Early Look

Thursday, March 21, 2024

This stock market just has no quit in it! Major stock averages notched all-time closing highs Wednesday night (for the S&P 500, Dow) after the Fed held rates steady at 5.25%-5.5% as expected and maintained expectations for three cuts before the end of 2024. Nothing changed from prior statement, but stock markets skyrocketed yet again, off prior day record highs mind you, simply by keeping their view status quo. There was some apprehension heading into the meeting that recent upticks in CPI and PPI might shift the projections to two cuts, but Fed Chair Jerome Powell shrugged off the recent hot data to seasonality and that was that. The Fed’s new policy statement described inflation as remaining "elevated," and updated quarterly economic projections showed the personal consumption expenditures price index excluding (PCE) food and energy rising at a 2.6% rate by the end of the year, compared to 2.4% in the projections issued in December. The odds of a 25-bps hike at the meeting on June 12 increased from around 55% to 69% after Powell’s press conference, causing more market celebration and driving some sustained momentum. The headlines barely moved Treasury yields as the 10-yr was steady around 4.27% (the 2-yr yield fell 7-bps), though the dollar slumped. Treasury yields have slipped this morning with the 10-yr down at 4.22% as stock futures surge. Interest rate sensitive sectors spiked, while also boosting riskier assets such as Bitcoin with a big move late Wednesday to around $67K. More positive news in the semi sector overnight as Micron (MU) reported a beat with better guidance lifting shares. Gains in Asia as well as the Nikkei Index jumped over 800 points, or 2% to settle at 40,815, the Shanghai Index slipped -2 points to 3,077, and the Hang Seng Index advanced 320 points or 1.93% to 16,863. In Europe, the German DAX is up 60 points to 18,076, while the FTSE 100 is up 74 points to 7,811. In commodity prices oil slips but gold prices surge over 2.4% to record highs $2,213 an ounce following the FOMC message late yesterday. Major averages on track to open at fresh all-time highs again!

• The Dow Jones Industrial Average rose 401.37 points, or 1.03%, to 39,512.13.
• The Nasdaq Composite surged 202.62 points, or 1.25%, to 16,369.41.
• The Russell 2000 Index advanced 39.17 points, or 1.92% to 2,074.88.

• 8:30 AM ET                  Continuing Claims…est. 1.82M
• 8:30 AM ET                  Current Account Balance for Q4…est. (-$209B)
• 8:30 AM ET                  Philly Fed Business Index for March…est. -2.3 (prior +5.2)
• 9:45 AM ET                  S&P Global Manufacturing PMI, March-Flash…est. 51.7
• 9:45 AM ET                  S&P Global Services PMI, March-F…est. 52.0
• 10:00 AM ET                Existing Home Sales M/M for February…est. 3.94M
• 10:00 AM ET                Leading Index N/M for February…est. (-0.2%)
• 10:30 AM ET                Weekly EIA Natural Gas Inventory Data

• Earnings After the Close: AIR AMPX APYX CBUS CUTR DRCT FDX HYPR IDN NKE SCHL TELA WS

• Goldman Sachs 7th Annual Healthcare Innovation Clinic, 3/21-3/22, in London
• NVIDIA GTC 2024, 3/18-3/21
• S&P Global 39th Annual World Petrochemical Conference, 3/18-3/22, in Houston, TX

• The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was 16 vs 24 last week. Bulls fall to 43.2% from 45.9%, Neutrals fall to 29.6% from 32.2%, Bears rise to 27.2% from 21.9%.
• In February, the EU car market surged by 10.1% compared to the same month last year, reaching 883,608 units, the ACEA said. Among the four major EU markets, France and Italy grew by double-digits.
• Euro zone business activity was close to returning to growth in March, as HCOB’s preliminary composite Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 49.9 this month from February’s 49.2, ahead of expectations in a Reuters poll for 49.7.

• Five Below (FIVE) Q4 EPS $3.65 vs est. $3.78 on sales $1.338B vs est. $1.349B; guides Q1 net sales $826-846Mm vs est. $851.96Mm and EPS $0.58-0.69 vs est. $0.76; sees FY net sales $3.97-4.07B vs est. $4.11B and EPS $5.71-6.22 vs est. $6.47; sees Q1 comparable sales flat to up 2%.
• Guess Inc. (GES) declares special div of $2.25 per share; Q4 adj EPS $2.01 vs est. $1.56 on revs $891Mm vs est. $855.5Mm; sees Q1 revs +1-2% vs est. +0.57%, adj EPS ($0.41) -($0.37) vs est. ($0.02); sees FY revs +11.5-13.5% vs est. +2.57%, adj op mgn 7.5-8.5% and adj EPS $2.56-3.00 vs est. $2.93.
• KB Homes (KBH) Q1 EPS $1.76 vs. est. $1.57; Q1 revs rose 6% y/y to $1.47B vs. est. $1.46B; Q1 Homes delivered increased 9% to 3,037, average selling price was $480,100, compared to $494,500; housing gross profit margin of 21.5% was even with the year-earlier quarter; Q1 net orders up 55%; net order value increased 58% to $1.58B; sees 2024 housing revs in range of $6.5B-$6.9B and avg selling price range $480K-$490K.
• Shoe Carnival (SCVL) Q4 adj EPS $0.59 in-line with consensus and revs $280.2M vs. est. $280.27M; sees FY24 adjusted EPS $2.55-$2.75 vs. est. $2.70, sees FY24 revenue $1.21B-$1.25B vs. est. $1.18B and said sees comparable store sales to be (3.0%)-1.0% vs. FY23.
• Steelcase (SCS) Q4 adj EPS $0.23 vs. est. $0.21 and revs fell -3.3% y/y to $775.2M vs. est. $780.3M; Q4 gross profit margin 31.2% vs. 29.8% y/y; guides Q12 adj EPS $0.08-$0.12 and revs $715m-$740M; said targets 2025 organic revenue growth up 1%-5% vs. 2024.

• U.S. President Joe Biden announced Thursday that $6 billion in student loans would be canceled for 78,000 borrowers, bringing his administration’s total student debt cancellation to nearly $150 billion. The latest group includes public service workers, like teachers, nurses, and firefighters, who qualify under the Public Service Loan Forgiveness Program created in 2007.

• Merck (MRK) announced that the Phase 3 KEYLYNK-006 trial evaluating KEYTRUDA, Merck’s anti-PD-1 therapy, in combination with maintenance LYNPARZA, a PARP inhibitor, did not meet its dual primary endpoints of overall survival (OS) and progression-free survival (PFS) for the first-line treatment of certain patients with metastatic non-squamous non-small cell lung cancer (NSCLC).
• OmniAb Inc. (OABI) Q4 EPS ($0.14) vs est. ($0.15) on revs $4.8Mm vs est. $7.467Mm; sees FY24 op exp about same as 2023, expects cash use in 2024likeo 2023 excluding $35Mm TECVAYLI milestone payment received in 2023; sees cash use in 2025 substantially below 2024.
• Trevi Therapeutics (TRVI) reaffirms guidance for the Phase 2a RIVER trial of Haduvio in RCC patients with topline data expected in the second half of 2024; Q4 EPS ($0.08) vs est. ($0.09), ended 2023 with $83Mm cash, equivalent and marketable securities and sees cash runway into 2026.

• AAPL (AAPL) shares lower after Bloomberg reported that the U.S. Department of Justice (DOJ) will sue Apple for antitrust violations as soon as Thursday, on how the company uses its other products and services to keep customers within its ecosystem.
• Accenture (ACN) Q2 adj EPS $2.77 vs. est. $2.66; Q2 revs $15.8B vs. est. $15.84B; narrows FY24 adjusted EPS view to $11.97-$12.20 from $11.97-$12.32 (est. $12.24) and lowers FY24 revenue view to 1%-3% in local currency from 2%-5% in local currency vs. consensus $66.18B; forecasts Q3 revs $16.25B-$16.85B, below est. $17.03B.
• Synopsys’ (SNPS) board of directors has approved initiation of a sale process of Synopsys’ software integrity business; now forecasts FY revenue excl. Sig $6.06B-$6.12B.