Morning Preview: October 16, 2024

Early Look

Wednesday, October 16, 2024

Futures

Up/Down

%

Last

Dow

-15.00

0.03%

43,000

S&P 500

1.25

0.03%

5,864

Nasdaq

18.50

0.09%

20,360

 

 

U.S. futures were steady overnight after stocks closed lower on Tuesday as a weak sales forecast from chipmaker ASML weighed heavily on tech shares, while crude extended its slide due to easing supply worries and weakening demand. All three major U.S. indexes ended the session in negative territory, with the S&P 500 and the Dow easing back from Monday’s record closing highs. Semiconductor stocks were broadly lower, falling over 5% after chip equipment-maker ASML cut its annual sales forecast with weak bookings, pressuring the industry. Financials a bright spot behind better earnings from GS, BAC and PNC as all posted better-than-expected profit, while managed care stocks sank as Dow component UNH issued a softer outlook. healthcare companies UnitedHealth UNH.N and Johnson & Johnson JNJ.N results underwhelmed investors. In Asian markets overnight, The Nikkei Index dropped -730 points to 39,180, the Shanghai Index was little changed rising 1 point to 3,202, while the Hang Seng Index fell -31 points to 20,286. In Europe, the German DAX is down -55 points to 19,431, while the FTSE 100 is up 45 points to 8,295. A light day of economic data this morning and earnings outside of a few financials; Treasury yields are lower; Bitcoin rises to $67,630; the dollar steady.

 

Market Closing Prices Yesterday

  • The S&P 500 Index dropped -44.59 points, or 0.76%, to 5,815.26.
  • The Dow Jones Industrial Average fell -324.80 points, or 0.75%, to 42,740.42.
  • The Nasdaq Composite slumped -187.10 points, or 1.01%, to 18,315.59.
  • The Russell 2000 Index edged higher 1.19 points, or 0.05% to 2,249.83.

Economic Calendar for Today

  • 7:00 AM ET MBA Mortgage Applications Data
  • 8:30 AM ET                  Import/Export Prices for September…est. for a decline of (-0.4%) for both
  • 10:30 AM ET                Weekly DOE Inventory Data

Earnings Calendar:

  • Earnings Before the Open: ABT CFG FHN MS PLD SYF USB
  • Earnings After the Close: AA BANR CCI CNS CSX DFS EFX FR GSBC HOMB KMI LBRT MMLP OSBC PPG REXR SLG SNV STLD

 

 

Macro

Up/Down

Last

Nymex

-0.35

70.23

Brent

-0.37

73.88

Gold

13.40

2,692.30

EUR/USD

0.0003

1.0893

JPY/USD

0.19

149.38

10-Year Note

-0.026

4.012%

 

World News

  • The pound fell 0.4% and earlier dipped below $1.30 for the first time since Aug. 20 after UK inflation slowed more than expected in September. Traders increased bets on interest-rate cuts by the Bank of England, boosting gilts.
  • Secretary of State Antony Blinken and Secretary of Defense Lloyd Austin issued a letter this week to the Israeli gov’t telling it to take “urgent and sustained action” to reverse course on the spiraling humanitarian situation in Gaza or risking seeing select US military assistance cut off. The US has reportedly given Israel 30 days to demonstrate progress

Sector News Breakdown

Consumer

  • Stellantis (STLA) said it expects a 20% drop in Q3 consolidated vehicle shipments amid declining business performance which led it last month to cut profit and cash-flow forecasts for the full year.
  • Yum! Brands (YUM) downgraded to Hold from Buy at TD Cowen.

Energy, Industrials and Materials

  • Eastman Chemicals (EMN) downgraded from Buy to Neutral at Bank America but raised tgt to $119 from $114.
  • Enphase Energy (ENPH) downgraded to Neutral from Positive at Susquehanna.
  • JB Hunt (JBHT) Q3 EPS $1.49 vs. est. $1.41 on revs fell -3% y/y to $3.07B vs. est. $3.02B; notes the decline in revs was primarily driven by a 5% and 6% decrease in gross revenue per load in Intermodal and Truckload, respectively, and a decline in load volume of 10% and 6% in Integrated Capacity Solutions and Dedicated Contract Services, respectively.
  • Lithium Americas Corp. (LAC) and General Motors Holdings LLC (GM) have entered into a new investment agreement to establish a joint venture for the purpose of funding, developing, constructing and operating Thacker Pass in Humboldt County, Nevada. The JV Transaction will deliver $625 million of cash and letters of credit from GM
  • Rio Tinto (RIO) said it shipped weaker-than-expected 84.5 mln tonnes of ore from its Western Australia operations during Q3, of which 19% accounted to lower-grade, lower-margin product called SP10; said mining costs there are likely to be in the upper half of an annual forecast, of $21.75 to $23.50 a ton, as inflation runs at the higher end.
  • United Airlines (UAL) authorized a new share repurchase program for up to $1.5B; Q3 adj EPS $3.33 tops consensus $3.17 on revs $14.8B vs. est. $14.78B; Q3 capacity up 4.1% y/y; Q3 TRASM down 1.6% y/y; Q3 CASM up 0.1%, and CASM-ex1 up 6.5% y/y; traffic up +2.7% and load factor 85.3%.
  • Westlake Chemical (WLK) upgraded to Neutral from Underperform at Bank America and raised target to $159 from $151 saying near-term concerns are now balanced with a more favorable mid- and long-term opportunity.
  • Nigeria’s oil regulator has rejected Shell’s (SHEL) proposed $1.3B sale of its onshore oilfields to Renaissance group because the buyer is not qualified to manage the assets, Reuters reports citing ThisDay newspaper.

Financials

  • Klarna is offloading most of its U.K. “buy now, pay later” portfolio to hedge fund Elliott in a deal that could free up as much as GBP 30B for new loans, the Financial Times reported.
  • First Horizon (FHN) Q3 adj EPS $0.42 vs. est. $0.38; Q3 tangible book value per share $13.02; Q3 net interest income $258M; Q3 credit loss provision $11.92M.
  • Fulton Financial (FULT) Q3 EPS $0.33 as Net interest margin rose 6bps to 3.49%; Common equity tier 1 capital increased to 10.5%, compared to 10.3% in the prior quarter; Tangible shareholders’ equity per common share increased $0.59, or 4.7%, to $13.02 compared to the prior quarter.
  • Hancock Whitney (HWC) Q3 EPS $1.33 vs. est. $1.29; Q3 net interest margin (NIM) 3.39% vs. 3.27% y/y; while loans fell -2.2% y/y to $23.46B; Total deposits fell -4.4% y/y to $28.98B; Q3 provision for credit losses -35% y/y to $18.6M.
  • Interactive Brokers (IBKR) Q3 ad EPS $1.75 below consensus $1.82; Q3 revs $1.365B vs. est. $1.33B; 3Q commission rev increased 31% to $435M on higher customer trading volumes; Q3 Net interest income (NII) increased 9% to $802M on higher customer margin loans and customer credit balances; other fees and services increased $20M, or 38%.
  • Synchrony (SYF) Q3 EPS $1.94 vs. consensus $1.79; Q3 CET1 capital ratio 13.1%, net charge-offs 6.06%, Q3 tangible book value per share $32.68, net charge offs +39% to $1.55B, provision for credit losses +7.3% to $1.6B, net interest margins 15% vs. 14.5% and net interest income +4.6% q/q to $4.61B.

Healthcare

  • Merck’s (MRK) Capvaxive™ (pneumococcal 21-valent conjugate vaccine) demonstrates positive immune responses in adults with increased risk for pneumococcal disease.
  • Novocure (NVCR) shares jumped overnight after saying the FDA approves Optune Lua for concurrent use with Pd-1/Pd-L1 inhibitors for treatment of metastatic non-small cell lung cancer.

Technology, Media & Telecom

  • Qualcomm (QCOM) is likely to wait until after the U.S presidential election in November before deciding whether to pursue an offer to buy Intel (INTC), Bloomberg reported last night. Qualcomm seeks greater clarity on the new occupant of the White House before deciding its next move because of the impact any future administration would have on the antitrust landscape and America’s relationship with China
  • Cisco (CSCO) was upgraded to Buy from Neutral at Citigroup and raised the tgt to $62 from $52 saying expects the company to benefit from an expanding ethernet artificial intelligence total addressable market and a narrowing valuation gap versus peers.
  • Omnicom (OMC) Q3 EPS $2.03 vs. est. $2.02 and revs $3.88B vs. consensus $3.79B; posted 6.5% organic revenue growth, and 7.9% EBITA growth in Q3; Q3 Operating income of $600.1M; EBITA of $622.3M and 16.0% margin; Q3 Operating expenses increased $265.2 million, or 8.8%.
  • Silvaco group (SVCO) cuts FY24 revenue view to $60M-$63M from $63M-$66M (est. $64.54M) and lowered its FY24 gross bookings view to $64M-$67M from $67M-$71M saying they “saw a decline in orders from Asia during Q3 primarily driven by economic challenges and the ongoing strain in U.S.-China trade relations”.

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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.