S&P futures are down 0.5% in Tuesday morning trading, following Monday’s mostly lower session where 10 of 11 sectors declined. Rate-sensitive stocks were notable laggards, though select big tech names outperformed. Treasuries weakened, with the 10-year yield hitting its highest level since late July. The Dollar Index is down 0.1%, gold is up 0.5%, Bitcoin futures fell 1%, and WTI crude rose 1.1%.
The backup in bond yields is the key overhang, driven by factors including continued soft-/no-landing narrative traction, which has fueled market gains for six straight weeks. The S&P 500 has risen in 37 of the past 51 weeks, marking its strongest YTD performance since 1997.
Today is relatively quiet on the macro front, with Richmond Fed manufacturing data due and Philadelphia Fed President Harker speaking at 10:00 AM. Later this week, key reports include existing home sales, the Fed Beige Book, initial claims, and durable goods orders.
Notable Earnings
- GE: Beat expectations, raised EPS and FCF guidance.
- Danaher (DHR): Beat, highlighted momentum in bioprocessing.
- SAP: Beat, raised some FY24 guidance, strong cloud ERP growth.
- RTX: Beat and raised.
- Sherwin-Williams (SHW): Missed, cited choppy demand.
- GM: Beat and raised.
- 3M (MMM): Beat, posted positive organic growth for third straight quarter.
- Kimberly-Clark (KMB): Missed, tweaked down FY organic growth guidance.
- Nucor (NUE): Weaker Q4 guidance.
- Genuine Parts (GPC): Missed and cut guidance.
- Zions (ZION): Beat on NII trends but reported higher NPAs.
- Hexcel (HXL): Withdrew 2024-26 guidance, citing supply chain issues.
- Inter Parfums (IPAR): Sales beat, FY24 guide reiterated.
- Medpace (MEDP): Pressured by Q3 bookings miss and lower FY24 revenue guidance.
Other Movers:
- Cheesecake Factory (CAKE): Up on activist headlines.
- iRhythm (IRTC): Big gainer after FDA clearance for Zio AT device updates.
US equities closed mostly lower on Monday, with the Dow down 0.80%, S&P 500 down 0.18%, and Russell 2000 declining 1.60%. However, the Nasdaq outperformed, rising 0.27%, driven by strength in big tech, particularly NVIDIA (NVDA). Weakness was seen across banks, insurers, credit cards, homebuilders, small-caps, autos, and machinery, while energy, aerospace & defense (A&D), precious metals miners, and managed care outperformed. Treasuries weakened across the curve, pushing the 10Y yield up by 17 basis points over the past three sessions. The Dollar Index gained 0.5%, gold rose 0.3%, Bitcoin futures dropped 1.7%, and WTI crude jumped 2.0% following a 9% drop last week.
The week ahead is expected to be busy, with 112 S&P 500 companies scheduled to report Q3 earnings, including Tesla (TSLA) post-close on Wednesday. Some rotation out of value/cyclicals continued, while recent laggards saw a bounce. Market sentiment remains focused on the soft-/no-landing narrative, supported by a Fed easing cycle, Q3 earnings, AI growth, and China’s stimulus efforts. Election dynamics are also becoming a greater focus, with an extremely tight race noted in headlines.
No major economic data was released on Monday, but Fed speakers Logan, Kashkari, Schmid, and Daly provided comments on the economy’s strength, rate levels, and economic resilience. Key reports this week include Richmond Fed manufacturing, existing home sales, Fed Beige Book, initial claims, new home sales, and durable goods orders.
Notable Stock Movements by GICS Sector
Information Technology
- Fortinet (FTNT) +1.2%: Named a top pick at Morgan Stanley, which remains bullish on network security stocks, highlighting potential upside from next-gen products and margin expansion.
- Lumen Technologies (LUMN) -2.5%: Announced a partnership with Meta (META) to expand network capacity and AI services, though analysts at Raymond James questioned whether the news added to previous announcements.
Consumer Discretionary
- Spirit Airlines (SAVE) +53.1%: Announced an extension of its debt refinancing deadline until December 23, expecting to end the year with over $1 billion in liquidity.
- Warby Parker (WRBY) +10.0%: Upgraded to buy from neutral at Goldman Sachs, with analysts citing growth potential from scaling insurance partnerships and active-customer growth.
- VF Corp (VFC) -7.2%: Estimates cut and placed on negative catalyst watch by JPMorgan, with concerns over high inventories and retailer reluctance to take stock early.
- Canada Goose (GOOS) -7.0%: Downgraded to sell by Goldman Sachs, citing increasing competition, normalizing brand momentum, and a weakening luxury market backdrop.
- Levi Strauss (LEVI): CFO stated the company has received interest in its Dockers brand from potential buyers, but shares traded lower.
- Hertz Global (HTZ) -8.6%: Downgraded to underweight at JPMorgan, citing softer travel trends and concerns over potential litigation costs related to prior bankruptcy.
Financials
- Atlantic Union Bankshares (AUB) -6.8%: Announced it will acquire Sandy Spring Bancorp (SASR) in an all-stock transaction valued at $1.6 billion, though analysts expressed concerns over a PPNR miss and equity raise.
Industrials
- Boeing (BA) +3.1%: Reached a tentative agreement with striking machinists’ union, with a ratification vote set for Wednesday. The new proposal includes a 35% wage increase over four years.
- United Parcel Service (UPS) -3.4%: Downgraded to underweight by Barclays, noting continued weak parcel demand and increasing long-term competitive pressures.
- Saia Inc (SAIA) -3.2%: Downgraded to hold from buy at Stifel, with concerns about sub-seasonal Q3 performance and uncertain macro demand outlook.
Healthcare
- Pfizer (PFE): CEO reportedly has strong board support amid an activist challenge from Starboard.
- Humana (HUM): Reportedly in refreshed deal discussions with Cigna (CI) after previous talks broke down over pricing disagreements. Humana also sued US health agencies over Medicare quality rating cuts.
- Kenvue (KVUE) +5.5%: Starboard reportedly built a stake in the company, which has fallen 18% since its public listing in May 2023.
- Cigna (CI) -4.7%: Bloomberg reported the company is in renewed deal discussions with Humana (HUM), though previous talks fell apart over pricing.
Utilities
- Southern (SO) +0.5%: Benefited from relative strength in utilities amidst a broader mixed market, reflecting investor rotation into defensive sectors.
Eco Data Releases | Tuesday October 22nd, 2024
S&P 500 Constituent Earnings Announcements | Tuesday October 22nd, 2024
Data sourced from FactSet Research Systems Inc.
