Mid-Morning Look
Thursday, January 23, 2025
Index |
Up/Down |
% |
Last |
DJ Industrials |
68.84 |
0.16% |
44,226 |
S&P 500 |
-3.83 |
0.05% |
6,083 |
Nasdaq |
-59.55 |
0.30% |
19,947 |
Russell 2000 |
-12.13 |
0.53% |
2,291 |
U.S. stocks off to a choppy start a day after the S&P 500 (SPX) hit 6,100 for the first time ever as technology and communication stocks pull back after leading markets yesterday. The semiconductor sector (SOX) in focus, down sharply after cautious memory and capex comments from Asia’s SK Hynix, which is weighing on the likes of MU, ASML, LRCX and others, ahead of TXN earnings tonight. Energy (XLE) outperforms as oil prices rebound. Treasury prices are down with yields higher across the board overnight as the 30yr moves back to 4.863% from a low on Tues of 4.775% and the 10yr yield to 4.652% from a low of 4.532% on Tuesday. Bitcoin prices were down overnight, falling to lows below $101,500 before surging on the open and pushing back above $105,500. The Dow Transport index is higher behind UNP earnings and KNX lifting truckers, though AAL slides on weaker outlook in airlines. EA shares tumbled after lower bookings guidance in video games and industrial metals down on mixed results from AA, FCX as well as tariff concerns. Markets still awaiting the FOMC policy meeting next week as well as key PCE inflation data next Friday and one of the busiest weeks of earnings for this quarter.
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%.
Macro |
Up/Down |
Last |
WTI Crude |
0.34 |
75.78 |
Brent |
0.56 |
79.56 |
Gold |
-21.40 |
2,749.50 |
EUR/USD |
-0.0012 |
1.0396 |
JPY/USD |
-0.13 |
156.40 |
10-Year Note |
0.055 |
4.655% |
Sector Movers Today
- Government IT Services names tumble (LDOS, BAH, PSN) with CACI despite earnings/guidance overnight. CACI reported upside F2Q25 results and raised FY25 revenue and profitability guidance, but shares tumbled. Also in the sector, PSN was downgraded to MP from OP at William Blair to reflect elevated risk associated with the company’s classified humanitarian aid U.S. State Department contract that is up for renewal in the first quarter.
- 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.
- In Managed Care: ELV shares rise on 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.
- 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 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.
Stock GAINERS
- ALK +4%; Q4 adj EPS $0.97 vs. est. $0.44; sees Q1 EPS adj loss (-$0.50-$0.70) vs. est. loss (-$0.72); forecast a smaller-than-expected loss for the current quarter, driven by strong holiday and corporate travel demand as well as improved pricing power.
- ELV +2%; increased its quarterly dividend and reported medical costs for Q4 that were lower than the average analyst estimates while Q4 EPS/revs were mixed.
- GE +5%; 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.
- GWRE +7%; 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
- KNX +5%; shares climbed on mixed results as Q4 adj EPS $0.36 vs. est. $0.33 but revs miss while saying anticipates 2025 will be a year of gradual recovery in market conditions that bridges to a more constructive 2026.
- NTRS +2%; 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.
- TAL +18%; after quarterly earnings top consensus in education sector.
Stock LAGGARDS
- AAL -7%; 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.
- ALAB -7%; tumbling below its 50dma $118.65, extending weekly declines to -15% (follows Morgan Stanley downgrade on Tuesday).
- ASML -3%; along with weakness in other semi equipment stocks AMAT, LRCX, KLAC after SK Hynix said its 2025 capital expenditure (capex) would rise only slightly from last year.
- ASTS -13%; after announcing a proposed private offering of $400.0M of convertible senior notes due 2032.
- EA -16%; pre-announced Q3 and FY25 results, 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.
- EVTL -36%; after prices $90M public offering at $6.00 per unit.
- MU -3%; SK Hynix remains bullish on AI chip demand following record quarterly profit, though flags soft memory demand, weighing on shares of MU
- PLXS -7%; 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).
- VEEV -5%; downgraded to Sell from Buy at Goldman Sachs (tgt to $200 from $261) as continues to view Veeva as sees the following medium-term risks to the Street and Veeva’s 2030 targets: In Commercial, Salesforce is positioning themselves for share gain.
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.