Market Review: October 31, 2024

Closing Recap
Thursday, October 31, 2024
Index |
Up/Down |
% |
Last |
DJ Industrials |
-378.35 |
0.90% |
41,763 |
S&P 500 |
-108.30 |
1.86% |
5,705 |
Nasdaq |
-512.78 |
2.76% |
18,095 |
Russell 2000 |
-36.38 |
1.63% |
2,197 |
US equity futures traded almost 1% lower overnight, despite headlines Ukraine may consider alternative peace initiatives, as earnings season progresses with less-than-stupendous results. META and MSFT both traded 3-4% lower in early pre-market trading following the results last night, while UBER dipped by about 5% after results this morning. A host of economic reports pre-market (including PCE and initial claims) were sufficiently in-line that they didn’t move the market, so the focus will return to earnings with AAPL and AMZN after the close today. Investors sold the open, so it wasn’t shaping up to be a great day for longs. That said, the bull-bear spread came in at 8.6 this week versus 7.8 last week. Bulls rose from 37.7% to 39.5%, while bears climbed from 29.9% to 30.9%, so sentiment is hanging tough. Fear and Greed was a little less bullish, coming in at 50/100 (Neutral) versus 57 (Greed) yesterday, 61 (Greed) a week ago and 73 (Greed) last month. Still, it was 30 (Fear) at this time last year. Early breadth favored decliners by about 5:2, though small caps outperformed with IWM -0.66% versus SPY -1.38% and QQQ -1.93%. Early S&P sector ETF performance saw Utilities, Consumer Staples and Energy outperforming, while Consumer Discretionary, Industrials and Technology paced the laggards. Only Energy and Utilities were in the green.
In data today, for Fed watchers, @NickTimiraos notes the employment cost index is seen inside the Fed as, “the highest-quality measure of compensation growth” so worth noting the year/year growth slipped to 4.0% versus 4.1% in Q2 and 4.5% last year. Perhaps also worth noting, initial jobless claims matched the lowest reading since May at 216k. Following today’s economic data, the Atlanta Fed posted an initial GDPNow estimate for Q4 GDP of 2.7%. On market predictions, @DataTrekMB notes S&P500 sector correlations to the index have done well at predicting near-term weakness for the past two years and the most recent analysis, “suggests clear skies ahead.” And, in case you were wondering, @RyanDectrick highlights this has been one of the least volatile Octobers in an election year ever, with the average intraday range for the S&P500 at 0.79%. That’s the second smallest in more than 50 years. After the election, who knows.
Heading into the final hour of trading, equities held near lows of the day. Breadth had expanded to about 2.7:1 with small caps continuing to outperform. IWM was -0.98% versus SPY -1.55% and QQQ -2.24%. On a sector basis, Utilities (XLU, +1.1%, Energy (XLE, +0.9% and Consumer Staples (XLP flat) were outperformers and the only sectors to the upside, while Industrials (XLI, -1%), Materials (XLB, -1%), Consumer Discretionary (XLY, -1.33%) and Technology (XLK, -2.7%) led the underperformers. Growth and value both slipped on the day with value the outperformer (not shocking given Technology’s underperformance). The Russell 1000 Value fell by 0.32%, while its Growth counterpart slid by 2.41%. We have plenty more on the earnings calendar tonight, so anything could happen tomorrow.
Economic Data
- Sept Personal Income rises +0.3% (vs. consensus +0.3%) and vs Aug +0.2% while Sept Personal Spending rises +0.5% (vs. consensus +0.4%) and above Aug +0.3%; Sept real consumer spending +0.4% vs Aug +0.2%.
- Inflation readings show: Sept overall PCE price index +0.2% vs Aug +0.1% and headline Y/Y PCE price index +2.1% vs Aug +2.3% (prev +2.2%). The Sept core PCE price index M/M rises +0.3% (+0.3% est.) and above Aug +0.2% while the Sept year-over year core +2.7% (above consensus +2.6%) and in-line vs Aug +2.7%.
- Weekly Jobless Claims fell to 216,000 in the latest week vs consensus 230,000 and from 228,000 prior week; the 4-week moving average fell to 236,500 from 238,750 prior week; continued claims fell to 1.862M from 1.888M and vs. consensus 1.885M; Insured Unemployment Rate unchanged at 1.2%.
- The Chicago PMI Index reported at 41.6 below est. 47.0; Production and order backlogs decreased over the month, as did new orders, spelling weak demand and further lackluster activity in the months ahead. Employment also dropped, pointing to some softening in the labor market.
- US employers announced 55,597 job cuts in October 2024, below 72,821 in September, but above 50.9% from 36,836 in October 2023.
- The BoJ kept its key policy rate unchanged at 0.25%, as expected, in a 9-0 unanimous decision. The Bank of Japan maintained ultra-low interest rates but said risks around the U.S. economy were somewhat subsiding, signaling that conditions are falling into place to raise interest rates again. The central bank also projected inflation would move around its 2% target in the coming years, stressing its resolve to keep raising borrowing costs if the economy sustains a moderate recovery.
- Euro zone inflation accelerated more than expected in October and could still pick up further in the coming months. Inflation in the 20 countries sharing the euro currency accelerated to 2.0% from 1.7% in September mostly on higher food and energy costs, above expectations for 1.9%. A more closely watched figure which strips out volatile food and energy prices meanwhile held steady at 2.7%, above forecasts for 2.6%, Eurostat said on Thursday
Commodities, Currencies & Treasuries
- December gold futures faded a bit overnight, then slid further into and beyond the US equities open before finding some support late morning but settling down $51.50/oz, or -1.84%, at $2,749.30. It was the largest slide since July. Yields and the Dollar were up small, and economic data was relatively benign, but recent headlines around both Ukraine and Israel may be pushing, “safe haven” investors to lighten up a bit while those expecting aggressive Fed cuts may also be rethinking positions. On the other side, investors should continue to see some support from election jitters. Even those looking for a short-term retreat still seem to be longer-term bullish on gold (e.g., Dennis Gartman). Citi also predicts there is more room for gold to climb to the $3,000 mark over the next six months.
- WTI crude futures gained overnight, then went mostly sideways before settling up $0.65/bbl, or +0.95%, to $69.26. Brent similarly gain $0.61/bbl, or +0.84%, to settle at $73.16. Support continued to come from demand optimism fueled by growth forecasts for the US economy and hopes around China stimulus. The real news for oil came just after today’s settlement, though, when headlines crossed indicating Iran is preparing a major retaliatory strike against Israel within days. WTI futures popped back above $70, and Brent gained more than $2.
Macro |
Up/Down |
Last |
WTI Crude |
0.63 |
69.26 |
Brent |
0.61 |
73.16 |
Gold |
-51.50 |
2,749.30 |
EUR/USD |
0.0013 |
1.0868 |
JPY/USD |
-1.28 |
152.14 |
10-Year Note |
0.014 |
4.278% |
Sector News Breakdown
Retailers:
- Chinese online retailer Temu (owned by PDD) will be investigated on whether it May have breached EU tech rules against the sale of illegal products, EU tech regulators said on Tuesday, in a move which could lead to hefty fines for the company – Reuters reports
- ETSY shares rose on the healthy results, a new $1B share buyback authorization and guidance that was likely no worse than expectations.
- PTON reported quarterly results and named Ford Motor executive Peter Stern as its next chief executive officer.
Consumer Staples & Restaurants:
- In Food: KHC was downgraded to Hold from Buy at Deutsche Bank after results, the by-product of reduced growth and profitability assumptions into FY25 and over the medium-term.
- In Beauty Products: EL shares tumble as cuts dividend to 35c per share from 66c; withdraws FY 25 guidance amid a slowdown in demand for luxury beauty products in major markets such as China; Q1 sales $3.36B vs. est. $3.37B; outlook q2 reported & organic net sales to decrease between 8% and 6%.
- In Restaurants: WEN Q3 results mixed as EPS in-line but revs beat (+2.9% y/y to $566.7M), boosted by an increase in franchise royalty revenue and an increase in franchise fees; same-restaurant sales were up 0.2%, to miss the FactSet consensus of 1.2% growth, as the 0.2% increase in the U.S. also missed expectations of a 1% rise; company trimmed its growth outlook for systemwide sales to about 3% from 3% to 5%, and narrowed its guidance for adjusted EPS. EAT was downgraded by both JP Morgan and BMO Capital following earnings results saying valuation full.
Autos, Leisure, Gaming & Lodging:
- In Ride Sharing/Food Delivery: UBER Q3 gross bookings rose 16.1% to $40.97B, vs. est. $41.24B and sees Q4 gross bookings of $42.75-$44.25B, with midpoint of $43.5B below estimates of $43.66B and sees Q4 adjusted EBITDA of $1.78-$1.88B, below analysts’ estimates of $1.84B. DASH reported a slight beat & raise 3Q24 earning report as GOV came in 1% above the high end of guidance and EBITDA came in toward the high end of guidance and 4% above consensus while 4Q24 guidance moves higher.
- In Online Travel: BKNG shares reach new record highs on good results as 3Q gross bookings at $43.4bn were above Street at $41.4bn on an improvement in EU travel and an expanding booking window. Revenue/EBITDA at $8.0bn/$3.7bn beat Street at $7.6bn/$3.3bn, with EBITDA margins at 45.8% above 43.7% expected. Booked nights at 299mn (up 8%) were above Street at 290mn, and booking guided to 6-8% 4Q room night growth (vs Street at 6.7%).
- In Cruise lines: NCLH raised its annual profit forecast for a fourth time this year, encouraged by strong booking trends for sea-based vacations at higher prices as now expects an adjusted profit of $1.65 per share for fiscal 2024, compared with its previous forecast of $1.53 (also topped Q3 EPS/revs).
- In Autos: CVNA reported Q3 retail unit growth accelerating sequentially to 34% y/y, beating estimates of 32% y/y. Revenue came in ~6% ahead of consensus while non-GAAP GPU also beat expectations by nearly 12% as CVNA continues to execute its strategy of driving fundamental improvements and operational efficiencies. Adj. EBITDA margin of 11.7% came in well above estimates of 9.5% and above the midpoint of LT target of 8%-13.5%. STLA Q3 revenue in North America missed expectations as total revenue per unit was 41,555 euros, 6% below expectations. LI shares fell as reported a decline in third-quarter profit even as revenue jumped 24%. Ford Motor (F) said it will halt production of F-150 Lightning electric vehicle pickup trucks for six weeks. The Dearborn automaker will suspend production of the EV trucks on Nov. 18 and resume it on Jan 6. In auto suppliers, APTV lowers outlook, BWA raises.
Energy
- COP board approves $20B increase to share repurchase authorization after Q3 EPS topped estimates as Q3 production rose 6% Y/Y to 1.92 million barrels of equivalent per day; forecasts annual output of 1.94 million to 1.95 million boepd, compared with 1.93 million-1.94 million previously.
- NXT reported strong fiscal 2Q results ahead of expectations and raised 2025 EBITDA and EPS guidance. Quarterly results benefited from strong demand, NXT’s discipline around pricing and costs, and a favorable sales mix, which skewed more heavily toward the U.S.
- OII posted in-line 3Q results and despite lowering FY24 EBITDA guidance, prelim ’25 EBITDA guide of $400-430mm implies y/y growth of 20% at the midpoint.
Financials
- In Brokers: HOOD posted Q324 results (revenue, adj. EBITDA) below the Street as both transaction-based and net interest revenue were light while opex was in line; the lower revenue was a function of lighter than anticipated option contract/ crypto volume and yield on equities trading volume (mix driven).
- In Crypto: RIOT reported poor Q324 earnings results with REV/ADJ. EBITDA coming in below and lowered its 2024 YE hash rate target slightly by 1.4 EH/s (35 EH/s year-end) and its 2025 target from 56.6 EH/s to 46.7 EH/s attributed to permitting delays in Kentucky, potential supply-chain constraints for transformers at Corsicana. COIN Q3 revenue $1.2B vs. est. $1.25B; Q3 transaction revenue fell -27% q/q to $573M while average native units grew Q/Q for staking, custody, and on-platform USDC, subscription and services revenue declined 7% Q/Q to $556M. MSTR reported earnings and plans to raise $42B over the next three years ($21B equity/$21B fixed income) to purchase more bitcoin.
- In Credit Cards: MA Q3 adjusted EPS $3.89 topped consensus $3.74 on better revs $7.4B vs. consensus $7.27B as Q3 gross dollar volume up 10% and purchase volume up 11%; Guides Q4 rev low-teens growth, operating expenses high-end of low-double-digits; Oct MTD switched transaction volume 12% y/y v 11% q/q, Cross-border volume 18% y/y. Bank America reported in note that total card spending per HH was up 2.6% y/y in the week ending Oct 26. Within the sectors, entertainment, online electronics and airlines showed the biggest y/y rise since last week.
Insurance & Services:
- AFL earnings were meaningfully higher than expected but this was entirely driven by the actuarial assumption review that saw ~$0.58 of re-measurement gains in Japan primarily due to favorable long-term experience for cancer and hospitalization remains in place while normalization of claims utilization is present in the U.S.
- ALL stronger than expected result driven by better underlying underwriting margins and property liability operating income.
- MET as operating EPS and normalized EPS missed Street’s estimates due to weaker results in most segments, but especially in Group Benefits, Retirement Income Solutions, and Asia on a normalized basis.
- PRU largely in-line results for Q3 and 4Q24 baseline EPS is also in line with current consensus although baseline EPS offered assumes normalized variable investment income (VII) in 4Q24 while it was $0.11 below plan in 3Q24.
- In Payroll: PCTY reported better than expected Q1 financial results as sales/demand commentary seemed notably better/more predictable than recent quarters said Needham; recurring revenues increased 14% (all organic); PAYC reported solid Q3 results, beating revenue consensus by $5M and EBITDA by $14M.
Biotech & Pharma:
- AMGN reported solid Q324 financial results, with total revenue of $8.50B vs $8.51B consensus estimates, and adj. EPS of $5.58 exceeded $5.11 consensus estimates.
- AVDL soars after a court ruled in favor of the U.S. FDA in a suit brought by JAZZ regarding the agency’s approval of narcolepsy drug Lumryz. With this ruling, the approval of Avadel’s Lumryz is upheld based on the FDA’s determination that Lumryz is clinically superior to Jazz’s twice nightly oxybate products, Avadel said
- BIIB downgraded to EW from Overweight at Morgan Stanley as the Leqembi launch has tracked below its expectations (it lowers its estimates) and it sees limited pipeline optionality over the next 12 months.
- BMY boosted its 2024 outlook on the back of strong quarterly sales of both legacy and newer drugs, despite generic competition and loss of exclusivity for some of its medicines; followed beat on Q3 EPS and sales.
- CORT reported Q324 EPS of $0.41 on revenue of $182.5M, compared to Street estimates of $0.28 and $172M, respectively; mgmt raised its 2024 Korlym sales guidance range to $675M-$700M, up from $640M-$670M, now implying growth versus 2023 of 43% at the midpoint.
- MDGL shares advanced after saying it achieved its coverage goal for its recently approved liver disease drug, Rezdiffra, one quarter ahead of schedule.
- MRK Q3 adj EPS $1.57 vs. est. $1.50; Q3 revs $16.7B vs. est. $16.46B; but cuts FY24 adjusted EPS view to $7.72-$7.77 from $7.94-$8.04 (est. $7.74) and narrows FY24 revenue view to $63.6B-$64.1B from $63.4B-$64.4B, vs. consensus $64.15B after demand for its HPV vaccine fell for a second straight quarter in China
- REGN tumbles as reported lighter-than-expected sales of its new eye disease drug as the newer high-dose Eylea lagged projections at $392M below estimates of $415M-$425M as per Piper
- TEVA receives a $500M EU fine by EU antitrust authorities saying the company abused its market position in a way that delayed competitors from entering the multiple sclerosis market.
Healthcare Services & MedTech movers:
- ACHC tumbles as cut its revenue and adjusted profits guidance for the full year, missing the average analyst estimate.
- ATEC boosted full-year revenue guidance amid strong growth in surgical revenue, helping to ease analyst concerns over profitability.
- CI reported top and bottom line beat in managed care for Q3 while its Evernorth unit which includes its Pharmacy benefit management unit saw large client wins and demand for specialty drugs.
- IQV shares stumbled after lowering its 2024 rev view to $15.35B-$15.4B from $15.43-$15.53B prior to reflect delays in two fast-burning mega trials due to client-related short-term logistical challenges; said trials are now expected to ramp up in the second half of 2025.
- NVST shares surged after better results and guidance; Q3 adj EPS $0.12 vs est. $0.09, adj EBITDA $54.9Mm vs est. $46Mm on sales $601Mm vs est. $590.3Mm; upgraded to Market Perform at Leerink.
- OPCH downgraded to Hold from Buy at Jefferies and cut tgt to $26 from $38 given its belief that uncertainty with the pricing dynamics for the drug Stelara will persist over the next few months and keep OPCH shares range-bound.
- SNN shares declined following Q3 rev miss and guides underlying revenue +4.5%, down from prior +5% to +6%, and est. +5.41% (worse than rival ZBH results the day prior in ortho space).
- STAA put up a Q3 beat with sales/EBITDA ahead by $1.7M/$6.4M on a combination of stronger-than-expected Japan ($2M ahead) and EMEA (Other region: $3M ahead) ICL contribution offset by continued China headwinds.
- TDOC reported a solid top-line beat driven by Integrated Care growth of ~2% and International Growth of 15% in the quarter along with BetterHelp results coming in slightly above
Materials, Metals & Mining
- In Chemicals: Keybanc noted Chemical Market Analytics (CMA) released its monthly chlor-alkali report, which shows an increase in caustic soda prices well above expectations (OLN, WLK levered to data). The U.S. caustic soda index rose $25/ton m/m in October, ahead of CMA’s forecast calling for a $5/ ton increase. This Marks the third consecutive monthly price increase and shows a distinct trend of tightening caustic soda market in 2024, in KEYB’s view.
- In Paper &Packaging: IP announces review of strategic options for global cellulose fibers business and closure of Georgetown, S.C. pulp and paper mill; 674 employees to be impacted by Georgetown mill closure (maybe a positive for PKG); also reported Q3 EPS $0.44 vs. est. $0.26 on in-line revs of $4.69B; SW upgraded to Outperform, raise PT to $58 (from $52) at RBC Capital saying SW checked three key boxes for US with its updates at the quarter: (1) it demonstrated a good pace of execution on integration; (2) it de-risked the near-term outlook for CAPEX; (3) it confirmed that management sees significant upside to its initial synergy target (an incremental $400MM+ in benefits).
Internet, Media & Telecom
- In Social media: META shares reversed lower overnight as initial Q3 results beat but forecast rising infrastructure expenses next year. Meta Platforms said it continues to expect "significant capital expenditures growth in 2025," adding it will have a "significant acceleration in infrastructure expense growth next year."
- In Internet: EBAY shares slipped as delivered solid Q324 results, beating consensus on the top and bottom lines but Q4 and Fy25 guidance/commentary was a bit softer than expected sending shares lower.
- In Cable & Telecom: CMCSA Q3 results topped ests driven by strong box office performance for its studio, higher ad sales during the 2024 Paris Olympics and a smaller-than-expected decline in broadband subscribers; said Q3 media biz saw a $1.9 billion revenue boost from the Paris Games; studio unit’s revenue rose 12.3% from a year earlier to $2.83 billion in the quarter, exceeding expectations of $2.75 billion according to estimates (also said considering spinning out its cable networks business into a new company). TGNA announced today that it has reached a new multi-year agreement with FUBO, the leading sports-first live TV streaming platform.
- In Media: ROKU shares slumped as Q3 Platform revenue 5% above the Street, with ~300bps tailwind from one-time factors, while Q4 guided 3% above, with ~100bps political benefit, but mgmt comments for slower 2H25 revenue growth and mid-single digit FY25 opex growth weighed on sentiment. RBLX shares jumped as Q3 bookings $1.13B topped the $1.03B estimate on a narrower earnings loss and guided Q4 bookings above views to $1.35B.
Hardware & Software movers:
- MSFT quarter beat across-the-board, with 100bps of Azure upside (34% Y/Y-CC, somewhat driven by higher in-period rev-rec), but shares fell as management’s Q2 Azure guide calls for 200-300 bps of Q/Q deceleration and OpenAI losses are expected to increase by over $1B Q/Q.
- CFLT reported better-than-expected 3Q24 results as optimization headwinds with digital-native customers started to ease; saw strong new customers adds (+15.7% YoY to 5,680 total customers) and a recovery in cloud growth QoQ.
- PCOR provided FY25 outlook that fell below consensus expectations with growth decelerating to 11% y/y (from 20%), offset slightly by better than anticipated margin expansion.
- TWLO reported a 3Q24 beat on accelerating messaging volumes, strong email revenues, and prudent cost management to drive strong OM performance according to Oppenheimer. The strength was balanced by mixed results from Segment, which saw NDER contract 2pts sequentially to 91%.
Semiconductors:
- ARM downgraded from Market Perform to Underperform at Bernstein with $100 tgt saying they worry about the revenues outside of AI, given the cyclical headwinds its analog names are facing, especially ex-memory. In automotive, Bernstein has seen a series of profit warnings from OEMs, concerns of building inventory and further signs of mix-shift away from BEVs to PHEVs.
- AVGO shares declined after TFI Internation analyst Ming Chi Kuo said Broadcom currently supplies over 300 million Wi-Fi+BT chips (hereafter referred to as Wi-Fi chips) per year to AAPL. However, Apple will rapidly reduce its reliance on Broadcom. With new products in 2H25 (e.g., iPhone 17), Apple plans to use its own Wi-Fi chips, which will be made by TSMC’s N7 process and support the latest Wi-Fi 7 spec.
- KLAC reported a F1Q beat and next quarter guide above. KLAC increased its CY24 WFE expectations to mid- to high-$90B (from mid-$90B) and expressed confidence it can outgrow an expanding CY25 WFE number driven by investment in leading edge F/L and DRAM. OPCO upgrades KLAC to Outperform on better-than-expected Q125 results and guidance, raising FY25-FY26 (June) estimates by 2%, and PT to $850 (prior $750).
- MPWR downgraded from Buy to Neutral at Rosenblatt with $880 PT after Q3 results, as MPS drove a decent beat and mixed outlook, with revenues a tad higher and GMs a bit weaker. Broader end market trends have recovered nicely; however, Enterprise Data (AI Nvidia-driven) took a pause for Q424 on the delayed Blackwell ramp.
- OLED shares slumped initially after cutting 2024 revenue outlook to $635M from $660M
- SMCI downgraded to Hold from Buy at Argus as auditor exits. Notes shares declined 33% on 10/30/24 following the release of a company 8K filing that indicated loss of a key accounting partner and an unexplained lag in sharing this information with investors. On 10/24/24, Ernst & Young LLP (EY) sent a letter resigning as the company’s registered public accounting firm. Super Micro did not disclose this information until 10/30/24.
- The Biden administration on Thursday announced an $825M investment in a new semiconductor research and development facility in Albany, New York, aiming to boost high-tech manufacturing and reduce reliance on foreign technology.
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.