Market Snapshot
briefing.com
| Dow | 35416.98 | +83.51 | (0.24%) | | Nasdaq | 14281.76 | +40.73 | (0.29%) | | SP 500 | 4554.89 | +4.46 | (0.10%) | | 10-yr Note | +26/32 | 4.34 |
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| | NYSE | Adv 1437 | Dec 1393 | Vol 828 mln | | Nasdaq | Adv 2081 | Dec 2218 | Vol 4.50 bln |
Industry Watch
| Strong: utilities, consumer staples, materials, consumer discretionary, real estate, communication services, information technology |
| | Weak: health care, industrials, real estate |
Moving the Market
--Waiting on earnings reports after the close from CRWD, INTU, NTAP, HPE, and WDAY
--November Consumer Confidence Index checks in at 102.0 for November (Briefing.com consensus 100.0), up from downwardly revised 99.1 (from 102.6) for October
--Fed Governor Waller says if inflation continues to fall for several more months, then the policy rate could be lowered, according to CNBC
--Fed Governor Bowman would support raising rates again if data show progress on inflation has stalled or is insufficient to bring inflation back down to 2% |
Closing Stock Market Summary
28-Nov-23 16:20 ET
Dow +83.51 at 35416.98, Nasdaq +40.73 at 14281.76, S&P +4.46 at 4554.89
[BRIEFING.COM] The major indices settled today's session little changed from where they began today's session. That isn't a bad thing considering how far they have come since their late October lows. Little change is the equivalent of a victory for the bulls or, viewed in another light, a defeat for anyone hoping for a more meaningful pullback either because they are short the market or have an unmet desire to buy on weakness.
A staying factor today was provided by Fed Governor Waller (FOMC voter) who, according to CNBC, acknowledged that the policy rate could be lowered if inflation continues to fall for several more months. He went on to add that, if inflation continues to decline, there is no reason for rates to remain really high.
Those remarks were made around mid-morning and they sent the indices to their best levels of the day. That rush of buying interest eventually faded, though, reflecting some of the buyer exhaustion that has set in after the big run from the late October lows.
Fed Governor Bowman, also an FOMC voter, provided an offset of sorts to the rate-cut excitement when she noted in a speech today that she would support raising rates again if data show progress on inflation has stalled or is insufficient to bring inflation back down to 2 percent.
Her view notwithstanding, the fed funds futures market appeared to place more of a premium on Mr. Waller's remark than Ms. Bowman's comment. The probability of a 25 basis points rate cut at the May 2024 FOMC meeting increased to 64.3% from 52.9% yesterday.
The 2-yr note yield, which is more sensitive to changes in the fed funds rate, seemed to react in the same vein, all but ignoring a $39 billion 7-yr note auction that was met with weak demand. The 2-yr note yield declined 14 basis points to 4.73%. The 10-yr note yield fell five basis points to 4.34%.
The drop in rates was an otherwise supportive influence for stocks, which lacked concerted leadership. Advancers outpaced decliners by a small margin at the NYSE and the reverse held true at the Nasdaq.
The biggest gainers among the 11 S&P 500 sectors were the real estate sector (+0.5%) and the consumer discretionary sector (+0.5%). Conversely, the biggest loser was the health care sector (-0.5%).
The Vanguard Mega-Cap Growth ETF (MGK) was up 0.3% and the Invesco S&P 500 Equal-Weight ETF (RSP) was down 0.1%. The Russell 3000 Growth Index was up 0.2% and the Russell 3000 Value Index was down 0.1%.
Outsized moves today were reserved for individual issues like Pinduoduo (PDD 139.00, +21.28, +18.1%), which reported earnings, and Tesla (TSLA 246.72, +10.64, +4.5%), which cleared resistance at its 50-day moving average (236.43) ahead of its Cybertruck delivery event on Thursday.
- Nasdaq Composite: +36.5%
- S&P 500: +18.6%
- Dow Jones industrial Average: +6.8%
- S&P Midcap 400: +4.5%
- Russell 2000: +1.8%
Reviewing today's economic data:
- The Conference Board's Consumer Confidence Index checked in at 102.0 for November (Briefing.com consensus 100.0). That was up from a downwardly revised 99.1 (from 102.6) for October. Accordingly, it will be advertised as an uptick in confidence, but such an advertisement should carry the disclaimer that confidence increased in November from a downwardly revised number for the prior month.
- The key takeaway from the report is that confidence in future business conditions, job availability, and incomes for the next six months improved -- a helpful attitude that should support the market's prevailing soft landing outlook.
- The September FHFA Housing Price Index was up 0.6% month-over-month following an upwardly revised 0.7% increase (from 0.6%) in August.
- The September S&P Case-Shiller Home Price Index was up 3.9% month-over-month (Briefing.com consensus 4.1%) following a downwardly revised 2.1% increase (from 2.2%) in August.
Wednesday's economic calendar features:
- 07:00 ET: Weekly MBA Mortgage Index (prior 3.0%)
- 08:30 ET: Q3 GDP -- second estimate (Briefing.com consensus 4.9%; prior 4.9%), Q3 GDP Deflator -- second estimate (Briefing.com consensus 3.8%; prior 3.5%)
- 08:30 ET: October Adv. International Trade in Goods balance (prior -$85.8 bln), October Adv. Retail Inventories (prior 0.9%), and October Adv. Wholesale Inventories (prior 0.0%)
- 14:00 ET: November Fed Beige Book
Stuck in a rut
28-Nov-23 15:30 ET
Dow +67.47 at 35400.94, Nasdaq +0.84 at 14241.87, S&P -1.90 at 4548.53
[BRIEFING.COM] Heading into the home stretch, the major indices remain stuck in a narrowly-traded rut. Being stuck where they are, however, isn't so bad.
Including today's "action," the Nasdaq Composite is up 10.9% this month, the S&P 500 is up 8.5%, the Russell 2000 is up 8.0%, and the Dow Jones Industrial Average is up 7.1%.
Although today's performance isn't moving the needle all that much, it belies the fact that this November is on course for being one of the best Novembers on record.
Indicative of today's languid showing, the Vanguard Mega-Cap Growth ETF (MGK) is flat and the Invesco S&P 500 Equal Weight ETF (RSP) is down 0.1%.
Looking ahead, Wednesday's economic calendar will feature the MBA Mortgage Applications Index, the second estimate for Q3 GDP, the Adv. Intl. Trade in Goods, Retail Inventories, and Wholesale Inventories Report, and the Fed's Beige Book.
Handling a weak 7-yr note auction well
28-Nov-23 15:00 ET
Dow +107.54 at 35441.01, Nasdaq +18.82 at 14259.85, S&P +3.70 at 4554.13
[BRIEFING.COM] The major indices are back sporting a mixed disposition with overall changes on either side of the unchanged line still modest.
There was already some backtracking from session highs taking place before the $39 billion 7-yr note auction at 1:00 p.m. ET. That auction was met with weak demand. The high yield of 4.399% tailed the when-issued yield by more than two basis points. Dollar demand was weak, too, evidenced by a 2.44 bid-to-cover ratio that was shy of the prior 12-auction average of 2.53.
Notwithstanding the weak demand, the indices are trading around levels they were at when the results hit, which is to say there hasn't been much reaction overall to this poor auction. That makes sense when one also recognizes that the Treasury market has managed to stay on a winning path today, with several securities extending today's gains despite the weak auction.
The 2-yr note yield is down 14 basis points to 4.73% and the 10-yr note yield is down five basis points to 4.34%. The moves there have been a placating factor for stocks.
Newmont Goldcorp atop the S&P 500, aided by rising gold prices
28-Nov-23 14:30 ET
Dow +63.71 at 35397.18, Nasdaq -2.21 at 14238.82, S&P -2.44 at 4547.99
[BRIEFING.COM] The S&P 500 (-0.05%) is now the worst-performing major average, albeit down just 2 points.
Elsewhere, S&P 500 constituents Newmont Goldcorp (NEM 40.46, +2.28, +5.97%), Synchrony Financial (SYF 30.75, +1.36, +4.63%), and PayPal (PYPL 58.32, +1.93, +3.42%) are among today's top gain getters. NEM enjoys gains alongside today's move in gold futures, SYF advances after news it is going to part with its Pets Best Insurance Services unit, while PYPL holds up nicely in spite of a cautious Evercore ISI note.
Meanwhile, Grainger (GWW 775.39, -34.96, -4.31%) slides to the bottom of the standings, sliding alongside general weakness in industrials (-0.21%).
Yields down, gold up on Tuesday
28-Nov-23 14:00 ET
Dow +66.51 at 35399.98, Nasdaq +3.90 at 14244.93, S&P +0.32 at 4550.75
[BRIEFING.COM] With about two hours to go on Tuesday the tech-heavy Nasdaq Composite (+0.03%) squeaks into second place, up about 4 points.
Gold futures settled $27.20 higher (+1.3%) to $2,060.20/oz, aided in part by declines in yields.
Meanwhile, the U.S. Dollar Index is down about -0.3% to $102.88.
Page One
Last Updated: 28-Nov-23 08:49 ET | Archive
Some buyer exhaustion perhaps
The major indices saw some modest losses yesterday and they are on track for some modest losses at today's open.
Currently, the S&P 500 futures are down seven points and are trading 0.1% below fair value, the Nasdaq 100 futures are down 26 points and are trading 0.1% below fair value, and the Dow Jones Industrial Average futures are down 20 points and are trading fractionally below fair value.
There aren't any specific news drivers that would account for the negative disposition. Rather, it appears to be a case of buyer exhaustion following four straight weeks of gains.
Cloud security software company Zscaler (ZS), up 25% from its October 26 low, is a proxy of sorts for this exhaustion. It delivered a better-than-expected fiscal Q1 earnings report, issued fiscal Q2 and FY24 guidance above consensus estimates, and reaffirmed its FY24 billings outlook, and yet shares of ZS are down 5.1% in pre-market trading.
One can call that a sell-the-news reaction, which is something to which NVIDIA (NVDA) can relate.
After today's close, CrowdStrike (CRWD), Intuit (INTU), NetApp (NTAP), Hewlett-Packard Enterprise (HPE), and Workday (WDAY) will report their quarterly results, so a bit of a wait-and-see mentality is hanging over the market.
The latter is also true relative to some economic releases on the near horizon. The September FHFA Housing Price Index (prior 0.6%) and the September S&P Case-Shiller Home Price index (Briefing.com consensus 4.1%; prior 2.2%) will be out at 9:00 a.m. ET; however, the focal point on the economic calendar today is the November Consumer Confidence Index (Briefing.com consensus 100.0; prior 102.6) at 10:00 a.m. ET.
These reports will be followed later in the day by the $39 billion 7-yr note auction. The auction results will be released at 1:00 p.m. ET, so the Treasury market will have plenty to chew on.
At the moment, the 2-yr note yield is unchanged at 4.87% and the 10-yr note yield is unchanged at 4.39%. Like stocks then, Treasuries are looking a little tired after a big run.
-- Patrick J. O'Hare, Briefing.com
Micron sees profit-taking despite hiking its Q1 guidance; higher expectations likely priced in (MU)
Micron (MU -3%) is edging lower today despite hiking its Q1 (Nov) earnings, sales, and non-GAAP gross margin forecasts. While raised guidance triggering a pullback seems counterintuitive, in Micron's case, having run up over +20% as of yesterday's close since the end of October, the market was pricing in high expectations ahead of NovQ earnings slated for December 20. Micron expects NovQ EPS of $(1.00), up from its previous forecast outlined in late September of $(1.00)-$(1.14), revs of $4.7 bln, up from $4.2-4.6 bln, and margins of (0.5)% to 0.0%, improved from (6)%-(2)%.
While sliding U.S. Treasury yields as investors bet on the Federal Reserve pausing interest rates soon helped propel Micron well above one-year highs this month, several other factors painted a rosier picture than Micron outlined two months ago, driving up expectations.
- Competitor Western Digital (WDC), a flash storage manufacturer, registered impressive Q1 (Sep) results in late October, including better-than-feared Q2 (Dec) guidance. The company was optimistic that flash and hard drive demand would enjoy modest sequential improvements through the end of December. Additionally, management added that as it moved through FY24 (Jun), it anticipated improving market conditions across both businesses.
- Samsung (SSNLF), another Micron competitor, boasted increasing adoption of high-density products across its DRAM and NAND businesses when it reported SepQ results around the same time as WDC. Furthermore, Samsung noticed a completion of customers' inventory adjustments. Both developments led to improvements in the demand backdrop. Also worth pointing out is that Samsung achieved record new design awards in SepQ, underscoring robust demand and fueling its mid-teens annual growth projection in a new backlog from design awards.
- NVIDIA (NVDA), a key customer of Micron's, may not have enjoyed outsized appreciation in its share price following its excellent OctQ report last week. However, its results showcased a sustained demand for its chips, particularly those geared toward powering AI applications. Micron is bullish on the potential revenue growth a surge in AI applications brings over the long term, commenting in late September that AI training servers contain significantly higher DRAM and NAND content.
Micron's raised NovQ guidance would likely have led to a round of applause today if not for bubbling expectations over the past month. Nevertheless, it is a bullish indicator that a revival within the memory chip market is starting to take shape. Recall that Micron's initial NovQ outlook was met by immediate profit-taking as it signaled a slower-than-expected recovery in memory chips as customers continued working through excess inventory. Therefore, despite today's pullback, Micron still looks healthy when taking a long-term view.
SpringWorks Therapeutics springing sharply higher after receiving FDA approval for OGSIVEO (SWTX)
SpringWorks Therapeutics (SWTX) is springing sharply higher after the biopharmaceutical company focusing on rare and severe diseases announced that the FDA has approved OGSIVEO, a treatment for adults suffering from desmoid tumors. The drug, which was previously granted fast track and orphan drug designations, is the first FDA-approved therapy for patients with desmoid tumors.
- For some quick background, desmoid tumors are extremely rare with an estimated incidence rate in the general population of two to four people per million. While they do not metastasize, desmoid tumors can be life-threatening and have a high recurrence rate of up to 77% following surgery. They are also difficult to live with, causing significant pain.
- Last March, results from the Phase 3 trial for OGSIVEO (then called nirogacestat) were published in the New England Journal of Medicine, setting the stage for today's approval.
- OGSIVEO met the primary endpoint of improving progression-free survival, achieving a 71% reduction in the risk of disease progression.
- Additionally, the drug demonstrated meaningful improvements in pain management, while exhibiting a favorable safety and tolerability profile.
- SWTX has never generated any product revenue, making this FDA-approval a landmark event for the company. Within five to ten business days, OGSIVEO will be available to purchase through specialty pharmacies.
- According to a Reuters report, the drug will be sold in the U.S. at a staggering price of $29,000/month, which is substantially more than analysts were anticipating.
- A marketing application is also expected to be filed in Europe soon, likely in 1H24.
- The company has another potential growth catalyst on the near-term horizon, too, with a new drug application (NDA) likely on the way in 1H24 for mirdametinib, a treatment for adult patients with NRAS mutant solid tumors that's being co-developed with BeiGene (BGNE).
- On November 16, STWX reported data from the Phase 2 trial, disclosing that 52% of pediatric patients and 41% of adult patients taking mirdametinib had objective responses, defined as a 20% reduction in target tumor volume.
The main takeaway is that the FDA approval of OGSIVEO is a milestone event for SWTX, putting the company on track to generate its first meaningful revenue in its history. SWTX is still projected to be unprofitable in FY24 -- the company posted a net loss of ($79.4) mln over the first nine months of 2023 -- but this approval marks an important step in becoming a profitable biopharmaceutical company in the future.
Pinduoduo up following another huge earnings beat driven by a recovery in consumer sentiment (PDD)
Pinduoduo (PDD +17%) is surging today after the Chinese ecommerce giant reported strong upside results for Q3. After a miss in Q4 of last year, PDD has now posted three consecutive huge EPS beats. Just as impressive, Q3 revenue rose 93.9% yr/yr to RMB 68.84 bln (US$9.44 bln), well ahead of analyst expectations.
- The strongest growth was generated by transaction services, which surged 315% yr/yr to US$3.99 bln. Online marketing services revenue rose a solid 39% yr/yr to US$5.44 bln. Last quarter, PDD said it saw a positive shift in consumer sentiment in Q2, leading to a rise in demand across various product sectors.
- The top line strength continued in Q3. PDD said that revenue growth in Q3 was mainly driven by the continued recovery in consumer sentiment. As one of the largest e-commerce platforms in China, PDD said it clearly felt the continuous recovery of the economy and the resilience of its consumption market.
- PDD noted that it introduced a number of policies to support consumption and it is now seeing robust demand for consumption upgrades. Consumer behavior is telling PDD that the consumption upgrade is not just about quality, but equally about price. It's the balance of quality and price that the consumers care most about. The company describes 2023 as a year of recovery and also a year of a heightened competition.
- Of note, while PDD operates primarily in China, it has been starting to branch out into international markets. In September 2022, PDD launched Temu in the US, which it hopes can compete with Amazon across a number of categories including clothing, shoes, appliances, beauty, automotive etc.
- Unfortunately, PDD was a little cautious, basically saying that the Temu business is still in its early stage and it will face uncertainties. With a year in the books, we would have liked to hear a more upbeat outlook. Briefing.com thinks it is going to be a heavy lift to make deep inroads in the US quickly as most Americans are unfamiliar with the Temu brand and AMZN already has a dominant presence. And it has played out that way thus far, but we will keep an eye on Temu in future quarters.
Overall, investors are clearly impressed with PDD's Q3 results, which bodes well for the holiday Q4 period as well. We were surprised to see PDD perform so well given the problems in China's real estate market. Also, China's Q2 GDP was short of expectations. However, on CNN.com today, an article quoted Pan Gongsheng, the governor of the People's Bank of China, as saying that China "is moving away from manufacturing and real estate, its traditional drivers of growth, towards a newer economic model driven by consumption and services." That seems to have played out with PDD's strong Q3 results.
Zscaler rebounds after relative conservatism in FY24 billings triggered profit-taking today (ZS)
Despite an over +20% run during November, shares of Zscaler (ZS) continue to climb today, rebounding after initially scaling back despite the Zero Trust and private access applications provider delivering another quarter of upside across the board. ZS topped earnings and sales estimates in Q1 (Oct) and issued upbeat Q2 (Jan) and FY24 (Jul) guidance, extending its streak of forecasting numbers ahead of consensus to nearly two years.
So why were shares retreating earlier today? The market may have became accustomed to ZS topping earnings and sales expectations each quarter, not having posted a miss in over five years, keeping a lid on enthusiasm over excellent headline results. Furthermore, a +20% jump in the stock price in under 30 days placed ZS in priced-to-perfection territory, leading to profit-taking on the slightest blemishes.
Speaking of which, while most of ZS's OctQ report contained positive developments, its FY24 billings guidance was mediocre. ZS kept its calculated billings outlook unchanged for the year at $2.52-2.56 bln despite exceptional performance in OctQ. CFO Remo Canessa noted that its relatively prudent billings forecast stemmed entirely from the go-to-market, given it is onboarding new sales leadership, maintaining conservativism surrounding close rates in JanQ.
- It should be noted that the new executives added to its sales and marketing teams resulted from accelerating demand. ZS commented that more customers are adopting its broader platform to consolidate multiple products, increasing its average deal size. Meanwhile, from conversations with hundreds of IT executives, ZS is confident that cybersecurity remains the top priority within IT spending.
- This outsized demand fueled several records for ZS in OctQ, including the number of new customers with annualized recurring revenue (ARR) over $1.0 mln, ending with 468, a 34% jump yr/yr. Another OctQ record emerged from ZS's U.S. Federal cohort, with new business up over 90% yr/yr, including four deals boasting an ACV greater than $1.0 mln.
- These record numbers helped ZS deliver better-than-expected earnings and sales in OctQ, growing its bottom line by 131% yr/yr to $0.67 and top line by 40% to $496.7 mln.
- They also aided ZS in lifting its FY24 predictions, projecting adjusted EPS of $2.45-2.48, up from $2.20-2.25, and revs of $2.09-2.10 bln up from $2.050-2.065 bln.
ZS's OctQ report was mostly bullish, underpinned by robust demand, as cybersecurity remains the last IT budget item to be reduced or eliminated. However, the market has brushed off several weak points from ZS's peers recently, including Palo Alto Networks' (PANW) trimmed FY24 (Jan) billings guidance and Fortinet's (FTNT) soft Q4 (Dec) estimates, sending ZS shares markedly higher over a short period and contributing to today's initial pullback. Nevertheless, there were no glaring concerns from ZS's OctQ report. With cybersecurity remaining a top priority from the private and public sectors, ZS stands to benefit significantly over the long term.
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