S&P futures are up 0.5% in Thursday morning trading after US equities posted a third straight decline on Wednesday, the first such streak since early September. Laggards included big tech, semis, autos, retail, beverages, trucking, hotels, and industrial metals. Treasuries firmed as the curve bull flattened, and the Dollar Index fell 0.3%. Gold rose 0.7%, Bitcoin futures gained 0.9%, and WTI crude increased 0.9%.
The market is attempting a bounce, driven by post-earnings strength from Tesla (TSLA), which beat expectations on automotive gross margins and offered a positive 2025 outlook, with Musk predicting 20-30% delivery growth. Softer global PMIs and a slight reprieve in rates are also providing support. However, concerns about election uncertainty, deficits, and higher earnings expectations persist.
US economic data includes initial claims, flash PMIs, and new home sales today. Claims are expected at 240K, while PMIs are anticipated to show manufacturing contraction and services expansion. New home sales are forecast to rise 0.6% for September after a 4.7% drop in August.
Notable Earnings:
- Tesla (TSLA): Beat on earnings, with strong gross margins and a positive 2025 outlook.
- IBM: Missed on sales, but software performed well, and AI commentary was upbeat.
- T-Mobile (TMUS): Beat on key metrics.
- ServiceNow (NOW): Beat and raised guidance, highlighted AI leverage.
- Honeywell (HON): Organic growth missed expectations.
- UPS: Beat with US Domestic performance standing out.
- Lam Research (LRCX): Expects to outperform wafer fab equipment growth in 2025+.
- Carrier (CARR): Missed on organic growth and trimmed guidance.
- Newmont (NEM): Production and EBITDA came in light.
- O’Reilly (ORLY): Comps were light amid a difficult macro environment.
- Las Vegas Sands (LVS): Macau EBITDA beat expectations, and the company increased its buyback.
- Southwest Airlines (LUV): Beat estimates, announced six new directors in cooperation with Elliott Management.
Outside earnings, Boeing (BA) declined after its union rejected the latest contract offer.
US equities finished lower on Wednesday, with the Dow down 0.96%, S&P 500 down 0.92%, and Nasdaq leading the decline, falling 1.60%. The S&P 500 experienced its third consecutive loss, the first such streak since early September. Laggards included big tech, semiconductors, retail/apparel, autos, beverages, trucking, and hotels. Relative outperformers were utilities, telecom, paper/packaging, hospitals, and insurance. Treasuries weakened, flattening the curve, with yields moving higher. The Dollar Index rose 0.3%, driven by yen weakness, while gold fell 1.1%, ending its six-day rally into record highs. Bitcoin futures fell 1.6%, and WTI crude was down 1.4% after gaining for two consecutive days.
Concerns over rising bond yields continued to pressure the market, with fears of reinflation and the highest 10-year breakevens since June. Market volatility remains high, with mixed earnings, stretched valuations, election uncertainty, and a strong dollar contributing to bearish sentiment. However, investors remain hopeful for a post-election bounce, buyback resumption, and favorable seasonality as potential bullish factors.
Notable Stock Movements by GICS Sector
Information Technology
- Qualcomm (QCOM) -3.8%: ARM reportedly gave Qualcomm 60-day notice to cancel architectural license agreements, contributing to a decline in shares.
- Texas Instruments (TXN) +4.0%: Q3 results exceeded expectations, with strong growth in the Auto business, particularly in China. Weakness in Industrial was offset by optimism around bottoming in the sector.
- Seagate Technology (STX) -8.1%: Despite better-than-expected FQ1 earnings and revenue, concerns over the timeline for HAMR qualification and product competitiveness weighed on shares.
- Manhattan Associates (MANH) -7.2%: Q3 results exceeded expectations, but analysts remain cautious about FY24 cloud subscription revenue, citing macroeconomic headwinds.
- Enphase Energy (ENPH) -14.9%: Q3 earnings and revenue missed, with analysts highlighting weak demand in Europe. The company also guided Q4 revenue below expectations and was downgraded to sell by Guggenheim.
Consumer Discretionary
- McDonald’s (MCD) -5.1%: Hit by a CDC Food Safety Alert related to E. coli in its Quarter Pounder, with 49 cases across 10 states. The news overshadowed the company’s recent positive sentiment from improved US comp momentum.
- Winnebago Industries (WGO) -10.8%: Reported a fiscal Q4 revenue beat but missed on EBITDA and EPS. FY25 guidance fell well short of expectations due to sluggish retail demand and operating inefficiencies.
- Stride (LRN) +39.1%: Shares surged after a big FQ1 earnings and revenue beat, driven by strong enrollment trends and well-managed costs. FY guidance was ahead of expectations.
- John Bean Technologies (JBT) +17.7%: Q3 earnings and revenue beat, with management pointing to a continued recovery in global poultry demand.
Communication Services
- Upwork (UPWK) +26.7%: Announced Q3 Gross Services Volume of $998M and organizational changes, including a 21% workforce reduction, driving shares higher.
- AT&T (T) +4.6%: Q3 results beat expectations across key metrics, including Wireless Service revenue and FCF, despite softer revenue from Mobility Equipment.
Industrials
- Old Dominion Freight Line (ODFL) -5.5%: Q3 revenue, operating income, and operating ratio missed expectations due to ongoing softness in the domestic economy. EPS beat slightly due to a lower tax rate.
- Packaging Corp of America (PKG) +5.5%: Q3 earnings and EBITDA beat expectations, driven by strong Packaging demand. Management expects corrugated shipments to continue strengthening into Q4.
Health Care
- Thermo Fisher Scientific (TMO) -1.7%: Q3 earnings were slightly better, but revenue fell short due to weak organic growth. Life Sciences Solutions was a weak spot, though the company raised its FY EPS guidance midpoint slightly.
- Boston Scientific (BSX): Hit by a temporary enrollment pause in its AVANT GUARD study, which weighed on shares.
Financials
- Northern Trust (NTRS) +7.0%: Q3 earnings beat expectations, with better-than-expected NII and net interest margin. Lower expenses and higher AUM contributed to the stock’s rise.
- TransUnion (TRU) +2.7%: Q3 results were strong, with EPS and revenue beating expectations. Mortgage strength, accelerating insurance growth, and large breach remediation wins drove positive sentiment.
Consumer Staples
- Coca-Cola (KO) -2.1%: Q3 results showed strong price/mix gains, but unit case volumes were down 1%, disappointing investors. GM missed expectations, though FY guidance was raised slightly.
Eco Data Releases | Thursday October 24th, 2024
S&P 500 Constituent Earnings Announcements | Thursday October 24th, 2024
Data sourced from FactSet Research Systems Inc.
