Mid-Morning Look: January 05, 2024

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Mid-Morning Look

Friday, January 05, 2024





DJ Industrials




S&P 500








Russell 2000






U.S. stocks with a strong bounce off overnight weakness and pre-market lows, as futures were hit initially following another strong job report. The December payroll report showed increasing jobs, higher wages, and lower unemployment, the third positive payroll report this week showing the labor market remains strong (ADP, jobless claims yesterday). The jobs data pushed Treasury yields much higher, with the 10-yr hitting highs above 4.1%, causing a pullback in S&P futures (Spuz) to lows at 4,702 this morning. The better results raised expectations that the Fed may delay in cutting rates as soon as March which has been the main driver of stock markets over the last month following the Fed “pivot” at the December meeting to a move “dovish” view on rate cuts. Futures rebounded, trading flat around the open before spiking following weaker ISM manufacturing data at 10:00 and softer prices paid inflation, with the Spuz hitting highs of 4,760. The S&P 500 cash (SPX) moved back above its 4,700 level after the ISM report and Treasury yields reversed, with the 10-yr at lows around 3.97%. The S&P, Nasdaq and Dow remain on track to snap their weekly winning streaks at nine barring a massive squeeze late day. Gold prices sharp reversal along with stocks, now up +0.9% to $2,068 an ounce (off earlier lows $2,030).

Economic Data

  • Very strong December payroll data across the board.
  • The U.S. December Nonfarm payrolls rose +216,000 topping consensus +170,000 and above downwardly revised November +173,000 (from +199,000), and October +105,000 (from +150,000).
  • December also marked the 36th consecutive month of jobs growth.
  • Factory jobs +6,000 (in-line with consensus of +5,000, but down from +25,000 prior.
  • Private Payrolls were +164,000 vs. est. +130,000 and vs. downwardly revised +136,000 (from +150,000).
  • The Unemployment rate was 3.7%, in-line with prior but below the expected 3.8% figure (the US Unemployment Rate has now been below 4% for 23 straight months, the longest streak since the late 1960s).
  • The participation rate 62.5% (lightest since January 2023) vs 62.8% estimate.
  • Average Hourly Earnings rose +0.4% M/m vs. est. +0.3%.
  • Total jobs in the US increased 1.7% over the last year, the lowest YoY growth rate since March 2021.
  • ISM report on U.S. non-manufacturing sector shows PMI 50.6 in December below consensus 52.6 and prior month 52.7 as prices paid index 57.4 in December vs 58.3 in November; new orders index 52.8 in December vs 55.5 in November and employment index 43.3 in December vs 50.7 in November.
  • Factory Orders for November ex-transportation +0.1% vs Oct -1.3%, factory orders ex-defense +3.0% vs Oct -4.0%, nondurables orders unchanged vs Oct -1.8% and Nov total manufacturing inventories +0.1% vs Oct unchanged.






WTI Crude















10-Year Note




Sector Movers Today

  • In Casinos/Gaming: Wells Fargo downgraded BALY to Underweight with $10 tgt as their more cautious view reflects no line of sight to leverage dropping below ~6x for the foreseeable future, which could limit Bally’s appeal. Wells also downgraded CHDN, cutting to Equal Weight from Overweight as sees risk/reward as fair here, though an upside scenario could push Churchill Downs to $170. Stifel downgraded both BYD and MCRI to Hold saying they want Macau/cruise exposure (smaller-cap cruise names, preferred) as regionals are a concern and said their top three ideas (> $2B market cap) for 2024 are WYNN, RCL and BOWL as believes owning a combination of those three names will allow investors to capture the Macau/LV Strip/cruise upside oppty as well as a highly controversial/misunderstood story in BOWL. Their other top ideas for 2024 include OSW, LIND, CHDN, and AGS.
  • In Aerospace & Defense: Wells Fargo raises price tgts: BA tgt to $280 from $230, GD to $290 from $264, LMT to $482 from $450, RTX to $91 from $82, HWM to $60 from $55, HXL to $81 from $64 and RKLB to $6 from $5 in defense stocks at Wells Fargo saying upcoming U.S. elections could support defense sector later in the year, as the stocks have outperformed the market by 9-10% in presidential election years. A shift to one-party control of Congress would be a positive. Says it expects better original equipment growth in 2024, particularly given easy compares on 2023 production delays. Barclays with industry note as they upgraded LDOS to OW, downgraded BAH to Underweight and said prefers CACI in services; within defense, favor LHX and downgraded HII to EW; in aerospace favors ATI, SPR, TDG and upgraded TGI to Overweight as sees further outperformance on upside to forward expectations that can more than offset likely modest valuation compression.
  • In REITs: KeyBanc with 2024 REIT outlook as they upgraded NSA, ROIC to Overweight from SW and downgraded AVB, MPW, and DOC to Sector Weight saying slower growth in 2024 (y/y) could pave way for an uptick in 2025, but uncertainty over whether the economy tips into recession remains a risk and may define the year. The firm favors Self Storage, Healthcare, Retail subsectors and maintain/reduce Industrial, Office, Residential, Triple-Net/Gaming, Lodging. UBS raised prices targets on several names: CPT tgt from $94 to $105, EQR from $63 to $73, ESS $221 to $250, BXP $52 to $69, NSA $36 to $40 and SPG $121 to $143 in outlook saying they think the setup for REITs in 2024 is more nuanced than at first glance despite visibility into rate cuts. A softer macroeconomic backdrop will likely pressure REIT fundamentals & earnings growth.



  • AXGN +21%; after raises 2023 revenue view to upper end of $154M-$159M view vs. consensus $156.75M.
  • BYON +1%; was upgraded to buy from hold at Needham citing the household goods retailer’s self-help initiatives.
  • COST +1%; reported total and U.S. core December comp growth of 8.1% and 7.4%, with an extra selling day adding ~3pts, compared to consensus of 4.3% and 4.0%.
  • SIMO +3%; said prelim Q4 sequential revenue growth is expected to slightly exceed the high-end of its original guidance range of 10% to 15%, and non-GAAP gross margin is also expected to exceed the high-end or prior view.
  • STZ +2%; Q3 comparable net sales $2.47B misses est. $2.54B but Q3 EPS $3.19, est. $3.03 as strong beer sales for the Modelo maker offset a continued decline in its wine and spirits business. STZ cut its earnings outlook for its fiscal year.



  • AGL -34%; after announces Tim Bensley to retire as CFO, cuts FY23 revenue view to $4.295B-$4.305B from $4.31B-$4.32B (est. $4.53B) and cuts FY23 adj EBITDA view to ($69M)-($55M) from $6M-$18M reflecting higher-than-expected costs, and provided an initial outlook for 2024.
  • ALLO -15%; after the company announced the discontinuation of the ALPHA2 and EXPAND trials, and the entry into CLL and autoimmune diseases with the net result is conservation of cash well into 2026.
  • ANGO -22%; after Q2 revs $79.1M missed the $92M estimate and lowered its FY24 EPS view to wider loss of (-$0.42-$0.35) from prior loss (-$0.34-$0.28) and cut its FY24 revenue view to $320M-$325M from $328M-$333M (est. $329.1M) and FY24 gross margin view to 49%-51% from 50%-52%.
  • APLT -34%; after reported its drug AT-001 was not statistically significant vs placebo in a late-stage trial to treat patients with diabetic cardiomyopathy at high risk of heart failure.
  • MPW -30%; after saying its largest tenant, Steward Health Care System, is $50 million behind in rent payments. MPW said it’s taking a fourth-quarter, non-cash charge of about $225 million to write off consolidated straight-line rent receivables and for other items.
  • TBPH -6%; after saying results from its Phase 4 study of Yupelri Revefenacin inhalation solution didn’t show a statistically significant difference between Yupelri and Spiriva HandiHaler on the primary endpoint.
  • VYGR -16%; after its 7.778M share Spot Secondary priced at $9.00.


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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