Mid-Morning Look
Wednesday, October 23, 2024
Index |
Up/Down |
% |
Last |
DJ Industrials |
-206.30 |
0.48% |
42,718 |
S&P 500 |
-19.37 |
0.33% |
5,831 |
Nasdaq |
-93.69 |
0.50% |
18,478 |
Russell 2000 |
-12.53 |
0.56% |
2,218 |
U.S. stocks sliding on the open, a rare 3-day losing streak for the S&P off recent all-time highs, as investors continue to parse through the deluge of earnings results for Q3, as well come to grips with the recent spike in the U.S. dollar and Treasury yields, each hitting highest levels in over 3-months. Gold hit an all-time high today for the 4th day in a row but has since pulled back -0.7% around 2,740 an ounce (still on pace for its best year since 1979 with a gain of 33% YTD). Economic data weaker as Home Sales on track for worst year since 1995. The U.S. dollar also not stopping its push higher along with Treasury yields since the FOMC rate cut in mid-September as the Canadian dollar weakens to 11-week low at 1.3852 per U.S. dollar, the euro falls below 1.08 and the dollar/yen tops 153 up over 1.25%. Oil prices fell after industry data showed U.S. crude inventories swelled more than expected, though futures were still up about 2% this week as traders factored in continuing conflict in the Middle East. Earnings continue to dominate with lodging stocks falling on HLT results, solar stocks weaker on EPH results, while analog semi stocks get a bounce on TXN results and oil services stocks rise on BKR, WFRD earnings. Restaurant giant MCD the big story today as the Dow component slides on e coli breakout in Colorado at a restaurant.
Economic Data
- U.S. Sept Existing Home Sales fell -1% M/M to 3.84M unit rate (consensus 3.86M), vs Aug 3.88M (prev 3.86M); U.S. Sept inventory of homes for sale 1.39M units, 4.3 months’ worth; U.S. Sept national median home price for existing homes $404,500, +3.0% from Sept 2023.
Macro |
Up/Down |
Last |
WTI Crude |
-0.84 |
70.88 |
Brent |
-0.82 |
75.22 |
Gold |
-29.10 |
2,730.70 |
EUR/USD |
-0.0025 |
1.0773 |
JPY/USD |
1.98 |
153.04 |
10-Year Note |
0.044 |
4.25% |
Sector Movers Today
- In Lodging: HLT Q3 results mixed as EPS of $1.92 beat ests but revs $2.87B below $2.91B estimates as System-wide comparable RevPAR increased 1.4%; the hotel operator lowered the upper end of its annual room revenue growth forecast to be between 2% and 2.5%, compared with its prior view of 2% to 3% noting some U.S. consumers cut back on domestic travel spending amid a drop in disposable income; also lowers FY24 net income outlook to $1.41B to $1.43B, from $1.53B to $1.56B (MAR, CHH, H shares dipped initially in sympathy).
- In Restaurants & Dining: MCD shares tumbled after the CDC reported ten people have been hospitalized and one older person in Colorado has died after E. coli infections linked to consuming McDonald’s quarter pounder hamburger (shares of beef supply names such as TSN were down as well in sympathy); SBUX shares declined after the company suspends its annual forecast, given CEO transition coupled with the “current state of the business; said Q4 comparable store sales declined 7%, net revenues declined 3% to $9.1B (below forecasts), guides prelim Q4 adj EPS $0.80 below est. $1.03, but did raise its dividend.
- In Solar: ENPH shares stumble on miss and lower guide; Q3 EPS $0.65 vs. est. $0.77; Q3 revs $380.87M vs. consensus $392.11M; guided Q4 revenue $360.0M-$400.0M below consensus $437M and guides Q4 adj operating expenses $81M-$85M (solar space remains pressured SEDG, RUN, NOVA, etc.). Separately, shares of foreign solar names DQ, JKS, CSIQ saw early strength on reports the US Commerce Department is considering reducing tariffs on the sector.
- In the Maritime sector: Stifel downgraded ASC, STNG, INSW to Hold from Buy in tanker names and downgraded GNK, SBLK in the dry bulk sector as the market finds its new level next year in Shipping preview. The firm said for the better part of the past four years, most shipping segments have been strong, following a multi-year period of weakness; but believe most shipping segments are headed toward a rate pause, which should drag asset values lower.
Stock GAINERS
- AMLX +7%; upgraded from Neutral to Buy at Bank America and raised tgt to $10 from $4.20 based on its view on the prospects of avexitide, a drug it is developing to control blood sugar
- EWBC +7%; after earnings results topped expectations
- LRN +30%; after the online education company reported Q1 results that were much stronger than expected and gave an outlook that is seen as positive.
- MGNI +4%; after signing a two-year extension with DIS which will now use MGNI’s services to monetize college football games on live streams on ESPN. The co will now support Disney in expanding monetizing ad-supported inventory in Brazil, Chile, Colombia, Mexico, Peru, and Argentina.
- PKG +6%; shares advanced after IP announced 5 box plant closures & 650 headcount reductions this past week as it looks to reduce costs by ~$1.2B in the next 2-3 years.
- SNAP +3%; was upgraded to Outperform from Market Perform at JMP Securities with a $17 price target saying with Snap set to roll out Simple Snapchat and launch Sponsored Snaps, it will see an inflection in impression growth
- TXN +3%; Q3 print better than feared as Auto surprisingly grew from strength in China and non-Industrial segments recover, driving higher Q3 GM (helped boost auto semis ON, NXPI, WOLF).
- UPWK +13%; after guides Q3 prelim revs $194M vs. est. $181.7M and announces organizational changes to drive continued profitable growth; sees about $60M in annual cost savings advances.
Stock LAGGARDS
- ANRO -63%; following news a Phase 2 study of the company’s ALTO-100 failed to meet its primary endpoint.
- CSGP -10%; downgraded to Sector Perform at RBC Capital and cut tgt to $83 post earnings noting core bookings declined 34% y/y and Homes.com bookings moderated to $1M in Q324 from $55M in 1H24 despite the elevated investments; also cut its outlook for year.
- ENPH -12%; shares stumble on miss and lower guide; Q3 EPS $0.65 vs. est. $0.77; Q3 revs $380.87M vs. consensus $392.11M; guided Q4 revenue $360.0M-$400.0M below consensus $437M and guides Q4 adj operating expenses $81M-$85M (solar space remains pressured SEDG, RUN, NOVA, etc.)
- MCD -5%; shares tumbled after the CDC reported ten people have been hospitalized and one older person in Colorado has died after E. coli infections linked to consuming McDonald’s quarter pounder hamburger
- NVDA -2%; CEO Huang said today that a design flaw with its latest Blackwell AI chips, which impacted production, has been fixed with the help of longtime Taiwanese manufacturing partner TSM
- QCOM -2%; after ARM said it is cancelling an architectural license agreement that allows QCOM to use intellectual property to design chips, Bloomberg News reported. ARM has given QCOM a mandated 60-day notice of the cancellation of the licensing agreement, the report said.
- STX -6%; shares declined after the company suspended its annual forecast, given CEO transition coupled with the current state of the business; said Q4 comp store sales -7%, net revenues declined 3% to $9.1B (below forecasts).
- VRT -1%; 3 adj EPS $0.76 vs. est. $0.69; Q3 revs $2.07B vs. consensus $1.98B; raises year EPS and rev outlook but Q4 guidance mixed as sees Q4 adjusted EPS 80c-84c, vs. consensus 75c while mid-point of Q4 revenue $2.12B-$2.17B below consensus $2.15B.
- WGO -5%; earnings dropped -82% y/y vs. analysts’ expectations for a -44% y/y loss while revenue dropped 6%, to $720.9M but just above the consensus view around $719M; guided 2025 adjusted EPS $3.00-$4.50, below consensus $5.35 as anticipates total North American RV wholesale shipments in the range of 320,000 to 350,000 units.
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.