Closing Recap

Friday, November 08, 2024

US equity futures traded slightly lower into the pre-market session after holding flattish for most of the overnight following recent post-election and post-Fed gains, but still are on track for a strong weekly performance. China unveiled a 10 trillion-yuan ($1.4 trillion) program to help resolve its local government debt crisis, as authorities moved to shore up a slowing economy facing fresh risks from the re-election of Donald Trump, but it failed to sufficiently impress, contributing to the equities fade. By mid-morning, equities had mostly regained their footing with breadth slightly favoring advancers by 1.4:1 as small caps outperformed with IWM (+0.36%) versus SPY (+0.32%) and QQQ (-0.04%). Sentiment held steady for a change with the Fear and Greed Index at 61/100 (Greed) versus 59 (Greed) yesterday, but 44 (Fear, pre-election) a week ago, 70 (Greed) a month ago and 39 (Fear) last year. Yesterday’s AAII bull-bear spread also improved to 13.9 from 8.6 last week with bulls rising from 39.5% to 41.5%, while bears fell from 30.9% to 27.6%. Early sector performance was mixed with Real Estate (+1.60%), Utilities (+1.43%) and Consumer Discretionary (+1.37%) leading outperformers among S&P sector ETFs, while Technology (-0.12%), Materials (-0.46%) and Communications (-0.63%) paced the underperformers all in the red. Energy also was slightly lower following oil down.

In noteworthy data today, we are still getting election-related views. @LizThomasStrat notes the Michigan consumer sentiment index improved to 73 versus a forecast of 71 with Democrats more positive on current conditions (Dems +6 versus Reps -5), but Republicans stronger on the expectations side (Reps +11 versus Dems +2). So maybe all consumer-related survey data should be viewed with some caution and will need time to settle. Also in what is likely election-related follow-through, US stocks are finishing the week at uniformly overbought levels at the index level, but @bespokeinvest notes there is much more dispersion at the sector level with six overbought and three oversold. On the DJIA, @charliebilello highlights the (temporary) move above $44,000 marks the seventh 1,000-point milestone this year. He also notes the S&P 500 has gained 25% this year, marking the best “start” to a year since 1997 and 12th best in history. Lastly, on the deficit, @KobeissiLetter notes the US deficit excluding interest payments hit 5.8% of GDP in 2023, the highest among all 38 OECD countries and puts it above all prior recessionary levels except 2008, 2020 and the World Wars. We have work to do.

Heading into the final hour of trading, breadth favored advancers by 1.4:1 as small caps continued to outperform with IWM (+0.64%) versus SPY (+0.49%) and QQQ (+0.04%) in a generally risk-on day. Sector performance favored Utilities (XLU, +1.98%), Real Estate (XLRE, +1.80%) and Consumer Discretionary (XLY, +1.35%) while Technology (XLK, -0.14%), Communications (XLC, -0.46%) and Materials (XLB, -0.95%) continued to lag as the only sector ETFs in the red. Value outperformed growth, but both enjoyed gains. The Russell 1000 Value climbed 0.61% versus its Growth counterpart at +0.42%.

• University of Michigan 5-yr Inflation prelim 3.1% vs forecast 3.0% and prior 3.0%
• University of Michigan 1-yr inflation prelim 2.6% vs forecast 2.7% and prior 2.7%.

• WTI December crude futures slid overnight and never managed a rally, settling -$1.98/bbl, or -2.74%, to $70.38. Traders, in part, attributed the slide to disappointment around China’s most recent stimulus measures and the potential demand impact. On the supply side, less concern around damage to oil and gas rigs in the Gulf of Mexico from Hurricane Rafael also were said to play a role in the crude fade. Brent slipped $1.76/bbl, or -2.33%, to settle at $73.87 in a similar move to WTI.

• RIVN was downgraded to Neutral at Bank America after earnings and cut tgt to $13 from $20 noting that positive gross margin will be supported by regulatory credits that could be at risk under the Trump administration.
• LCID shares were mixed following a modest earnings double beat and announcing that they were accepting orders for the Lucid Graviy SUV last night.
• STLA announced more job cuts, this time 400 jobs at their Detroit parts facility.
• TSLA shares crested the $300 level for the first time since September 2022 and continued upward, hitting the $1 trillion market level at $317 per share, due to investor’s euphoria over CEO Musk’s proximity to President-elect Trump.

• MNST reports Q3 EPS $0.40 ex-items vs FS $0.43, Revenue $1.88B vs FS $1.91B, GM 57.7%, Operating Margin 27.0% vs FS 28.5% and leaves ~500M available for repurchase under the previously authorized program.
• SG reports Q3 EPS ($0.18) vs FS ($0.13), Revenue $173.4M vs FS $175.5M, Comps 6% vs FS 6.5%, and Adj EBITDA $6.8M vs $7.0M. FY Guidance December 2024 sees Revenue $675-$680M vs prior $670M-$680M and FS $678.6M, Comps 6%-7% vs prior 5%-7% and FS 6.4%, and Adj EBITDA $18M-$20M vs prior $16M-$19M and FS $18.6M.
• TAP double upgraded from Underweight to Overweight at Wells Fargo and raised tgt to $74 from $52.
• BLMN reported inline earnings this morning, but shares dipped following missed comps in several of their restaurant brands.
• XPOF saw its shares move sharply higher after last night’s report of Q3 adjusted EPS with revenue ahead of consensus and adjusted EBITDA margin softer than expected as well as reaffirming FY24 financial guidance.
• UAA Shares of the athletic apparel and footwear company surrendered more than half of y’day’s gains following strong earnings despite being named a Top Pick at UBS.

• DKNG reported Q324 revenue of $1.095B, increasing 39% YoY, but overall, -2% vs. consensus expectations; MUPs increased 57% YoY to 3.6M, a record quarter for the company; revenue was slightly short of expectations, EBITDA of -$59M was $11M ahead of consensus expectations; Q4 revs weak
• EXPE Q3 results were generally mixed with bookings and adjusted EBITDA marginally ahead, while revenue came in slightly below; was downgraded to Hold from Buy at Deutsche Bank.

• HASI reported 3Q EPS below consensus, with lower than anticipated revenue. HASI reiterated guidance for 2024 and its 8-10% growth outlook through 2026.
• IEP announces proposed tender offer to acquire additional shares of CVI common stock for a purchase price of $17.50 per share; IEP would commence a tender offer to acquire up to 15M additional shares as believes that CVI shares are undervalued in market.
• RUN reported mixed results, missing on revenue but exceeding its own guidance on networked capacity additions in 3Q, and ending up with slightly positive cash generation
• GEVO Short seller Iceberg Research announces that they are short the biofuels company joining Bleecker Street Research which published a negative report yesterday.
• BE Despite a double earnings miss, shares rose impressively due to affirmed guidance and a partnership announced with SK Eternix.

• VLY 42.8M share Spot Secondary priced at $9.35

• SQ
• UPST upgraded to Overweight at Piper and raising its PT to $85 after earnings; said Q3 performance was primarily driven by improvements in its lending model and also helped by the lower interest rates
• SQ shares fell following last night’s double earnings miss.
• PDD Citi cut off Temu payments after Visa raised concerns per The Information.
• SEZL The payments platform company’s shares rocketed ~80% higher due to blowout earnings, raised guidance and momentum traders. SEZL shares are +4,124% over the past year.
• INOD The data engineering company’s shares climbed sharply following strong earnings and ignoring their announcement that the company has been subpoenaed by a grand jury in a DOJ investigation.

• ARDX Ardelyx tumbles as lawsuit against CMS dismissed over Xphozah
• RIGL rose sharply following last night’s large EPS beat and sales beat.
• TEM shares were sharply higher following a pre-market announcement that their Nine Abstracts accepted for presentation at the 2024 Society for Immunotherapy of Cancer Annual Meeting.
• ANIX Anixa Biosciences and Cleveland Clinic present new updated positive data from Phase 1 study of breast cancer vaccine at the 39th SITC annual meeting.
• MRVI saw its stock fall precipitously after a double earnings miss, lowered expectations, an acquisition last night which led to a downgrade at William Blair and a round of price target reductions.

• BAX cut its annual profit to $2.90-$2.94 per share, compared with its previous expectation of $2.93-$3.01 due to a hurricane-related hit to its IV solutions facility.
• CHWY was upgraded to Buy with $40 tgt at Citigroup on the positive inflection in customer count and expanding EBITDA margin story unfolding.
• DOCS was upgraded to Overweight at Keybanc after a very healthy FQ2 report and forward-looking outlook, which suggests to them that momentum is building into the years ahead.
• EVH shares tumbled as Q3 EBITDA came in 49% below consensus, driven by a significant increase in Oncology costs, both retrospective and in the qtr and reduced FY24 guidance.
• GEHC shares were lower following a 13M shares spot secondary.
• FTRE shares rose by 1/3 following a Q3 core profit beat in the pre-market.
• FIGS shares of the healthcare apparel maker lost 1/3 of its value following weak earnings

• FLR shares fell in E&C space as Q3 adjusted EPS $0.51 misses the $0.76 estimate and revs $4.09B below consensus $4.74B; guides FY adj EPS $2.55-$2.75 vs. est. $2.89.
• OTTR The Department of Justice is investigating potential price-fixing in the market for PVC pipes, which follows allegations of a conspiracy in the $4B market for municipal water pipes and so-called electrical conduit pipes made in a recent short seller report and civil class action lawsuits.

• ERJ Brazil’s aircraft maker’s shares rose following a strong earnings report and an optimistic conference call.
• LMT Pentagon lifts ban on U.S. defense contractors in Ukraine to repair U.S.-supplied weaponry.
• JBLU US court rejects American airlines’ appeal of ruling that barred JetBlue alliance.

• FCX Copper miners sold off on an overnight announcement China fiscal stimulus package that did not meet high expectations. Furthermore, chatter that the new Trump administration may hire uber protectionist Robert Lighthizer to run its US trade policy.

• NRDY downgraded to MP from Outperform at JMP Securities after the company reported Q324 results that came in slightly better than consensus revenue and EBITDA, but it lowered forward guidance again as Q4 revenue guidance came in 20% below consensus.
• TTD reported better Q3 results and the Q4 revenue outlook was ahead of the Street (EBITDA ~in-line).
• DJT shares rallied off pre-market lows after President-elect Trump posted that he will not sell any shares.

• AKAM Akamai Technologies shares fell after saying last night that Q4 revenue forecast below estimates.

• ASML U.S. lawmakers seek details on China sales from top semiconductor equipment makers, including KLA, Applied Materials, Lam Research, Tokyo electron, and ASML.