Stocks See Support as Weak Retail Sales Report Bolsters Fed Rate-Cut Hopes

Rich Asplund - Barchart - Thu Feb 15, 8:59AM CST

Morning Markets

The S&P 500 Index ($SPX) (SPY) today is currently up +0.19%, the Dow Jones Industrials Index ($DOWI) (DIA) is +0.38%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.22%.

Stock indexes this morning are mixed but are seeing support as a weaker-than-expected U.S Jan retail sales report and an unexpected decline in Jan manufacturing activity knocked bond yields lower and bolstered the case for Fed interest rates cuts. However, gains in stock indices are muted after weekly jobless claims unexpectedly fell, a sign of labor market strength that is a hawkish factor for Fed policy.

Strength in overseas equity markets is providing carryover support to U.S. stocks after the Euro Stoxx 50 today climbed to a 23-year high and the Nikkei Stock Index rallied to a 34-year high.

The markets are discounting the chances for a -25 bp rate cut at 11% for the March 19-20 FOMC meeting and 42% for the following meeting on April 30-May 1.

U.S. weekly initial unemployment claims unexpectedly fell -8,000 to 212,000, showing a stronger labor market than expectations of an increase to 220,000.

U.S. Jan retail sales fell -0.8% m/m, weaker than expectations of -0.2% m/m and the biggest decline in 10 months. Also, Jan retail sales ex-autos unexpectedly fell -0.6% m/m, weaker than expectations of an increase of +0.2% m/m.

The U.S. Feb Philadelphia Fed business outlook survey rose +15.8 to a 6-month high of 5.2, stronger than expectations of -8.1.

The U.S. Feb Empire manufacturing survey general business conditions index rose +41.3 to -2.4, stronger than expectations of -12.5.

The U.S. Jan import price index ex-petroleum rose +0.6% m/m, stronger than expectations of no change and the largest increase in 13 months.

U.S. Jan manufacturing production unexpectedly fell -0.5% m/m, weaker than expectations of no change.

U.S. and European government bond yields today are lower. The 10-year T-note yield is down -4.3 bp at 4.212%. The 10-year German bund yield fell to a 1-week low of 2.291% and is down -1.4 bp at 2.322%. The 10-year UK gilt yield is down -3.4 bp at 4.011%.

Overseas stock markets are higher. The Euro Stoxx 50 is up +0.58%. China’s Shanghai Composite Index was closed for a holiday. Japan’s Nikkei Stock Index closed up +1.21%.

Pre-market U.S. Stock Movers

Zebra Technologies (ZBRA) is up more than +14% to lead gainers in the S&P 500 after reporting Q1 net sales of $1.01 billion, above the consensus of $996.4 million.

CBRE Group (CBRE) is up more than +7% after reporting Q4 revenue of $8.95 billion, stronger than the consensus of $8.47 billion.

Equinix (EQIX) is up more than +4% after reporting Q4 FFO/share of $5.54, better than the consensus of $5.38 and forecasting 2024 FFO/share of $34.58-$35.31, the midpoint above the consensus of $34.71.

Eversource Energy (ES) is up more than +2% after Mizuho Securities upgraded the stock to buy from neutral with a price target of $62.

AppLovin (APP) is up more than +17% after reporting Q4 revenue of $953.3 million, stronger than the consensus of $928.7 million.

Epam Systems (EPAM) is up more than +4% after forecasting Q1 revenue of $1.16 billion to $1.17 billion.

Crocs (CROX) is up more than +5% after reporting Q4 adjusted EPS of $2.58, better than the consensus of $2.36.

Super Micro Computer (SMCI) is up more than +7% after Bank of America Global Research initiated coverage of the stock with a buy recommendation and a price target of $1,040.

West Pharmaceutical Services Inc (WST) is down more than -19% to lead losers in the S&P 500 after reporting Q4 net sales of $732 million, weaker than the consensus of $739.6 million.

Alphabet (GOOGL) is down more than -3% to lead losers in the Nasdaq 100 after the Information reported that ChatGPT owner Open AI has been developing a web search service.

Cisco Systems (CSCO) is down more than -2% to lead losers in the Dow Jones Industrials after cutting its full-year revenue forecast to $51.5 billion-$52.5 billion from a previous estimate of $53.8 billion-$55.0 billion, weaker than the consensus of $54.33 billion.

Deere & Co (DE) is down more than -3% after cutting its full-year profit outlook to $7.50 billion-$7.75 billion from a previous estimate of $7.75 billion-$8.25 billion, weaker than the consensus of $7.75 billion.

Genuine Parts Co (GPC) is down more than -4% after reporting Q4 net sales of $5.59 billion, weaker than the consensus of $5.68 billion, and forecasting full-year adjusted EPS of $9.70-$9.90, the midpoint below the consensus of $9.82.

Rollins (ROL) is down more than -5% after reporting Q4 revenue of $754.1 million, below the consensus of $756.6 million.

Twilio (TWLO) is down more than -13% after forecasting Q1 revenue of $1.03 billion-$1.04 billion, weaker than the consensus of $1.05 billion.

Earnings Reports (2/15/2024)

10X Genomics Inc (TXG), Air Lease Corp (AL), Alliant Energy Corp (LNT), Alnylam Pharmaceuticals Inc (ALNY), Amedisys Inc (AMED), Applied Materials Inc (AMAT), Bio-Rad Laboratories Inc (BIO), CBRE Group Inc (CBRE), Cognex Corp (CGNX), Coinbase Global Inc (COIN), Consolidated Edison Inc (ED), Corebridge Financial Inc (CRBG), Crocs Inc (CROX), Deere & Co (DE), Digital Realty Trust Inc (DLR), DoorDash Inc (DASH), DraftKings Inc (DKNG), Dropbox Inc (DBX), Dun & Bradstreet Holdings Inc (DNB), EPAM Systems Inc (EPAM), Genuine Parts Co (GPC), Globant SA (GLOB), Hyatt Hotels Corp (H), IDACORP Inc (IDA), Ingersoll Rand Inc (IR), Iridium Communications Inc (IRDM), Kinsale Capital Group Inc (KNSL), Laboratory Corp of America Hol (LH), Lincoln Electric Holdings Inc (LECO), Organon & Co (OGN), Penn Entertainment Inc (PENN), Procore Technologies Inc (PCOR), Reliance Steel & Aluminum Co (RS), Roku Inc (ROKU), Royalty Pharma PLC (RPRX), Shockwave Medical Inc (SWAV), Southern Co/The (SO), Targa Resources Corp (TRGP), Texas Roadhouse Inc (TXRH), Toast Inc (TOST), Trade Desk Inc/The (TTD), Ultragenyx Pharmaceutical Inc (RARE), US Foods Holding Corp (USFD), Vontier Corp (VNT), Wendy's Co/The (WEN), West Pharmaceutical Services Inc (WST), YETI Holdings Inc (YETI), Zebra Technologies Corp (ZBRA).

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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.