Early Look

Thursday, September 26, 2024

Another day, another record on tap for the S&P 500 and Dow Jones Industrials, while the Nasdaq nears its all-time bests (less than 3% away) behind strength in semiconductors as Micron (MU) shares surge 15% following better earnings and guidance and as China said it is considering another trillion to recapitalizing key commercial banks. Gold prices edge higher approaching $2,700 an ounce at new highs as China measures helping boost commodity prices (excluding oil which is down -1.5%). Seeing strength in US listed China stocks yet again (BABA, BIDU, JD, PDD, NIO) as well as metal stocks (AA, FCX, CLF, CENX). This all adds to strong optimism in markets after the FOMC cut rates by 50-bps last Wednesday. Late on Wednesday, Fed Governor Adriana Kugler said she “strongly supported” the central bank’s decision to kick off monetary policy easing with a rare half a percentage point cut last week, as part of an emerging focus on the job market. The spotlight will now be on Powell’s remarks at a New York conference expected before the market opens as investors look for clues on the outlook for the economy and the pace of further easing. Odds of a 50 basis-point reduction in interest rates in November are at 60.8%, compared with 38.8% a week ago, as per the CME Group’s FedWatch Tool. Traders also await remarks from a host of Fed officials, including John Williams, Michael Barr, Michelle Bowman and Neel Kashkari. In Asian markets, The Nikkei Index surged over 1,000 points or 2.79% to settle at 38,925, the Shanghai Index jumped 104 points or 3.61% to settle at 3,000 and the Hang Seng Index spiked nearly 800 points or 4.16% to close at 19,924. In Europe, the German DAX is higher by 212 points to 19,130, while the FTSE 100 is up 18 points to 8,286.

China stimulus measures announced Tuesday helped push markets higher earlier this week, but now the PBoC plans to issue special sovereign bonds worth about 2 trillion yuan ($284.43 billion) this year as part of a fresh fiscal stimulus, according to reports. As part of the package, the Ministry of Finance (MOF) plans to issue 1 trillion yuan of special sovereign debt primarily to stimulate consumption. Part of the MOF proceeds raised via special bonds will be used to increase subsidies for the trade-in and renewal of consumer goods and for the upgrade of large-scale business equipment. The proceeds will also be used to provide a monthly allowance of about 800 yuan, or $114, per child to all households with two or more children, excluding the first child, the first source said. China also aims to raise another 1 trillion yuan via a separate special sovereign debt issuance and plans to use the proceeds to help local governments tackle their debt problems

• The Dow Jones Industrial Average fell -293.47 points, or 0.70%, to 41,914.75.
• The Nasdaq Composite edged higher 7.68 points, or 0.04%, to 18,082.21.
• The Russell 2000 Index declined -26.54 points, or 1.19% to 2,197.45.

• 8:30 AM ET                  Continuing Claims…est. 1.838M
• 8:30 AM ET                  Gross Domestic Product (GDP) Q2 Final…est. +3.0%
• 8:30 AM ET GDP Consumer Spending Q2 final…est. +2.9%
• 8:30 AM ET GDP Price Deflator Q2 final…est. +2.5%
• 8:30 AM ET PCE Prices for Q2 final…(prior +2.5%)
• 8:30 AM ET                  Core PCE Prices for Q2 final…est. +2.8% (prior +2.8%)
• 8:30 AM ET                  Durable Goods Orders for August…est. (-2.6%)
• 9:10 AM ET                  Fed’s Collins, Kugler Participate in Fireside Chat
• 9:25 AM ET                  Fed’s Williams Gives Remarks at Conference
• 10:00 AM ET                Pending Home Sales M/M for August…est. +1%
• 10:30 AM ET                Weekly EIA Natural Gas Inventory Data
• 10:30 AM ET                Fed’s Barr Gives Remarks at Conference
• 11:00 AM ET                Kansas City Fed Manufacturing for September…prior (+6)
• 1:00 PM ET U.S. Treasury to sell $44B in 7-year notes

• Earnings After the Close: COST ISPR MTN SCHL

• Goldman Sachs European Real Estate Equity and Debt Conference, 9/26, in London
• Oppenheimer Oncology Summit at MD Anderson, 9/26

• Aramark (ARMK) shares rising over 7% pre mkt after Bloomberg reported last night that Sodexo (SDXAY) is weighing a potential acquisition of Aramark (ARMK) as it eyes growth overseas.
• Bath & Body Works, Inc. (BBWI) said the Company and Julie Rosen, President, Retail of Bath & Body Works, have mutually agreed MS. Rosen will step down from her role, effective immediate; the firm reaffirms Q3, FY2024 guidance.
• Hershey (HSY) downgraded to underperform from hold at Jefferies saying elevated prices and a stretched consumer are finally impacting the US snack category. Chocolate stands out as amongst the most concerning, with buy rates vs 2019 trailing other snacks, wide price gaps vs other snacks getting wider.
• Starbucks (SBUX) upgraded to Outperform from Market Perform and raise tgt to $115 from $92 saying the market has positively reacted to the appointment of Brian Niccol as the new CEO, but the stock’s current valuation does not fully appreciate the earnings power that Starbucks could unlock.

• SMA Solar Tech (SMTGY) initiates restructuring and transformation program with target of cost savings of EU150M-EU200M; says sales development in Home Solutions and Commercial & Industrial Solutions continues to be significantly influenced by persistently high inventories at distributors and installers, and challenging market environment.
• Worthington Steel (WS) Q1 EPS $0.56 vs est. $0.55, adj op Inc $39.4Mm on revs $834Mm vs est. $748.4Mm.

• Armada Hoffler (AHH) announces offering of 7M shares of common stock.
• Jefferies (JEF) Q3 EPS $0.75 vs est. $0.78 on net revs $1.68B vs est. $1.71B, says optimistic about balance of this year and outlook for 2025; said momentum across all business lines continues; IB pipeline remains strong heading into year-end.
• Northern Trust (NTRS) downgraded to Sell from Neutral at Goldman Sachs on interest rate risk saying recent changes in interest rate expectations create a renewed downside risk to earnings estimates.
• New York Community Bancorp (NYCB) upgraded to Overweight from Equal Weight at Barclays as sees a favorable risk/reward at current share levels.

• Accenture (ACN) Q4 adj EPS $2.79 vs. consensus $2.78 and revs $16.4B vs. est. $16.38B; guides Q1 revenue $16.85B to $17.45B, vs. est. $16.96B; sees FY25 operating cash flow $9.4B-$10.1B vs. est. $10.77B, revs +3% to +6%, guides operating margin 15.6% to 15.8% and guides free cash flow $8.8B-$9.5B vs. est. $9.84B; Board Approves $4B of Additional Share Repurchases.
• Concentrix Corp. (CNXC) shares dip on results; Q3 adj EPS $2.87 below consensus est. $2.93, adj EBITDA $388.1Mm vs est. $403.43Mm on revs $2.387B vs est. $2.382B; sees Q4 revs $2.42-2.47B vs est. $2.465B, adj op Inc $335-355Mm vs est. $331.59Mm, adj EPS $2.90-3.16 vs est. $3.48; cuts FY24 EPS view to $11.05-$11.31 from $11.40-$12.07.
• Sonos (SONO) double downgraded to Underweight from Overweight at Morgan Stanley and slash tgt to $11 from $25 saying they believe the impact of the company’s app redesign is likely greater than the market currently perceives.