Markets News, Feb. 5, 2024: Stocks Fall as Yields Climb After Fed Officials Urge Caution


Equity Indexes Wrap: Chip Stocks Boost Tech as Nvidia, Caterpillar, Eli Lilly Hit Records

February 05, 2024 04:31 PM EST

The Dow

Caterpillar (CAT) gained 2% after topping Wall Street’s estimates with its fourth-quarter earnings amid strong sales at its energy and transportation unit. 

Apple (AAPL) shares rose 1% amid upbeat appraisals of the company’s new VR headset, Apple Vision Pro, from analysts at Wedbush Securities and Bank of America. 

McDonald’s (MCD) shares fell 3.7% after missing quarterly revenue estimates as boycotts prompted by Israel’s war in Gaza hit sales in the Middle East. 

UnitedHealth Group (UNH) fell 1.4% after competitor Humana (HUM) said in a regulatory filing that the government’s proposed Medicare reimbursement rate, released last Wednesday, was lower than the company had expected. Humana shares fell 4.7%.

Boeing (BA) fell 1.3% after the company said it would need to rework about 50 undelivered 737 Max jets on which it found manufacturing defects. 

The S&P 500 

Estée Lauder (EL) soared 12.1% after beating earnings estimates and saying it would cut 3% to 5% of its workforce as part of a restructuring. 

Catalent (CTLT) rose 9.7% to $59.82 after it said it had agreed to be purchased for $63.50 per share, or about $16.5 billion, by Novo Nordisk (NVO) parent Novo Holdings.

Eli Lilly (LLY) rose 5.8% after the Food & Drug Administration indicated a demand-driven shortage of the company’s diabetes drug Mounjaro would persist into March. 

Nvidia (NVDA) rose 4.7% to a record high of $693.18 after Goldman Sachs raised its price target to $800, citing the AI boom. 

Tyson Foods (TSN) gained 2% after cost controls helped the packaged meat company post better-than-expected quarterly earnings

Air Products & Chemicals (APD) tumbled 15.6% after missing quarterly earnings estimates and lowering its full-year outlook. 

Archer Daniels Midland (ADM) fell 4.9% as the Department of Justice opened an investigation into the company’s accounting practices after the agricultural commodities trader said it was looking into inter-segment sales.

The Nasdaq 100

Onsemi (ON) rose 9.5% after the semiconductor maker reported record automotive revenue growth in the fourth quarter. 

IDEXX Laboratories (IDXX) climbed 8.5% after topping Wall Street estimates with its quarterly earnings report. 

Other chip stocks got a boost from Nvidia’s upgrade and Onset’s results. NXP Semiconductors (NXPI) gained 2.8%, while Applied Materials (AMAT) rose 1.7% and Qualcomm (QCOM) climbed 1.6%. 

GlobalFoundries (GFS) slid 6.7% after JPMorgan downgraded the stock to neutral from overweight, citing increased competition and a deeper-than-expected bottom to the semiconductor cycle. 

ZScaler (ZS) fell 4.9% after chief operating officer Dali Rajic resigned. 

Charter Communications (CHTR) dropped 4.9% after several firms cut their ratings and price targets following last week’s disappointing quarterly report

Tesla (TSLA) lost 3.7%, continuing to fall after a judge last week rejected CEO Elon Musk’s $56 billion compensation package and raised questions about Musk’s influence over the company’s board of directors. 

Meta Platforms (META) retreated 3.3%, pulling back after a blowout earnings report last week added a record $205 billion to its market value.

McDonald’s Turns In Mixed Earnings as Middle East Boycotts Hit Sales; Stock Tumbles

February 05, 2024 03:56 PM EST

Despite a fourth-quarter earnings beat from McDonald’s (MCD) Monday, investors focused on the company missing its revenue estimates, sending the company’s stock sharply lower.

The international fast-food giant posted better-than-expected diluted earnings per share of $2.95 as revenue rose 8% from the year-ago period to $6.41 billion, which was slightly shy of expectations.

The big concern for investors was the impact on sales from boycotts tied to the Israel-Hamas war. The company’s International Developmental Licensed (IDL) markets segment, which includes Middle Eastern franchisees, posted comparable sales growth of just 0.7%.

Chief Executive Officer Chris Kempczinski said that, while “the most pronounced impact (from the boycotts) is in the Middle East, we are seeing some impact in other Muslim countries like Malaysia (and) Indonesia.” He added, as long as the war continues, “we’re not expecting to see any significant improvement in this.”

McDonald’s shares were down 3.7% at $286 shortly before markets closed on Monday.

Vivian Medithi

Treasury Yields Rise for a Second Day as Rate Cut Hopes Fade

February 05, 2024 03:08 PM EST

Treasury yields rose Monday as traders pared bets of a March interest rate cut after several Fed officials advocated approaching cuts cautiously. 

The yield on the 10-year Treasury note climbed 14 basis points on Monday afternoon to about 4.165% Monday afternoon, higher than they were throughout most of 2023.

Fed chair Jerome Powell on Sunday said in an interview with CBS that strong economic data was buying the Fed time and that it was too early for policymakers to say when they might start cutting interest rates this year.

“We just want to see more good data along those lines—it doesn’t need to be better or even as good, it just needs to be good,” he said.

Ans on Monday morning Chicago Fed President Austan Goolsbee told Bloomberg that he expects the Fed to be able to cut rates this year, but that they likely wouldn’t be any bigger than a quarter of a percentage point at a time.

Markets have dramatically dialed back rate cut expectations. One week ago, markets were pricing in a 47% chance the Fed would lower rates at its March meeting. After last week’s Fed meeting and surprisingly strong jobs report, those odds now stand at 14.5%.

Lower Costs Helped Tyson Foods Post Better-Than-Expected Results

February 05, 2024 02:17 PM EST

Tyson Foods (TSN) shares rose after the largest U.S. poultry producer’s cost-cutting measures helped it report better-than-expected results.

Tyson posted first quarter fiscal 2024 profit of 69 cents per share, down 9% year-on-year, but beating estimates by 68%. Revenue was up 0.4% at $13.32 billion, also more than analysts’ estimates.

A 10.5% jump in average prices helped lift the company’s beef sales by 6.3% to $5.02 billion, even as volumes fell 4.1%. Lower prices dragged down chicken and pork revenue.

The company raised its full-year adjusted operating income (AOI) for its chicken unit from a range of $400 million to $700 million to $500 million to $700 million. It sees the adjusted operating income at its pork unit rising year-on-year from breakeven to $100 million in fiscal 2024.

Shares of Tyson were 2% higher at $57.47 Monday afternoon. They are down about 10% over the past year.

Bill McColl

Caterpillar Stock Hits New High After Better-Than-Expected Q4 Profit

February 05, 2024 01:37 PM EST

Shares in Caterpillar (CAT) hit fresh all-time highs in early trading Monday after the industrial equipment manufacturer reported earnings that beat Wall Street expectations.

The company posted adjusted earnings per share of $5.23, up from $3.86 a year earlier and well above Wall Street analysts’ consensus view of $4.75 a share. Revenue for the fourth quarter of 2023 came in at $17.1 billion, 3% higher than the same period a year ago and roughly in line with expectations.

Caterpillar’s Energy and Transportation business led revenue gains for the company, with sales rising 12% to $7.7 billion in the fourth quarter. Sales in Construction Industries fell 5% to $6.5 billion, while those in Resource Industries dropped 6% to $3.2 billion.

Caterpillar said that retail new business in the latest quarter was $3.6 billion, a 30% increase over a year ago, driven primarily by higher North American volume.

Caterpillar shares were up 2.2% at $322 Monday afternoon, after rising as high as $334.87 earlier in the session.

Kevin George

TradingView

Estée Lauder Stock Jumps as Makeup Maker Posts Earnings Beat and Slashes Jobs

February 05, 2024 12:51 PM EST

Estée Lauder (EL) shares skyrocketed Monday after the cosmetics giant posted better-than-expected earnings and said it would cut jobs as part of a restructuring plan.

The company reported second-quarter fiscal 2024 earnings per share (EPS) of $0.88, above analysts’ estimates. Revenue fell 7.4% from a year ago to $4.28 billion, also beating forecasts.

CEO Fabrizio Freda said Estée Lauder is at “an inflection point” and noted the firm made progress in the first half of the year “across several strategic priorities.” He pointed to reduced inventory in the trade of Asia travel retail, improved working capital, price increases, and “managing expenses with discipline.”

The company also announced plans to expand its Profit Recovery Plan through fiscal years 2025 and 2026, starting with steps in the current quarter that include job cuts. Estée Lauder said it will eliminate 3% to 5% of its workforce, impacting up to approximately 3,150 employees.

Shares of Estée Lauder were up 12% at $150.28 Monday afternoon. However, even with Monday’s gains, they were still down 44% over the past year.

Bill McColl

TradingView

Tesla Stock Slides to Almost 8-Month Low Amid Scrutiny of Directors’ Ties to Musk

February 05, 2024 12:07 PM EST

Shares of Tesla (TSLA) tumbled Monday morning after the Wall Street Journal on Saturday outlined the blurry personal and professional boundaries between CEO Elon Musk and the directors tasked with overseeing his work. 

“Several current or former directors at Tesla and SpaceX attend parties with him, go on exotic vacations and hang out at Burning Man, the Nevada arts and music festival,” according to the Journal. They have also “amassed shares worth hundreds of millions of dollars from their seats over the years, significantly more than what board members at other companies make for their service.”

The report comes just days after a Delaware court struck down Musk’s 2018 compensation package, which was valued at up to $55.8 billion. “The process leading to the approval of Musk’s compensation plan was deeply flawed,” wrote Chancellor Kathaleen McCormick, who cited his professional and personal ties to the directors with whom he negotiated the pay package. 

In response, Musk said in a post on X (formerly Twitter) that Tesla would hold a shareholder vote on transferring its state of incorporation from Delaware to Texas. The company relocated its corporate headquarters to Austin, TX from Palo Alto, CA in 2021 after Musk criticized California’s tax and regulatory environment.

Adding to the bad news for Tesla investors Monday, German software giant SAP (SAP) will stop purchasing Tesla vehicles for its corporate fleet due to unpredictable deliveries and price swings, according to German newspaper Handelsblatt. It follows German rental company Sixt, which in December dropped Tesla from its fleet because the company’s price cuts on new vehicles were devaluing its used fleet. U.S. rental company Hertz said in January that it would reduce the size of its Tesla and EV fleet due to weak demand and price instability.

Tesla shares fell about 5% to $179, nearly an eight-month low, in intraday trading on Monday.

Eli Lilly Stock Rises Amid Weight-Loss Drug Shortage

February 05, 2024 11:14 AM EST

Shares of drugmaker Eli Lilly (LLY) rose more than 5% Monday amid signs of booming demand for the company’s weight-loss drugs Mounjaro and Zepbound. 

According to an update posted to the Food & Drug Administration’s website, increased demand for Mounjaro has caused a shortage of higher-dose presentations that is expected to last through early March.

Drug makers have struggled for more than a year to keep up with demand for their blockbuster weight-loss drugs. Shortages of Novo Nordisk’s (NVO) diabetes drug Ozempic and weight-loss indicated Wegovy were reported as early as the spring of 2022 when celebrities and TikTok stars began to tout the drugs’ benefits. 

Novo Nordisk’s parent company on Monday announced the $16.5 billion acquisition of drug delivery technology company Catalent (CTLT) as it seeks to boost production capacity and address shortages.

Also on Monday, Amgen (AMGN) published findings from an early-stage trial of its answer to the weight-loss craze. A monthly injection of Amgen’s drug MariTide caused patients to lose 14.5% of their body weight in 12 weeks, according to the company’s researchers. They also said some patients kept the weight off for up to 150 days after stopping the injections. 

Eli Lilly shares traded at a record high of $707 early Monday. Novo Nordisk shares were up 2.5%, while Amgen shares were down about 1%. 

Boeing Stock Back on the Radar After Another 737 MAX Glitch

February 05, 2024 10:14 AM EST

Boeing (BA) shares are once again on investors’ radar screens Monday after the Seattle-based airplane maker said a production glitch detected by a supplier on the fuselage of some of its undelivered 737 MAX aircraft could disrupt deliveries.

The aerospace giant confirmed that a spacing problem involving holes drilled on the window frame of around 50 jets had been identified by its 737 fuselage supplier Spirit AeroSystems (SPR) and could potentially delay some near-term deliveries. However, the company said the production glitch didn’t pose a safety risk and that existing 737 MAX planes could continue to fly.

Boeing’s latest mishap comes less than a month after the door plug of a 737 MAX 9 flown by Alaska Airlines (ALK) blew out mid-air, prompting aviation regulators to ground nearly 200 jets while investigators inspected similar door panels to those involved in the incident. When reporting quarterly earnings last week, the company suspended its forward guidance for 2024 amid ongoing safety issues.

Source: TradingView.com.

Since falling below the 200-day moving average in mid-January, the Boeing share price has consolidated within a tight range just under the closely watched indicator. It’s also worth noting that volume has increased significantly in recent weeks, indicating institutional reallocations within the stock.

On the downside, monitor a long-term uptrend line that stretches back to September 2022 as a possible area of support, currently around $193. If the price rallies above the 200-day moving average, keep an eye on the August swing high around $240 — a region on the chart that may provide overhead resistance.

Boeing shares were down 2% at $205 in early trading Monday.

Timothy Smith

Stocks Making the Biggest Moves Premarket

February 05, 2024 09:21 AM EST

Gains:

Estée Lauder Cos. (EL): Shares of the cosmetics giant jumped 16% after it outlined plans to cut 3% to 5% of positions, or about 3,000 jobs, as part of a restructuring…



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