Morning Preview: July 26, 2024

Auto PostDaily Market Report

Early Look

Friday, July 26, 2024

Futures

Up/Down

%

Last

Dow

242.00

0.60%

40,434

S&P 500

42.25

0.78%

5,483

Nasdaq

194.50

1.03%

19,187

 

 

U.S. futures are rebounding on the final day of the trading week heading into the June Personal Consumption Expenditures (PCE) inflation data at 8:30 AM, after the S&P and Nasdaq sunk in the final minutes of trading Thursday. Smallcaps are off to a good start this morning, rising 1.5% pre mkt, coming into the day +1.77% on week and +8.56% MTD ahead of the PCE June inflation report. Since the weaker CPI reading 2-weeks ago, Smallcaps have been among the biggest beneficiaries while investors have rotated out of the 2024 winners, the tech heavy Nasdaq (-3.1% MTD). Nasdaq futures are up 1%, but come into the week -3%, falling 6 of the last 7 trading days along with the S&P 500 Index. Thursday was another mixed bag as the S&P and Nasdaq extended their slides from Wednesday, while the Smallcap Russell 2000 index continues to enjoy a strong July. The Dow Jones Industrial Averages managed a modest +0.2% gain on Thursday, but still settled below the 40,000 level. Economic data was a mixed bag on Thursday with higher GDP versus estimates, lower durable goods and initial claims pretty much in-line…but now all important monthly PCE inflation data coming at 8:30 this morning, with little changes seen from the prior month. Among the S&P’s 11 major industry sectors, just 4 managed a gain on Thursday with Energy (XLE) rising 1.7%, followed by Industrials (XLI) +0.8%, while the biggest decliner was communication services (XLC) -1.16% and Tech (XLK) -1.07%. In Asian markets, The Nikkei Index fell -202 points to 37,667, the Shanghai Index edged higher 4 points to 2,890, and the Hang Seng Index gained 16 points to 17,021. In Europe, the German DAX is up 42 points to 18,341, while the FTSE 100 is up 50 points to 8,236. Several other assets also rebound as gold bounces after a 2.5% plunge and Bitcoin rises 3% back above $67,000 as investors come into Friday all bulled up following a week of declines outside of Smallcaps.

 

Market Closing Prices Yesterday

  • The S&P 500 Index slumped -27.90 points, or 0.51%, to 5,399.23.
  • The Dow Jones Industrial Average rose 81.20 points, or 0.20%, to 39,935.07.
  • The Nasdaq Composite dropped -160.69 points, or 0.93%, to 17,187.72.
  • The Russell 2000 Index advanced 27.61 points, or 1.26% to 2,222.98.

Economic Calendar for Today

  • 8:30 AM ET                  Personal Income M/M for June…est. +0.4%
  • 8:30 AM ET                  Personal Spending M/M for June…est.
  • 8:30 AM ET PCE Price Index M/M for June…est. +0.1% (prior +0.0%)
  • 8:30 AM ET PCE Price Index Y/Y for June…est. +2.5% (prior +2.6%)
  • 8:30 AM ET                  Core PCE Price Index M/M for June…est. +0.1% (prior +0.1%)
  • 8:30 AM ET                  Core PCE Price Index Y/Y for June…est. +2.5% (prior +2.6%)
  • 10:00 AM ET                University of Michigan Confidence, July-Final…est. 66.0
  • 10:00 AM ET                University of Michigan 1-yr and 5-yr inflation expectations, July-Final
  • 1:00 PM ET                   Baker Hughes Weekly rig count data

Earnings Calendar:

  • Earnings Before the Open: AB AON AVTR B BAH BCPC BEN BMY CHTR CL CNC EAF FHB GNTX HHH MMM NWL POR SAIA STEL SXT TNET TROW VRTS WT

 

 

Macro

Up/Down

Last

Nymex

-0.28

78.00

Brent

-0.26

82.11

Gold

19.30

2,372.80

EUR/USD

0.0011

1.0855

JPY/USD

0.35

154.28

10-Year Note

-0.015

4.241%

 

Sector News Breakdown

Consumer

  • Boston Beer (SAM) Q2 EPS $4.39 vs. consensus $5.01; Q2 revenue fell -4% y/y to $614.22M vs. est. $597.33M; said Q2 gross margin expanded over 250 basis points year-to-date; Q2 Depletions decreased 4% and shipments decreased 6.4%; backs FY24 GAAP EPS view $7.00-$11.00 vs. est. $10.27.
  • Boyd Gaming (BYD) Q2 adj EPS $1.58 above consensus $1.49 and Q2 revenue $967.5M vs. consensus $909.06M; Total adjusted EBITDA was $344.2M in Q2 versus $351.4M y/y.
  • Carter’s (CRI) Q2 EPS $0.76 beats consensus of $0.49 but revs of $564M are below consensus $568.16M; sees Q3 adjusted EPS $1.10-$1.35, below consensus $1.88 on weaker revs $735M-$755M (est. $805.92M); sees FY24 EPS $4.60-$5.05 below consensus $6.20 and sees FY24 revenue $2.798B-$2.83B vs. est. $2.92B.
  • Columbia Sportwear (COLM) Q2 EPS loss (-$0.20) vs. est. (-$0.34); Q2 revs $570.2M vs. consensus $568.3M; affirms FY24 EPS view of $3.65-$4.05 (est. $3.88) and affirms FY24 revenue view of $3.35B-$3.42B (est. $3.39B).
  • Comfort Systems (FIX) Q2 EPS $3.74 vs est. $3.14 on revs $1.81B vs est. $1.688B, adj FCF $189.9Mm, adj EBITDA $222.739Mm vs est. $179.95Mm.
  • Decker’s Outdoors (DECK) Q1 EPS $4.52 vs est. $3.48 on sales $825.347Mm vs est. $807.94Mm, gr mgn 56.9%; guides FY sales $4.7B vs est. $4.8B, gr mgn approx 54%, op mgn 19.5-20%, EPS $29.75-30.65 vs est. $31.07.
  • Fortune Brands (FBIN) Q2 EPS $1.16 above consensus $1.12; Q2 revenue $1.24B misses consensus $1.28B; sees 2024 EPS $4.25-$4.35 vs. prior $4.20-$4.40 (est. $4.28) and cuts 2024 sales to up 2.5%-4.5% vs. prior up 3.5%-5.5%.
  • Mohawk Industries (MHK) Q2 adj EPS $3.00 vs est. $2.75 on revs $2.8B vs est. $2.83B; guides Q3 adj EPS $2.80-2.90 vs est. $2.71; says initiating additional restructuring actions that will generate annualized savings of $100Mm with cash cost about $40Mm.
  • Skecher’s (SKX) Q2 adj EPS $0.97 vs. est. $0.95; Q2 sales $2.16B vs. est. $2.23B; said gross margin 54.9% vs. 52.7% y/y and operating margin 9.6% vs. 10.8% y/y; guides Q3 EPS $1.10-$1.15 vs. consensus $1.11; sees Q3 revenue $2.3B-$2.35B vs. consensus $2.23B; authorizes $1B share buyback; raises FY24 EPS view to $4.08-$4.18 from $3.95-$4.10.
  • Texas Roadhouse (TXRH) Q2 EPS $1.79 vs. consensus $1.64; Q2 revenue $1.34B vs. consensus $1.34B; Q2 comparable restaurant sales increased 9.3% at company restaurants vs. est. 8.9% and increased 8.3% at domestic franchise restaurants vs. est. 6.3%; sees positive comparable restaurant sales growth in FY24.

Energy,

  • Baker Hughes (BKR) Q2 EPS $0.57 vs. est. $0.49; Q2 revs $7.1B vs. consensus $6.8B; raising the midpoint of our full-year guidance by 5% and are confident in our ability to drive margins structurally higher over the coming years; raised its quarterly dividend by 5% to 21 cents per share; Baker Hughes’ international segment revs rose 5.4% to $2.99B while total revenue from its North America segment slipped 1.8% to $1.02B.
  • Edison International (EIX) Q2 core EPS $1.23 vs. consensus $1.07; Q2 revenue $4.34B tops consensus $4.12B; said reaffirming our 2024 core EPS guidance of $4.75 to $5.05.

Financials

  • JPMorgan Chase (JPM) has begun releasing a generative AI product, telling its employees that its own version of ChatGPT can do the work of a research analyst, Financial Times reports. According to an internal memo seen by the Financial Times, the bank has given employees of its asset and wealth management division access to a large language model the bank is calling LLM Suite, which can help with writing, idea generation, and summarizing documents
  • AllianceBernstein (AB) Q2 adj EPS $0.71 vs. est. $0.66; Q2 revs $825.83M vs. consensus $804.61M; total assets under management as of June 30 $769.5B.
  • Cincinnati Financial (CINF) Q2 adj EPS $1.29 vs. consensus $0.96; Q2 revenue $2.54B vs. consensus $2.45B; 98.5% second-quarter 2024 property casualty combined ratio, increased from 97.6% for the second quarter of 2023; 14% growth in second-quarter net written premiums.
  • Digital Realty (DLR) Q2 AFFO/shr $1.65, adj EBITDA $727Mm vs est. $695.6Mm, total bookings $164Mm; maintains FY core FFO/shr outlook $6.60-6.75.
  • Hartford Financial Group (HIG) Q2 core EPS $2.50 vs. consensus $2.24; Q2 revenue $6.49B vs. consensus $6.57B; announces new $3.3B stock buyback; Q2 Property & Casualty (P&C) written premiums rose 12%, driven by Commercial Lines and Personal Lines premium growth of 11% and 14%, respectively; Commercial Lines second quarter combined ratio of 89.8 and underlying combined ratio of 87.4.
  • Lending Tree (TREE) Q2 adj EPS $0.54 vs. est. $0.46; Q2 revs $210.1M vs. consensus $187.36M; guides Q3 revs above consensus and raises FY24 revenue view to $830M-$870M from $690M-$720M (est. $716.53M), while sees FY24 adjusted EBITDA $85M-$95M.
  • Principal Financial Group (PFG) Q2 adj EPS $1.50 vs. consensus $1.84; Q2 Principal Global Investors (PGI) managed AUM of $513 billion increased 6% y/y; Q2 Life Insurance business market premium and fees increased 15% from second quarter 2023; says remain well positioned to deliver full year guidance.

Healthcare

  • Centene (CNC) Q2 adj EPS $2.42 vs. consensus $2.07; Q2 revenue $39.84B topped consensus $36.46B; Raises FY24 revenue view to $155B-$157B from $147.5B-$150.5B (est. $149.64B) while affirms its FY24 EPS view; Q2 medical loss ratio was 87.6%, an increase from 87% reported last year and an estimate of 86.84%; Centene was expected to pay $1.3 billion towards the U.S. Centers for Medicare & Medicaid Services’ risk adjustment program for 2023. But the agency has said the company can forgo the payment.
  • Dexcom (DXCM) shares tumble -30%; Q2 adj EPS $0.43 vs est. $0.39 on revs $1.004B vs est. $1.036B, adj op Inc $195.4Mm vs est. $188.8Mm; guides FY revs $4.00-4.05B vs est. $4.332B, adj gr mgn approx 63%, adj op mgn approx 20%, adj EBITDA mgn approx 29%; shares of PODD, TNDM dropped overnight in sympathy in insulin sector, but PODD this morning announced prelim Q2 revs above consensus.
  • Ensign Group (ENSG) Q2 adj EPS $1.32 vs est. $1.30 on adj revs $1.04B vs est. $1.02B; sees FY revs $4.2-4.22B vs est. $4.159B and EPS $5.38-5.50 vs est. $5.40.
  • Healthpeak Properties (DOC) Q2 FFO/shr $0.45 vs est. $0.44; increased FY EPS guide to $0.27-0.31 vs est. $0.38.
  • Insulet Corp. (PODD) guides prelim Q2 revs $488M vs. est. $460.2M and says it expects to raise its FY24 total rev outlook to up 18%-21%; shares +5.5% pre mkt after falling overnight on rival DXCM weaker results/guidance.

Industrials and Materials

  • 3M (MMM) Q2 adj EPS $1.93 vs. est. $1.68; Q2 revs $6.3B vs. est. $5.88B; raises lower end of FY adj EPS from continuing operations to $7.00-$7.30 from prior $6.80-$7.30 (est. $7.17); still sees FY adj organic sales 0% to +2% and total adj total sales -0.25% to +1.75%.
  • Eastman Chemical (EMN) Q2 adj EPS $2.15 vs. est. $2.01; Q2 revs $2.36B, in-line with consensus; narrows FY24 EPS view to $7.40-$7.85 from $7.25-$8.00 (est. $7.67); see 2024 cash from operations to be approximately $1.4 billion; says customer inventory destocking largely complete and end-market demand stabilizing at lower levels.
  • L3Harris Technologies (LHX) Q2 adj EPS $3.24 vs est. $3.18 on revs $5.3B vs est. $5.298B, adj EBIT $825Mm vs est. $794.3Mm; sees FY revs $21.0-21.3B vs prior $20.8-21.3B and est. $21.208B, adj segment op mgn 15.2-15.4% and adj EPS $12.85-13.15 vs prior $12.70-13.05 and est. $12.97.
  • Norfolk Southern (NSC) Q2 EPS $3.25 vs. consensus $2.86; Q2 revs rose 2% y/y to $3.0B vs. consensus $3.04B; reaffirms full year adjusted operating ratio guidance; Income from railway operations grew 96% to $1.1B from $555M y/y.
  • Olin Corp. (OLN) Q2 adj EBITDA $278.1Mm vs est. $288.8Mm on revs $1.644B vs est. $1.709B; says sees Q3 adj EBITDA reduced by about $100Mm due to incremental costs to restore operations following hurricane Beryl.
  • Veralto Corp. (VLTO) Q2 adj EPS $0.85 vs est. $0.80 on sales $1.288B vs est. $1.277B, adj op mgn 24%; guides Q3 adj core sales +low-mid single digits and adj EPS $0.82-0.86 vs est. $0.83; maintained FY core sales growth target +low-single digits, raised FY adj EPS to $3.37-3.45 vs est. $3.34.
  • Weyerhaeuser (WY) Q2 adj EPS $0.21, in-line with consensus and revenue $1.9B vs. est. $1.94B; announced strategic timberland acquisitions in Alabama, totaling 84,300 acres for $244M, first transaction closed in 2Q for $48M.

Technology, Media & Telecom

  • AppFolio (APPF) Q2 EPS $1.12 vs. consensus $0.96; Q2 revenue $197.4M vs. consensus $190.57M; sees FY24 revenue $772M-$778M, vs. consensus $772.76M; sees FY24 non-GAAP operating margin as a percentage of revenue in the range of 23.5%-24.5% and non-GAAP free cash flow margin as a percentage of revenue in the range of 22%-24%.
  • Coursera (COUR) Q2 adj EPS $0.09 vs est. $0.01 on revs $170.337Mm vs est. $164.41Mm, adj EBITDA $10.4Mm vs est. $1.078Mm; guides Q3 revs $171-175Mm vs est. $178.84Mm and adj EBITDA $0-4Mm vs est. $5.634Mm; sees FY revs $695-705Mm vs est. $699.75Mm and adj EBITDA $24-28Mm vs est. $26.23Mm.
  • Verisign (VRSN) Q2 EPS $2.01 vs est. $1.93 on revs $387.1Mm vs est. $385.8Mm; approved additional repurchase authorization of approx $1.11B.

_________________________________________________________________

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.

Live Trading

Open an Account

Paper Trading

Register