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Equity Indexes Wrap: Nvidia Bounces Back on Positive Analyst Comments; Apple Falls Again
January 05, 2024 04:30 PM EST
The Dow
Walgreens Boots Alliance (WBA) led the index as it rebounded from yesterday’s sell-off. Shares rose 3.1% today.
Verizon (VZ) followed, gaining 2.1%. The stock has risen for six consecutive sessions.
UnitedHealth Group (UNH) led the index’s laggards, falling 1.5%.
International Business Machines (IBM) lost 1.1% after analysts at Societé Generale downgraded the stock to “sell.”
McDonald’s (MCD) fell 0.9% after Oppenheimer downgraded the stock to “market perform” from “outperform” after a strong 2023.
Apple (AAPL) fell for a fourth straight day, losing 0.4% after the New York Times reported a Justice Department investigation could lead to an antitrust lawsuit focused on the iPhone.
The S&P 500
Airlines, financials, and cruise operators made up nearly all of the top-performing stocks in the index Friday. Southwest Airlines (LUV) added 4.3%, while American Airlines (AAL) tacked on 3.9%, and Delta (DAL) rose 3.4%.
Meanwhile, Synchrony Financial (SYF) gained 3.6%, Zions Bancorp (ZION) rose 3.3%, and Citizens Financial Group (CFG) climbed 3.2%.
Royal Caribbean (RCL) gained 3.1% and Carnival Corp. (CCL) rose 2.8%.
Constellation Brands (STZ) rose 2.1% after it reported better-than-expected quarterly earnings despite sluggish wine and liquor demand.
Most food stocks underperformed, with Conagra Brands (CAG) and Hershey (HSY) falling 1.8% and 1.6%, respectively.
Tesla (TSLA) slid 0.2% after recalling 1.6 million vehicles in China to address concerns about its auto-pilot software.
The Nasdaq 100
Investors bought up smaller tech names like chipmaker Marvell Technologies (MRVL), up 3.2%, and Datadog (DDOG), up 2.6%.
Nvidia (NVDA) rose 2.3% after Bank of America named it a top sector pick and argued it could generate $100 billion in incremental free cash flow in the next two years thanks to its dominance in the AI chip market.
Magnificent Seven peers Meta Platforms (META) and Amazon (AMZN) climbed 1.4% and 0.5%, respectively.
Costco (COST) gained 1.2% after reporting a 10% year-over-year increase in sales in December.
PepsiCo (PEP) fell 1.5% after the chair of French supermarket chain E.Leclerc expressed support for competitor Carrefour’s decision, revealed yesterday, to drop Pepsi products in protest of the company’s price hikes. Competitors Keurig Dr. Pepper (KDP) and Coca-Cola Europacific Partners (CCEP) both fell about 1.2%.
Constellation Brands Benefits From Modelo Beer Sales, Sending Shares Higher
January 05, 2024 03:55 PM EST
Demand for Modelo beer helped Constellation Brands (STZ) post better-than-expected results, and shares gained close to 3% in intraday trading Friday.
The alcoholic beverage maker reported third-quarter fiscal 2024 earnings per share (EPS) of $3.19, above forecasts. Revenue rose 1.4% from a year ago to $2.47 billion, short of estimates.
Beer sales were up 4% to $1.97 billion, led by an approximately 12% increase in sales of Modelo Especial.
Wine and spirits revenue slipped 8% to $502 million, and Constellation warned about full-year demand, which it blamed on a broader marketplace deceleration and U.S. wholesale underperformance.
Shares of Constellation Brands were up 2% at $247.15 shortly before the close Friday. They reached an all-time closing high in July after Modelo Especial took the title of America’s top-selling beer brand from Bud Light, and they’ve gained more than 19% over the last year.
TradingView
Apple Stock Sinks After Reports of Potential Antitrust Suit
January 05, 2024 02:58 PM EST
Shares of Apple (AAPL) tumbled in afternoon trading Friday following reports the company could be facing an antitrust suit over its smartphone dominance.
Officials are nearing the end of an investigation that could lead the Justice Department to file an antitrust suit against Apple, according to the New York Times, which cited people familiar with the matter. The suit, which would focus on Apple’s efforts to protect the iPhone’s dominance in the smartphone market, could come within the first half of the year.
According to the Times, officials are investigating whether Apple designs hardware and software to make it harder for customers to switch to a different phone and for peers to compete. iMessage, which only works with an iPhone, was one product cited as an example of Apple’s efforts to shut out competitors. Investigators are also looking into the Apple Watch and whether it is designed to work better with iPhones than with comparable smartphones.
The report is another blow to Apple, which had its stock downgraded by analysts at Barclays on Tuesday and at Piper Sandler on Thursday. Both firms expressed pessimism about—ironically, in light of today’s reports—iPhone sales, which they expect to fall short of expectations.
Shares, which were in the green for the first time this year earlier Friday, traded 0.5% lower following the Times report.
Midday Movers
January 05, 2024 02:02 PM EST
American Airlines Group Inc. (AAL): Airlines were among the S&P 500’s leading stocks Friday. American shares rose 4%, while Southwest (LUV), Delta (DAL), and United (UAL) all added more than 3%.
Constellation Brands Inc. (STZ): Shares of the beer, wine, and spirits maker rose over 3% after its quarterly earnings topped Wall Street’s estimates despite sluggish sales.
Agilon Health Inc. (AGL): The health care stock tumbled more than 30% after it slashed its full-year revenue and earnings guidance.
PepsiCo Inc. (PEP): Shares of the packaged food and beverage giant fell about 2% after the chair of French supermarket chain E.Leclerc backed competitor Carrefour’s decision, revealed yesterday, to drop Pepsi products in protest of the company’s price hikes.
Palantir Shares Fall After Jefferies Downgrades Stock as ‘Overhyped on AI’
January 05, 2024 01:18 PM EST
Palantir (PLTR) shares lost 2% Friday after Jefferies downgraded the stock, with analysts calling it “overhyped” on artificial intelligence (AI), in a shift from the firm’s previous stance.
Jefferies downgraded Palantir to “underperform” from “hold” in an analyst note and lowered the firm’s price target to $13 from $18, saying that the valuation was “unjustifiable.”
The firm noted Palantir was “one of the largest beneficiaries of the AI trade” in 2023, with shares more than doubling in value last year, but as the company’s government business decelerates, “there is more pressure being put onto PLTR’s commercial business segment to drive overall growth.” Jefferies added that it views the reliance on commercial business to drive growth as a risk.
Even with Friday’s losses, Palantir shares have gained more than 150% over the past year.
CostCo Stock Rises on Strong Holiday Season
January 05, 2024 12:39 PM EST
Shares of Costco Wholesale Corp. (COST) advanced after the biggest U.S. warehouse retailer reported a strong holiday shopping season.
Costco on Thursday reported sales for the five weeks from Nov. 27 to Dec. 31 totaled $26.15 billion, up almost 10% from 2022.
Comparable store sales rose 8.5%. They were up 7.3% in the U.S., 12.8% in Canada, and 10.5% in other countries. E-commerce sales jumped 17.7%. The company noted that 2023 had one more shopping day than the year before because of when New Year’s Day fell. That benefited total and comparable sales by about 3%.
Costco shares hit an all-time high last month and, although they have slid somewhat since then, they’re still up more than 35% over the past year. The stock was up about 1% at $655.15 as of 12:30 p.m. ET Friday.
TradingView.
Chart to Watch: JetBlue Airways
January 05, 2024 11:48 AM EST
JetBlue Airways (JBLU) climbed nearly 8% on Thursday amid increasing volatility ahead of a looming court ruling over the company’s proposed $3.8 billion acquisition of no-frills carrier Spirit Airlines, Inc. (SAVE).
The Justice Department sued last March to prevent the tie-up between the two discount airlines, arguing that it would reduce competition in a highly concentrated industry. Attorneys representing JetBlue say the deal is critical for allowing the airline to become a viable disruptor among the industry’s dominant carriers.
Source: TradingView.com.
JetBlue’s share price broke above the neckline of an inverse head and shoulders chart pattern in early December and continued trending mostly higher until the end of last month. Volatility has increased this year with three consecutive days of price moves over 5%.
Looking ahead, investors may want to keep an eye on the $4.75 level where the price could encounter support from the inverse head and shoulders pattern’s neckline which roughly aligns with the 50-day moving average.
See here for more charts to keep an eye on today.
Amer Sports, Maker of Wilson Tennis Rackets, Files for IPO
January 05, 2024 10:41 AM EST
Sporting equipment and apparel company Amer Sports on Thursday filed for an initial public offering, adding to hopes the interest rate cuts investors expect in 2024 will reinvigorate the IPO market after two dismal years.
Amer Sports, which was founded in Finland in 1950, owns a portfolio of brands including Arc’teryx, Salomon, and Wilson. The company was listed on the Nasdaq Helsinki in 1977 before it was taken private in 2019 by a consortium led by ANTA Sports, China’s largest sporting goods company. Co-owners include Anamered Investments, the investment company of Lululemon founder Chip Wilson, FountainVest Partners, and Tencent.
Amer has grown at a compound annual rate of 20% since being taken private and sold more than $3.5 billion in merchandise in 2022, according to an SEC filing.
The IPO market ground to a halt in 2022 when 149 debuts raised about $21 billion—a sliver of the $282 billion raised in 908 IPOs in 2021. Things weren’t much better in 2023 when, according to Renaissance Capital, 108 IPOs raised $19.4 billion.
But the outlook began to improve at the end of the year when chip designer Arm (ARM) raised nearly $5 billion in the largest U.S. IPO since 2021. Arm’s September debut opened the door for grocery delivery firm Instacart (CART) and sandal maker Birkenstock (BIRK).
Stocks Making the Biggest Moves Premarket
January 05, 2024 09:24 AM EST
Gains:
Peloton Interactive Inc. (PTON): Shares of the at-home fitness company rose 7%, extending yesterday’s gains following an announcement it would partner with TikTok to bring fitness content to the short-form video platform.
Costco Wholesale Corp. (COST): The warehouse retailer gained about 1% after it said same-store sales increased 8.5% year-over-year in December.
Constellation Brands (STZ): Shares of the beer, wine, and spirit maker rose 1% after its quarterly earnings topped expectations despite sluggish sales and lowered guidance.
Losses:
Palantir Technologies Inc. (PLTR): Shares of the data analytics firm fell about 4% after analysts at Jefferies downgraded the stock to “sell,” citing a rally that has taken the stock to “unsustainable valuation levels.”
Okta Inc. (OKTA): The cybersecurity stock slid 2% after it was also downgraded by Jefferies analysts, who said a recent data breach could pressure the stock.
Medical Properties Trust (MPW): The healthcare REIT plummeted 20% after it said it was working with major tenant Steward Health Care to recover $50 million in unpaid rent.
December Jobs Report
January 05, 2024 08:52 AM EST
The U.S. added 216,000 jobs in December, surging past expectations of 170,000 new jobs, according to the Bureau of Labor Statistics. The unemployment rate remained at 3.7%. Economists had expected it to tick up slightly to 3.8%.
Wages growth accelerated to an annual rate of 4.1% slightly above November’s reading and above the current inflation rate.
The Federal Reserve has been closely watching employment data as it seeks to slow inflation and the economy without triggering a wave of layoffs.
Stock Futures Slip Ahead of Jobs Report
January 05, 2024 08:18 AM EST
Futures contracts connected to the Dow Jones Industrial Average were about 0.3% lower in premarket trading Friday.
S&P 500 futures also slipped 0.3%.
Nasdaq 100 futures were also 0.3% lower.
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