Today’s Big Picture
Asia-Pacific stock markets ended the day lower, except for South Korea’s KOSPI, which gained 1.04% in a mixed day led by Industrial Services and Energy Minerals names. Japan’s Nikkei and Australia’s ASX All Ordinaries were both near flat, down 0.08% and 0.06%, respectively, while India’s SENSEX fell 1.06%. China’s markets resumed their slide as the Shanghai Composite fell 1.91% and Hong Kong’s Hang Seng closed 1.51% lower. Taiwan’s markets are closed as the country observes Peace Memorial Day, otherwise known as 228 Memorial Day, which commemorates a 1947 anti-government uprising that was quickly and brutally put down by authorities. European markets are mixed in midday trade and US stock futures point to a lower open.
Coming off last week’s market strength, investors are taking a more cautious tone ahead of tomorrow’s January PCE price index data and Friday’s February manufacturing PMI reports. The growing concern is that the data will reinforce a slow path to the Fed’s 2% inflation target even though the economy continues to grow above trend. As that data is digested, the market will begin to consider possible revisions to the Fed’s Economic Projections, which in December called for GDP of 1.4% in 2024 with core PCE inflation at 2.4%. Recent data suggests that the Fed will need to revise that GDP forecast higher and possibly do the same for its core PCE inflation as well. If tomorrow’s and Friday’s data reinforce that thought, market expectations for the start of rates may slide further. According to the CME FedWatch Tool, the current thinking is that the first rate cut will be in June, but we would point out that thinking is only by a modest margin.
Data download
International Economy
The economic sentiment indicator in the Euro Area fell to 95.4 in February, down from January’s revised figure of 96.1 and falling short of market expectations of 96.7. Sentiment remained subdued as businesses struggled with still high inflation, rising borrowing costs and weak external demand. The consumer confidence indicator in the Euro Area rose by 0.6 points from the previous month to -15.5 in February, in line with previous estimates. The index of consumer inflation expectations in the Euro Area rose by 3.5 points to 15.5 in February, the highest level since March 2023.
Domestic Economy
In addition to the usual Wednesday weekly data, which includes the latest figures for the MBA Mortgage Application Index and crude oil inventories, today brings the second look at 4Q 2023 GDP. Compared to the original estimate of +4.9% YoY, the market expects this second appearance to come in at +3.3% YoY. Although this is slower compared to the original figure, it is still faster compared to 1H 2023.
Markets
Energy (-0.43%) and Healthcare (-0.24%) were the only sectors that declined yesterday but apart from Communication Services (0.81%) and Utilities (1.89%) the rest of the sectors managed returns between 0.01% (Consumer) and 0.37% ( Materials). Declines in United Health Group (UNH) and Amgen (AMGN) helped push the Dow lower as it fell 0.25%. The S&P 500 gained 0.15%, the Nasdaq Composite added 0.37% and the Russell 2000 had a relatively strong day, up 1.34%. Helping to drive the Utilities sector was the 16.92% return produced by shares of Constellation Energy (CEG) after the company crushed earnings and went on to provide strong guidance as well as a 25% dividend increase.
Here’s how the major market indicators stack up year-over-year:
- Dow Jones Industrial Average: 3.40%
- S&P 500: 6.46%
- Nasdaq Composite: 6.82%
- Russell 2000: 1.43%
- Bitcoin (BTC-USD): 35.76%
- Ether (ETH-USD): 41.16%
Stocks to Watch
Advance Auto (AAP), Baidu (BIDU), Clear Secure (VI), Dycom (DY), Integra (IART), Patterson Companies (PDCO), Payoneer (PAYO), Squarespace (SQSP), Stericycle (SRCL), Steve Madden (SHOO), TJX Companies (TJX)and Warby Parker (WRBY) are expected to release quarterly earnings before shares begin trading later this morning.
Premarket breadth is healthy today, as 263 names in the S&P 500 have traded hands so far this morning with 61 gainers and 202 decliners. Although there are considerably more names trending lower, there don’t seem to be any major breakouts this morning, evidenced by the roughly 2% indicated drop in Applied Materials (AMAT), KeyCorpand Align Technology (ALGN) who lead that group. Names grabbing a bid this morning include Universal Health Services (UHS), First Solar (FSLR)and eBay (EBAY)which are on track to open 7%, 6%, and 4% higher.
Apple (AAPL) will end his team working on electric cars, ending his effort to challenge Tesla (TSLA) and others. The company has other automotive-related projects, including its CarPlay infotainment software, which Apple says is installed on 80% of new vehicles. With that off the table, Apple can focus on applying AI to its current products, including the iPhone and iPad, and avoid falling behind its tech peers.
Workers at unionized Starbucks (SBUX) coffee shops will receive the wage increases their non-union co-workers first collected in May 2022. The wage increases are a sign of Starbucks’ good faith in Workers United, an affiliate of the Service Employees International Union, which has organized more than 300 company Starbucks locations. .
December quarter income at Beyond Meat (BYND) exceeded expectations, and the company guided 2024 revenue to $315-$345 million compared to the $344.43 million consensus. What caught the attention of investors was the company’s gross margin guidance for next year, which is expected to be in the mid to high teens for 2024 with the second half of the year higher compared to the first half. As part of that outlook, Beyond Meat also announced plans to increase product prices and “dramatically reduce” costs this year.
Agilent Technologies (A) delivered a better-than-expected earnings report last night, but its revenue outlook for the current quarter of $1.56-$1.59 billion missed the $1.62 billion consensus. However, the company maintained its FY2024 revenue outlook of $6.71 to $6.81 billion, which supports the $6.77 billion consensus.
Shares of Lemonade (LMND) were hit hard in aftermarket trading last night after the insurer issued downgrade guidance for the current quarter and 2024 while doubling its growth budget. For 2024 the company sees revenue reaching $505-4510 million with adjusted EBITA in the range of -$160 to -$155 million.
For its December quarter, Bumble (BMBL) reported mixed results although total paying customers reached 4.0 million in the quarter, up 16.4% YoY. Total Average Revenue per Paying User, however, fell to $22.64 from $23.01. For the current quarter, Bumble’s revenue growth forecast indicates $1.136-$1.168 billion compared to the $1.19 billion consensus. Along with the quarter’s results, the company announced it will reduce its global workforce “by approximately 350 roles to better align its operating model with future strategic priorities and drive stronger operating leverage.”
IPOs
Readers who want to delve into the upcoming IPO calendar should visit Nasdaq’s Latest and Upcoming IPOs page.
After Today’s Market Close
AMC Entertainment (AMC), C3.ai (AI), DoubleVerify (DV), Duolingo (DUOL), HP (HPQ), Monster Beverage (MNST), Nutanix (NTNX), Okta (OKTA), Salesforce (CRM), Snowflake (SNOW), and WW (WW) are expected to report quarterly results after shares stop trading today. Those looking for more on upcoming quarterly earnings reports should head over to Nasdaq’s Earnings Calendar.
On the Horizon
Thursday, February 29
- Japan: Retail Sales, Housing – January
- Germany: Retail Sales, Inflation – January
- UK: Bank of England Consumer Credit – January
- United States: Weekly Initial & Continuing Jobless Claims
- United States: Personal Income and Expenditure, PCE Price Index – January
- United States: Pending Home Sales – January
- United States: Weekly EIA Natural Gas Inventories
Friday, March 1st
- Japan: Jibun Bank Manufacturing PMI (Final) – January
- China NBS Manufacturing & Non-Manufacturing PMI – February
- China: Caixin Manufacturing PMI – January
- Eurozone: HCOB Manufacturing PMI (Final) – February
- UK: S&P Global Manufacturing PMI (Final) – February
- US: S&P Global Manufacturing PMI (Final) – February
- United States: ISM Index of Manufacturing – February
Thought for the Day
“It never ceases to amaze me: we all love ourselves more than other people, but care more about their opinion than our own.” – Marcus Aurelius
Revelations
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.