Market Snapshot
| Dow | 43268.94 | -120.66 | (-0.28%) | | Nasdaq | 18987.49 | +195.66 | (1.04%) | | SP 500 | 5916.99 | +23.36 | (0.40%) | | 10-yr Note | +3/32 | 4.38 |
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| | NYSE | Adv 1313 | Dec 1409 | Vol 914 mln | | Nasdaq | Adv 2375 | Dec 1867 | Vol 7.2 bln |
Industry Watch
| Strong: Information Technology, Communication Services, Utilities |
| | Weak: Energy, Materials, Financials, Health Care |
Moving the Market
-- Geopolitical worries after Russian President Putin lowers threshold for nuclear weapon use; Ukraine fires U.S.-made long-range missiles into Russia; Russian Foreign Minister Sergey Lavrov says Ukraine attacks against Russia's border region is a signal of escalation
-- Gains in large-cap stocks and chipmakers
-- Monitoring Treasury yields, which are lower due to the geopolitical angst
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Closing Summary
19-Nov-24 16:30 ET
Dow -120.66 at 43268.94, Nasdaq +195.66 at 18987.49, S&P +23.36 at 5916.99
[BRIEFING.COM] The stock market opened on a cautious note, reacting to rising geopolitical tensions. This followed reports that President Putin had lowered Russia's threshold for using nuclear weapons, that Ukraine had launched U.S.-made missiles into Russia, and that Russian Foreign Minister Lavrov had called the attack on Russia an "escalation signal."
Stocks quickly brushed off fears related to the Ukraine situation and the major equity indices settled mostly higher. The S&P 500 settled 0.4% higher, the Russell 2000 was up 0.8%, and the Nasdaq Composite jumped 1.0%.
The bond market didn't show any signs of panic related to the geopolitical developments, which helped the equity market remain calm, too. The 2-yr yield dropped one basis point to 4.27% and the 10-yr yield dropped four basis points to 4.38%.
Some defense-related names benefitted from the rising tensions overseas. Dow component Boeing (BA 145.60, +1.73, +1.2%) was a standout in that respect. Fellow Dow component Walmart (WMT 86.60, +2.52, +3.0%) was another influential winner, responding to earnings results.
Mega caps stocks and chipmakers were also favored by buyers today. The Vanguard Mega Cap Growth ETF (MGK) jumped 1.0% and the PHLX Semiconductor Index (SOX) registered a 0.6% increase.
- Nasdaq Composite: +26.5%
- S&P 500: +24.1%
- S&P Midcap 400: +15.6%
- Dow Jones Industrial Average: +14.8%
- Russell 2000: +14.7%
Reviewing today's economic data:
- October Housing Starts 1.311 mln (Briefing.com consensus 1.340 mln); Prior was revised to 1.353 mln from 1.354 mln, October Building Permits 1.416 mln (Briefing.com consensus 1.441 mln); Prior was revised to 1.425 mln from 1.428 mln
- The key takeaway from the report is that it included some weather impact from the hurricanes, evidenced by a 10.2% month-over-month decline in starts in the South -- the nation's largest homebuilding region -- but overall it was a generally soft report on a year-over-year basis with total starts down 4.0% and total permits down 7.7%.
Looking ahead, Wednesday's calendar features the weekly MBA Mortgage Applications Index at 7:00 ET and the weekly EIA crude oil inventories at 10:30 ET.
Stocks hold steady in front of closing bell
19-Nov-24 15:30 ET
Dow -160.66 at 43228.94, Nasdaq +173.56 at 18965.39, S&P +16.98 at 5910.61
[BRIEFING.COM] There hasn't been much up or down movement at the index level in recent trading. The S&P 500 sports a 0.3% gain heading into the close.
Treasuries settled with gains. The 2-yr yield dropped one basis point to 4.27% and the 10-yr yield dropped four basis points to 4.38%.
Looking ahead, Wednesday's calendar features the weekly MBA Mortgage Applications Index at 7:00 ET and the weekly EIA crude oil inventories at 10:30 ET.
Super Micro Computer rallies after naming new auditor, Incyte falls in S&P 500 after trial updates
19-Nov-24 14:30 ET
Dow -77.55 at 43312.05, Nasdaq +183.02 at 18974.85, S&P +25.72 at 5919.35
[BRIEFING.COM] The S&P 500 (+0.44%) is in second place on Tuesday afternoon.
Elsewhere, S&P 500 constituents Super Micro Computer (SMCI 28.26, +6.72, +31.20%), GE Vernova (GEV 339.10, +13.73, +4.22%), and United Airlines (UAL 93.91, +3.53, +3.91%) dot the top of the standings. SMCI moves aggressively higher after announcing BDO as its Independent Auditor and the filing of a compliance plan with the NASDAQ, GEV announced earlier plans to acquire Woodward's (WWD 170.14, +0.23, +0.14%) gas turbines unit, while UAL hits 5-year highs on a bullish TD Cowen note and reporting record demand for European Christmas markets.
Meanwhile, Incyte (INCY 69.47, -7.50, -9.74%) falls to the bottom of the average after pausing enrollment in Phase 2 chronic urticaria trial and halting development of cholestatic pruritus program.
Gold notches one-week high as Russia-Ukraine tensions drive safe-haven demand
19-Nov-24 14:00 ET
Dow -27.20 at 43362.40, Nasdaq +190.26 at 18982.09, S&P +27.70 at 5921.33
[BRIEFING.COM] The broader market has rallied to session highs over the last half hour, the tech-heavy Nasdaq Composite (+1.01%) moving above 1% gains with two hours to go on the trading day.
Gold futures settled $16.40 higher (+0.6%) to $2,631.00/oz, surging to one-week high amid escalating Russia-Ukraine tensions and Federal Reserve rate speculation.
Meanwhile, the U.S. Dollar Index is largely flat at $106.28.
DJIA near HoDs, albiet on modest losses; Disney, UnitedHealth lag
19-Nov-24 13:30 ET
Dow -109.76 at 43279.84, Nasdaq +134.26 at 18926.09, S&P +14.25 at 5907.88
[BRIEFING.COM] The Dow Jones Industrial Average (-0.25%) is near HoDs, albeit on a losing effort on Tuesday afternoon.
A look inside the DJIA shows that Walt Disney (DIS 111.73, -1.81, -1.59%), UnitedHealth (UNH 580.37, -9.28, -1.57%), and Johnson & Johnson (JNJ 152.66, -2.11, -1.36%) are underperforming.
Meanwhile, Walmart (WMT 87.35, +3.27, +3.89%) holds decent gains.
The DJIA is now -2.72% lower off last week's highs.
Medtronic edges lower after a supplier issue interferes with internal expectations in Q2 (MDT)
Medtronic (MDT -2%) ticks lower today as sellers remain in control of the stock despite the medical device manufacturer delivering beats on its top and bottom lines in Q2 (Oct) while also raising its FY25 (Apr) guidance. MDT has slipped by roughly 7% since reaching one-year highs in late October. Currently, the stock is returning toward mid-August levels, searching for support at its 200-day moving average (84.49).
What was the central issue in Q2? MDT's Cardiac Ablation Solutions (CAS) segment recorded flat yr/yr sales growth in the quarter, missing internal expectations of accelerating sequential growth. New product sales failed to outpace legacy product sales due to a third-party component supplier interruption. MDT mentioned that this supplier has since expanded capacity, allowing it to ramp up new product availability and activate new accounts. However, this minor setback raised concerns about MDT achieving its projected double-digit growth in this business in Q3 (Jan), generating today's moderate selling pressure.
- Aside from the blemish in CAS, MDT delivered consistency in Q2. EPS grew by 1% yr/yr to $1.26, exceeding analyst estimates for the tenth straight quarter. Revs rose by 5% to $8.4 bln, accelerating from the +3% delivered last quarter and topping consensus for the eighth consecutive quarter.
- Strength was spread across MDT's highest growth (20% of revs), established market (50%), and synergistic businesses (30%). In highest growth, which includes CAS, total revs ticked 8% higher in the quarter, supported by Structural Heart, Diabetes, and Hypertension divisions. Established market, vital to MDT's financial model, delivering consistent revenue growth, mid-single digit sales were bolstered by Cranial & Spinal Technologies and Cardiac Rhythm Management. Synergistic businesses grew at a similar pace, underscored by Neuromodulation.
- MDT is confident its diversified growth will continue, raising its FY25 EPS outlook to $5.44-5.50 from $5.42-5.50 and organic revenue growth forecast to +4.75-5.00% from +4.50-5.00%. A business MDT is growing excited about is Hypertension, noting that the condition is the leading cause of cardiovascular disease globally. This makes it a market for the company's Simplicity blood pressure procedure to thrive in, as it plays a critical role in cost-effectively managing hypertension.
MDT is known for its steady quarterly performances, and Q2 was no exception. However, investors are expressing modest discontent over the missed CAS sales growth prediction in the quarter. Meanwhile, with many of MDT's devices dependent on Medicare reimbursement, potential cuts could significantly hurt future growth. That said, MDT remains a healthcare stock worth keeping on the radar given its established credibility in the healthcare sector, capacity for further tuck-in acquisitions, and stable 3.3% annual dividend yield.
Walmart: Attention shoppers, another good quarter; this report bodes well for TGT (WMT)
Walmart (WMT +4%) is heading modestly higher after reporting Q3 (Oct) results this morning. The retail giant beat on EPS and revenue. It also raised full year EPS and revenue guidance. Transaction counts and unit volumes were positive across each segment. WMT also said it continued to gain market share in the US both in grocery and general merchandise with $100K+ households accounting for 75% of that share gain. WMT was pleased with its Q3 results despite there being a US port strike, two large hurricanes, and the flooding they caused.
- Its Walmart US segment performed well with comps (exc fuel) up +5.3%, up from +4.2% in Q2 and +3.8% in Q1. We think this strong comp is a key reason why the stock is higher. WMT said sales reflect broad-based strength across merchandise categories with strong transaction counts and unit volumes. WMT also benefitted from share gains, primarily from upper-income households. Walmart Connect advertising grew 26%, although that was down a bit from 30% growth in Q2.
- WMT said it had almost no like for like inflation in the US this quarter. WMT was pleased to see general merchandise grow low single digits in the US, even as prices were deflated by over 4%. The company did say it's feeling some margin pressure from growth in GLP-1 drugs, so it was pleased to see general merchandise sales be positive across the company.
- Sam's Club US comps (excl fuel) are following a similar pattern as Walmart US comps, namely it is seeing a strong trend higher. Comps came in at a robust +7.0%, up from +5.2% in Q2 and +4.4% in Q1. Growth was led by food and health & wellness categories. Comp growth was primarily driven by transaction counts and unit volumes. It also saw share gains in grocery and general merchandise categories, including apparel and consumer electronics. E-commerce sales were up 26%.
- The company does not provide comps for its Walmart International segment, but sales grew 12.4% CC to $30.3 bln. This was notably higher than Q2's 8.3% CC growth. Growth was led by Flipkart, Walmex, and China with transaction counts and unit volumes up across markets. WMT saw growth in general merchandise and food & consumables. Also, the timing of Flipkart's The Big Billion Days event benefited growth in Q3 and will impact growth in Q4. E-commerce sales were up 43%.
- Looking ahead, WMT says it's excited for the holiday season and its stores are ready. WMT had a good back-to-school and a good Halloween. So it's going into the holiday season with momentum. General merchandise, which had been a trouble spot, has improved and that is despite some deflation in some GM categories. Inventory is in very good shape heading into the holiday quarter.
Overall, this was an impressive quarter for the retail giant. What really stood out were its increasing comp trends at both Walmart US and Sam's Club US. Q3 comps were better than Q2 which were better than Q1, so that provides some excitement heading into the Q4 holiday period. Another standout was general merchandise. A few quarters ago, many GM categories were struggling and overall results were buoyed by groceries. But now GM is coming back. And finally, a big reason WMT is gaining share is because it is attracting more higher income customers as they seek out value buys.
Lowe's modest guidance increase tempers near-term demand recovery expectations (LOW)
Following in the footsteps of rival Home Depot (HD), Lowe's (LOW) delivered a beat-and-raise Q3 earnings report as the home improvement retailer saw stronger demand for smaller-ticket DIY items and continued to benefit from a more resilient Pro business. Like HD, the company also received a sales boost from the preparation and recovery efforts surrounding Hurricanes Milton and Helene. However, these positive factors were already widely anticipated following HD's results, placing the focal point on LOW's guidance. Although LOW lifted its FY25 EPS, revenue, and comparable sales guidance, the magnitude of the increase was modest and mostly just incorporated the upside from its Q3 results, suggesting that the anticipated improvement in demand isn't materializing just yet.
- Bolstered by high-single-digit growth in the Pro business and healthier demand for smaller-ticket outdoor products, comparable sales improved to (1.1)% from (5.1)% last quarter. Still, LOW continued to encounter weak spending trends for larger projects as higher-for-longer interest rates keep a lid on the housing market and prevent consumers from tackling remodeling jobs that oftentimes require financing.
- For the seventh quarter in a row, total sales declined on a yr/yr basis at (1.5)% for Q3 and LOW's updated FY25 guidance indicates that streak will continue in Q4. Based on the midpoint of LOW's FY25 revenue guidance, the company is forecasting a decrease of about 2% for Q4. In addition to the stubbornly sluggish demand for big-ticket categories, LOW and other retailers are facing a shorter-than-normal Black Friday shopping period since Thanksgiving falls later in the month this year.
- LOW did keep a far more positive streak intact, too. Specifically, the company exceeded EPS expectations yet again, thanks to a combination of solid cost control (SG&A expenses up just 1.7%) and share buybacks (repurchased 2.9 mln shares in Q4). The last time that LOW fell short of EPS estimates was 3Q20.
The main takeaway is that HD's beat-and-raise performance from last week raised the bar for LOW. With improved Q3 results anticipated, investors are homing in on LOW's updated FY25 guidance, looking for signs that the long-awaited recovery in demand is finally materializing. The modest bump in LOW's forecast is creating some disappointment, indicating that the Federal Reserve's interest rate cuts have yet to provide a meaningful spark.
Trip.com Group up on sustained robust inbound, outbound, and domestic travel demand in Q3 (TCOM)
China-based travel giant Trip.com Group (TCOM) is garnering a positive reaction today following another period of sustained travel demand in Q3. In the two weeks leading up to TCOM's report, the stock slid by around 14% as market participants began taking profits, given lingering worries over shaky economic conditions in China. For instance, last week, Chinese e-commerce titans JD.com (JD) and Alibaba (BABA) each registered underwhelming e-commerce growth in SepQ, reflecting pockets of weakness in the region as job losses mount and the real estate market sours.
However, TCOM alleviated fears that economic softness would seep into the historically resilient travel industry, posting healthy inbound, outbound, and domestic travel demand during Q3. While management echoed remarks from others operating in China surrounding recent stimulus measures, noting that it is still too early to determine the policy's direct impact, the company is confident in maintaining its energetic momentum over the long run.
- Revenue growth accelerated sequentially in Q3, improving by 16% yr/yr to RMB 15.9 bln compared to a +14% jump last quarter. During the quarter, outbound hotel and air ticket bookings restored to 120% of pre-pandemic levels. Japan stayed the top destination for outbound travel. At the same time, travelers are expressing increasing interest in long-haul destinations like Europe and the Americas.
- A positive development supporting a stronger foundation for TCOM is that lower-tier cities, i.e., less economically developed, are starting to venture outside national borders, emerging as a new growth driver in outbound travel. For instance, during China's National Day holiday, travel bookings from Tier 4 and 5 cities surged by 100% and 300%, respectively.
- Domestically, travel patterns are becoming more evenly distributed across China. TCOM continues to partner with hotels to develop package deals and increase awareness for domestic and international markets.
- Inbound hotel bookings roughly doubled yr/yr in Q3. Despite cooling off from an approximately 200% jump yr/yr in Q2, growth remains elevated, underpinning a substantial desire to visit China, particularly after the government's expanded visa-free entry program, where individuals can book leisure stays for around two weeks.
- While the U.S. has yet to be added, China continues to add more countries to its visa-free policy, recently including nine new nations, such as South Korea and Denmark, potentially assisting TCOM in sustaining its inbound booking growth in future periods. At the same time, TCOM offers complimentary city tours for inbound travelers. Management conveyed notable optimism regarding the long-term health of inbound travel.
TCOM's Q3 report illustrates that within China's borders, individuals prioritize spending on travel despite navigating a wobbly economy. Meanwhile, outside of China, individuals remain excited to take advantage of visa-free entry and explore what the country offers. We mentioned last quarter that TCOM is in a compelling position to mount a broader rally. While government policy has had a pronounced impact on shares of TCOM, producing potentially elevated volatility, we continue to like TCOM's capacity to sustain its upward momentum.
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