Mid-Morning Look

Tuesday, October 29, 2024

U.S. stocks open slightly lower, before quickly rebounding and now trading at the highs. Early weakness due to mixed earnings and another spike in Treasury yields and the dollar weigh on sentiment ahead of next week FOMC meeting. But prices rebound after economic data as Job openings fell in September and were revised down for August, putting the 3-month moving average at its lowest level since the reopening in Spring 2021. There were fewer than 1.1 posted job vacancies for every worker counted as unemployed in September. The jobs results took some pressure off Treasury yields as the 10-yr dropped to 4.3% from highs of 4.34% prior to data. Meanwhile, Consumer confidence jumped to highest levels since January.  U.S. natural gas futures fell about 5% to a seven-week low – front month for November delivery on the NYMEX fell 10.8 cents, or 4.7%, to $2.201 per million British thermal units (mmBtu). Utilities (XLU) underperform, down -1.5% to 2-week lows as higher rates hitting dividend paying sectors. Smallcaps Russell 2000 falls the most given the continued push high in Treasury yields, with the 10-yr topping 4.33%. The US dollar at highs of the morning, up 0.27% to 104.585 – just breaking above yesterday hi of 104.573 and Weds 10-23 hi of 104.57. Bitcoin surges another 2.8% nearing $72,000 and gold prices news record highs topping $2,782 an ounce. Big earnings movers today include BP sliding in energy, Ford (F) declines in autos, CROX, BOOT both tumble in retail though VFC surges, DHI underperforms in homebuilders and in tech CDNS, FFIV up on results while AMKR, HLIT, XRX tumble on results/guidance. Next up tonight, GOOGL, AMD among top names in tech along with Visa (V), MDLZ, CMG, QRVO, FSLR, OKE and many others.

Supporting commodity prices overnight, Reuters reported China is considering approving next week the issuance of over 10 trillion yuan ($1.4 trillion) in extra debt in the next few years to revive its fragile economy, a fiscal package which is expected to be further bolstered if Donald Trump wins the U.S. election, said two sources with knowledge of the matter. China’s top legislative body, the Standing Committee of the National People’s Congress (NPC), is looking to approve the fresh fiscal package, including 6 trillion yuan which would partly be raised via special sovereign bonds, on the last day of a meeting to be held from Nov. 4-8, said the sources.

• US August 20-metro area home prices +5.2% (consensus +5.1%) from year ago vs July +5.9%. US August home prices in 20 metro areas +0.4% seasonally adj (consensus +0.2%) vs July +0.3%. US August 20-metro area home prices non-adjusted -0.3% vs July 0.0% as per S&P CoreLogic Case-Shiller.
• U.S. job openings fall to 7.443 million in Sept (mor than 3 ½ year lows) from 8.04 million prior month. Data for August was revised down to show 7.861 million unfilled positions instead of the previously reported 8.040 million.
• Oct. Consumer Confidence 108.7, highest since January and tops est. 99.5. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—increased by 14.2 points to 138.0.

• CWH +8%; delivered adjusted EBITDA -$0.4M vs consensus on revenue +$83.2M vs consensus via stronger vehicles (+$83.4M), CS&P (+ 9.4M), and F&I (+$6.7M), partially offset by PS&O (-$9.1M); shares outperformed after being one of the first in the towable/RV space this quarter with upside results.
• FFIV +12%; Q3 top-line and bottom-line metrics come in ahead of consensus and the high-end of guidance as Software continues to outperform and management noted that hardware showed improving demand signals
• NARI +15%; reported a beat-and-raise in Q3 with $153.4M (+21.4% Y/Y), driven by its core VTE market. Revenue beat CG’s estimate of $150.5M and the consensus $150.7M. Management raised its FY24 revenue guidance.
• VFC +27%; Q2 showed progress, as upside featured better-than-expected metrics across nearly all key measures including 1) lesser Vans declines, 2) better-than-expected TNF declines, 3) gross margin, and 4) SG&A management.

• BOOT -17%; after announced CEO Jim Conroy would depart from the company on Nov. 22 to become CEO of Ross Stores and reported results and guidance that topped consensus.
• CROX -18%; after guiding Q4 PS $2.20-$2.28 below est. $2.72 and said expects Q4 revenue to be flat to up slightly compared with last year and sees 2024 rev growth of about 3% compared to last year, at the lower end of prior guidance of 3% to 5% (followed strong Q3 EPS/sales beat).
• CVI -24%; shares tumbled after results and announced dividend suspensions; took shares of IEP down too.
• DHI -12%; after forecast 2025 revenue and home deliveries below estimates as expects to deliver 90,000 to 92,000 homes vs. ests of more than 94,000 homedeliveries and guided FY25 revs $36B-$37.5B vs. est. $39.4B following a Q4 EPS and rev miss.
• HLIT -25%; topped expectations in Q3 and guided to continued strength in Q4, but cautionary comments about some potential customer delays in 2025 around the availability of unified DOCSIS 4.0 components weighed on shares.
• KDP -4%; after top shareholder German investment firm JAB Holding to sell about 60M shares of KDP at $32.85 per share; the offer price is at ~3% discount to KDP stock as of Monday’s close.
• TMDX -25%; shares tumbled after Q3 revs miss ($108.8M vs. $115M est.) on weaker earnings while backed FY24 revenue view $425M-$445M, vs. consensus $444.36M.
• XRX -20%; lowered its 2024 rev forecast from a decline of 5% to 6% in constant currency to a decline of around 10% in constant currency to reflect additional reductions in non-strategic revenue and lower-than-expected equipment sales.