Market Review: February 05, 2024

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Closing Recap

Monday, February 05, 2024





DJ Industrials




S&P 500








Russell 2000













U.S. stocks finished lower, but another midday rebound pared the losses as strength in a handful of key technology stocks and the Healthcare industry helped ease broader market declines despite sharpy lower negative market breadth (nearly 4:1 margin as decliners outpaced advancers). The CBOE Volatility index (VIX) fell again despite stocks ending lower, as fear in stocks has been absent for nearly 4-months now amid rate cut hopes (S&P and Nasdaq up 13 of last 14 weeks heading into this one). Even a spike in treasury yields over the last 2-days (10-yr up nearly 30-bps in 2-days) failed to dent investor optimism in tech stocks, specifically the semi sector (SOX) and large cap (AAPL, GOOGL). Fed Chairman Powell reiterated the Fed’s view on a Sunday night 60-minutes interview that a Mach rate cut is becoming more unlikely. The comments pressured bonds and interest rate sensitive stocks, but not broader markets. Material stocks were hammered (XLB down over 2%) as the US dollar index jumped (DXY +0.5% above 104.50) as the ongoing weakness in China economy weighs on metals and mining (commodity names). More Chinese officials made suggestive/supportive comments this weekend about markets and actions they could take in the future, but markets remain weak, and the Shanghai index failed to rally overnight despite these reaffirmations. Consumer Discretionary (XLY) declined -1.4% behind MCD, TSLA weakness and interest rate sensitive sectors (high paying dividend names) such as Utilities and REITs rounded out the biggest sector losers on Monday. A “hotter” price paid component in today’s ISM services index added to yield strength.


@zerohedge noted the massive recent announcements to start the year of job cuts (yet the Fed keeps saying the economy is showing signs of strength given jobs data) noting since the start of the year: Twitch: 35% of workforce, Roomba: 31% of workforce, Hasbro: 20% of workforce, LA Times: 20% of workforce, Spotify: 17% of workforce, Levi’s: 15% of workforce, Xerox: 15% of workforce, Qualtrics: 14% of workforce, Wayfair: 13% of workforce, Duolingo: 10% of workforce. Washington Post: 10% of workforce, Snap: 10% of workforce, eBay: 9% of workforce, Business Insider: 8% of workforce, PayPal: 7% of workforce. Charles Schwab: 6% of workforce UPS: 2% of workforce, Blackrock: 3% of workforce, Citigroup: 20,000 employees. Pixar: 1,300 employees.

Economic Data

  • U.S. S&P Global January final composite PMI at 52.0 (vs flash 52.3) and U.S. S&P Global January final services PMI at 52.5 (vs flash 52.9).
  • ISM report on U.S. non-manufacturing sector shows PMI 53.4 in January vs. consensus 52.0 and vs 50.5 in December; ISM non-manufacturing business activity index 55.8 in January vs 55.8 in December; prices paid index 64.0 in January vs 57.4 in December; new orders index 55.0 in January vs 52.8 in December and ISM non-manufacturing employment index 50.5 in January vs 43.8 in December.

Commodities, Currencies & Treasuries

  • Gold prices fell -$10.80 to settle at $2,042.90 an ounce (off earlier lows $2,030.80), pressured by the bounce in the dollar index (DXY) and Treasury yields after Powell interview on 60-minutes this weekend. The U.S. dollar index (DXY) jumps to near 3-month highs, last up 0.5% at 104.40.
  • WTI crude oil futures settle at $72.78 per barrel, reversing earlier losses to gain $0.50 or 0.69% amid a broader rebound in riskier assets. Brent Crude futures settled at $77.99/bbl, up 66 cents, 0.85%.
  • Yields on U.S. government debt jumped Monday following ISM Services data and Fed Chairman Jerome Powell’s weekend comments about the need to “carefully” approach the timing of interest-rate cuts. The yield on the 2-year Treasury rose over 10-bps to 4.47%, and the 10-yr yield rose 12-bps to 4.156%. Friday saw the biggest one-day yield rise for the 10-year since Sept. 26, 2022, according to Dow Jones Market Data.





WTI Crude















10-Year Note




Sector News Breakdown

Retail, Consumer Staples & Restaurants:

  • In Restaurants: MCD reported better Q4 adj EPS $2.95 vs. est. $2.82, but revs of $6.418 below est. $6.45B and weaker global comp sales rising +3.4% vs. est. 4.79% as results pinched by weak demand in its Middle East, China, and India business divisions. MCD said the international Developmental Licensed Markets segment’s comparable sales were up 0.7% vs est. of 5.5% growth. SBUX files three-part senior notes offering, size not disclosed.
  • In Food: TSN Q1 results topped estimates ($0.69/$13.26B vs. est. $0.41/$13.27B), while said it expects sales to be "relatively flat" in FY24 vs. year ago period and sees FY capex $1B-$1.5B. CHEF mentioned positively in Barron’s noting the stock could deliver 25% returns for investors, saying wealthy diners are still spending on Wagyu beef, stone crab, and other upscale menu items at restaurants even as food prices rise.
  • In Beauty Products: EL shares rise on quarterly beat and restructuring headlines as announced to lay off 3%-5% of workforce or about 3,000 jobs and forecasts restructuring costs $500M-$700M before taxes (news overshadowed weaker guidance as sees Q3 adj EPS $0.36-$0.46 below the $0.81 consensus).
  • In Tobacco: PM mentioned positively in Barron’s noting the stock hasn’t had a hot start to 2024, but its shares could be ready to bounce back when it reports fourth-quarter earnings on Feb. 8. Sales for the quarter are expected to grow 10.5% to $9B, and the increased adoption of the company’s smokeless products, including its IQOS heated tobacco, should offset declines in traditional cigarette sales.
  • In Consumer products: CLX downgraded to Neutral from Buy at DA Davidson noting its stock recovery from its August 2023 cyberattack has been quicker than expected and market share is nearly back to normal, noting their October 2nd upgrade thesis has played out, and the share price is close to its PT.
  • In Toy retailers: MAT downgraded to neutral at JP Morgan saying weak 2023 industry holiday sales are expected as the category remains under pressure, setting a lower base to build from in 2024, and believes Barbie provided a significant boost to results in mid-to-late 2023 but the duration proved unexpectedly short.

Autos, Leisure, Gaming & Lodging:

  • In Lodging: Hyatt (H) was downgraded from Outperform to In Line at Evercore/ISI while raise tgt to $135 from $125 noting shares are up 32% since late October and cut HLT from Outperform to In Line and raise tgt to $200 from $175 as the stock is also up 32%, now trading at 18x Evercore’s ’24 adj. EBITDA (vs. historical range of 14-16x).
  • In Autos: TSLA tgt to $225 from $295 and lower ests at Piper as now think TSLA will deliver 1.93M vehicles in 2024, vs. our previous estimate of 2.18M. Also, due to an aging product lineup, more price cuts may be necessary. Hence, they expect 2024 Automotive gross margin (excl. credits) to fall by 110bps y/y, to 16.6%. Shares of GM, Ford (F) were also broadly lower in the weak auto sector.
  • In Theme Parks: SIX downgraded from Buy to Neutral at B. Riley following the ~16% rise in shares since its opinion change on 11/3/23 compared to gains of ~11% for Cedar Fair, L.P. (FUN) and ~14% for the Russell 2000—which has shifted, in its opinion, the relative upside potential between SIX and FUN.

Energy, Industrials and Materials

  • In Solar: the sector hammered again as JKS was downgraded at both Daiwa and HSBC to Hold ratings, while the rest of the group tumbles sharply as rate cut expectation from the Fed for the March meeting lessen following comments from Fed Chair Powell in 60-Minutes interview on Sunday night; shares of ARRY, CSIQ, ENPH, FSLR, NOVA, RUN, SEDG, SPWR tumbled.
  • In Machinery: CAT gives machinery (and the Dow) a boost after reporting Q4 adj EPS $5.23 topping est. $4.73 as Q4 revs rose 2.8% y/y to $17.07B vs est. $17.2B; Q4 Machinery, Energy & Transportation segment revenue $16.24B, +2.3% y/y, vs. est. $16.53B; forecasts Q1 sales & revenues to be broadly similar y/y. In Heavy Duty trucks (CMI, PCAR), ACT Research released preliminary January Class 8 net orders of 27,000 units, up +45% y/y and +3% sequentially from December.
  • In Chemicals: APD shares fell after Q1 miss (EPS $2.82/$3B vs. est. $3.00/$3.19B) and guided Q2 adjusted EPS $2.60-$2.75, below consensus $3.16 and sees FY24 adj EPS $12.20-$12.50 vs. est. $12.97. LYB was upgraded to Overweight at JP Morgan and raised tgt to $100 as believes that there is a reasonable probability that Lyondell will increase its dividend by 5% in May.
  • In Metals & Mining: HAYN agreed to be acquired by a unit of Spanish stainless-steel maker Acerinox in an all-cash deal with an enterprise value of about $970 million, with holders to receive $61 a share in cash under the deal. Lithium stocks (ALB, LAC, SQM, SGML) extend recent declines as lithium prices have fallen sharply since last year, down over 80% while investors have pivoted into uranium pays during that stretch (URA, UEC, UUUU). FCX, AA and other industrial metals tumbled on China weakness after Donald Trump said Sunday that he would consider a plan to impose tariffs of 60% or higher on Chinese goods in a potential second term as president.
  • In Transports: SNDR was downgraded from Overweight to Equal Weight at Stephens saying while they concede that the current freight recession has been deeper and last longer than it anticipated, it has nevertheless been disappointed by the cyclically and lack of durability of SNDR’s earnings power.
  • In Aerospace: BA shares weak initially again after saying it found more mistakes with holes drilled in the fuselage of its 737 Max jet, a setback that could further slow deliveries on a critical program already restricted by regulators over quality lapses. Also, Barron’s cautious noting while the co suffers from backlash due to quality control issues, there’s a way investor can profit off the company’s woes, such as buying pure-play aftermarket players like TDG and FTAI which provide engineering, maintenance, and training to airlines.


  • In Banks: Citigroup upgraded CFG to Buy, as well as reiterating its Buy rating on MTB as believes mgmt. will restore confidence in their credit portfolio at the mid quarter update. The firm maintained the view that investors should be playing offense rather than defense in the current environment as the best time to own bank stocks is when valuations go from late cycle to early cycle multiples.
  • In Crypto: COIN shares tumbled and is down nearly 40% in 6-weeks. Mizuho noted earlier that "outflows from ETFs where Coinbase is the custodian exceed inflows (I.E. -$6B outflows from GBTC since January 11th vs +$4.9B estimated inflows to other seven ETFs that Coinbase custodies); and said, "Spot volumes on Coinbase have abated following the initial excitement surrounding the ETF launch."
  • In Insurance: Loews Corp (L) reported a nearly 26% jump in Q4 profit, as higher premiums, and a market rally at the end of last year helped the insurer earn more from its investments. Investment income rose to $643 million in the quarter ended Dec. 31, from $600 million a year earlier.
  • In Financial Services: Goldman Sachs upgraded KVYO to Buy following underperformance vs. NDX (-22% in last 3 months) as believe concerns around disruption to its business from changes to email spam filtering are overdone and look for continued evidence of share gain up market while downgraded BIGC to Neutral and cut tgt to $9.50.

Biotech & Pharma:

  • AMGN said animal and early-stage human trial data for experimental obesity drug showed that it promoted significant weight loss with an acceptable safety profile.
  • BBIO said the FDA accepted its marketing application for acoramidis to treat patients with the heart disease known as ATTR-CM. An approval decision is expected on or before Nov. 29.
  • BTAI announces USPTO’s allowance of patent application for method of treating agitation in Alzheimer’s disease using Oromucosal formulations of Dexmedetomidine; aligns with Company’s strategic focus on bringing to market BXCL501 for potential acute treatment of agitation for Alzheimer’s patients.
  • CANO files Chapter 11 and receives $150M new capital; the company entered into a Restructuring Support Agreement with lenders holding 86% of its secured revolving and term loan debt and 92% of its senior unsecured notes, with the company receiving $150M in new debtor-in possession financing.
  • CI upgraded to Overweight from Neutral at Cantor and raise price target to $372 from $334, seeing it as positioned with one of the larger 2025/2026 earnings estimate upside potential driven by Evernorth.
  • CTLT to be acquired by Novo Holdings, the controlling shareholder of NVO for $16.5B in cash, or $63.50 per share, a 16.5% premium to Friday’s close and 39% premium since CTLT strategic review.
  • CYTK disclosed that on January 29, Ching Jaw, Senior Vice President & CFO, informed the company that he would be resigning his office and employment, effective February 23 to attend to a personal health condition.
  • ELAN announced it has entered into an agreement to sell its aqua business to MRK Animal Health for approximately $1.3B in cash.
  • FDMT announced interim data this weekend from mid-stage trial studying its eye disease drug 4D-150 in wet age-related macular degeneration patients; said 6-month Phase II data for 4D-150 (high dose, N=20) demonstrate strong efficacy, including 89% reduction in injections, 63% injection-free patients.
  • Metagenomi Technologies, a genetic medicines company backed by BAYRY and MRNA said it was targeting a valuation of up to $638M for its IPO; the company is looking to sell 6.25M shares priced between $15 and $17 each.
  • MOR shares jumped over 40% after Reuters reported NVS is in advanced talks to acquire MorphoSys, a developer of cancer treatments that has a market value of 1.6B euros ($1.7B), citing familiar with the matter and said Novartis has so far prevailed over rival drug maker INCY, which also made an offer. (shares of KPTI advanced in sympathy with the headlines).
  • NVTA shares tumbled to record lows after the WSJ reported the company is preparing to file for bankruptcy within weeks, citing people familiar with the matter.
  • RVPH files $200M mixed securities shelf.

Internet, Media & Telecom

  • In Cable/Telecom: CHTR downgraded from Overweight to Neutral at JP Morgan and slash tgt to $370 from $445 driven by 1) weaker broadband subscriber trends; 2) slower EBITDA growth due to a combination of slowing unit growth, lower ARPUs, and higher costs; 3) higher CAPEX; and 4) uncertainty related to the ACP program.
  • In social media: SNAP said it plans to reduce its workforce by about 10% to trim costs as they grapple with a soft advertising market and expects to incur pre-tax charges of $55M-$75M (the co had cut 20% of staff in 2022).
  • In Media/Broadcasting: Stephens said several private checks pointed to ongoing weakness within the scatter market, with direct sales efforts exhibiting stronger performance. This may apply some top-line pressure to TTD, MGNI and ROKU they said. From a category perspective, Stephens is hearing of softness in auto ad spend to close out the year, in addition to ongoing weakness within the insurance vertical. The automotive vertical represents ~7% of digital ad spend. Stephens’ broadcast coverage (NXST, SSP and GTN) are the most heavily exposed.

Hardware & Software movers:

  • In Software: EVBG announced it entered into a definitive agreement to be acquired by Thoma Bravo for $1.5 Billion as Everbridge shareholders to receive $28.60 per share in cash . ZS shares slumped after operating chief Dali Rajic resigned, according to a Securities Exchange Commission filing. Cybersecurity startup Wiz has hired Dali Rajic, former chief operating officer and President at Zscaler. QLYS shares tumbled after Morgan Stanley notes on May 1st, MSFT will retire Defender’s Vulnerability Assessment solution powered by Qualys, transitioning customers to its own VM solution for Defender.
  • In Video Game Software: TTWO was downgraded from Buy to Neutral at Moffett saying they are not surprised to see many of its peers ratchet up their TTWO price targets over the last couple of weeks, but at the risk of leaving the party too soon, Moffett thinks it could be a decent time to hit pause on Take-Two.


  • NVDA price tgt was raised to $800 from $625 at Goldman Sachs and increases its FY2025/26 non-GAAP EPS (excl. SBC) estimates, on average, by 22% as GSCO reflects recent industry data points indicative of robust AI server demand and improving GPU supply.
  • GFS was downgraded to Neutral from Overweight at JPMorgan and cut tgt to $56 from $65 as specialty/mature node foundry manufacturing activity in a broad set of markets continues to decline, potentially lagging semiconductor industry recovery trends by 1-2 quarters and is not adequately reflected in current consensus CY24 expectations.
  • ON reports Q4 revenue $2.02B vs. est. $2.0B and adj EPS $1.25 vs. est. $1.21 (better than comps MCHP and WOLF last week in the SiC sector) and adj gross margin 46.7% vs. 48.4% y/y (est. 46.5%), while Q1 EPS guide of $0.98-$1.10 is below consensus $1.10 but better than comps last week.
  • NXPI earnings are expected tonight (another auto related semi plays like ON).
  • SMCI shares rose as much as 14% to new all-time highs and +130% YTD on AI optimism.


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.

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