Early Look

Monday, February 5, 2024

Futures	Up/Down	%	Last
Dow	-30.00	0.08%	38,735
S&P 500	-9.25	0.19%	4,970
Nasdaq	-23.50	0.13%	17,709

 

 

U.S. stock futures look modestly lower, pulling back slightly from all-time highs after more big gains last week, while Treasury yield bounce after Federal Reserve Chairman Jerome Powell said in an interview last night that Americans may have to wait beyond March for the central bank to cut interest rates. In a 60-Minutes interview last night, the Federal Reserve’s rate-setters still expect to make around three quarter-point rate cuts this year, according to Fed chair Jay Powell. Powell told CBS’s 60 Minutes show that “almost all” of the membership of the Federal Open Market Committee (FOMC) think the US Central bank will cut rates from their current 23-year high of 5.25-5.5 per cent at some point over the course of 2024. He also said “the U.S. federal government is on an unsustainable fiscal path. And that just means that the debt is growing faster than the economy… We’re borrowing from future generations,” says Fed chief Jerome Powell.” Fed comments/views on rates have certainly not impacted the rally in stocks as the S&P 500, and Nasdaq 100 both climbed for fourth straight week and are now up a remarkable 13 of the last 14-weeks. For last week, the S&P 500 rose 1.38%, the Nasdaq rose 1.12%, and the Dow rose 1.43% (though the Smallcap Russell 2000 index fell about -0.8% on the week and remains down over -3% thus far in 2024). US 10-year yields rose 4bps to 4.09%, adding to gains seen on Friday after the blockbuster jobs report. Solid quarterly results from the likes of big tech Meta Platforms, Amazon.com helped boost the S&P 500 and the Nasdaq Composite Index. Financial markets are pricing in a 20.5% likelihood of a 25-basis point rate cut at the Fed’s March meeting, down from 69.6% a month ago, according to CME’s FedWatch tool, but that hasn’t dented investor optimism. China’s stock rout continued Monday despite the CSRC’s pledge on Sunday to protect the interests of small and medium-sized investors by severely punishing illegal market behavior. In Asian markets, The Nikkei Index gained 196 points to 36,354, the Shanghai Index fell -27 points to 2,702, and the Hang Seng Index slipped -23 points to 15,510. In Europe, the German DAX is up 44 points to 16,962, while the FTSE 100 is up 31 points to 7,645.

 

• The Dow Jones Industrial Average rose 134.58 points, or 0.35%, to 38,654.42.
• The Nasdaq Composite surged 267.31 points, or 1.74%, to 15,628.95.
• The Russell 2000 Index declined -11.69 points, or 0.59% to 1,962.73.

• 9:45 AM ET                  S&P Global Services PMI, Jan-Final
• 10:00 AM ET                Employment Trends for January
• 10:00 AM ET                ISM Non-Manufacturing PMI, for January
• 2:00 PM ET                   Senior Loan Officer Opinion Survey on Bank Lending Practices

• Earnings After the Close: AMKR BRBR CBT CCK CHGG CHX COHR FLXS FMC GBDC GLAD HI IVAC JJSF KE KFRC PLTR RMBS SKY SPG SSD SYM VRNS VRTX

 

 

Macro	Up/Down	Last
Nymex	-0.42	71.86
Brent	-0.38	76.95
Gold	-10.90	2,042.80
EUR/USD	-0.0031	1.0754
JPY/USD	0.02	148.40
10-Year Note	+0.046	4.077%

 

• U.S. Senate releases draft of $118 billion bipartisan bill, which would provide $60 billion in military aid to Ukraine, $14 billion to Israel and $20 billion for border security. The deal would allow 1.5 million illegals to enter the US every year, allocate $2.3 billion towards "Refugee and Entrant Assistance" and other organizations which traffic them.
• Japan’s services PMI rose to 53.1 in January from 51.5 in December.
• Hong Kong’s composite PMI eased to 49.9 in January from 51.3 in December

• Estee Lauder (EL) Q2 adj EPS $0.88 vs. est. $0.55; Q2 revs $4.28B vs. est. $4.19B; sees Q3 adj EPS $0.36-$0.46 below the $0.81 consensus and net sales are forecasted to increase between 3% and 5% versus the prior-year period; to lay off 3%-5% of workforce and forecasts restructuring costs $500M-$700M before taxes.
• Philip Morris International (PM) mentioned positively in Barron’s noting the stock hasn’t had a hot start to 2024, but its shares could be ready to bounce back when it reports fourth-quarter earnings on Feb. 8. Sales for the quarter are expected to grow 10.5% to $9B, and the increased adoption of the company’s smokeless products, including its IQOS heated tobacco, should offset declines in traditional cigarette sales.
• Clorox (CLX) downgraded to Neutral from Buy at DA Davidson.

• Air Products (APD) Q1 adj EPS $2.82 vs. est. $3.00; Q1 revs $3B vs. est. $3.19B; sees Q2 adjusted EPS $2.60-$2.75, below consensus $3.16 and sees FY24 adj EPS $12.20-$12.50 vs. est. $12.97.
• Haynes International (HAYN) has agreed to be acquired by a unit of Spanish stainless-steel maker Acerinox in an all-cash deal with an enterprise value of about $970 million, with holders to receive $61 a share in cash under the deal.
• Barron’s noted while Boeing Co. (BA) suffers from backlash due to quality control issues, there’s a way investor can profit off the company’s woes, such as buying pure-play aftermarket players like TransDigm Group Inc. (TDG) and FTAI Aviation Ltd. (FTAI), which provide engineering, maintenance, and training to airlines.
• Boeing Co. (BA) said it found more mistakes with holes drilled in the fuselage of its 737 Max jet, a setback that could further slow deliveries on a critical program already restricted by regulators over quality lapses.
• In heavy duty machinery (CMI, PCAR), ACT Research released preliminary January Class 8 net orders of 27,000 units, up +45% y/y and +3% sequentially from December.

• Elanco (ELAN) announced it has entered into an agreement to sell its aqua business to Merck Animal Health (MRK) for approximately $1.3B in cash.
• Novo Holdings, the controlling shareholder of Novo Nordisk (NVO) said it’s buying Catalent (CTLT) for $16.5B in cash, or $63.50 per Catalent share, a 16.5% premium to Friday’s close. The deal is a 39% premium to Catalent’s close before it announced a strategic review. http://tinyurl.com/kzd3u7wf
• Reviva Pharmaceuticals (RVPH) files $200M mixed securities shelf.

• Charter (CHTR) downgraded to Equal Weight from Overweight at Wells Fargo and cut tgt to $340 from $460.
• Foxconn, Apple’s (AAPL) biggest iPhone assembler said it expects its business this year to be "slightly better" than last year but is facing a shortage of chips for AI servers, according to Reuters.
• Zscaler’s (ZS) operating chief Dali Rajic has resigned, according to a Securities Exchange Commission filing. The cloud security company didn’t disclose on Friday who will be replacing Rajic.

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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.