Closing Recap
Thursday, January 23, 2025
Index |
Up/Down |
% |
Last |
DJ Industrials |
408.40 |
0.92% |
44,565 |
S&P 500 |
32.35 |
0.53% |
6,118 |
Nasdaq |
44.34 |
0.22% |
20,053 |
Russell 2000 |
10.88 |
0.47% |
2,314 |
A bit more clarity on Trump policies and a decent start to earnings season has buoyed US equities recently but futures faded overnight (before closing at all-time highs). Generally, in-line US Initial Jobless Claims (slightly above estimates) gave the markets a little initial boost but equities remained in the red into the open. Where we close the day is another story. After all, all fifty states in the US have seen snow this winter (only Hawaii and Florida have seen less than a foot) so anything is possible. Sentiment-wise we saw a shift in the AAII bull-bear spread, moving to 14 this week versus -15.2 a week ago. Bulls rose from 25.4% to 43.4%, while bears dropped from 40.6% to 29.4%. Separately, the Fear and Greed Index was 45/100 (Neutral) today versus 43 (Fear) yesterday, 34 (Fear) a week ago and 29 (Fear) last month. Last year at this time, the reading was 70 (Greed). Early breadth favored decliners by 3:2 as small caps underperformed, and large-cap indices were split with IWM (-0.25%) versus SPY (+0.05%) and QQQ (-0.24%). On a sector basis, Energy (+0.78%), Utilities (+0.60%) and Industrials (+0.46%) were outperformers among S&P sector ETFs, while Real Estate (-0.34%), Technology (-0.39%) and Consumer Staples (-0.45%) led the underperformers with five sectors gaining vs six declining.
On the data side today, the US Continuing Jobless Claims number was the highest since 2021 per @jsblokland as he notes the potential for a boost in equities if the labor market weakens from here. Following December’s weak period of breadth, the recent breadth rebound has generated expansion in net new highs per @bespokeinvest. Lastly, on a different note, @KobeissiLetter discusses China’s population crisis, noting 2024 was the third straight yearly decline (by 1.29Mm people) and marked the second lowest number of births since the founding of the People’s Republic in 1949. The working-age population has been declining for more than five years.
Heading into the final hour of trading, US equity indices remained split with the S&P 500 at record highs and the Nasdaq lower. Breadth was back to being slightly in favor of advancers as small caps moved back into the green. Sectors also moved to favor gainers with nine S&P sector ETFs to the upside versus only two in the red. Industrials (XLI, +1%) and Health Care (XLV, +1.3%) led the gainers, while Communications (XLC) and Technology jumped late to turn positive in the final minutes. Growth trailed value with the Russell 1000 Growth -0.08% versus its Value counterpart +0.49%.
Economic Data
- Weekly Jobless Claims climbed to 223,000 from 217,00 in the prior week (vs. consensus 220,000) while the 4-week moving average climbed to 213,500 from 212,750 the prior week; continued claims climbed to 1.899M from 1.853M prior week (est. 1.862M) and the US unemployment rate unchanged at 1.2%.
Commodities, Currencies & Treasuries
- February gold futures faded overnight and bounced early but never made it back to positive territory, settling -$5.90/oz, or -0.21%, to $2,765. While still a safe haven asset, gold was due for some consolidation after hitting a three-month high yesterday. No doubt plenty of uncertainty remains around Trump policies and tariffs, so underlying support remains in place for potential moves higher.
- WTI March crude futures gained overnight and into the regular session but rolled as President Trump spoke at Davos and noted he would ask OPEC to lower oil prices. A larger draw in the weekly inventory release provided some brief support, but futures still closed lower by $0.82/bbl, or -1.09%, to $74.62. Brent similarly dipped by $0.71/bbl, or -0.9%, to $78.29.
Macro |
Up/Down |
Last |
WTI Crude |
-0.82 |
74.62 |
Brent |
-0.71 |
78.29 |
Gold |
-5.90 |
2,765.00 |
EUR/USD |
0.0012 |
1.0418 |
JPY/USD |
-0.64 |
155.89 |
10-Year Note |
0.036 |
4.636% |
Sector News Breakdown
Retail, Consumer Staples & Restaurants:
- In Retailers: BOOT was upgraded to Overweight from Sector Weight with $190 tgt at Keybanc as thinks the better than anticipated results for holiday position the company favorably for 2025, supported by rising comp store sales and broad-based category momentum. Also sees potential for sustained growth across the business, driven by store fleet expansion, broader assortments, and an enhanced channel presence. Keybanc also upgraded RVLV to Overweight with $37 tgt saying the company has resumed top-line growth and EBITDA margin expansion, and they expect another quarter of better-than-expected results even with margin pressure.
- In Beverages: Piper said as they look into C4Q24 earnings for our covered Beverage names, KO looks best positioned fundamentally, though currency remains a headwind, and has already grown in recent weeks as a headwind. They see some downside risk to KDP, as recent further surges in coffee costs add incremental headwinds to its 2025 outlook since it last gave an update and believe below-algo EPS guidance is a very real possibility. They also downgrade SAM from OW to Neutral, as we still expect Hard Mtn Dew to grow, but at a much slower rate than previously expected.
Leisure, Gaming & Lodging:
- In Leisure Sector: Marine stocks strong after HZO posted an unexpected profit of $0.17 EPS vs. est. loss (-$0.19) though revs fell -11% y/y to $468.5M missing ests of $485M citing slow demand and disruptions from hurricanes Milton and Helene, while reaffirmed its year EPS/rev outlook; in golfing industry, GOLF was downgraded to Underweight at JP Morgan and is lowering its FY25 revenues to Flat Y/Y on a reported basis (below the Street at +4.5% Y/Y), or +2.0% constant-currency growth Y/Y with its model embedding a ~200bps FX topline headwind.
- In Casinos & Gaming: Stifel said it believes the setup for CZR in 2025 is overly attractive and believe the risk/reward at current trading levels is too compelling to pass up, thus it believes investors should be revisiting the CZR story. Bank America with preview on casinos (MGM, CZR, WYNN, LVS, PENN) saying they are slightly below the Street in Macau driven by softness in recent market share data for LVS and on margins. In Las Vegas they are below the Street but given negative sentiment we think reports/outlooks may end up less bad than expected. For regionals, consumer trends accelerated over the last 3-4 months, and they tweaked our estimates up slightly
Energy, Industrials and Materials
- In Metals: in aluminum space, AA beat on Q4 EPS, revs ad Ebitda while 2025 outlook was mostly in line, except for higher-than-expected capex (higher tariff remain a concern); in copper sector, FCX reported Q4 EPS $0.31 vs. est. $0.22, but revs $5.72B was below consensus $5.92B and said Q4 average realized price of $4.15/pound for copper compared to $3.81/pound a year ago; also said expects 2025 capex to be about $5.0B, up from $4.8B in 2024.
- In Airlines: ALK rises on results while AAL slips; AAL shares slumped after guiding 2025 EPS between $1.70-$2.70, compared with estimates of $2.42 per share saying they are hurt by an uptick in jet fuel prices and efforts to fix a sales-strategy misstep that drove away corporate travelers (did post Q4 EPS/rev beat of $0.86/$13.66B vs. $0.65/$13.43B); note the sector has already seen good results from UAL and DAL recently and ALK this morning.
- In Trucking, Rail, and Freight: UNP reported a 7% rise in Q4 profit to $2.91 EPS vs. $2.71 y/y (and above est. $2.79) helped by an increase in volumes while revs fell -1% y/y to $6.12B vs. est. $6.15B citing lower fuel surcharge revenue, unfavorable business mix, and lower other revenue; in trucking, KNX shares climbed on mixed results as Q4 adj EPS $0.36 vs. est. $0.33 but revs $1.86B vs est. $1.88B while saying anticipates 2025 will be a year of gradual recovery in market conditions that bridges to a more constructive 2026; sees early contract rate increases up mid-single digits, improvement in truckload utilization, rate progress into bid season.
- In Aerospace & Defense: GE a standout to the upside, after Q4 results beat ($1.32/$10.81B vs. $1.04/$9.47B) and said it plans to buy back $7 billion worth of stock in 2025 and to raise its dividend by 30%, subject to board approval while sees FY25 adjusted revenue growth up low double digits and sees FY25 free cash flow $6.3B-$6.8B. ASTS shares tumbled after announcing a proposed private offering of $400.0M of convertible senior notes due 2032; EVTL shares tumbled after prices $90M public offering at $6.00 per unit; in Gov’t Services, CACI reported Q2 adj EPS $5.95 topped est. $5.21 on better revs of $2.09B while guides FY adj EPS $23.87-$24.76 vs. est. $23.91 and guides FY revs $8.45B-$8.65B vs. est. $8.53B.
- The European Union is open to discussing purchases of energy and arms from the U.S. to ward off tariffs that President Donald Trump has threatened to impose on the bloc. EC Executive VP Valdis Dombrovskis said the EU would defend its rights and interests if tariffs were imposed and referred to the retaliatory duties the EU imposed on U.S. imports when EU steel and aluminium were hit by tariffs during Trump’s first term.
Banks, Brokers, Asset Managers:
- In Banks: BANC Q4 adj EPS $0.28 vs. est. $0.23; said expects mid-to high-single digit growth in loans this year vs analysts’ expectation of 4.2% rise. BANR Q4 adj EPS $1.33 vs est. $1.21 on revs $160.1Mm vs est. $137.5Mm; Q4 net interest margin 3.82% vs. 3.83% last year. CADE Q4 EPS $0.70 vs est. $0.68 on interest revs $620.31Mm, NIM 3.38%. CATY Q4 EPS $1.12 vs. est. $1.10; Q4 Net interest margin 3.07% vs. 3.27% y/y, but above 3.04% in Q3; Q4 Return on average assets 1.37% vs. 1.4% y/y and Return on average equity 11.2% vs. 12.2% y/y; Q4 Total deposits increased $360.8 million, or 1.9%, to $19.69 billion in 2024. MTB authorizes a $4B share repurchase program. NBHC Q4 adj EPS $0.86 vs est. $0.76 on NII $90.131Mm vs est. $89.32Mm. NTRS Q4 EPS $2.26 vs. est. $2.02 and revs $1.97B vs. est. $1.93B; Q4 NII climbed 15% to $574.3M, trust, investment and other servicing fees rose 12% to $1.22B in Q4 y/y while its assets under custody or administration gained 9% to $16.79 trillion, and forex trading income rose 26% to $61.7M, driven by higher trading volumes. TFIN shares fell as Q4 EPS missed estimates.
- President Donald Trump delivered an unexpected critique of Bank of America (BAC CEO Brian Moynihan, accusing the executive of restricting business with conservative clients, Bloomberg’s Katherine Doherty reports. "I hope you start opening your bank to conservatives," Trump remarked during a virtual Q&A at the World Economic Forum in Davos, Switzerland. Trump also called out JPMorgan (JPM) CEO Jamie Dimon for the same alleged treatment of conservative customers
Biotech & Pharma:
- In Dental Sector: Activist investor Ananym Capital Management plans to nominate as many as half a dozen directors to the board at HSIC, Reuters reported last night; XRAY was downgraded to Hold from Buy at Jefferies and cut tgt to $20 from $30 saying investor sentiment has become very negative and the shares trade at the lowest valuation in the dental peer group.
- In Managed Care: ELV shares bounced despite mixed results as Q4 adj EPS of $3.84 slightly missed est. $3.86 but revs of $45B were better and raises quarterly dividend 5% to $1.71 per share; sees FY25 adjusted EPS $34.15-$34.85 vs. est. $34.52; said Medical membership totaled 45.7 million at year-end, down 2% y/y; Q4 benefit-expense ratio, a measure of medical costs as a percentage of premium revenue, increased by 320 bps to 92.4%, due to higher Medicaid costs, but was below the 92.6% estimate on the Street.
- Pet Insurance sector: TRUP was upgraded to Overweight from Neutral at Piper saying they see favorable catalysts on the horizon such as Setting of ’25 guidance with drag from Pet’s Best better understood while the underlying Subscription business retains strong growth characteristics and sees continued compounding of multi-year significant rate increases leading to faster-than-expected underwriting improvement
- In Healthcare Technology: VEEV was double downgraded to Sell from Buy at Goldman Sachs (tgt to $200 from $261) as continues to view Veeva as significantly entrenched in its core Life Sciences customer base, with potential for cross sell over the next decade…but sees the following medium-term risks to the Street and Veeva’s 2030 targets: In Commercial, Salesforce is positioning themselves for share gain.
- VSTM outlines 2025 strategic priorities and milestones for novel pipeline targeting RAS/MAPK pathway-driven cancers; Avutometinib plus defactinib granted priority review by FDA, under the accelerated approval pathway, for recurrent KRAS mutant LGSOC; PDUFA action date set for June 30, 2025; said VS-7375 is on track for U.S. IND filing in Q1 2025 with plans for a Phase 1/2a study in mid-2025.
Internet, Media & Telecom
- In European Telecom: Bernstein with several changes as they said DTEGY remains top pick in the sector (and raise PT to €38, while also recommends exposure to CLNXSwisscom (SCWMY) and BT. The firm said they would avoid exposure to VOD and Telia given the structural issues faced by both companies. Due to rising price pressures in France and the Netherlands and structural changes to cablecos’ business models, Bernstein reduces its ratings on Orange (ORANY), KPN (KKPNY) and Liberty Global (LBTYA) to Market Perform (from Outperform). Conversely, Bernstein upgraded Telenor (TELNY) to Market Perform (from Underperform).
- In Media Sector: CMCSA said Xfinity launches $70 sports and news video package; Xfinity sports & news tv includes 50+ broadcast, cable news & sports channels, premium DVR, peacock.
Hardware & Software movers:
- In Video Game software: EA shares tumbled after pre-announced Q3/FY25, reflecting disappointing launches for EA Sports FC 25 and Dragon Age: The Veilguard, and reduced FY2025 guidance; forecasts FY net bookings $7B-$7.15B, down from prior view of $7.5B-$7.8B; sees Q3 net revs approx $1.883B vs est. $2.46B and EPS $1.11.
- In Software application: GWRE will replace ARWR in the S&P MidCap 400, and Arrowhead will replace Barnes Group Inc. (B) in the S&P SmallCap 600 effective prior to the opening of trading on Monday, January 27. S&P 500 constituent Apollo Global Management Inc. (APO) is acquiring Barnes Group.
- In Electronic Manufacturing Services (EMS) Sector: group was weaker after PLXS posted mixed Q1 results as EPS beat but revs of $976.12M missed the $982M estimate and guided Q2 revs $960Mm-$1.0B which was below the consensus est. $1.015B (shares of other EMS names on weaker guidance such as BHE, CLS, FLEX, JBL, SANM fell).
- In Semiconductors: SK Hynix remains bullish on AI chip demand following record quarterly profit, though flags soft memory demand, weighing on shares of MU. SK Hynix also said its 2025 capital expenditure (capex) would rise only slightly from last year, and those comments weighed on shares of semiconductor equipment makers AMAT, ASML, LRCX, KLAC; SK Hynix said it begun supply talks for 2026 for memory chips used in AI applications and expects better visibility in the first half about shipment plans for next year. TXN reports earnings tonight. ALAB extending weekly declines to -15% below 50dma support $118.65 following Morgan Stanley downgrade on Tuesday.
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.