Markets Today: Stocks Fluctuate After Mixed Earnings Results

Rich Asplund - Barchart - Tue Feb 6, 7:53AM CST

Morning Markets

This morning, the S&P 500 Index ($SPX) (SPY) is down -0.11%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.10%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.22%.

Palantir is soaring soared more than +25% after reporting stronger-than-expected Q4 revenue. Also, Coherent is up more than +12% after reporting Q2 revenue above consensus. In addition, Eli Lilly is higher after reporting better-than-expected Q4 revenue and forecasting 2024 revenue above consensus.

U.S. stocks also have carryover support from a sharp +3% rally today in China’s Shanghai Composite on signs that China will step up efforts to stem the rout in its equity market, including a pledge by a state fund to boost stock purchases.

On the negative side for stocks, FMC Corp is down more than -9% after reporting weaker-than-expected Q4 revenue and cutting its full-year revenue forecast. Also, Cummins is lower after reporting an unexpected Q4 Ebitda loss.

The markets are discounting the chances for a -25 bp rate cut at 21% at the March 19-20 FOMC meeting and 76% for that -25 bp rate cut at the following meeting April 30-May 1.

U.S. and European government bond yields today are mixed. The 10-year T-note is down -0.4 bp at 4.154%. The 10-year German bund yield climbed to a 1-1/2 week high of 2.344% and is up +0.9 bp at 2.324%. The 10-year UK gilt yield is down -1.7 bp at 3.990%.

Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.47%. China’s Shanghai Composite Index closed up +3.23%. Japan’s Nikkei Stock Index closed down -0.53%.

The Euro Stoxx 50 today climbed to a 23-year high and is moderately higher. Economic optimism is lifting stocks today after German Dec factory orders unexpectedly rose by the most in 3-1/2 years. Corporate news today was mixed. BP Plc jumped more than +6% after announcing plans to repurchase $3.5 billion of its shares in the first half of this year. However, UBS AG fell more than -3% after reporting a wider-than-expected loss in Q4. Also, Infineon Technologies AG fell more than -3% after the German chipmaker lowered its full-year revenue forecast.

Eurozone Dec retail sales fell -1.1% m/m, weaker than expectations of -1.0% m/m and the biggest decline in a year.

The ECB Dec 1-year inflation expectations eased to +3.2% from +3.5% in Nov, the slowest pace of increase in 1-3/4 years. The Dec 3-year inflation expectations increased to +2.5 % from +2.4% in Nov.

German Dec factory orders unexpectedly rose +8.9% m/m, stronger than expectations of -0.2% m/m and the largest increase in 3-1/2 years.

Swaps are pricing in the chances for a -25 bp rate cut by the ECB at 11% for its next meeting on March 7 and at 63% at the following meeting on April 11.

China’s Shanghai Composite Index today rallied sharply by more than +3% on speculation that Chinese authorities are planning more forceful efforts to stabilize equity markets. Bloomberg reported that the China Securities Regulatory Commission plans to update President Xi Jinping on market conditions and the latest policy initiatives. Policymakers are trying to stabilize the stock market to avoid further hurting consumer confidence ahead of China’s weeklong Lunar New Year holiday that begins this Friday. Stocks extended their gains in afternoon trading when Central Huijin Investment, whose subsidiaries include Chinese state-owned banks, announced that it would expand its purchases of stock index funds. The Shanghai Composite tumbled to a 5-year low on Monday as China’s ongoing property slump, weak economic news, and trade tensions with the U.S. continue to weigh on stocks.

Japan’s Nikkei Stock Index today finished with moderate losses. Japanese stocks fell back on negative carryover from a slide in U.S. stocks on Monday after hawkish Fed comments and a strong U.S. Jan ISM services report dampened speculation that the Federal Reserve would soon start cutting interest rates. Also, disappointing earnings results from Mitsubishi UFJ Financial Group, Mitsubishi Electric, and Omron weighed on the overall market. Losses were limited as Japanese chip stocks rose after a report from the Semiconductor Industry Association pointed to a significant rebound this year in the global chip market. Also, Mitsubishi Heavy Industries rallied more than +6% after the company said it would carry out a 10 for 1 stock split to lower its share price and help expand its investor base.

Japan Dec household spending fell -2.5% y/y, weaker than expectations of -2.0% y/y.

Japan Dec labor cash earnings rose +1.05 y/y, weaker than expectations of +1.4% y/y. Also, Dec real cash earnings fell -1.9% y/y, weaker than expectations of -1.5% y/y.

Swaps are pricing in the chances for a +10 bp rate increase by the BOJ at 26% for its next meeting on March 19 and at 79% for the following meeting on April 26.

Pre-market U.S. Stock Movers

FMC Corp (FMC) sank more than -14% in pre-market trading after reporting Q4 revenue of $1.15 billion, weaker than the consensus of $1.24 billion, and cut its full-year revenue forecast $4.50 billion-$470 billion from a previous estimate of $4.65 billion-$4.85 billion, below the consensus of $4.68 billion.

Cummins (CMI) tumbled more than -3% in pre-market trading after reporting an unexpected Q4 Ebitda loss of -$878 million, well below the consensus of a profit of $1.2 billion.

Symbotic (SYM) plunged more than -17% in pre-market trading after forecasting Q2 adjusted Ebitda of $12 million-$15 million, well below the consensus of $25.2 million.

Amkor Technology (AMKR) tumbled more than -4% in pre-market trading after forecasting Q1 net sales of $1.30 billion-$1.40 billion, weaker than the consensus of $1.51 billion.

Lear Corp (LEA) dropped more than -6% in pre-market trading after reporting Q4 adjusted EPS of $3.03, weaker than the consensus of $3.13.

Rambus (RMBS) sank more than -9% in pre-market trading after reporting Q4 product revenue of $53.7 million, below the consensus of $55 million, and forecasting Q1 product revenue of $47 million-$53 million, weaker than the consensus of $63.6 million.

Fabrinet (FN) dropped more than -10% in pre-market trading after forecasting Q3 revenue of $705 million-$725 million, the midpoint below the consensus of $718.6 million.

Tesla (TSLA) fell over 2% in pre-market trading after Daiwa Securities downgraded the stock to neutral from outperform.

Eli Lilly (LLY) climbed more than +4% in pre-market trading after reporting Q4 revenue of $9.35 billion, better than the consensus of $8.96 billion, and forecast 2024 revenue of $40.4 billion-$41.6 billion, well above the consensus of $39.52 billion.

Palantir (PLTR) soared more than +17% in pre-market trading after reporting Q4 revenue of $608.4 million, stronger than the consensus of $603.1 million.

Coherent (COHR) jumped more than +10% in pre-market trading after reporting Q2 revenue of $1.13 billion, above the consensus of $1.12 billion.

NXP Semiconductors NV (NXPI) rose more than +3% in pre-market trading after reporting Q4 revenue of $3.42 billion, above the consensus of $3.39 billion.

Varonis Systems (VRNS) climbed more than +6% in pre-market trading after reporting Q4 adjusted EPS of 27 cents, better than the consensus of 23 cents.

Spotify (SPOT) jumped more than +5% in pre-market trading after forecasting Q1 operating income of 180 million euros, above the consensus of 84.6 million euros.

Jacob Solutions (J) rose more than +1% in pre-market trading after reporting Q1 revenue of $4.16 billion, stronger than the consensus of $3.78 billion.

Earnings Reports (2/6/2024)

Amcor PLC (AMCR), AMETEK Inc (AME), Amgen Inc (AMGN), Assurant Inc (AIZ), Atmos Energy Corp (ATO), Carrier Global Corp (CARR), Centene Corp (CNC), Chipotle Mexican Grill Inc (CMG), Cincinnati Financial Corp (CINF), Cognizant Technology Solutions (CTSH), Cummins Inc (CMI), DuPont de Nemours Inc (DD), Edwards Lifesciences Corp (EW), Eli Lilly & Co (LLY), Enphase Energy Inc (ENPH), Essex Property Trust Inc (ESS), Fiserv Inc (FI), Ford Motor Co (F), Fortinet Inc (FTNT), Gartner Inc (IT), GE HealthCare Technologies Inc (GEHC), Gilead Sciences Inc (GILD), IDEX Corp (IEX), Jack Henry & Associates Inc (JKHY), Jacobs Solutions Inc (J), Linde PLC (LIN), Omnicom Group Inc (OMC), Prudential Financial Inc (PRU), UDR Inc (UDR), Veralto Corp (VLTO), VF Corp (VFC), Waters Corp (WAT), Willis Towers Watson PLC (WTW), Xylem Inc/NY (XYL).

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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.