Mid-Morning Look

Friday, March 01, 2024

Index	Up/Down	%	Last
DJ Industrials	-12.12	0.03%	38,984
S&P 500	13.78	0.26%	5,109
Nasdaq	70.29	0.43%	16,161
Russell 2000	7.11	0.34%	2,061

 

 

U.S. stocks opened higher and extend the advance, trying to hold weekly gains for major averages after the S&P 500, Nasdaq Composite and Philly semi-index (SOX) all settled at record highs on Thursday night. The Nasdaq is on track for 7^th winning week in last 8 behind the extended gain in semiconductors as SOX tops 4,800 and the S&P 500 (SPX) trying to hold its 5,100 level as momentum remains to upside with recent market data points showing mixed signals. Treasury yields reversed to lows after the 10:00 economic data points (see below), as none have really impacted the expectations of Fed rate cuts coming this year (the timing has, and amount has – but markets have focused on view that rate hikes going forward are not in the picture. Fed speakers have been mostly unanimous this week in the view that rate cuts are coming, but more of an early summer timeframe and their outlook of 3 cuts remains constant. Early strength in Energy, Technology, and Communications, while defensive Utilities and Financials are down the most. Big gains in DELL, NTAP overnight in tech space overnight as the AI rally continues while regional banks lag behind NYCB headlines. Several Fed speakers out already today Goolsbee, Larkin, Logan, as markets take commentary in stride.

• Construction spending for January fell -0.2% vs. consensus for rise +0.2% and vs Dec +1.1% (prev +0.9%); January private construction spending +0.1%, public spending -0.9%.
• ISM U.S. Manufacturing index weaker at 47.8 in February from 49.1 in Jan and below consensus 49.5 while the prices paid index 52.5 in February vs. 52.9 in January; new orders index 49.2 in February vs 52.5 in January and the employment index 45.9 in February vs 47.1 in January.
• University of Michigan surveys of Consumers Sentiment final Feb 76.9 below consensus 79.6 and down from preliminary Feb 79.6; the current conditions index final Feb 79.4 vs prelim Feb 81.5 and expectations index final Feb 75.2 vs prelim Feb 78.4 and final Jan 77.1.
• University of Michigan surveys of consumers 1-year inflation outlook final Feb 3.0% vs prelim 3.0% and final Jan 2.9% while the 5-year inflation outlook final Feb 2.9% vs prelim 2.9% and final Jan 2.9%.

 

 

Macro	Up/Down	Last
WTI Crude	1.61	79.87
Brent	1.09	83.00
Gold	15.40	2,070.10
EUR/USD	0.0029	1.0833
JPY/USD	0.20	150.18
10-Year Note	-0.037	4.215%

 

• In Casinos (MLCO, LVS, MGM, WYNN) and gaming: Macau casino revenue falls short of expectations on post-Chinese New Year slowdown as Macau gross gaming revenue (GGR) increased 79% y/y to 18.5B patacas ($2.3B) in February, according to data from the Gaming Inspection and Coordination Bureau, short of the consensus estimate for a rise of 92% and fell about 27% below the pre-pandemic level seen in 2019. The February GGR mark was also down 4% M/M. Truist downgraded shares of IGT/EVRI to Hold from Buy, positive on the longer-term merger oppty, but think near-term execution risks are real, and investors will have to wait almost a year for the deal to even close.
• In Industrials/Machinery: OSK was upgraded to Buy from Neutral at DA Davidson following investor meetings held yesterday in Minneapolis, MN, as firm said they came away with more confidence in its above consensus estimates for 2025, and it pieced together some clarity in 2026. GE said its Board of Directors formally approved the spin-off of GE Vernova which will happen April 2, 2024, under symbol GEV – GE shareholders as of 3/19 will receive one share of GE Vernova for every four shares of GE stock.

 

• COO +6%; after Q1 results and increased FY24 guidance.
• DELL +26%; after Q4 revenue topped expectations, helped by AI boom and a recovery in personal computer market; said its backlog of artificial intelligence servers (most powered by NVDA H100 chips as per DJ) has now reached $2.9 billion, compared with $1.6 billion last quarter.
• EVBG +25%; agreed to an increased buyout offer of $35 per share or $1.8B (up from $28.60 or $1.5B prior) from private-equity firm Thoma Bravo. The original deal, agreed to in early February, included a "go-shop" period, which allowed Everbridge to solicit other offers https://tinyurl.com/5eerm6kh
• NTAP +23%; after Q4 results topped expectations and raised its FY24 adjusted EPS view to $6.40-$6.50 from $6.05-$6.25 and guides FY24 revenue $6.185B-$6.335B vs. est. $6.23B.
• ROOT +12%; upgraded from Hold to Buy at Jefferies and raised tgt to $40 saying the co executed a better-than-industry target loss ratio this quarter, setting a path to profitable growth, market share gains and scalability for a viable business model.
• SG +21%; after guiding higher-than-expected revenue growth in Q1 ($150M-$154M vs. est. $147.8M) and guided year revs above also ($655M-$670M vs. $661.5M est.)
• VSTO +5%; after the WSJ reported MNC Capital Partners proposed buying Vista for $35 per share in cash, according to a letter to the company’s board dated Feb. 19 seen by the WSJ https://tinyurl.com/yjcah9f5

 

• ESTC -11%; posted 3Q results that beat across all key metrics, although the beat was driven by self-managed outperformance according to Stifel, noting SaaS only beat consensus by ~$1Mm. Noted after two straight quarters of solid Q/Q SaaS growth and positive stock reaction, and 68% rally in shares, the lackluster cloud results weighed.
• FSR -345%; reported Q4 results that missed expectations and raised substantial doubts about its ability to continue as a going concern, saying it intends to reduce its workforce by about 15% and reduce overall expenses to address potential liquidity issues.
• KDP -2%; after announced an 87M share Block sold by JAB Holding Co priced at $29.10. KDP to repurchase 35 mln shares in the offering under its $4 bln buyback program, of which approx $1.8 bln will remain post-offering.
• NYCB -20%; after reported that: 1) it has identified material weakness in the internal controls related to the loan review process, 2) it is writing off 100% of its goodwill, 3) Alessandro DiNello will replace Tom Cangemi as CEO, (reported changes within risk mgmt), and 4) there will be a delay in the filing of its 10-K.
• RILY -13%; cut its dividend 50% to 50c per share; launched a review of strategic options for its appraisal and retail, wholesale, and industrial solutions businesses, which could include a potential sale.
• ZS -7%; as better results and guidance failed to meet lofty expectations.

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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.