Market Review: February 08, 2024

Closing Recap

Thursday, February 08, 2024





DJ Industrials




S&P 500








Russell 2000













U.S. stocks finished higher, trading in a narrower range than yesterday as the S&P 500 (SPX) cash was in 13-point range, touching just above 5,000 for a brief moment just before the bell, but settled just below (vs. yesterday high was 4,999.89). Smallcaps jumped for a change as the IWM rose over 1.5% above the 196 level (well above 50-day MA support of $193.45). Still, despite the Russell bouncing back after recent losses, it is still in a bear market (down by 20% from prior peak in 2021). Treasury yields finished higher despite the $25 billion 30-year auction being well received, following a better 3-yr auction on Tuesday and a strong 10-yr auction ($42B was highest offering ever) on Wednesday. Data released this morning showed that initial jobless claims fell by 9,000 to 218,000 in the first week of February, below the 220,000 that had been expected, giving a small boost to treasury yields initially (10-yr to 4.15%). Sector leaders were Energy (XLE), REITs (XLRE), and Consumer Discretionary (XLY), while Utilities (XLU) and Financials (XLF) lagged. The strength in the semiconductor chip space on AI growth hopes continues to astound, with the SOX rising around 2% led by massive gains in ARM and MPWR post earnings. We are roughly 75% through S&P earnings this quarter, and results still coming in strong with near 80% earnings beat as per Refinitiv. Disney (DIS) was a standout in the Dow after earnings, buyback news, and strategic deals. Retailers a bright spot behind big moves in RL, TPR after earnings results and guidance. Chinese equity markets rose again, helped by stimulus while China replaced the head of its securities regulator – but that did not carry over the US listed China stocks as BABA fell sharply a second day after disappointing earnings results the day prior sunk shares. Reminder China markets are closed next week for the Lunar Year Holiday. In Asian markets, The Nikkei Index surged 743 points or over 2% to 36,863, the Shanghai Index gained 36 points to 2,765, and the Hang Seng Index declined -203 points to 15,878. Overnight, Chinese inflation was weaker than expected as headline CPI fell by -0.8% YoY (est. -0.5%; prev. -0.3%), the fastest decline since the financial crisis.

Economic Data

  • Weekly Jobless Claims fell to 218K from 227k in latest week (vs. est. 220K) as the 4-week moving average climbed to 212,250 from 208,500 prior week and continued claims fell to 1.871M from 1.894M prior week and the US Insured Unemployment rate fell to 1.2% from 1.3% prior week.
  • Wholesale inventories for December unrevised at +0.4% vs. consensus +0.4% while Wholesale sales +0.7% vs. consensus +0.2% and vs Nov -0.1%; U.S. Dec stock/sales ratio 1.34 months’ worth vs Nov 1.34 months.


  • Oil prices rose as WTI crude $2.36 or 3.2% to settle at $76.22 per barrel helped midday after Venezuela said it would respond in a “forceful” way to Exxon’s plans to drill in the disputed Essequibo region off the coast of Guyana. Gold prices slip -$3.80 to settle at $2,047.90 an ounce – little movement last few days. Bitcoin prices jump over 2.5% to $45,300 regaining momentum and the dollar index (DXY) edges slightly higher to 104.15. Natural gas for March delivery settles down 2.5% at $1.917/mmBtu, its lowest since September 2020.
  • Markets breathe a sigh of relief following a good week of gov’t bond auctions. The US Treasury sold $25B in 30-year notes at a yield of 4.36% vs. 4.380% when issued prior as the bid-to-cover (demand) was 2.40, as primary dealers take 14.81% of U.S. 30-year bond sale, direct 14.49% (lowest since Aug 2020) and indirect 70.7% (best since June of last year). Overall a third straight day of solid bond auctions, following a good $54B 3-yr Tuesday and great $42B in 10-year yesterday. The dollar has been rising steadily all year with $DXY up ~3.5% from the 12/27 low.





WTI Crude















10-Year Note




Sector News Breakdown

Retail, Consumer Staples & Restaurants:

  • Retailers: COST January core comps were +3.4% with sales up 4.5% YoY, including the negative 3-3.5% impact from one less shopping day. Traffic experienced positive trends both worldwide and domestically, with January transactions up slightly, including the negative impacts from FX and gas. RL shares rose to near decade highs after profit jumps above expectations, amid strength internationally (Q4 North American revenue about flat while Europe revenue rose 11% and Asia revenue increased 16%) and still expects revenue growth in the LSD percentage range (vs. est. about 2% rise). TPR Q2 sales of $2.08B topped ests of $2.06B helped by 91% jump in China sales and boosted its annual profit forecast to $4.20-$4.25 from $4.10-$4.15 prior citing a 12% rise in average price of Coach brand items in the U.S. and promotions remaining low. UAA posts better profit and guidance (sees FY EPS $0.57-$0.59 from prior $0.47-$0.51) on better margin outlook, while sales missed for Q3 and guided Q3 FY sales to fall (-3%-4%).
  • In Food: Kellanova (K) Q4 results topped expectations, as price increases offset a decline in volume and the divestiture of its business in Russia. HSY forecasts 2024 adj EPS about $9.59, below est. $9.82 citing slower demand and higher costs of raw materials like cocoa and sugar while posted Q4 sales below views; looks to cut jobs and incur costs of up to $60M in costs.
  • In Consumer Goods: UL announced a $1.6B buyback after volumes increased as full-year operating profit rose 2.6% to 9.9 billion euros and its underlying operating margin was up 60-bps but missed analyst expectations for operating profit of 10.4 billion euros and a margin of 16.9%. KVUE Q4 sales $3.67B missed the $3.78B estimate, missing in both its self-care as well as skin health and beauty segments and lowered its year profit outlook ($1.10-$1.20 vs. $1.26). COTY FQ2 adj. EBITDA beats $366m vs. St $358m but guide reaffirmed and implies 2H slowdown.
  • In Tobacco: PM mixed Q4 results as EPS $1.36 miss the $1.45 consensus on slightly better sales of $9.05B and forecasts 2024 organic rev. +6.5% to +8%; BTI reported 5.2% rise in full year adjusted profit, FY adjusted diluted EPS 3.86 pounds, compared with 3.76 pounds consensus and said expects slow recovery in U.S. economy.

Leisure, Gaming & Lodging:

  • In Autos: Auto retailer ORLY reported Q423 results that were slightly lower than consensus as Q4 comps of +3.4% were slightly lower than consensus’ 4.0% and operating margins of 18.8% (flat y/y) were below consensus’ 19.1% but EPS of $9.26 was stronger than consensus’ $9.16. In auto suppliers, BWA forecasts FY24 revenue between $14.4B-$14.9B, below ests $15.31B and EPS view to $3.65-$4.00 (below $4.27 est.) and Q4 EPS miss ($0.90 vs. $0.94).
  • In Casinos: WYNN Q4 results strong as Property EBITDAR $630M vs est. $580M, Macau $297M vs est. $276M and Vegas $271M EBITDA vs est. $230M as earnings and revs topped consensus.

Energy, Industrials and Materials

  • In Energy: Reuters reported DVN has approached Enerplus (ERF), a peer with a market value of C$3.9B ($2.9B), with an acquisition offer, people familiar with the matter said. COP reported a Q4 earnings beat, moving back above its 200-day MA $112.40 and 50-day MA $113.20 in process after earnings.
  • In Shipping: Maersk (AMKBY) EBITDA for the Qtr came in below expectations, as realized freight rate was $1,925/feu, below Jefferies $1,970/ feu estimate and gave disappointing ’24 guidance, with an EBITDA range of $1-6B, an EBIT range of -$5-0B and FCF of -$5B or higher.
  • In Aerospace & Defense: SPR upgraded to Outperform at TD Cowen on what they think will be improving 737 productivity under new CEO Pat Shanahan, a likely positive Airbus negotiation, and improving FCF with opportunity; TDG reported Q1 results ahead of ests while forecasts FY adj EPS $29.97-$31.73 below prior forecast $31-$32.94.
  • In Metals: CLF downgraded from Buy to Hold at Argus as views as a well-run company with a strong track record in its industry but said earnings are in a down cycle due to pricing. CMP declined on earnings results.
  • In Chemicals: Jefferies said the EU decision this week to move forward with easing regulations for the use of gene-edited crops creates a structural tailwind for the industry and CTVA.


  • In Payments/FinTech: PYPL disappoints as shares tumbles following better-than-expected Q4 earnings but guided 2024 adj EPS to roughly in line with profit of $5.10 in 2023, well below the consensus of $5.51. AXP was downgraded at Morgan Stanley on valuation as lots of good news “baked in;” DFS upgraded to Overweight at Morgan Stanley and raise tgt to $133 calling the company a more pure-play consumer credit exposure with a robust near-term catalyst path. Notes DFS’s credit performance has lagged peers over the past few quarters, with card DQ & NCO rates now 48%/43% above 2019 vs peers at 9%/12%. FLT shares tumbled on lower outlook after results.
  • In Lending: ALLY upgraded to Overweight at Morgan Stanley calling it the best way to play lower rates under coverage, given its exposure to slower moving loan yields (74% of loans are in fixed-rate loans, largely auto) and faster-moving funding costs (~90% of funding is in deposits, 63% of which are in OSA, checking accounts, and MMA).
  • In Insurance: ALL said Allstate brand auto rates up 33% in last 2 years as costs climbed; said pursuing rate hikes in 10 states to boost margins after Q4 adj EPS $5.82 topped est. $3.99 on revs $14.8B vs. est. $12.94B and Q4 net investment income rose 8.4% y/y to $604M.
  • In Crypto: Bitcoin (BTC) extended this week’s gains, rising above $45,000 back above its levels when the Bitcoin ETF news launched a few weeks ago. Shares of names that trade, invest, or mine Bitcoin such as COIN, RIOT, MARA, MSTR among others saw early gains in sympathy.
  • In Financial Services: SPGI pulls back from 1-yr highs, down over 5% after guided FY24 EPS $13.75-$14.00 vs. est. $14.43 and a small Q4 EPS miss (shares of MCO down in sympathy ahead of earnings on 2/13).

Biotech & Pharma:

  • AZN shares slid as Q4 core earnings per share were below consensus expectations due to higher costs, including investment in research and development, and lower-margin sales.
  • FHTX said LLY will conduct clinical trials of one of the company’s cancer treatment candidates (FHD-909 oral medicine) under the companies’ joint-venture arrangement.
  • KYTX opened at $34.25, after IPO priced at $22.
  • VKTX trades new all-time highs in Pharma space after earnings results.

Healthcare Services & MedTech movers:

  • In Hospital Providers: THC reported 4Q EBITDA of $1B vs. est. $910M (in-line with its preannouncement last week that pointed to EBITDA ahead of the high end of guidance) and provided F1Q guidance calling for EBITDA of $800M to $850M (vs. $840M consensus).
  • In Orth: ZBH Q4 sales in line with estimates thought both hips and knees slightly below estimate, FY24 EPS and Rev growth guidance slightly above consensus.
  • In Healthcare Services: BAX Q4 top and bottom-line results were above consensus but guided mi-point of FY profit outlook below ests.; MCK reported solid F3Q results with rev and EPS ahead and raised FY24 revenue growth guidance across each segment, and Operating Profit growth across all segments.
  • In Health Insurance: OSCR posted a better-than-expected loss in Q4 (-$0.66 vs. est. -$0.72) and adjusted EBITDA forecast for 2024 (adj EBITDA loss ($11.6M) vs ($122.9M) estimate) on in-line revs $1.43B.
  • In MedTech: NVST had a mixed Q423 as revenue beat while EPS missed consensus but provided 2024 guidance for EBITDA margin (16-17%) that was significantly below consensus of 18%+ despite its core revenue outlook in-line.

Internet, Media & Telecom

  • In Media: Dow component and media giant DIS reported Q1 results were well ahead (EBIT 12%/EPS 25% better vs street), driven by near breakeven profits at DTC & record parks performance and now expects 20%+ EPS growth in F24 to $4.60 vs. est. $4.20 and announced boosts cash dividend 50% and targets $3B buyback in FY24. Disney also announced Sports TV JV, DTC Margins, and $1.5B EPIC Games Investment. WMG announces strategic restructuring; 10% reduction in workforce after Q1 revenue beat.
  • In Internet: GOOGL renamed its Bard chatbot after the new AI that is powering it, called Gemini, and said customers can subscribe for $19.99 a month to access Gemini Advanced, which includes a more powerful Ultra 1.0 AI model, as subs will receive two terabytes of cloud storage that typically cost $9.99 monthly.

Hardware & Software movers:

  • CFLT shares surged after as delivered 24% rev growth vs Street at 22% & maintained FY24 guide of +22% but off a larger base and Cloud grew 46%, the biggest upside in 7 qtrs. as consumption from digital natives stabilized.
  • GPRO Q4 revenue was $295M, down 8% y/y vs. consensus of $326M and guidance of $320M-$330M as revenue from the retail channel increased 18% y/y to $228Min Q4, while DTC revenue declined 47% YoY to $67M
  • LITE shares dropped after lower Q3 revs guidance $35M-$380M vs. est. $379M overshadowed Q2 beat.
  • ZI downgraded to sell at Citigroup and put on negative catalyst watch on KVYO in N.A. application software space saying heading into the front-office Dec-Q reporting season, it is more cautious on select names, downgrading ZI shares to Sell (3H) and opening a negative 30-day catalyst watch on KVYO.
  • In Cyber Security: CYBR shares rallied on big Q4 beat ($0.81/$223.1M vs. $0.47/$209.6M est.) while midpoint profit guidance for year in-line and revs above (FY24 revenue $920M-$930M vs. est. $915.82M). QLYS shares slumped as reported $144.6M and $1.43 compared to street expectations for $145.1M and $1.24, but shares dip as guided FY24 to $600-$610M and $4.95-$5.27 below consensus estimates for $617.2M and $5.32.


  • ARM shares spike 50% after delivered a very impressive beat and raise as strength in both royalties and licensing drove the upside, with the former up on increased Armv9 volumes at higher royalty rates and an improving cycle and the latter up on accelerating AI adoption and broadening customer needs for Arm technology.
  • ACLS reports Q4 upside results but guides lower – guides Q1 revs $242Mm vs est. $284.9Mm, op Inc approx $45Mm vs est. $67Mm and EPS about $1.22 vs est. $1.83.
  • MPWR surges as delivered modest upside to Q4, and guided Q1 more solidly above consensus just as its inventories are below the long term target; Enterprise Data (ED) continues to lead, reflecting 48V AI server demand.


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.