45.
  • Knight-Swift Transport (KNX) Q2 EPS $0.24 vs. est. $0.28; Q2 revs $1.85B vs. est. $1.83B; Q2 Truckload operating ratio 97.2% vs. 91.8% last year and Q2 Less-Than-Truckload operating ratio 85.9% vs. 85.1% last year; guides Q4 adj EPS $0.32-$0.36.
  • Newmont Mining (NEM) said anticipating sequential increase in production in the second half of the year, weighted towards the fourth quarter; on track to deliver 2024 guidance for production, costs and capital spend
  • Republic Service (RSG) Q2 adj EPS $1.61 vs. consensus $1.53; Q2 revenue $4.05B vs. consensus $4.04B; raises quarterly dividend 4.5% to 58c per share; sees 2024 adj EPS $6.15-$6.20 above consensus $6.06 and guides 2024 revenue $16.08B-$16.13B vs. consensus $16.15B.
  • United Rentals (URI) Q2 adj EPS $10.70 vs. consensus $10.54; Q2 revs $3.773B, in-line with consensus $3.77B; narrows FY24 revenue view to $15.05B-$15.35B from $14.95B-$15.45B (est. $15.22B) and narrows FY24 adjusted EBITDA $7.09B-$7.24B from $7.04B-$7.29B.
  • Waste Management (WM) Q2 EPS $1.69 vs. consensus $1.83 and said revs rose 5.5% y/y to $5.40B vs. consensus $5.43B; Q2 adjusted operating EBITDA increased by 10.3%, and margin expanded by 130 basis points resulting in quarterly margin of 30.0% for the first time ever.
  • Waste Connections (WCN) Q2 adj EPS $1.24 vs. consensus $1.17; Q2 revs $2.25B vs. consensus $2.22B; guides FY24 revenue $8.85B, up $100M from original view (est. $8.82B); sees Q2 net income is estimated to be approximately $1.087B, and adjusted EBITDA is estimated to be approximately $2.9B, or about 32.8% of revenue, as compared to the original outlook for adjusted EBITDA of $2.86B or 32.7% of revenue.

Financials

  • Bank of America (BAC) raises dividend 8%, announces $25B share repurchase plan
  • Ameriprise Financial (AMP) Q2 adj EPS $8.72 vs. est. $8.53; Q2 revs $4.22B, in-line with consensus; Q2 Assets under management and administration reached $1.4 trillion, up 12% from strong client net inflows and market appreciation; Pretax adjusted operating margin was 26.8% and adjusted operating return on equity was 48.9%.
  • Invitation Homes (INVH) Q2 AFFO/shr $0.47 vs est. $0.47 on revs $653Mm vs est. $642.59Mm; sees FY adj revs +4.5-5.25% vs est. +6.91% and AFFO/shr $1.84-1.90 vs est. $1.88.
  • Raymond James (RJF) Q3 adj EPS $2.39 vs. consensus $2.32 and revs $3.23B vs. consensus $3.24B; reports record client assets under administration of $1.48T and record Private Client Group assets in fee-based accounts of $820.6 billion, up 15% and 18%, respectively, over June 2023.

Healthcare

  • Align Technologies (ALGN) Q2 adj EPS $2.41 vs est. $2.30, op Inc $147.046Mm vs est. $240.5Mm on revs $1.029B vs est. $1.036B; guides Q3 revs $980Mm – 1B vs est. $1.023B with adj op mgn flat y/y; sees FY revs +4-6% vs est. +6.7% with adj op mgn up y/y.
  • AstraZeneca (AZN) raised its full year sales and profit forecast after beating analyst expectations for Q2 revenue on strong demand for its cancer, rare disease and heart disease medicines; said Q2 oncology sales grew 19% at constant currency rates to $5.33B and accounted for 41% of the total; expects both 2024 revenue and core earnings per share to increase by a mid-teens percentage at constant currency rates.
  • BioMarin Pharmaceutical Inc. (BMRN) said the FDA approved the company’s supplemental Biologics License Application (sBLA) for BRINEURA) to slow the loss of ambulation in children of all ages with neuronal ceroid lipofuscinosis type 2 (CLN2 disease), also known as tripeptidyl peptidase 1 (TPP1) deficiency.
  • Concentra Group Holdings Parent, Inc. (CON), a wholly owned subsidiary of Select Medical (SEM), today announced the pricing of Concentra’s IPO of 22.5M shares of Concentra’s common stock at a price of $23.50 per share.
  • Edwards Lifesciences (EW) Q2 adj EPS $0.70 vs. est. $0.69; Q2 sales fell -9.4% y/y to $1.39B below est. $1.65B; said Q2 Transcatheter Aortic Valve Replacement sales $1.04B, +4.7% y/y, and Transcatheter Mitral and Tricuspid Therapies sales $83.0M, +74% y/y.
  • Molina Healthcare (MOH) Q2 adj EPS $5.86 vs est. $5.50 on premium revs $9.446B; guides FY premium revs approx $38B, reaffirms FY adj EPS at least $23.50 vs est. $23.09.
  • Roche (RHHBY) raised its full-year earnings forecast after exceeding expectations for the first half, driven by strong demand for newer drugs such as eye medicine Vabysmo; said it expects growth in adjusted earnings in the “high single-digit range”, excluding the effect of currency swings and resolution of tax disputes in 2023, up from previous estimates of “mid-single-digit” percentage growth; said 1H operating profit gained 4% to 11.3 billion Swiss francs ($12.8 billion).
  • Viking Therapeutics (VKTX) Q2 EPS ($0.20) vs est. ($0.27); said VK2735 to advance to Phase 3 for Obesity; end-of-phase 2 meeting planned for 2H24; Oral VK2735 Phase 2 Study in obesity expected to begin 4Q24.
  • United Health Services (UHS) Q2 adj EPS $4.31 vs est. $3.28 on revs $3.907B vs est. $3.864B; guides FY revs $15.565-15.753B vs prior $15.411-15.706B and est. $15.592B, adj EBITDA $2.154-2.226B vs prior $1.931-2.019B and est. $2.016B, adj EPS $15.40-16.20 vs prior $13.00-14.00 and est. $13.79.

Technology, Media & Telecom

  • IBM Corp. (IBM) Q2 adj EPS $2.43 vs est. $2.20 on revs $15.8B vs est. $15.616B, gr mgn 56.8%; sees FY constant currency revs growth consistent with mid-single digit model, sees more than $12B FCF in FY.
  • Impinj (PI) Q2 adj EPS $0.83 vs est. $0.74, adj EBITDA $25Mm vs est. $24.2Mm on revs $102.495Mm vs est. $97.5Mm, adj gr mgn 58.2%; guides Q3 revs $91.0-94.0Mm vs est. $90.32Mm and adj EPS $0.46-0.50 vs est. $0.40 with adj EBITDA $14.5Mm vs est. $13.28Mm.
  • KLA-Tencor (KLAC) Q4 adj EPS $6.60 vs. est. $6.11; Q4 revs rose 9.1% y/y to $2.57B vs. est. $2.52B; guides Q1 adj EPS $6.40-$7.60 above consensus $6.49; Q1 GAAP gross margin is expected to be in a range of 59.9% +/- 1.0%.
  • MaxLinear (MXL) Q2 adj EPS ($0.25) vs est. ($0.19) on revs $91.99Mm vs est. $100Mm; sees Q3 revs $70-90Mm vs est. $111.08Mm.
  • Ribbon Communications (RBBN) Q2 adj EPS $0.05 vs est. $0.05, adj EBITDA $22Mm vs est. $22.8Mm on revs $193Mm vs est. $205Mm; guides Q3 revs $205-220Mm vs est. $219.59Mm, sees FY revs $830-850Mm vs est. $852.38Mm.
  • ServiceNow Inc. (NOW) Q2 EPS $3.13 vs. consensus $2.84; Q2 revenue $2.63B vs. consensus $2.61B. COO resigns after probe into hiring of former Army exec; Q2 current remaining performance obligations (CRPO) of $8.78B, representing 22% y/y growth, 22.5% in constant currency; sees Q3 sub revenue up 20.5% at $2.66B-$2.665B.
  • Teradyne Inc. (TER) Q2 EPS $0.86 vs. est. $0.77; Q2 revenue $730M tops consensus $701.2M; sees Q3 EPS $0.66-$0.86 vs. consensus $0.86 and sees Q3 revenue $680M-$740M vs. consensus $717.7M.
  • Tyler Technologies (TYL) Q2 adj EPS $2.40 vs. consensus $2.30 and revs in-line at $541M; boosts FY24 EPS view to $9.25-$9.45 from $9.10-$9.30 (est. $9.22) and raises FY24 revenue view to $2.12B-$2.15B from $2.11B-$2.14B (vs. consensus $2.13B).
  • Warner Brothers (WBD): The NBA said late Wednesday that TNT “did not match the terms” of Amazon’s rights bid and that Amazon will be a new streaming partner for the league. Earlier this week, TNT, a division of Warner Bros. Discovery (WBD) and an NBA partner since 1989, announced it had matched a competing bid to remain rights partners with the league.
  • Allegro MicroSystems (ALGM) 25M share Secondary priced at $24.00.

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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.