Closing Recap

Monday, March 04, 2024

Index	Up/Down	%	Last
DJ Industrials	-97.55	0.25%	38,989
S&P 500	-6.13	0.12%	5,130
Nasdaq	-67.43	0.41%	16,207
Russell 2000	-2.15	0.10%	2,074

 

 

 

 

 

 

 

 

 

Stocks slid in the final minutes of the day, erasing gains after setting new intraday record highs for the S&P 500 (16^th this year) and Nasdaq just an hour prior, led by another bounce in semis. The SOX index attained another record high, topping 5,000 for the first time ever (up about 20% in 2 months) before paring gains. Along with semis, Utilities, REITs, Materials, Industrials outperformed while Energy, Communications, and Discretionary slumped. Several Wall Street banks have recently boosted their year-end S&P 500 target (Bank America today raised it to 5,400), while some of the most notoriously bearish on Wall Street like Nouriel Roubini (aka Dr. Doom) recently found reasons for optimism. Markets showed no concerns on Monday ahead of two days of testimony from Fed Chairman Powell on Capitol Hill this week (3/6-3/7) and several job-related economic data (ADP, nonfarm and JOLTs). The dollar and Treasury yields were little changed while gold made another new high.

 

Another laundry list of 52-week highs in the Nasdaq today (over 335) with chip names leading as the SOX index makes another record high, rising over 2% to 5,035: ASML, AMD, AMAT, AVGO, KLAC, LRCX, MKSI, NXPI, NVDA, QRVO, QCOM, SMCI, STX, WDC were among some of the semi names hitting fresh 52-week highs today (many of them all-time) while AVGO reports earnings later this week 3/7. Other large cap tech names making 52-week highs today included AMZN, NFLX, as well as volatile crypto names like COIN. A few names that have been left out of the recent Nasdaq all-time high rip include some of the favorites over the last few years: AAPL, GOOGL, and TSLA as money has been pouring into AI, chips, and crypto plays for few weeks nonstop. The other market phenomenon has been Bitcoin, with the crypto price rising above $66K and nearing its intraday all-time high of $68,990 made on 11/10/21. There were lots of upside movers following S&P index news last Friday as SMCI, DECK both added to S&P 500 effective 3/19 rebalance, INTU added to S&P 100, CYTK and AIT added to S&P Midcap 400, and BGC, BOX, ARCH, AL, BL, MGEE, and MGY shares all rose after being announced they will be added to the S&P Smallcap 600.

 

Macro	Up/Down	Last
WTI Crude	-1.23	78,74
Brent	-0.75	82.80
Gold	30.60	2,126.30
EUR/USD	0.002	1.0858
JPY/USD	0.42	150.53
10-Year Note	0.039	4.221%

 

• In Apparel/Footwear Retail: DECK will replace ZION in the S&P 500 effective prior to the open of trading on Monday, March 18, to coincide with the quarterly rebalance and ZION will replace SMCI in the S&P MidCap 400; GIII was downgraded to Underweight at Barclay’s and cut tgt to $23 citing lost revenue from customer store closures, lost licenses which will occur over a five-year period, and muted interest in owned brands for the downgrade. JOAN seeks cash boost as liquidity wears thin according to a weekend Bloomberg report.
• In Sporting Goods/Ammo: VSTO announced that its Board of Directors rejected an unsolicited indication of interest received on February 19, 2024, from MNC Capital pursuant to which MNC expressed interest in acquiring Vista Outdoor in an all-cash transaction for $35.00 per Vista share. In Guns/Ammo (SWBI, RGR, VSTO): U.S. unadjusted criminal background checks rose 9.1% to 2.44Mm in February from 2.237MM, citing monthly FBI National Instant Criminal Background Check System (NICS) data, but was down -4.9% y/y from 2.57Mm.
• In Beverages: ABEV downgraded to EW from Overweight at Barclay’s and cut tgt to $3 from $3.50 saying despite a strong FY23, expectations for FY24 were higher and cost benefits seem to be more muted than initially anticipated. HEINY was upgraded to Overweight from Equal Weight at Barclays saying 2024 looks set to be a better year for Heineken after many years of disappointments, many of which were macro-related.
• In Food sector: BRFS upgraded to OW from EW at Barclays noting the co profitability surprised to the upside and management remains confident in an improving consumer environment, pricing, and cost savings.

• In Autos: TSLA China’s February total shipments fell 15.5% from January to 60,365 units, according to Bloomberg calculations based on preliminary data released by China Passenger Car Association. RACE downgraded to Sell from Neutral at Citigroup but raise tgt to EU329 from EU305 following a 30% rally since December, trading on nearly 12-times sales and 57-times fiscal 2024 price-to-earnings. Tata Motors said it plans to demerge into two separate listed companies to refine focus on the passenger and electric vehicle segments, it said in an exchange filing on Monday.
• In Cinema: IMAX said it earned over $32M on its global opening weekend, or 18% of the global box office. Domestically, Dune earned $18.5M, or 22.7% of the total box office, representing the largest March domestic opening in IMAX’s history.

• In Oil E&P: BP was upgraded from Hold to Buy at Jefferies and raise tgt to $42.30 as expects the stock to continue to close its valuation Gap vs peers supported by a greater focus on distributions, reduced CAPEX risk and relatively conservative consensus earnings growth expectations. EQT said it would curtail nearly 1 billion cubic feet per day (Bcfd) of natural gas production through March as the reduction is expected to total nearly 30 to 40 bcf of net production during the first quarter.
• In Aerospace & Defense: BA this weekend confirmed it’s in discussions to acquire aero parts supplier SPR which would reclaim control of its struggling former aerostructures unit and the main supplier at the center of numerous quality issues affecting the 737 Max airliner. BKSY shares rose after saying it won a multi-million-dollar contract in support of the U.S. Department of Defense.
• In Industrials: GE mentioned positively in Barron’s saying the company is nearing the end of its recovery period after falling 80% from its 2000 peak in 2018. A looming corporate breakup is a sign of optimism for investors, and buying GE ahead of the final phase of its split could be a lucrative payoff.
• In Transports: UPS was mentioned positively in Barron’s noting shares have fallen 7% since the company’s disappointing 2024 guidance at the end of January – but looks like a promising buy as the package-delivery service seeks to cut costs, increase automation, and boost volumes to offset front-end loaded expenses. In Rails, NSC was upgraded to Buy from Neutral at UBS because it expects stronger performance in NSC’s merchandise network.
• In Airlines: JBLU and SAVE terminated their merger agreement, weeks after a judge ruled that the $3.8 billion deal would reduce competition and harm cost-conscious fliers. Spirit Chief Executive Ted Christie said that the airlines concluded that regulatory obstacles would likely be insurmountable. JBLU to pay $69m break-up fee.
• In Uranium Sector (URA, UEC, UUUU, CCJ), the U.S. uranium enrichment industry would get a $2.7 billion infusion in a government funding bill unveiled Sunday, reflecting efforts to wean the nation off nuclear fuel imported from Russia. The funding, which was requested by the White House, is part of a broader plan by President Joe Biden’s administration to buy enriched uranium directly from domestic producers. https://tinyurl.com/yc5h3xrs
• In Paper & Packaging: IP, PKG and BALL all upgraded to Buy at Bank America saying its research, including its proprietary Box Surveys and BofA Global Ag & Materials Conference company & panel commentary, suggests a containerboard upcycle has begun. IP was double upgraded from underperform saying co commentary suggests trends, after a choppy period, have stabilized and are improving.

• In Financial Services: INTU will replace EXC in the S&P 100. Exelon is no longer representative of the mega-cap market space. Exelon will remain in the S&P 500.
• In Banks: NYCB had its credit grade cut to junk by Fitch Ratings, and Moody’s Investors Service lowered its rating even further. Banks in general saw strength after the recent pullback on NYCB fears as PNC, MS, USB, MTB, FITB, KEY all among the top performers in the S&P 500.

• BBIO sold European marketing rights to acoramidis, its treatment for a form of progressive heart disease, to the German pharma giant Bayer. Under terms of the licensing deal, BridgeBio will receive $310Mm from Bayer in an upfront payment and will be eligible for royalties starting in the 30% range on acoramidis sales in Europe.
• BIVI sold 21 million shares, along with warrants to buy up to 10.5 million shares, at a combined price of $1.00 per share and associated warrants, well below Friday’s closing price of $1.89.
• CLRB announced that Iopofosine I 131 in combination with external beam radiation therapy was safe and tolerated in a SPORE Grant supported investigator-initiated Phase 1 clinical trial.
• IOVA said the FDA lifted a partial clinical hold placed on the registrational IOV-LUN-202 trial investigating LN-145 TIL cell therapy in non-small cell lung cancer. Iovance developed additional safety measures and monitoring in collaboration with the FDA/independent committee.
• RNA said its therapy AOC 1001 showed reversal of disease progression in patients with a form of muscle wasting disorder called myotonic dystrophy type 1; the trial showed positive results across key parameters that will be later used to evaluate the treatment in a late-stage trial.
• RVNC offering of 16M shares prices at $6.25 per share.
• ZVRA shares fell after saying the FDA extended its decision on marketing application of ZVRA’s experimental treatment, arimoclomol, for an ultra-rare genetic disorder.
• S&P SmallCap 600 constituent CYTK will replace CALX in the S&P MidCap 400 effective prior to the open of trading on Monday, March 18, to coincide with the quarterly rebalance and CYTK will replace CALX in the S&P SmallCap 600.

• SMCI shares surge on news it will replace WHR in the S&P 500 effective prior to the open of trading on Monday, March 18, to coincide with the quarterly rebalance and WHR will replace SMCI in the S&P MidCap 400.
• The Philadelphia semiconductor index (SOX) topped 5,000 for the first time this morning, extending its 2024 gains to over 18% thus far led by NVDA, AMD, ARM, TSM, etc. while SMCI surged following news it will be added to the S&P 500 index when the rebalance takes place.
• SE reported Q4 results as posted EPS loss (-$0.19) vs. est. loss (-$0.25); Q4 revs rose 4.8% y/y to $3.62B vs. est. $3.55B; said Q4 e-commerce sales increased 23% year over year to $2.6B.
• BOX, BGC, BL are among the tech names that will be added to the S&P SmallCap 600 effective prior to the open of trading on Monday, March 18, to coincide with the quarterly rebalance.
• AT&T (T) reaffirmed plans to invest heavily into expanding its fiber networks in an update saying capex in 2024 would be between $21 billion to $22 billion and reiterated that based on "fiber returns better than initial assumptions," it could potentially pass an incremental 10 million to 15 million consumer/business fiber locations.

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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.