Early Look

Thursday, January 4, 2024

U.S. futures are looking at a modest bounce after starting the year lower on back-to-back days heading into key jobs data. Stocks fell for a second day on Wednesday as the S&P 500 index (SPX) fell for a 3^rd straight day (S&P futures, Spuz, are down 4-straight days), bouncing off the 4,700 late Wednesday, while the Nasdaq built on its worst daily performance in nearly three months, falling -1.18%. Bespoke Invest noted yesterday marked just the third time in its history that the Nasdaq has started the year with back-to-back 1%+ declines (other two years were 1980 and 2005). Stocks lost steam midday yesterday after Minutes from the Federal Reserve’s December meeting released yesterday suggested rates could remain at restrictive levels “for some time” until a durable move down in inflation can be seen. Fed policymakers nonetheless acknowledged rates had probably peaked and they would begin cutting in 2024. Heavy dose of jobs data coming up today and tomorrow that could impact stocks, bonds, and currencies: the December ADP payrolls data due at 8:15 AM today w/est. 115K (prior month was 103K), Jobless Claims est. 216K and con claims est. 1.883M at 8:30 AM. Then on Friday, Dec Nonfarm payrolls w ests. 170K (prior 199K), private payrolls est. 130K (prior 150K) and unemployment rate to rise to 3.8% from 3.7%. In Asian markets, The Nikkei Index declined -175 points to 33,288, the Shanghai Index fell -12 points to 2,954, and the Hang Seng Index was little changed at 16,645. In Europe, the German DAX is up 37 points to 16,575, while the FTSE 100 is up about 10 points to 7,690. Crude oil prices are higher along with gold as the dollar eases.

• The Dow Jones Industrial Average fell -284.85 points, or 0.76%, to 37,430.19.
• The Nasdaq Composite dropped -173.73 points, or 1.18%, to 14,592.21.
• The Russell 2000 Index declined -53.59 points, or 2.66% to 1,959.20.

• 8:15 AM ET                  ADP Private Payrolls for December…est. 115K
• 8:30 AM ET                  Weekly Jobless Claims…est. 216K
• 8:30 AM EST                Continuing Claims…est. 1.883M
• 9:45 AM ET                  S&P Global Composite PMI, Dec Final
• 9:45 AM ET                  S&P Global Services PMI, Dec-Final
• 10:30 AM ET                Weekly EIA Natural Gas Inventory Data
• 11:00 AM ET                Weekly DOE Inventory Data

• Earnings After the Close: FC KRUS

• China Caixin December Services PMI 52.9 vs. est. 51.6 and prior 51.5; China Caixin December Composite PMI 52.6 vs. prior 51.6 reading.
• Russia is planning to buy short-range ballistic missiles from Iran, a step that would enhance Moscow’s ability to target Ukraine’s infrastructure at a critical moment in the conflict, U.S. officials said – WSJ.
• The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was 25.1 vs 21.2 last week. Bulls rise to 48.6% from 46.3%, Neutrals fall to 27.9% from 28.6%, Bears fall to 23.5% from 25.1%.

• General Motors (GM) upgraded to Outperform at Wolfe Research.

• In Solar: Enphase Energy (ENPH) and Sunrun (RUN) both downgraded to Sector Weight from Overweight at Keybanc.
• Gold Fields (GFI) said an employee died in an underground accident at its South Deep mine in South Africa on Jan. 2^nd and that operations at the mine have been suspended, without disclosing when it expects to resume mining or what impact that will have on output.
• RPM (RPM) Q2 adj EPS $1.22, in-line with consensus and reports Q2 revenue $1.79B vs. consensus $1.84B.
• In heavy duty trucking, watch shares of Cummins (CMI), Paccar (PCAR) after ACT Research released preliminary December Class 8 net order figures of 26,500 units (20,900 on a seasonally adjusted basis). Orders in December decreased 13% y/y and 37% seq. as demand seemingly slowed given the current challenging freight markets fundamentals.
• The American Petroleum Institute said weekly Crude stockpiles fell -7.418M barrels, Cushing rose +0.765M barrels, Gasoline reported a build of +6.913M barrels and Distillates rose +6.686M barrels.

• Capital One Financial (COF) downgraded to neutral from overweight at J.P. Morgan.
• Resources Connection (RGP) reports Q2 EPS $0.14, Q2 gross margin 38.9%, adj Ebitda margin 9.8% and revs $163.12M; said cautiously optimistic that buying environment and revenue growth will improve in calendar 2024.
• Sallie Mae (SLM) downgraded to neutral from overweight at J.P. Morgan.

• Dyne Therapeutics (DYN) announces a $175M common stock offering.
• Keros Therapeutics (KROS) announces $120M common stock offering.
• Novo Nordisk (NVO) said it entered research collaboration agreements with Omega Therapeutics Inc. (OMGA) and Cellarity on new treatments for obesity management.
• Simulations Plus (SLP) Q1 EPS $0.10 in-line with estimates and Q1 revs $14.5M vs. est. $13.92M; reaffirms FY24 EPS view $0.66-$0.68 and revs view $66M-$69M.

• MongoDB (MDB) downgraded to Neutral from Buy at UBS and cut tgt to $410 from $475.
• TEGNA Inc. (TGNA) and NBC announced a comprehensive, multi-year deal that renews station affiliation agreements for 20 TEGNA markets nationwide, including 10 of the top 25 markets for NBC. The 20 markets renewed cover more than 21M households, nearly 17 percent of U.S. TV households.