Monday, December 11, 2023

Daily Markets: Treasury Yields Move Lower, Apple Earnings and Jobs Data Ahead

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Today’s Big Picture

Asia-Pacific equity markets finished the day higher on the heels of what has been acknowledged as a positive Fed meeting that potentially showed investors a light at the end of this rate hike tunnel. The only market still working through some issues was represented by China’s Shanghai Composite, which declined 0.45%. Both Hong Kong’s Hang Seng and India’s SENSEX gained around 0.75%, Australia’s ASX All Ordinaries rose 1.00%, Japan’s Nikkei added 1.10% and South Korea’s KOSPI closed 1.81% higher. Taiwan’s TAIEX was boosted 2.23% by a broad rally led by Electronic Technology names.
European markets are up across the board in midday trading, and U.S. equity futures point to a higher market open due in part to the additional move lower this morning in Treasury yields. While investors ponder Fed Chair Powell’s comments from yesterday’s monetary policy presser, the market will decode several fresh pieces of economic data and another barrage of corporate earnings. After today’s market close, S&P 500 and Nasdaq Composite heavyweight Apple (AAPL) will deliver its quarterly earnings. Those results and guidance, along with the details found in tomorrow’s October Employment Report, will determine how the market finishes the first few trading days of November.

Data Download

International Economy
The HCOB Eurozone Manufacturing PMI came in at 43.1 in October, down from 43.4 in September and compared with a preliminary estimate of 43. New orders, purchasing activity, and backlogs all contracted significantly and rapidly, leading to a notable decrease in factory production. October’s contraction in new orders was among the strongest ever recorded, highlighting significant weaknesses in the Eurozone’s manufacturing economy.
At 8 AM ET, the Bank of England is expected to leave interest rates unchanged at 5.25%.
Domestic Economy
Once again it is Thursday and that brings the weekly data for Initial and Continuing Jobless Claims as well as Natural Gas Inventories. In addition, 3Q 2023 data on Productivity and Unit Labor Cost will be published at 8:30 AM ET, which should be of more than passing interest to the market following Fed Chair Powell’s press conference comments.
At 10 AM ET, September Factory Order data will be released, and the market consensus expects a 2.4% MoM increase from 1.2% the prior month. The UAW strike that went into effect on September 15 could generate some noise in the data.

At the beginning of Fed Chair Powell’s comments, traders knew they were in for some hawkish comments. Exiting the policy press conference, the prevailing view was that even though Powell left the door open for another potential rate hike, the odds of that occurring were low. Upcoming data will tell us if that conclusion is correct, but in the short-term, Powell’s less-hawkish-than-expected tone led stocks to close higher.
Energy (-0.23%) and Consumer Staples (-0.10%) were the only sectors to lose ground yesterday while Technology (1.93%), Communication Services (1.47%), and Consumer Discretionary (1.24%) led the way as the Magnificent 7 rode again. The Russell 2000 gained 0.45%, the Dow rose 0.67%, the S&P 500 advanced 1.05% and the Nasdaq Composite closed 1.64% higher.
The trend of traders taking what a former mentor used to refer to as “the big ugly stick” to companies missing numbers or taking down guidance this earnings cycle continues. Shares of Estee Lauder (EL) fell 18.90% after the company reported a weak quarter and lowered guidance ahead of yesterday’s market open.
Here’s how the major market indicators stack up year-to-date:

  • Dow Jones Industrial Average: 0.38%
  • S&P 500: 10.38%
  • Nasdaq Composite: 24.79%
  • Russell 2000: -5.70%
  • Bitcoin (BTC-USD): 113.67%
  • Ether (ETH-USD): 54.10%

Stocks to Watch

Before U.S. equity markets begin trading today, ConocoPhillips (COP), Crocs (CROX), Cummins (CMI), CyberArk (CYBR), Eli Lilly (LLY), Ferrari (RACE), InterDigital (IDCC), Kellanova (K), Marriott (MAR), Molson Coors (TAP), Papa John’s (PZZA), Parker Hannifin (PH), Portillo’s (PLTO), Shopify (SHOP), Starbucks (SBUX), and Wendy’s (WEN) will report their latest quarterly results.

Approximately 240 S&P 500 constituents are seeing action this morning with 204 gainers and 39 losers. Leading the charge are Clorox Companies (CLX), up over 10%, and PayPal Holdings (PYPL) (more below) and Starbucks Corporation (SBUX) both pushing large gains in pre-market trading. Solar Edge Technologies (SEDG) is on track to open 18% lower (more below).
Qualcomm (QCOM) shares moved higher in aftermarket trading after the chip company delivered September quarter results that topped Wall Street’s consensus forecasts. EPS came in at $2.02 vs. the $1.91 consensus on revenue of $8.66 billion vs. the $8.51 billion consensus. Handset revenues of $5.5 billion increased 4% QoQ, benefiting from the early stages of recovery in Android demand. For the current quarter, Qualcomm guided EPS to $2.25-$2.45 vs. the $2.22 consensus and called for December quarter revenue to rise 5%-15% QoQ to $91.1-$9.9 billion.
Stronger than consensus September quarter revenue and earnings led the shares of PayPal to climb higher last night. However, the company’s December quarter guidance of $7.82-$7.9 billion in revenue and EPS of $1.36 were below the $7.98 billion and $7.98 consensus forecasts. Management also reaffirmed expectations for PayPal’s 2023 share repurchases to tally ~$5 billion.
elf Beauty (ELF) crushed September quarter expectations, lifting its shares in aftermarket trading last night. The company delivered EPS of $0.82 vs. the $0.53 consensus while revenue soared 76.1% YoY to $215.5 million, handily beating the $197.1 million consensus. For the current fiscal year, elf guided its top line to $896-$906 million vs. the $851.6 million consensus.
Airbnb (ABNB) reported essentially in-line September quarter revenue of $3.4 billion vs. the $3.37 billion consensus. During the quarter, Nights and Experiences Booked exceeded 113 million, up 14% YoY with all geographies delivering sequential acceleration in YoY bookings growth. Airbnb issued revenue guidance of $2.13-$2.17 billion for the current quarter vs. the $2.18 billion consensus and shared it sees nights booked growth moderating compared to the September quarter.

Shares of Confluent (CFLT) tumbled more than 30% last night after the company trimmed its full-year revenue projection to $768-$769 million, down from the previous range of $767-$772 million and the $771 million consensus.
SolarEdge Technologies shares also fell double-digits last night after missing quarterly revenue expectations and guiding the current quarter revenue to $300-$350 million, well below the $715 million consensus.
Disney (DIS) has agreed to take full control of Hulu in a deal with Comcast (CMCSA), which owned a third of the streamer ever since Disney’s acquisition of the 21st Century Fox entertainment assets. Disney expects to pay at least $8.61 billion by December 1 but the final amount will be determined by the final appraisal of Hulu’s value.
Rani Therapeutics (RANI) plans to cut around 25% of its workforce as part of a restructuring effort intended to prioritize three drug programs and extend its cash runway.
Readers who want to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close
Apple (AAPL), Block (SQ), Cirrus Logic (CRUS), Cloudflare (NET), Dropbox (DBX), Fortinet (FTNT), Insulet (PODD), Motorola Solutions (MSI), Omega Health (OHI), Skyworks (SWKS), Universal Display (OLED), and WW (WW) will report their quarterly results after equities stop trading. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar.

On the Horizon

Friday, November 3

  • China: Caixin Services PMI – October
  • UK: S&P Global-CIPS Final Services PMI – October
  • Eurozone: Unemployment Rate – September
  • US: Employment Report – October
  • US: S&P Global Final US Services PMI – October
  • US: ISM Non-Manufacturing Index – October

Thought for the Day

“There comes a time when people get tired of being pushed out of the glittering sunlight of life’s July and left standing amid the piercing chill of an alpine November.” ~ Martin Luther King, Jr.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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