Early Look

Thursday, September 19, 2024

After initially pulling back late day Wednesday following the Fed’s oversized interest rate cut of 50-bps, with major U.S. stock averages ending at their lows, futures are absolutely surging this morning, with a 2% jump in Nasdaq futures and S&P futures rising over 1.5% at new record highs as global stocks have reacted positively to the cut. U.S. banks (JPM, BAC, C, GS) rising early on hopes the will benefit in the longer run as rate cuts would help ease deposit costs, which has pressured net interest margin; though could see temporary headwinds as interest income is expected to take a hit. There is nothing else that matters right now, the Fed 50-bps rate cut and expectations of further aggressive cuts this year and next are propelling global stock prices as the Nikkei Index jumped 775 points to 37,155, the Shanghai Index gains 18 points to 2,736, and the Hang Seng Index gained 353 points to 18,013. In Europe, the German DAX is jumping 275 points to a record 18,985, while the FTSE 100 is up around 100 points to 8,351. Smallcaps outperform as Russell 2000 futures look higher by over 3%. Gold is higher, silver is higher, Bitcoin is up over 3.5% to $62,400, oil is higher – so far, all arrows pointing up while the dollar is flat along with Treasury yields.  Earnings today from Fed-Ex (FDX) at night, Lennar (LEN) in housing and Darden Restaurants (DRI).

Yesterday, U.S. markets were hoping and expecting for a large interest rate cut by the Fed to help a “softer” jobs market as evident by last month’s nonfarm payroll figures and to not be “behind the curve” in lowering rates. Well, the FOMC delivered exactly that, a 50-bps rate cut while policy makers see the Fed’s benchmark rate falling by another 50bps by the end of this year, another 100bps in 2025, and by a final 50bps in 2026 to end in a 2.75%-3.00% range. Stock markets reacted favorably initially as the S&P 500 Index (SPX) hit a fresh all-time high at 5,689.75, passing its previous intraday high of 5,670.81 and gold/silver prices also jumped in reaction. While stock markets held steady (mostly) throughout most of Fed Chairman Powells, prices started rolling late day, eventually giving way to declines as the S&P snapped its 7-day winning streak. Was the Fed giving mixed messages? All we kept hearing about is how good the economy remains and how inflation is going down. Powell said today “the economy is strong overall”, his words, but still delivered an aggressive 50-bps rate cut which is normally for weakening economies – while seeing aggressive cuts going forward. Is there more that the Fed is seeing that we don’t? Recession fears? Time will tell, but the reaction last night in markets raised some eyebrows, especially heading into the Presidential election. For today’s Bank of England (BoE) interest rate policy meeting, most of Wall Street is near unanimous that rates will be left unchanged at 5% in September (tomorrow widely expected for no change by the Bank of Japan).

• The Dow Jones Industrial Average fell -103.08 points, or 0.25%, to 41,503.10.
• The Nasdaq Composite dropped -54.76 points, or 0.31%, to 17,573.30.
• The Russell 2000 Index edged higher 0.86 points, or 0.04% to 2,206.34.

• 8:30 AM ET                  Continuing Claims…est. 1.854M
• 8:30 AM ET                  Current Account for Q2…est. (-$260B)
• 8:30 AM ET                  Philly Fed Business Index for September…est. (-1.0)
• 10:00 AM ET                Existing Home Sales M/M for August…est. 3.9M
• 10:00 AM ET                Leading Index M/M for August…est. (-0.3%)
• 10:30 AM ET                Weekly EIA Natural Gas Inventory Data

• Earnings After the Close: CBRL FDX IPW LEN LPTH MLKN

• Cantor Global Healthcare Conference, 9/17-9/19, in New York
• DA Davidson 23rd Annual Diversified Industrials and Services Conference, 9/18-9/20 in Nashville, TN
• Salesforce.com (CRM) Dreamforce Conference 9/17-9/19, in San Francisco, CA

• Playtika Holding Corp. (PLTK) announced it has entered into a definitive agreement to acquire SuperPlay, a mobile gaming company based in Tel Aviv, Israel, for $700M, and additional contingent consideration of up to $1.25B, subject to achieving certain financial targets over three years.
• Steelcase (SCS) Q2 adj EPS $0.39 vs est. $0.37 on revs $855.8Mm vs est. $864.1Mm; sees Q3 gr mgn 32.5-33.0%, op exp $225-230Mm, int exp net and other Inc net approx $2Mm.
• Target Corporation (TGT) announced that Jim Lee has been named Chief Financial Officer and a member of its leadership team effective Sept. 22.
• Exports of Swiss watches recorded a slight rebound in August, as total exports of timepieces amounted to 1.95 billion Swiss francs ($2.3 billion), 6.9% higher compared with the same month last year.
• In August, new EU car registrations saw a sharp decrease of 18.3%, with negative results across the region’s four major markets as double-digit losses were witnessed in Germany, France, and Italy, and the Spanish market declining by 6.5%.

• BioAge Labs (BIOA), an obesity therapy-focused company that has also collaborated with Eli Lilly (LLY), said it was seeking a valuation of as much as $587 million in its initial public offering (IPO) in the United States.
• Progyny, Inc. (PGNY) shares tumble after disclosing in an 8K that a “significant” client had exercised a 90-day option to terminate its contract with PGNY, effective January 1, 2025. This client represented 670K members (~10% of its 2Q total) and ~13% of 1H24 revenue ($76M).
• QIAGEN (QGEN) announced the launch of 100 new assays for its digital PCR platform QIAcuity for use in the study of cancer, inherited genetic disorders, infectious disease surveillance, and food and environmental monitoring.
• Repligen (RGEN) said it is reaffirming prior 2024 revenue guidance; understated $6.6M in 1H’24 to be added incrementally, thus updating FY range to $627M-$642M.

• Amazon (AMZN) raises pay for fulfilment and transportation workers by $1.50 an hour, adds Prime membership as benefit.