S&P futures are down 0.1% in Wednesday morning trading after mixed performance on Tuesday, where the S&P 500 logged its first back-to-back decline since early September. Builders, A&D, auto parts, and telecom lagged, while banks, cable, and tobacco outperformed. Asian markets were mixed overnight, with Hong Kong and South Korea up over 1%, while Japan lagged. European markets are also mixed. Treasuries are weaker across the curve, the Dollar Index is up 0.2%, gold rose 0.2%, and WTI crude is down 1%.
Key headlines include negative news from restaurants: McDonald’s (MCD) facing an E. coli outbreak and Starbucks (SBUX) preannouncing a larger-than-expected Q4 comp decline. Qualcomm (QCOM) dropped after ARM canceled a license agreement. Meanwhile, Texas Instruments (TXN) reported China EV strength, though Q4 guidance remains soft. Rising GOP sweep expectations and budget deficit concerns are driving a rapid repricing in rates, weighing on sentiment.
On the economic front, existing home sales data for September is due today, along with the Fed Beige Book and Fedspeak from Bowman and Barkin. Bank of Canada is expected to announce a 50 bp rate cut. Looking ahead, Thursday brings initial claims, flash PMIs, and new home sales, with durable goods orders and consumer sentiment rounding out the week on Friday.
Notable Earnings:
- McDonald’s (MCD): Hit by E. coli outbreak.
- Qualcomm (QCOM): Down on news of ARM canceling a license agreement.
- Starbucks (SBUX): Preannounced a larger-than-expected Q4 comp decline, suspending FY25 guidance.
- Texas Instruments (TXN): Strong Q3 performance driven by China EV strength, but soft Q4 guide.
- Canadian National Railway (CNI): Beat expectations and reaffirmed guidance.
- Seagate (STX): Beat and raised guidance, though HAMR delay remains an overhang.
- Packaging Corp of America (PKG): Beat on EBITDA, strong demand in the packaging segment.
- Manhattan Associates (MANH): Beat and raised guidance, though expectations were high.
- Enphase Energy (ENPH): Missed expectations and issued soft guidance due to weakness in Europe.
- Stride (LRN): Surged on beat and better FY25 guidance
US equities were mixed in Tuesday trading, with the Dow down 0.02%, S&P 500 up 0.05%, Nasdaq up 0.18%, and Russell 2000 down 0.37%. The S&P 500 logged its first back-to-back decline since early September, with breadth slightly negative and the equal-weight S&P lagging the official index. Notable laggards included truck manufacturers, aerospace & defense (A&D), auto parts, retail, telecom, and housing-related sectors. On the other hand, energy, moneycenter banks, tobacco, regional banks, rails, and copper/aluminum stocks were among the outperformers.
Big tech was mixed, with Microsoft (MSFT) standing out as a notable gainer. Treasuries were little changed, while the Dollar Index edged up 0.1%. Gold finished up 0.8%, Bitcoin futures slipped 0.3%, and WTI crude rose 2.4%, adding to Monday’s gains but still recovering from last week’s steep decline.
Market sentiment continued to be shaped by rate stabilization, providing some cushion from recent risk-off moves, alongside traction from the soft-/no-landing narrative and expectations of a Republican sweep in the upcoming elections.
The Richmond Fed Manufacturing Index improved to -7 in October from -14 in September, though it remained in contraction. Looking ahead, key data this week includes existing home sales, Fed Beige Book, initial claims, new home sales, and durable goods orders.
Notable Stock Movements by GICS Sector
Information Technology
- iRhythm Technologies (IRTC) +21.7%: Gained after receiving FDA 510(k) clearance for design updates to its Zio AT device.
- SAP (SAP): Beat Q3 expectations and raised parts of its FY24 guidance, with strong performance in Cloud ERP growth.
- Danaher (DHR) -4.0%: Q3 results ahead of expectations, but core revenue growth was slightly positive at +0.5%, in line with a guide for a low-single-digit decline. Bioprocessing business showed momentum, though weakness in Life Sciences continued.
Financials
- Zions Bancorporation (ZION) +6.2%: Q3 EPS, NII, and core PPNR beat expectations, with lower operating expenses. However, nonperforming assets and classified loans increased significantly.
- Genuine Parts (GPC) -21.0%: Reported a Q3 EPS miss by over 20% and cut FY revenue and EPS guidance due to continued market weakness in Europe and its industrial business.
Industrials
- Norfolk Southern (NSC) +4.9%: Q3 EPS and revenue beat expectations, with a notable improvement in operating ratio and carload growth.
- PACCAR (PCAR) -4.4%: Q3 EPS and revenue beat, with stronger truck sales, but Europe was a drag. Margins normalized, and FY24 guidance was mixed, with a narrowed forecast for US and Canada truck registrations.
- General Electric (GE) -9.1%: Q3 earnings beat but Commercial Engine results were below consensus. Raised FY EPS and FCF guidance but reaffirmed revenue outlook.
Consumer Discretionary
- Polaris Inc. (PII) -9.9%: Reported a Q3 miss on both EPS and revenue due to lower volumes, negative mix, and higher promotional activity. Management also cut FY24 guidance.
- Deckers Outdoor (DECK) -3.7%: Downgraded to neutral by BTIG due to slower holiday sales expectations for Ugg and reliance on wholesale performance over direct-to-consumer.
Materials
- Nucor (NUE) -6.5%: Weaker Q4 guidance despite a Q3 revenue beat. Earnings in line, but the company flagged lower average selling prices (ASPs) and decreased mill shipments, leading to an expected sequential EPS decline.
- Sherwin-Williams (SHW) -5.3%: Q3 earnings and revenue missed expectations. Management noted continued demand softness, particularly in the North American DIY market, though its protective and marine segments outperformed
Healthcare
- Quest Diagnostics (DGX) +6.9%: Q3 revenue and EPS ahead of expectations. Management raised FY revenue guidance, with analysts highlighting the company’s positioning for accelerated growth in 2025.
- Medpace Holdings (MEDP) -7.5%: Q3 EPS and EBITDA beat, but revenue was light. Analysts raised concerns over the company’s lowest-ever book-to-bill ratio, which led to a reduction in FY24 revenue guidance.
Energy
- First Solar (FSLR) +2.6%: Upgraded to buy by Citi, with analysts noting the company’s strong margins and positioning for growth regardless of the outcome of the US presidential election.
Consumer Staples
- Kimberly-Clark (KMB) -4.5%: Q3 earnings beat expectations, but revenue missed. Organic growth came in below consensus, driven by price gains, while flat volumes and retailer inventory reductions pressured sales.
- Philip Morris International (PM) +10.5%: Q3 earnings and revenue beat expectations, with better-than-expected volumes and strong performance in its Smoke-Free segment. Management raised FY EPS guidance.
Eco Data Releases | Wednesday October 23rd, 2024
S&P 500 Constituent Earnings Announcements | Wednesday October 23rd, 2024
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Data sourced from FactSet Research Systems Inc.
