Mid-Morning Look: January 31, 2025

Mid-Morning Look

Friday, January 31, 2025

Index

Up/Down

%

Last

DJ Industrials

54.34

0.12%

44,935

S&P 500

38.53

0.63%

6,109

Nasdaq

234.97

1.19%

19,916

Russell 2000

-0.27

0.02%

2,306

 

 

U.S. stocks open higher, extending recent gains and erasing weekly losses following a rebound in technology stocks after Monday’s plunge on DeepSeek AI concerns. Stocks have rallied on better earnings from mega cap tech names AAPL (overnight), META, TSLA along with a bevy of better semiconductor results ASML, LRCX, KLAC, and software as well (TEAM overnight). Economic data didn’t scare investors as monthly PCE inflation data (the Fed’s preferred measure) showed the core personal consumption expenditure (PCE) price index rose 0.2% last month, in line with economists’ expectations, for an annual gain of 2.8%. The headline PCE price index rose 0.3% last month for an annual gain of 2.6% (also in line with estimates). Consumer spending, which accounts for more than two-thirds of U.S. economic activity, beat estimates with a 0.7% jump during the month. Gold steadied near a record high, as investors flock to safety after President Donald Trump reiterated threats to impose tariffs on Mexico and Canada this week to the tune of 25%. U.S. Treasury prices rise (yields dip) after data showed that core inflation rise at a moderate pace in December while consumer spending surged, solidifying expectations the Federal Reserve will keep rates on hold for the coming months. The S&P 500 (SPX) is back above 6,100 (less than 20 points form ATH) while the Nasdaq approaches 20,000 and the Dow approaches 45,000 again. Sector winners on the week remain Consumer Discretionary, Healthcare and Communications all up over 2%, while Energy falls the most -3.3% on week, led by CVX, XOM weakness today after earnings.

Economic Data

  • December PCE inflation data all in-line with estimates, but nudges higher from prior month. The PCE price index rises 0.3% m/m (in-line w ests but up from +0.1% prior while Y/Y rose an in-line 2.6% (vs. 2.4% prior). The Core PCE Price Index M/M rose +0.2% (in-line) but up from +0.1% prior) while Y/Y rose +2.8% (in-line and same as prior).
  • December Personal Income rises +0.4%, in-line with consensus +0.4% and above Nov +0.3% while the Personal Spending rose +0.7% topping consensus +0.5% and above Nov +0.6%; the December personal saving rate 3.8% vs Nov 4.1% and real consumer spending +0.4% vs Nov +0.5%.
  • The Q4 employment cost index +0.9%, in-line with consensus +0.9% and vs Q3 +0.8%; Q4 benefit costs +0.8% vs Q3 +0.8% (prev +0.8%) and Q4wages/salaries +0.9% vs q3 +0.8% (prev +0.8%).
  • Chicago PMI for January reported at 39.5, above prior month 36.9, but below the 40 estimate: the 14th month in a row under 50 reading/expansion and 28 of last 29 months under 50.

 

 

Macro

Up/Down

Last

WTI Crude

-0.38

72.35

Brent

-0.20

76.67

Gold

9.60

2,854.80

EUR/USD

-0.0024

1.0368

JPY/USD

0.29

154.59

10-Year Note

-0.018

4.512%

 

Sector Movers Today

  • In Major Oils: In earnings, CVX Q4 EPS of $2.06 was down from $3.45 y/y and below consensus of $2.11, depressed because of low oil and gas prices, and weak refining margins, while noting its downstream business (refining) logged its first loss in four years, while its acquisition of HES remains in limbo. XOM Q4 adj EPS $1.67 topped est. $1.55 on higher oil and gas production; but FY24 earnings fell 13.2% to $33.46 billion on weaker refining margins; MUR was downgraded from Buy to Hold at Truist and cut tgt to $31 from $42, as the firm raises its Murphy capital spend, LOE, and operating expense estimates causing its EBITDA and FCF estimates to fall. OXY was downgraded to Sell from Neutral at Goldman Sachs and reduced their price target to $45 from $54.
  • In Chemicals: OLN shares fell after guided MarQ25 adj EBITDA midpoint at $160M vs $227M consensus and reported DecQ24 adj. EBITDA of $193M vs $174M consensus hurt by lingering impact from Hurricane Beryl. EMN Q2 EPS beat on in line revenue and said is on track with 2025 commitment of $75-$100mn EBITDA growth while guided FY EPS $8-$8.75 vs. est. $8.47; PPG reported Q2 EPS of $1.61 vs $1.65 consensus and guided FY 2025 EPS below consensus; guides FY organic up LSD and Q1 organic slightly down to flat; APD was upgraded to Outperform from Market Perform at Bernstein with a $375 price target noting investors voted for change at the company’s general meeting, and for the key directors proposed by Mantle Ridge.
  • In Autos: GM and Ford (F) remain pressured into the weekend after Trump’s announcement of 25% tariffs on imports from Mexico to Canada starting this weekend; auto supplier ALV Q4 EPS beat ($3.05 vs. $2.88 est.) on better margins though revs/comps fell short (-3.3% vs. +0.6% est.) and said they  expect 2025 to be a challenging year for the automotive industry with LVP declining slightly and continued geopolitical risks. GNTX shares fell on EPS miss ($0.39 vs. est. $0.48) and revs miss ($541.6M vs. $600M) and guided FY25 revs below consensus.

 

Stock GAINERS

  • AAPL +3%; Q1 EBIT beat on better gross margins and in-line revenue (iPhone and Wearables miss offset by iPad and Mac beat; Services in-line) and opex, but F2Q25E guidance was better-than-feared.
  • ABBV +7%; shares rose on results and guidance; reported Q4 EPS $2.16 vs. est. $2.12 and guided 2025 adj. profit of $12.12-$12.32 vs. est. $12.18 per share; said 2027 combined sales forecast for newer immunology drugs Skyrizi and Rinvoq to more than $31B above prior view of $27B.
  • ASTS +17%; after saying that the Federal Communications Commission (FCC) has granted it special temporary authority permitting testing service in the US with partners AT&T and Verizon Communications.
  • CIFR +17%; after announced a $50 million PIPE investment from SoftBank that will support the high-performance computing business.
  • TEAM +19%; Q2 revenue growth beat guidance by 4%, the largest margin since early 2022 while Cloud revenue grew a better-than-expected 30% Y/Y and easily beat the Street’s ~26% forecast and issued better Q3 revenue and margin guidance.
  • VIAV +27%; upgraded to Buy at Needham after earnings results saying there is evidence the NA Service Provider recovery is well underway and the balance of its smaller verticals appearing past bottom (sees Q3 revenue $276M-$288M vs. est. $255.6M).
  • VRTX +5%; said it won U.S. approval for the first new non-opioid painkiller in decades as the FDA approved its suzetrigine to treat moderate to severe acute pain. The drug is set to be sold under the brand name Journavx. Vertex will charge $15.50 per pill, or $217 for a week’s prescription.

 

Stock LAGGARDS

  • BOOT -7%; reported in-line Q3 prelim results while FY outlook rose and solid comp sales momentum into Q4. Consolidated comp sales growth came in in line with the preliminary results; guides FY sales $1.908B-$1.918B vs. est. $1.91B.
  • BZH -15%; reported FY1Q25 results and provided Q2 guidance below Street expectations. The company sold fewer homes than it expected in the quarter and spent more on incentives for the sales it made (Q1 EPS $0.10 vs. est. $0.31; Q1 revs rose 21% y/y to $469.0M vs. est. $464.9M).
  • CL -5%; reported better-than-expected Q4 profit of $0.91 per share vs. est. $0.89 while revs of $4.944B slipped from $4.95B y/y and below ests $4.98B; Q4 North America business net sales decline 1%, while for Latin America, sales down 7.2% in qtr; said expects FY25 net sales to be flat, below analysts’ expectations of a 1.3% increase.
  • DECK -14%; reported beat and raise Q3 results with Hoka brand DTC channel sales growing +27% y/y and UGG DTC growth of +16% y/y and now forecast DECK delivering a 14% 5-yr. sales CAGR, supported by 21% and 8% growth at Hoka and UGG, respectively (shares slipped as Q4 implies softness relative to initial expectations).
  • GNTX -7%; shares fell on EPS miss ($0.39 vs. est. $0.48) and revs miss ($541.6M vs. $600M) and guided FY25 revs below consensus.
  • OLN -9%; shares fell after guided MarQ25 adj EBITDA midpoint at $160M vs $227M consensus and reported DecQ24 adj. EBITDA of $193M vs $174M consensus hurt by lingering impact from Hurricane Beryl.
  • WBA -15%; shares fell after saying it would be suspending its quarterly cash dividend

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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.