| | | Market Snapshot
briefing.com
| Dow | 35333.47 | -56.68 | (-0.16%) | | Nasdaq | 14241.03 | -9.83 | (-0.07%) | | SP 500 | 4550.43 | -8.91 | (-0.20%) | | 10-yr Note | +6/32 | 4.39 |
|
| | NYSE | Adv 1654 | Dec 1202 | Vol 848 mln | | Nasdaq | Adv 1670 | Dec 2731 | Vol 4.22 bln |
Industry Watch
| Strong: real estate, consumer discretionary, information technology, utilities |
| | Weak: energy, industrials, health care, communication services |
Moving the Market
--Consolidation expectations after four straight weeks of gains
--Retail watch as holiday selling season goes into full swing
--October new home sales (-5.6% m/m to 679K) disappoint on affordability pressures |
Closing Stock Market Summary
27-Nov-23 16:25 ET
Dow -56.68 at 35333.47, Nasdaq -9.83 at 14241.03, S&P -8.91 at 4550.43
[BRIEFING.COM] It was tough watching the stock market today, not because of how poorly it did, but because of how little it did until there was some seesaw action in the last hour of trading. The major indices had a mixed disposition throughout today's trade as neither buyers nor sellers showed much conviction. The Invesco S&P 500 Equal-Weight ETF (RSP) declined 0.2%.
The Nasdaq Composite had a small performance edge, drawing added support from select mega-cap names like Amazon.com (AMZN 147.73, +0.99, +0.7%), NVIDIA (NVDA 482.42, +4.66, +1.0%), Tesla (TSLA 236.08, +0.63, +0.3%), and Microsoft (MSFT 378.61, +1.18, +0.3%). Those gains also helped keep the S&P 500 in a fairly steady position relative to Friday's closing level. In fact, the S&P 500 traded in just a 14-point range between its high and low today.
The deliberate move was reflected in the modest changes for the S&P 500 sectors. The biggest gainer was the real estate sector (+0.4%) and the biggest loser was the health care sector (-0.6%). Everything else fell somewhere in between.
Market breadth tilted in favor of declining issues by a 4-to-3 margin at the NYSE and by a roughly 7-to-4 margin at the Nasdaq.
Separately, Treasury yields took a lower turn to begin the week, aided by a weaker-than-expected October New Home Sales Report and a $55 billion 5-yr note auction that trumped some soft demand seen at the $54 billion 2-yr note auction. The 2-yr note yield fell eight basis points to 4.87% and the 10-yr note yield dropped eight basis points to 4.39%.
The drop in market rates did not excite the stock market like it has for the most of the month, but arguably it helped keep selling efforts in check on this Cyber Monday, which saw the retail stocks deliver a lackluster performance. The SPDR S&P Retail ETF (XRT) declined 0.6%.
- Nasdaq Composite: +36.1% YTD
- S&P 500: +18.5% YTD
- Dow Jones Industrial Average: +6.6% YTD
- S&P Midcap 400: +5.2% YTD
- Russell 2000: +2.3% YTD
Reviewing today's economic data:
- New home sales decreased 5.6% month-over-month in October to a seasonally adjusted annual rate of 679,000 units (Briefing.com consensus 720,000) from a downwardly revised 719,000 (from 759,000) in September. On a year-over-year basis, new home sales were up 17.7%.
- The key takeaway from the report is that new home sales activity slumped noticeably in October despite a big drop in median and average selling prices. The latter had to do with a large decline in sales in the high-priced West region, but in general, high mortgage rates and generally high prices combined to create affordability pressures for prospective buyers.
Tuesday's economic calendar features:
- 09:00 ET: September FHFA Housing Price index (Prior 0.6%)
- 09:00 ET: September S&P Case-Shiller Home Price Index (Briefing.com consensus 4.1%; Prior 2.2%)
- 10:00 ET: November Consumer Confidence (Briefing.com consensus 100.0; Prior 102.6)
Support from semiconductors
27-Nov-23 15:30 ET
Dow -53.72 at 35336.43, Nasdaq +15.57 at 14266.43, S&P -4.86 at 4554.48
[BRIEFING.COM] Stocks continue to walk a middling line, much like they have throughout the bulk of today's trading session.
The Nasdaq has held the upper hand today among the major indices, mostly because of some relative strength found in some of the mega-cap stocks and the semiconductor stocks. NVIDIA (NVDA 483.45, +5.69, +1.2%) is the spotlight issue in the latter respect, but has company with the likes of Adv. Micro Devices (AMD 123.12, +0.81, +0.7%), Intel (INTC 44.28, +0.33, +0.7%), Lam Research (LRCX 725.93, +8.43, +1.2%), Micron (MU 77.69, +0.82, +1.1%), and Qualcomm (QCOM 128.68, +0.93, +0.7%) also in outperformance mode.
The Philadelphia Semiconductor Index, though, is up just 0.2%. That small gain belies what has been an otherwise huge month. Including today's gain, the Philadelphia Semiconductor Index is up 16.8% in November.
Looking ahead, Tuesday's economic calendar will feature the November Consumer Confidence Index (Briefing.com consensus 100.00; Prior 102.6) and the earnings calendar will feature results before the open from Pinduoduo (PDD 118.35, -0.35, -0.3%) and after the close from CrowdStrike (CRWD 210.87, +0.21, +0.1%), Hewlett-Packard Enterprise (HPE 15.63, -0.20, -1.3%), Intuit (INTU 562.27, -1.80, -0.3%), NetApp (NTAP 78.11, -0.23, -0.3%), and Workday (WDAY 236.47, -0.14, -0.1%).
A drop off in stocks... and market rates
27-Nov-23 15:00 ET
Dow -82.09 at 35308.06, Nasdaq -0.40 at 14250.46, S&P -8.98 at 4550.36
[BRIEFING.COM] The indices have dropped off a bit from their prior levels, but still show only modest losses for the session.
Rising rates can't be cited as catalyst for today's weakness. On the contrary, rates have been falling today and are currently at their lows for the session with buying interest picking up after a $55 billion 5-yr note auction that was met with decent demand. The high yield of 4.420% stopped through the when-issued yield by 0.5 basis points.
The 2-yr note yield is down eight basis points to 4.87% and the 10-yr note yield is down seven basis points to 4.40%.
The drop in rates has provided some added support to the real estate sector (+0.7%) and the rate-sensitive utilities sector (+0.3%). They are among a small batch of sectors trading higher at this time.
Crown Castle outperforming in S&P 500 after Elliott discloses stake; Albemarle underperforms
27-Nov-23 14:30 ET
Dow -49.11 at 35341.04, Nasdaq +15.31 at 14266.17, S&P -4.80 at 4554.54
[BRIEFING.COM] The S&P 500 (-0.11%) is in second place on Monday afternoon.
Elsewhere, S&P 500 constituents Crown Castle (CCI 108.71, +5.13, +4.94%), Domino's Pizza (DPZ 386.75, +16.43, +4.44%), and Etsy (ETSY 74.26, +2.44, +3.40%) dot the top of the standings. CCI outperforms after Elliott Investment Management sent a letter to CCI's Board alongside disclosing a $2 bln position in the stock, while ETSY finds strength as a play on strong Black Friday consumer shopping numbers.
Meanwhile, Albemarle (ALB 121.84, -7.03, -5.46%) is today's top laggard, underperforming the broader materials group (xxx).
Gold higher to open the week amid falling dollar, yields
27-Nov-23 14:00 ET
Dow -49.17 at 35340.98, Nasdaq +25.81 at 14276.67, S&P -2.25 at 4557.09
[BRIEFING.COM] With about two hours to go on Monday the tech-heavy Nasdaq Composite (+0.18%) is still the lone gainer among the major averages.
Gold futures settled $9.40 higher (+0.5%) to $2,012.40/oz as a softer dollar and declining treasury yields allowed for a move higher.
Meanwhile, the U.S. Dollar Index is down less than -0.1% to $103.34.
Page One
Last Updated: 27-Nov-23 09:03 ET | Archive
Price action looms large
Retail stores, e-commerce sites, and airports were buzzing over the extended Thanksgiving Day weekend, but there isn't any buzz this morning in the equity futures market.
Currently, the S&P 500 futures are down eight points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 24 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are down 67 points and are trading 0.2% below fair value.
That's not a bad indication given the hefty gains the major indices are sitting on this month. Although there isn't much buying interest at the moment, it's more notable that there still isn't much selling interest.
There are some trite explanations for the lack of selling interest: seasonality... momentum... mega-cap leadership... the trend is your friend until it isn't.
They are all applicable, so any change of note in the performance of the major indices is likely going to boil down to the price action itself. That, too, is a trite view, but it will surely resonate with traders.
The market's resilience to selling interest has been impressive, as the S&P 500 has moved from the threshold of 4,100 to the doorstep of 4,600 in a nearly straight line, reflecting the offsides positioning of short sellers and many participants underweight equities.
That parabolic move is why each day now invites the supposition that the market is due for a pullback, but it is the absence of any pullback of note that is fostering a fear of missing out on further gains that keeps the major indices in relatively good form. Again, this is why the price action looms as large as it does as a driving force.
There isn't any corporate news of note to force the market to move in any direction. Many of the headlines revolve around the retail industry, which isn't surprising as we have passed Black Friday and Small Business Saturday to arrive at Cyber Monday. 'Tis the season for lots of retail activity.
Mastercard Spending Pulse said Black Friday retail sales were up 2.5% year-over-year. That isn't exactly "robust," but it would seem to fit with assertions going into the holiday selling season that consumers are apt to be more deliberate with their discretionary spending activity as they deal with inflation pressures and higher borrowing costs.
We'll get a line on some of the inflation pressures on Thursday when the PCE Price Indexes are released as part of the October Personal Income and Spending Report. Today's economic calendar will feature the October New Home Sales Report (Briefing.com consensus 720,000; Prior 759,000) as the lone release.
Over the course of the week, there will be a slate of earnings reports from some notable companies, including Zscaler (ZS), CrowdStrike (CRWD), Hewlett Packard Enterprise (HPE), Intuit (INTU), NetApp (NTAP), Workday (WDAY), Dollar Tree (DLTR), Foot Locker (FL), Five Below (FIVE), Okta (OKTA), PVH (PVH), Salesforce (CRM), and Snowflake (SNOW).
Today, then, has the feel of a slow start from a news standpoint, but that will change as the week progresses. Now, all that remains to be seen is if the price action changes.
-- Patrick J. O'Hare, Briefing.com
Roku breaks above $100 for the first time since June 2022 following an analyst upgrade today (ROKU)
Incorporating today's outsized gains following an analyst upgrade at Cannonball Research, shares of Roku (ROKU +7%) have surged over +70% during November, returning to over $100 per share for the first time since June 2022.
Briefing.com notes that ROKU's upbeat Q4 guidance on November 1 was pivotal to its breath-taking rise. The underlying factor in the streaming software and hardware supplier's uplifting Q4 outlook was a stabilizing video advertisement market, projecting a similar yr/yr growth rate of video ads in Q4 as it saw in Q3. While ROKU is still cautious given the numerous macroeconomic uncertainties, it may be amid a much more sizeable turnaround, especially given that shares are still roughly 80% below all-time highs posted in late 2021.
- ROKU recorded a solid 18% bump yr/yr in platform revs during Q3, reflecting meaningful contributions from content distribution and video advertising. Management anticipates the ad industry will continue recovering throughout subsequent periods, lifting its average revenue per user (ARPU) and propping up its overall top-line figure.
- Smart TV sales may have already bottomed. During Q3, ROKU added 2.3 mln active accounts sequentially, aided by growth in smart TV unit sales in the U.S. ROKU partners with several TV manufacturers, most of which compete at relatively lower-price points, such as TCL, Sharp, Hisense, and Westinghouse. While these brands have faced many challenges this year, they already started observing stabilizing trends. For example, in late August, TCL noticed the industry stabilizing, while Sharp registered recovering large display sales earlier this month.
- ROKU is making healthy progress in reducing operating expenses, highlighting early success in improving profitability. Recall that in September, ROKU announced a 10% workforce reduction and other business enhancements, including removing select content. These measures allowed ROKU to reiterate its plan to deliver positive adjusted EBITDA for FY24, with ongoing improvements thereafter.
There are still near-term risks, particularly branching from the ad industry. While ROKU was optimistic about an ongoing rebound in its platform's video advertising, it acknowledged the uneven recovery. For instance, consumer packaged goods and health care grew nicely during Q3 while industries such as financial services and insurance found it more difficult to mount recoveries. Furthermore, while TV sales may be stabilizing, they are still relatively depressed. Samsung (SSNLF) recently discussed how consumer sentiment remains in decline as interest rates and inflation weigh on discretionary spending. The company also noted that regarding the TV market in 2024, demand would likely fluctuate, with consumer sentiment seeing only modest improvements.
Nevertheless, ROKU's recent quarterly performance showcased its sturdy positioning in the streaming market. Unlike others in this field, such as Amazon (AMZN) with its FireTV and Apple (AAPL) with its Apple TV, ROKU is a neutral player, welcoming all competitors and streaming providers to its platform. This open ecosystem may serve as a meaningful advantage over the long haul as consumers opt for the device they know will be willing to host all their streaming subscriptions.
Cerence pulls back following EPS miss this morning; stock continues its trend lower (CRNC)
Cerence (CRNC -4%) initially popped higher following its Q4 (Sep) results this morning, but it has since pulled back and is lower on the day. Importantly, Cerence swung to a non-GAAP profit in Q4 at $0.09, up from a $(0.14) loss in the year ago period. However, analysts had been expecting a larger adjusted EPS number. CRNC said on the call that it continues to invest heavily in R&D.
- It was a better result on the top line with revenue growing a robust 39.1% yr/yr to $80.8 mln, which was well ahead of prior guidance of $72-76 mln. It was good to see upside during a quarter which had the UAW strikes. Its top line results show that Cerence's AI-based technology is growing in popularity with car drivers. It allows you to speak voice commands in your car, it's sort of like Siri integrated with your car's controls.
- Probably even more impressive was the guidance. Cerence guided to Q1 (Dec) revenue of $128-132 mln, which was well ahead of analyst expectations. In fairness, this guidance includes $67.8 mln of deferred revenue that is accelerated due to an early termination agreement relating to the Toyota "Legacy" contract. Cerence's Q1 adjusted EBITDA outlook of $58-62 mln, is well above the $16.6 mln reported in Q4. However, the Toyota contract likely helped. For all of FY24, the company expects revenue of $355-375 mln.
- On the call, management said it is seeing a high level of interest and traction across its OEMs as generative AI and large language models accelerate transformation across transportation and beyond. Cerence believes no company is better positioned to guide and support automakers with providing an immersive, intuitive, in-cabin experience. Cerence says its core auto business delivered strong Q4 results with its global auto penetration coming in at 54% on a trailing 12-month basis.
- Cerence pointed out that it won more than a dozen strategic deals in its core auto business in FY23, including five winbacks. In addition, it says it made strong progress in transportation adjacencies like two-wheelers and trucks. In fact, Cerence is becoming a primary supplier of conversational AI technology in the two-wheeler space, having won every two-wheeler deal it has pitched.
Overall, there were some good aspects to this report, most notably the revenue upside and the positive comments about Cerence's position in the AI automotive space. However, the stock started to pull back during the call this morning. The Cerence story has some positive aspects long term as it has a dominant position. However, the stock reaction today and its recent pullback shows there is some concern on the part of investors.
Shopify continues to rally on upbeat Black Friday sales; helping out e-commerce firms today (SHOP)
Shopify (SHOP +4%) continues its breathtaking rally today following record Black Friday sales, delivering a 22% increase on top of the +17% jump last year. Since registering better-than-feared Q3 results on November 2, shares of SHOP have risen nearly +50%, popping to highs not seen since March 2022. While the market was more than pleased with SHOP's Q3 performance, its Q4 revenue growth outlook of high-teens percentage yr/yr (on a GAAP basis) translated to a meaningful deceleration from the previous five quarters, underpinning some concern regarding whether the holiday shopping season would see decent demand given the sharp downturn in discretionary spending this year.
It was not just SHOP potentially seeing choppiness in Q4. Ahead of the all-important Black Friday shopping event, which extends multiple days and encompasses the weekend, numerous e-commerce retailers warned of tepid spending. For instance, eBay (EBAY) cautioned investors earlier this month that softening consumer trends thus far through Q4 suggested a more muted seasonal uptick over the holidays. Likewise, Etsy (ETSY) commented around the same time that it anticipated the holiday season would be challenging, given a multitude of headwinds. Additionally, Amazon (AMZN) noticed customers remaining cautious about price in late October, spending less on discretionary items.
With expectations lowered, SHOP's superb Black Friday sales growth is triggering a rush of buyers not only toward its shares but also helping out much of the e-commerce landscape, with sizeable gains coming through for ETSY and AMZN, which is climbing to 52-week highs today.
- Like this time last year, an excellent Black Friday season is precisely what SHOP needs to maintain its current rally. With sales tracking above its high-teens growth forecast for Q4, SHOP should be on target to reach its other Q4 goals, including gross margin expansion of 300-400 bps and continued improvement in free cash flow. Surpassing these achievements would mark a significant leap toward greater profitability, a central focus of SHOP throughout the past year as consumer spending soured.
- According to SHOP, the categories that led this year's Black Friday event were clothing, personal care, and jewelry. These items somewhat resembled last year's top-performing categories, which included apparel, accessories, health & beauty, and home & garden. Solid clothing demand was a consistent theme touched on by several retailers recently, including Macy's (M) and Kohl's (KSS), and bodes well for other apparel-focused organizations who have yet to report earnings, such as Lululemon (LULU) on December 7 and NIKE (NKE) on December 21.
- Another highlight was a 33% jump in global sales made on Shopify POS, SHOP's point-of-sales app that can be used to conduct sales at physical locations, despite lapping a +27% jump in the year-ago period.
Better-than-feared Black Friday sales removes a layer of unease surrounding the holiday shopping season. It also provides insight into how SHOP may perform in Q4, now likely tracking above its previous forecasts. These favorable developments bode well for SHOP to maintain its upward momentum heading into the year's final month.
Tesla keeping its charge today despite expanding worker strikes in Sweden (TSLA)
Between Elon Musk's controversial comments on his social media platform, X, and now worker strikes in Sweden, it's been a bumpy ride for Tesla (TSLA) this week.
- Due to Musk's hardline stance against allowing his workers to unionize, TSLA has avoided the UAW strikes that have afflicted Ford Motor (F) and General Motors (GM). However, he won't be able to avoid the fight that is brewing in Sweden.
- After refusing to sign a collective bargaining agreement with IF Metall -- a union with more than 300,000 workers -- the union decided to go on strike.
- So far, investors are taking the news in stride, but as the strike continues to spread across car dealerships and mechanics, TSLA could begin to feel a financial impact.
- From a financial standpoint, what's most concerning is that the EV maker's margins, which are already strained from price cuts, could take another hit if its forced to ramp wages significantly higher.
- For some context, TSLA's gross margin sank by 719 bps yr/yr in Q3 to 17.9%, causing EPS to decline by 37% to $0.66.
- Compounding the issue is that demand is also waning, including in China, TSLA's second largest market. Specifically, sales dipped by 2.6% in October in China.
All in all, news of the worker strike in Sweden adds another wrench to TSLA's story. Perhaps the biggest fear is that the strikes will spread to other countries, including Germany, where TSLA recently opened a new plant. While the stock is holding up today, it's worth noting that volume is very light today, making TSLA a stock to watch next week when more traders are active
|
|
