Closing Recap

Friday, March 01, 2024

Index	Up/Down	%	Last
DJ Industrials	90.99	0.23%	39,087
S&P 500	40.82	0.80%	5,137
Nasdaq	183.02	1.14%	16,274
Russell 2000	21.60	1.04%	2,076

 

 

 

 

 

 

 

 

 

U.S. stocks were on cruise control, pushing higher all-day amid another boost from technology names, though other sectors have participated in the 2024 rally that has seen the S&P rise +7% the first 2 months of the year, the Nasdaq +7.2% and the Russell 2000 moved back into positive territory YTD after a near 3% jump this week. The Nasdaq hit an intra-day record high on Friday, as chipmakers and heavyweight technology stocks remain hooked on to a rally sparked by Nvidia’s AI optimism, spreading to other semis/sectors. The Nasdaq has surged 58% from its lows in December 2022 and beat its previous intra-day high of 16,212.229 points, hit on Nov. 22, 2021 (after closing at a fresh high on Thursday). Semi strength continues to astound amaze as the Philly semi-index (SOX) rises to fresh record high, rising as much as 4.7% to highs above 4,950 crushing the prior day fresh record close of 4,737 as the AI/chip growth trades continues to push the Nasdaq to fresh highs. NVDA is now up 65% YTD and 460% since the end of 2022. DELL and NTAP further extended that AI growth story last night after earnings, while NVDA, AMD, ARM, TSM, AVGO (ahead of earnings next week) still lead the index. AAPL has not participated in the most recent rally, falling below its 200-dma recently and down 5 of last six days. Along with Technology, Energy and Healthcare saw strength today. Several Fed speakers weighed in again on rates/outlook (Bostic, Logan, Goolsbee, Waller, Barkin) on Friday, but all staying the course on their view of rate cuts are coming this year, but timing uncertain.  Treasury yields fell this week boosting interest rate sensitive names while PCE inflation data was reported in-line, better-than-feared, and helping reduce inflation concerns for now.

 

With earnings winding down for Q4 – attention turns to a few key events next week. Conferences include TD Cowen Healthcare Conference, Raymond James Institutional Investor Conference, Morgan Stanley TMT Conference, RBC Capital Financial Conference among a few others. Jobs data dominates next week’s economic data in the U.S. with ADP, JOLTS, Jobless Claims and Nonfarm payrolls. Other macro includes Super Tuesday, Fed Chairman Powell testifies before Congress 3/6 and 3/7, and President Biden State of the Union & government funding deadline. The S&P 500 posted another weekly gain, marking the 16th out of the past 18 weeks in which stocks have risen. That’s something that hasn’t happened since 1971, when does it ease or slow remains unseen.

• Construction spending for January fell -0.2% vs. consensus for rise +0.2% and vs Dec +1.1% (prev +0.9%); January private construction spending +0.1%, public spending -0.9%.
• ISM U.S. Manufacturing index weaker at 47.8 in February from 49.1 in Jan and below consensus 49.5 while the prices paid index 52.5 in February vs. 52.9 in January; new orders index 49.2 in February vs 52.5 in January and the employment index 45.9 in February vs 47.1 in January.
• University of Michigan surveys of Consumers Sentiment final Feb 76.9 below consensus 79.6 and down from preliminary Feb 79.6; the current conditions index final Feb 79.4 vs prelim Feb 81.5 and expectations index final Feb 75.2 vs prelim Feb 78.4 and final Jan 77.1.
• University of Michigan surveys of consumers 1-year inflation outlook final Feb 3.0% vs prelim 3.0% and final Jan 2.9% while the 5-year inflation outlook final Feb 2.9% vs prelim 2.9% and final Jan 2.9%.
• Euro data overnight May push out ECB rate cut hopes after the Euro-area Feb. CPI came in hotter-than-expected in both the headline (2.6% vs. 2.5% est.) and the core (3.1% vs. 2.9%). Euro Manufacturing PMI data also continues to show contraction in the Eurozone (46.5), France (47.1), Germany (42.5), and Italy (48.7) with Spain (51.5) expanding.

• Commodity prices jump behind a weaker dollar following economic data as gold prices settle at $2,095.70 an ounce, rising over $41 points of 2% while WTI crude topped $80 per barrel for the first time since November – didn’t settle there though as WTI crude futures settle at $79.97/bbl, up $1.71, 2.19%. Brent settled $1.64 higher, or 2%, at $83.55 a barrel. The April Brent futures contract expired on Feb. 29 at $83.62 a barrel. For the week, Brent added around 2.4% following the switch in contract months, while WTI gained more than 4.5%.

 

Macro	Up/Down	Last
WTI Crude	1.71	79.97
Brent	1.64	83.55
Gold	41.00	2,095.70
EUR/USD	0.0038	1.0841
JPY/USD	0.08	150.06
10-Year Note	-0.072	4.18%

 

• In Autos: Volkswagen (VWAGY) said they expect sales growth to slow this year, as they forecast revs to grow by up to 5% while the operating margin is expected at between 7% and 7.5%. It had reported sales growth of 15% in 2023 and an operating margin of 7%. TM said its North America unit reported February 2024 U.S. sales of 184,450 vehicles, up 16.2% on a volume basis.
• In Electric vehicles: FSR reported Q4 results that missed expectations and raised substantial doubts about its ability to continue as a going concern, saying it intends to reduce its workforce by about 15% and reduce overall expenses to address potential liquidity issues.

• In Food & Beverage: KDP announced an 87M share Block sold by JAB Holding Co priced at $29.10. KDP to repurchase 35 mln shares in the offering under its $4 bln buyback program, of which approx $1.8 bln will remain post-offering. SG shares advanced after guiding higher-than-expected revenue growth in Q1 ($150M-$154M vs. est. $147.8M) and guided year revs above also ($655M-$670M vs. $661.5M est.)

• In Aerospace & Defense: SPR shares jumped after the WSJ reported BA is in talks to acquire the company noting Spirit has had preliminary discussions with Boeing and hired bankers to explore strategic options (BA accounts for 2/3 of Spirit sales) https://tinyurl.com/46wrtr4n
• In Agriculture: ADM files for non-timely 10k filing as currently expects to file the annual report by March 15, 2024; anticipates reporting a material weakness in the company’s internal control over financial reporting.
• In Industrials/Machinery: OSK was upgraded to Buy from Neutral at DA Davidson following investor meetings held yesterday in Minneapolis, MN, as firm said they came away with more confidence in its above consensus estimates for 2025, and it pieced together some clarity in 2026. GE said its Board of Directors formally approved the spin-off of GE Vernova which will happen April 2, 2024, under symbol GEV – GE shareholders as of 3/19 will receive one share of GE Vernova for every four shares of GE stock.
• In E&C Sector: MTZ reported 4Q EBITDA of $231M, ahead of guidance of $221M and consensus of $219M and adj EPS of $0.66 beat consensus helped by lower G&A, D&A, and higher other income but revs of $3.28B was in line with guidance; EBITDA margin was 7.1% and 2024E guidance is in line with consensus. APG 10.6M share Secondary priced at $34.25.

• In Insurance: ROOT upgraded from Hold to Buy at Jefferies and raised tgt to $40 saying the co executed a better-than-industry target loss ratio this quarter, setting a path to profitable growth, market share gains and scalability for a viable business model.

• CLDX 8.52M share Secondary priced at $47.00.
• DNA Q4 revs fell -65% y/y to $34.8M missing the $42.6M estimate though adj EBITDA loss rose 19% y/y to $95.8M but was better than Street at loss $147.8M.
• DYN, RNA shares were active ahead of Muscular Dystrophy Assoc meeting this weekend in Florida.
• HUMA 13.4M share Spot Secondary priced at $3.00.
• LLY price tgt raised to $1,000 at Bank America on continued upside for its diabetes and obesity programs.

• VEEV reported FY4Q24 results ahead of guidance and consensus expectations, while slightly lowered its FY25 revenue guidance driven by services and to a lesser extent by deal timing which impacts revenue linearity.

• Elon Musk has sued ChatGPT-maker OpenAI and its chief executive Sam Altman, among others, saying they had abandoned the company’s original mission to develop artificial intelligence for the benefit of humanity not-profit. The lawsuit filed late on Thursday said Altman and OpenAI’s Co-founder Greg Brockman originally approached Musk to make an open source, non-profit company.
• Publication The Information reported that META decided against a partnership with GOOGL to use Google’s Android XR platform for its mixed reality Quest headsets.

• In Storage and Comm: NTAP shares jumped after Q4 results topped expectations and raised its FY24 adjusted EPS view to $6.40-$6.50 from $6.05-$6.25 and guides FY24 revenue $6.185B-$6.335B vs. est. $6.23B.
• In Cyber Security: ZS reported a Q2 billings beat, and FY24 billings guide raised about in line with the F2Q beat; Q2 EPS and revs topped consensus, with revs up 35% y/y, and billings growth of 27% y/y (consensus up 24% y/y); guidance was notably above expectations from a profitability perspective,
• In Tech Services: HPE reduced its full-year outlook for sales growth and profit, citing lower demand for networking products and a crunch in chip availability.
• In Software: ADSK reported better F4Q revenue, while FY25 guidance of 9-11% revenue growth was in line, OM guide of 35-36%, which implies flat to ~70 bps of y/y OM contraction, was better than feared and provided FY26 FCF commentary and expects FCF of $2.05B, which is a touch better than ests. ESTC posted 3Q results that beat across all key metrics, although the beat was driven by self-managed outperformance according to Stifel, noting SaaS only beat consensus by ~$1Mm.
• In M&A News: EVBG agreed to an increased buyout offer of $35 per share or $1.8B (up from $28.60 or $1.5B prior) from private-equity firm Thoma Bravo. The original deal, agreed to in early February, included a "go-shop" period, which allowed Everbridge to solicit other offers https://tinyurl.com/5eerm6kh

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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.