Mid-Morning Look
Tuesday, April 23, 2024
Index |
Up/Down |
% |
Last |
DJ Industrials |
153.94 |
0.41% |
38,395 |
S&P 500 |
46.81 |
0.93% |
5,056 |
Nasdaq |
196.19 |
1.27% |
15,648 |
Russell 2000 |
27.88 |
1.42% |
1,995 |
U.S. stocks adding to big gains on Monday, looking to post the biggest 2-day rally in a few months as markets celebrating earnings results and economic data that help case for rate cuts in coming months by the Fed. A second day of broad-based gains for major U.S averages with Industrials, Technology, Communications, and Healthcare leading early while the materials sector underperforms in the S&P behind weakness in metals NUE, FCX after results and SHW in chemicals. The 10-yr yield tumbles 6 bps quickly to 4.58% following PMI data (off highs 4.65% earlier). Early gains in some chip stocks also offered support to equities, with NVDA, AMD, SMCI, ARM recovering some of this month’s losses. Autos get a boost behind better GM results and guidance, ahead of TSLA results tonight, looking to snap its 7-day losing streak. Gold prices fell as much as -1.4% after falling -2.75% Monday near lows of $2,300 an ounce (off recent ATH $2,448.40 an ounce), but pared losses dramatically to $2,342 an ounce following a bounce in stocks as better PMI data raised hopes of rate cuts once again. The
Economic Data
- Philadelphia Fed non-manufacturing regional business activity index -12.4 in April vs -18.3 in March, firm-level business activity index 18.4 in April vs -2.3 in March, non-manufacturing new orders index 6.5 in April vs -3.9 in March, non-manufacturing full-time employment index 11.0 in April vs 3.5 in March.
- U.S. S&P Global April flash services PMI at 50.9 (vs 51.7 in March) and U.S. S&P Global April flash composite PMI at 50.9 (vs 52.1 in March); S&P Global April flash manufacturing PMI at 49.9 (vs 51.9 in March).
- Richmond Fed composite manufacturing index -7 in April vs -11 in March; Richmond Fed manufacturing shipments index -10 in April vs -14 in March and services revenues index -13 in April vs -7 in March.
- March single-family home sales rose 8.8% to 0.693M unit ann. Rate above consensus 0.670M and vs Feb 0.637M unit rate; March home sales Northeast +27.8%, Midwest +5.3%, South +7.7%, West +8.6%; new home supply 8.3 months’ worth at current pace vs Feb 8.8 months and median sale price $430,700, -1.9% from March 2023 ($438,900).
Macro |
Up/Down |
Last |
WTI Crude |
0.20 |
82.10 |
Brent |
0.12 |
87.12 |
Gold |
-7.90 |
2,338.50 |
EUR/USD |
0.005 |
1.0703 |
JPY/USD |
-0.16 |
154.68 |
10-Year Note |
-0.043 |
4.58% |
Sector Movers Today
- In Solar: SPWR said to restate financials saying new material weakness exists in internal control; in research, NOVA downgraded to Sector Weight from Overweight at Keybanc, cautious on residential solar levered names going into Q1 saying the lack of encouraging data points from the industry that could point to definitive inflection, and believe the recovery remains elusive (remains SW rated on RUN, ENPH, and SEDG); Evercore ISI downgraded SPWR to In Line from Outperform as it assesses persistent high interest rates, continued weakness in California after NEM 3.0, and the possibility of further capital needs. While upgraded FSLR from In Line to Outperform w/ $227 tgt saying the market is expecting the Biden administration to remove a trade exemption for bifacial solar modules imported to the U.S., which now represent about 98% of U.S. solar imports.
- In Software: CALX shares tumble as guides Q2 revs $197M-$203M below consensus estimate of $228.1M on lower profit outlook for Q2 of $0.03-$0.09 vs. market est. of $0.22 and reported Q1 revs $226.3M vs. est. $233.7M. DDOG upgraded to Overweight at Wells Fargo and raised tgt to $150 from $130 as cost optimization comes to an end; believe Datadog has many ways to drive upside in FY24, including vendor consolidation, security cross-sell and Gen AI. SAP 1Q with results mostly in line with Street estimates. Positively, the top-line growth reaccelerated, cloud bookings remained strong, cloud margins expanded, and cash generation outperformed too. Specifically, the company generated the largest quarterly FCF in three years.
- In Retail: CPRI shares dipped after the FTC sued to stop TPR’s $8.5 billion takeover of Capri; FIVE was downgraded to neutral from Overweight at JP Morgan and cut tgt to $170 from $215 as work points to an underlying low-to-mid-teens earnings growth profile. HIBB shares jumped as announces definitive agreement to be acquired by JD Sports Fashion Plc for $87.50 per share in cash, in a $1.1B transaction; price represents a 21% premium to the April 22, 2024, closing price.
- In Aerospace & Defense: GE shares advanced after forecasts FY operating profit $6.2B-$6.6B vs. forecast $6B-$6.5B; raised its full-year profit forecast on strong demand for jet-engine parts and services as carriers keep their older planes in the air to tide over a shortage of new commercial aircraft. RTX Q1 earnings topped ($1.34/$19.3B in revs vs. est. $1.23/$18.41B), helped by demand for missile defense systems and strength in the commercial aftermarket business. LMT reported a near 14% Q1 sales rise as sales in its missiles and fire control unit jumped 25.3% to nearly $3Band sales in its aeronautics business, which makes the F-35 fighter jets, rose 9.2% to $6.85B; reaffirmed its full-year outlook, projecting net sales of $68.5 billion to $70 billion and profit between $25.65 and $26.35 per share.
Stock GAINERS
- DHR +6%; Q1 adj EPS $1.92 tops $1.71 estimate and revs $5.8B also beats $5.62B view driven by strength in its diagnostics and bioprocessing businesses.
- GE +4%; forecasts FY operating profit $6.2B-$6.6B vs. forecast $6B-$6.5B; raised its full-year profit forecast on strong demand for jet-engine parts and services as carriers keep their older planes.
- GM +6%; quarterly results that topped consensus and raised its annual forecast, citing stable pricing and demand for its gas-engine vehicles; Q1 adj EPS $2.62 vs. est. $2.12; Q1 sales rose 7.6% y/y to $43.01B vs. est. $42.19B; raises FY24 EPS $9.00-$10.00, up from prior $8.50-$9.50 (est. $9.04) and raises FY adj FCF, adj Ebit view and net income outlook.
- HIBB +18%; as announces definitive agreement to be acquired by JD Sports Fashion Plc for $87.50 per share in cash, in a $1.1B transaction; price represents a 21% premium to the April 22, 2024, closing price.
- IBRX +21%; said the FDA approved its Anktiva treatment for certain patients with bladder cancer; said it expects Anktiva to be available in the U.S. by mid-May.
- KMB +5%; boosted its FY sales and profit forecasts on higher prices and strong demand after beating Q1 expectations with sales of $5.15B above the $5.09B estimate and better EPS of $2.01; guides 2024 organic sales to rise in mid-single digits vs prior forecast of low- to mid-single digit rise.
- NVS +2%; raised its full-year guidance on wider use of psoriasis and arthritis drug Cosentyx; said 2024 net sales were set to grow by a high-single to low double-digit percentage and added that adjusted operating income was expected to grow by a low double-digit to mid-teens percentage.
- SPOT +14%; quarterly gross profit topped 1 billion euros ($1.1 billion) for the first time, revs rose 20% y/y to 3.64B euros, and monthly active users (MAUs) rise 19% to 615M, but missed own guidance of 618M, while gross margins rose to 27.6% in the quarter from 25.2% a year earlier.
Stock LAGGARDS
- ABEO -48%; the FDA declined to approve its treatment for a rare skin blistering condition; the FDA issued a Complete Response Letter requesting certain additional information to satisfy a critical part of pharma product application.
- CALX -2%; as guides Q2 revs $197M-$203M below consensus estimate of $228.1M on lower profit outlook for Q2 of $0.03-$0.09 vs. market est. of $0.22 and reported Q1 revs $226.3M vs. est. $233.7M.
- CDNS -2%; shares fall (SNPS in sympathy) after reported a mixed quarter with Q224 revenue guidance missing consensus by ~7% saying the new Z3/X3 launch this year is causing some customers to hold off their Z2/X2 orders, leading to lower Q2 outlook while full year maintained.
- LXQ -14%; lowered its FY24 organic revenue growth for parts and services in range of 2.5%-4.5%, from previous forecast of 3.5%-5.5% and cut EPS view to $3.32-$3.62 from $3.43-$3.73 citing softer-than-expected Q1 demand and higher projected restructuring-, transaction-related expenses (missed Q1 revs as well).
- NUE -6%; Q1 miss and weaker guide hurts steel stocks as reported Q1 EPS $3.46 vs. est. $3.65; Q1 revs $8.14B vs. est. $8.26B; said expects Q2 earnings to decrease compared to Q1 (est. $3.63) primarily due to lower average selling prices.
- SHW -4%; reported weaker-than-expected Q1 adjusted EPS ($2.17 vs. est. $2.21) due to lower sales in North America while sales fell to $5.37B from $5.44B y/y while maintained its annual earnings target, which was below consensus.
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.