Early Look

Tuesday, January 9, 2024

After stocks surged in a straight-line higher Monday from the open until the close, U.S. futures are modestly weaker with the Small Cap Russell 2000 (IWM -1%) down the most overnight. After snapping the 9-week winning streak on Friday, US stocks came back with a vengeance Monday, recovering a good bulk of YTD losses in one-day as investors took weakness in the first 4-trading days of the year as an opportunity to buy the dip. The S&P 500 rallied 1.4% on Monday, moving back within 35 points of its record closing highs. In early trading the U.S. Dollar is incrementally higher while bonds are modestly pressured (lifting the 10-yr yield back above 4.04%). Crude extends gains as it attempts to pare back the prior day’s losses and amid geopolitical tailwinds. After yesterday’s nonstop melt day high is some caution warranted? @RyanDetrick noted “It is quite rare for stocks to be lower during the Santa Claus Rally and first 5 days of a new year. ’24 is about to see it. Full year up less than 3% on avg.” Markets await commentary from the ICR Exchange, JP Morgan Healthcare, and Consumer Electronics Show conferences taking place today. Chinese stock market rebounded on Tuesday, after experiencing a five-day decline since the starting of 2024. In Asian markets, The Nikkei Index rose 385 points to 33,763, the Shanghai Index gained 5 points to 2,893, and the Hang Seng Index fell -34 points to 16,190. In Europe, the German DAX is down -66 points to 16,650, while the FTSE 100 is flat. In corporate news, the WSJ reported that HPE is in talks to buy JNPR in the networking sector and that activist Allitt Management took a big stake in Tinder owner MTCH.

• The Dow Jones Industrial Average rose 216.90 points, or 0.58%, to 37,683.01.
• The Nasdaq Composite spiked 319.70 points, or 2.20%, to 14,843.77.
• The Russell 2000 Index advanced 37.86 points, or 1.41% to 1,989.01.

• 7:45 AM ET                  ICSC Weekly Retail Sales
• 8:30 AM ET                  International Trade for November
• 8:55 AM ET                  Johnson/Redbook Weekly Sales
• 1:00 PM ET                   US Treasury to sell 3-yr notes.
• 4:30 PM ET                   API Weekly Inventory Data

• Earnings After the Close: AEHR AZZ CAMP ETWO KBH PSMT SAR

• Consumer Electronics Show (CES), 1/9-1/12, in Las Vegas, NV
• ICR Conference, 1/8-1/10, in Orlando, FL
• JP Morgan 42nd Annual Healthcare Conference, 1/7-1/11, in San Francisco, CA
• 17th Annual London Energy & Power Conference

• The Container Store (TCS) cuts Q3 revenue view to $214M from $220M-$225M (est. $225.4M) saying expects its profitability for the quarter to be negatively impacted by the sales shortfall.
• Urban Outfitters (URBN) reported that November and December net sales increased 10% compared to the same two months the year prior.
• Zumiez (ZUMZ) forecasts Q4 EPS low end of $0.24-$0.34 and forecasts Q4 net sales low end of $275M-$281M, vs. est. $276.3M.

• Eversource Energy (ES) said it expects to take a charge of as much as $1.6 billion for the fourth quarter for offshore wind assets after costs climbed.
• MSC Industrial (MSM) Q1 adj EPS $1.25 vs. est. $1.31; Q1 revs $953.97M vs. est. $972.06M; Backs FY24 adjusted operating margin view 12%-12.8% and backs FY24 tax rate view 25%-25.5%.

• Atea Pharmaceuticals (AVIR) announces positive initial data from phase 2 study for hepatitis c virus (HCV) and significant enrollment milestone for phase 3 sunrise-3 trial for COVID-19; first interim analysis by independent data safety monitoring board (DSMB) expected in March 2024.
• Danaher Corp (DHR) said for Q4, estimated revenues are anticipated to decrease in low-double digit percent range year-over-year; estimated non-GAAP base business core revenue for Q4 of 2023 is expected to decline in mid-single digit percent range.
• Eisai (ESAIY) and Biogen (BIIB) said that their Alzheimer’s treatment Leqembi had won approval in China, the third country after the United States and Japan. The two companies are preparing to launch the drug in the second quarter of Eisai’s 2024/25 business year starting in April.
• Grifols (GRFS) shares tumbled Tuesday after short-seller Gotham City Research criticized the financial reporting of the Spanish pharmaceutical company, which denied the allegations. Gotham City Research said in its report that it believes Grifols’s debt-to-earnings ratio is worse than reported by the company. http://tinyurl.com/4nxyz54e

• Extreme Networks (EXTR) provides update to Q2 outlook saying Q2 revenues are now expected to be approximately $294-$297M vs. consensus of $320.5M and said remain confident in our long-term strategy and our ability to achieve double-digit long-term revenue and EPS growth.
• Microchip (MCHP) said it sees prelim Q3 revs down sequentially about -22% vs. guidance of down (15%-20%) citing weakening economic environment customers faced.
• Elliott Investment Management has built a big $1B stake in Match Group (MTCH) and intends to meet with Match to discuss ways to improve online dating company’s performance – WSJ http://tinyurl.com/25hpsc5e
• Netflix (NFLX) downgraded to Neutral from Buy at Citigroup with an unchanged $500 price target saying across 2024 and 2025, the Street has lofty expectations for Netflix, but 2024 revenue estimates may be a tad too high.
• Unity Software (U) said it plans to cut about 1,800 employee roles or 25% of the current workforce and forecasts costs substantially incurred in Q1.
• Microsoft Corp.’s (MSFT) $13 billion investment into OpenAI Inc. is facing the potential of a full-blown European Union merger probe, after a mutiny at the ChatGPT creator laid bare deep ties between the two companies – Bloomberg.
• Paramount (PARA) upgraded to Neutral from Sell at MoffettNathanson with $13 tgt.