Market Review: February 21, 2024

Closing Recap

Wednesday, February 21, 2024





DJ Industrials




S&P 500








Russell 2000













US equity futures saw modest overnight declines as investors continue to attempt to forecast Fed moves but have been getting a bit more cautious on rate cut expectations with May now seeing just a 35% probability of a cut and the December implied rate back up to 4.4% into today’s Fed minutes release. Early breadth tilted slightly negative with decliners outpacing advancers by just 1.2:1 overall. Nasdaq breadth was a little more negative at about 1.7:1 decliners, mirroring the relative performance of the QQQ vs SPY. Further on relative performance, small caps were mixed early as IWM held a small outperformance versus QQQ and similar underperformance vs SPY (each about 20bps). Sector-wise, XLE, XLU, XLY, XLRE, XLP and XLI were all outperforming and in the green, while XLK was the primary laggard at about -1.05%. Looking ahead, all eyes will be on NVDA earnings and guidance tonight.


In data of interest, WSJ reminds us individual investors have added a net $1.2B into NVDA this year. Something to remember into earnings. On earnings, @DataTrekMB notes with 79% of S&P 500 companies having reported, the season is looking, “distinctly average.” They also note layoffs are growing because earnings are lagging revenue growth. Separately from @DataTrekMB, they comment the Fed is on the right track (a rare view) given their read of inflation expectations in TIPS prices, which historically has been a solid indicator of where policy "should" be. As is often the case, we get a more cautionary comment from @KobeissiLetter, noting the top 10% of stocks in the US currently reflect 75% of the entire market, the most concentrated since the 1931 Great Depression. The historic average is 64%. 


Heading into the final hour of trading, markets were just off their lows after fading on more hawkish Fed meeting minutes before a late rip in the final 30-minutes back near intraday highs took the S&P positive (almost a 40-point spike in last 30minutes). Breadth had expanded to just over 2:1 still favoring decliners. Sector performance was still paced to the upside by Energy (XLE, +1.5%), Utilities (XLU, +1.2%) and Real Estate (XLRE, +0.6%). Leading the decliners were Technology (XLK, -1%) and Communication Services (XLC, -0.35%). Small caps lost some ground and were trading about in-line with QQQ but underperforming by about 65bps versus SPY. From a growth vs. value perspective, growth lagged as one may expect with the XLK weakness today. The Russell 1000 Value gained about 0.1%, while its Growth counterpart lost 0.9%. 


China’s Shanghai and the Hang Seng gained overnight, boosted after China banned major institutional investors from reducing equity holdings at the open and close of each trading day, Bloomberg News reported as the order from China’s securities watchdog was delivered to major asset managers and the proprietary trading desks of brokerages. Note the CSI 300 index has risen for seven consecutive sessions straddling the Lunar New year holiday period and is up 12% from five-year lows it hit early this month, amid hopes of more forceful measures to revive the market.


  • April gold slipped $5.50/oz, or -0.27%, to settle at $2,034.30. The pause came after four days of gains and was attributed to rising Treasury yields ahead of the release of January Fed meeting minutes. Yields did rise on the release of the minutes as most policymakers noted risks of easing too quickly. While most viewed the policy rate as having hit its peak for the cycle, some are concerned inflation progress could stall and most are looking to future data releases to determine whether inflation continues to move toward 2%.
  • April WTI crude futures erased an early decline to settle higher by $0.87/bbl, or +1.13%, at $77.91. Brent also gained $0.69/bbl, or +0.84%, to settle at $83.03. Ongoing geopolitical issues in the Middle East continue to raise supply concerns and support prices. With no signs of a ceasefire agreement and ongoing attacks against commercial tankers in the Red Sea, there is little to comfort investors. On the demand side, Fed minutes were a bit more hawkish, but perhaps better macro results recently offset the rate concerns by reducing perceived recession risk.





WTI Crude















10-Year Note




Sector News Breakdown

Retail, Leisure, Consumer Staples & Restaurants:

  • In Retail: AMZN will replace WBA in the Dow Jones Industrial Average on 2/26; BYON Q4 total net revs declined -5% to $384.5M but was above the consensus view of $346M while saying active customers returned to YoY growth for the first time in three years and goal is to achieve $2B of revenue in 2024. WWW forecasted revs from ongoing biz to fall 15% to 12% this year citing a tough macro environment and says the first half of the year will likely be especially difficult.
  • In Food Sector: KHC forecasts long-term organic net sales growth of 2% to 3% at CAGNY conference and forecasts long-term adjusted EPS growth of 6% to 8% and said realigned its portfolio around three new platform roles – accelerate, protect, and balance.
  • In Restaurants: WING beat Q4 sales and profit estimates driven by increased traffic resulting in 18.3% growth in domestic same-store sales but guides mid-single digit growth in FY24 domestic same-store sales vs. 18.3% growth reported in FY23 and sees higher SG&A expenses vs. FY23 ($108M vs. $96.9M). WEN downgraded from Overweight to Neutral at JP Morgan and trim tgt to $19 after recent Q4 results.
  • In Casino/Gaming: CZR reported revenue/EBITDAR at the midpoints of its previous guidance ranges. Several headwinds impacted the quarter, including a tough hold comp in its brick-and-mortar casinos and negative sporting outcomes within its digital business.

Homebuilders, Building Products, Home Furnishing:

  • In Homebuilders: TOL reported Q1 beat on revenue and margins as EPS of $2.25, well ahead of consensus of $1.78 and better than expected higher average selling price (ASP), gross margin and well-controlled SG&A expenses. Home sales revenue grew 10% YoY, homes closed (units) increased 5.5% YoY, adj home sales gross margin expanded 134bps YoY to 28.9% and net orders were well ahead of expectations and grew 39.8% YoY to 2.0k in units.
  • In Weekly Data: US MBA weekly mortgage data showed applications index fell -10.6% in latest week, the purchase index fell -10.1%, the refinance index falls -11.4% as the avg 30-year mortgage rate climbs 19 bps to 7.06%.


  • In Oil E&P: FANG Q4 profit topped expectations as reported production of 462,600 barrels of oil equivalent per day (boepd), compared with 391,402 boepd in the year-ago quarter which helped offset a decline in prices. Its average unhedged realized price for oil fell to $76.42 per barrel, compared with $80.37 per barrel, last year. CHK posted a profit of $569M in Q4, down from $3.51B y/y and a decline in production. MTDR full-year capex/production outlook was near expectations, however 1Q24 guidance disappointed with anticipated oil volumes ~8% below consensus.
  • In Solar: another weak earnings report as SEDG Q4 adj EPS loss (-$0.92) vs. est. loss (-$1.33); Q4 revs fell -65% y/y to $316.04M vs. est. $323.3M and guided Q1 revs $175M-$215M well below the $373.44M consensus; said H1 23 included record installations and expectations for continued growth, with a shift in H2 23 to a weaker market due to higher interest rates & lower power prices (shares of ENPH, ARRY, FSLR, SPWR, NOVA, RUN were active).
  • In Utilities: NI Q4 revs fell to $1.42B, missing last year/and est. of $1.7B and lower gas distribution operating income as expenses rose 38% y/y, but raised its FY EPS outlook to $1.70-$1.74, from $1.68-$1.72 prior. EXC reported Q4 adj EPS $0.60 above the $0.58 estimate and revs rose to $5.37B vs. est. $3.87B and guided 2024 adj EPS of $2.40-$2.50 vs. est. $2.41 while the company plans to invest $35 billion into its system over the next four years.

Banks, Brokers, Asset Managers:

  • In Banks: HSBC lost $153M in Q4 of last year, after writing down the value of its stake in a large Chinese bank; quarterly revenue was $13B, down around 11% from the same period in 2022 vs. est. $15.4B; said it would buy back up to $2B in shares; PNC at conference today said sees net interest income for Q1 down 3%-5%.
  • In REIT/mortgage Sector: CSGP forecast full-year 2024 revenue below market expectations, $2.75B-$2.77B vs. est. $2.78B and Q1 revs below views at $645M-$650M vs. est. $652.9M. O posted inline 4Q23 AFFO of $1.01 (+1% YoY) and issued its FY24e AFFO guidance, which captured consensus and reflects 4.3% of AFFO growth at midpoint. SUI reported 4Q23 Core FFO above consensus estimates due to better-than-expected NOI growth and issued in-line 2024 core FFO guidance with 5.4% SS NOI growth.
  • In Lending: President Joe Biden’s administration announced that more than 150,000 borrowers will receive $1.2B in student loan forgiveness under a program unveiled in January seeking to provide relief for Americans who had been making payments for at least a decade. The move – which benefits those enrolled in the government’s Saving on a Valuable Education plan – wipes out loans for those who borrowed less than $12,000 for their higher education.

Biotech & Pharma:

  • BTAI was downgraded to Neutral from Buy at UBS and cut tgt to $4 from $9 citing uncertainty around the company’s ability to raise capital to fund ops after they recently withdrew the $60M proposed equity raise more than 1 week after announcement.
  • EBS said they appointed Joseph Papa as its new CEO, effective Feb. 21 as Haywood Miller will step down from his role as interim CEO (Papa recently was CEO and Chairman at Bausch + Lomb).
  • HALO announced Q423 results and provided a business update, reporting strong top-line and bottom-line results and the company reiterated guidance provided on its recent long-term strategic update.
  • IONS reported a Q4 rev beat of $325M vs. est. $175M helped by increased R&D revs, but guidance below consensus.
  • IOVA surged over 30% to new highs after SEC filings showed several insider Buys reported last night following yesterday’s 23M share secondary.
  • REGN won FDA priority review for its application seeking approval of linvoseltamab for certain patients with blood cancer multiple myeloma; said the application covers linvoseltamab for adults with relapsed/refractory multiple myeloma that has progressed after at least three prior therapies.

Healthcare Services & MedTech movers:

  • In Healthcare Services: TDOC shares fell after missing Q4 revs ($660.5M vs. $671.4M), guiding Q1 and ’24 below consensus saying it sees FY sales $2.64B-42.74B below consensus of $2.77B though a narrower EPS loss; NEO reported better-than-expected 4Q results and increased growth expectations for 2024 and beyond while Improved product mix from Next-Generation Sequencing tests and operational efficiencies led to the improved outlook.
  • In Hospital Providers: CYH shares tumbled as reports Q4 adj EPS loss (-$0.41) vs. est. $0.06 on better revs while saying the loss was due to higher costs as it paid more for physicians’ salaries and benefits and guided 2024 EPS loss (65c)-(5c) vs. est. $0.07 and revs $12.3B-$12.7B vs. est. $12.7B.
  • In Medical Equipment: BLCO reported 4Q revenue of $1.17B (vs. $1.11B est.) and EBITDA of $231M (vs. $227M est.) FY24 rev guidance was ahead of street, with $4.6B to $4.7B vs. $4.525B est., while EBITDA of $840M to $890M topped consensus of $870M.


  • In Industrials: FLS delivered adj. EPS of $0.68 topping consensus at $0.60 as organic sales increased +10.1% with Original Equipment up +13.1% and Aftermarket up +7.2%; segment operational result was roughly in line. ENVX 4Q results ahead of expectations, 1Q guidance slightly lower, start of production on Fab2 Agility line in April is next catalyst; potential design wins in early 2025, not 2H24 said B Riley.
  • In Transports: UBER to replace JBLU in the Dow Jones Transportation Average effective 2/26; NSC upgraded to OW from EW at Barclays and raise tgt to $305 saying potential for board and management change are likely to accelerate operational improvements at Norfolk Southern and sees significant long-term upside potential in shares.

Materials, Metals & Mining

  • In Chemicals: IFF shares slumped as forecasts 2024 sales below estimates ($10.8B-$11.1B vs. est. $11.4b) and takes a $2.6B non-cash impairment charge on its nourish segment in Q4, and cut its quarterly dividend by about half, to 40 cents per share, in an attempt to save cash. CE guided MarQ24 segment EBIT midpoint $488M vs $562M consensus and reported quarterly EBITDA down 2.5% Q/Q to $608M (vs. $618M est. on 3% lower volume.
  • In Metals & Mining: aluminum producers rise early after CSTM results; ESI reported Q4 EBITDA/EPS of $120M/$0.32 that were below consensus of $124M/$0.33 while organic sales declined 3%, driven primarily by weaker industrial markets (Industrial/Specialty segment (-7%) and Electronics (-1%). RIO reported a 12% fall in annual underlying earnings on Wednesday, in line with forecasts, but paid a better-than-expected final dividend and said realized iron ore prices dropped 22%; copper, 19%; and for aluminum. Gold miners tumbled.

Internet, Media & Telecom

  • China Internet stocks rally early (BABA, BIDU, NTES, JD, PDD) following gains in China markets overnight after Bloomberg reported that Chinese regulators are implementing a “net sales ban” during the first and last 30 minutes of trading on major institutional investors as it attempts to prop up markets. In Research, Mizuho said TCOM remains top pick for China Internet; raise TME PT to $12 on increased FY25 estimates saying checks show improvements in consumption from retail sales during the promotional season, but sustainability remains unclear.

Hardware & Software movers:

  • In Cyber Security: PANW shares tumbled after forecast Q3 billings of $2.30B-$2.35B below est. $2.62B and Q3 revs of $1.95B-$1.98B vs. est. $2.04B which followed a slight Q2 rev beat; cut its annual rev outlook to $7.95B-$8B, down from its prior range of $8.15B-$8.2B on lower profit (sunk shares of CRWD, FTNT, ZS among others).
  • In Data center equipment: VRT shares stumble as Q4 EPS beat estimates while revs missed and guided Q1 EPS/revs below consensus and sees FY24 adj EPS $2.20-$2.26 vs. est. $2.24 and revs $7.52B-$7.66B vs. est. $7.54B.
  • In Hardware: GRMN advanced on Q4 beat (ESP $1.72 vs. $1.40 est.) and guidance as sees FY sales about $5.75B, above analysts’ estimates of $5.56B, as it expects strong growth in its auto and fitness businesses.


  • All eyes on NVDA earnings after the close tonight which posted its first 4-day losing streak since October, down 10% during that time hitting lows around $664 today (off all-time highs of $746.11 on 2/12) and taking the rest of the sector lower.
  • ADI Q1 results topped views but marked its third straight quarter of declining sales and earnings; guided Q2 adjusted EPS $1.26 plus/minus 10c below consensus $1.57 and Q2 revs $2.1B +/- $100M vs. consensus $2.36B


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.