Daily Markets: Can Stocks Keep Going Higher?

Today’s Big Picture

Asia-Pacific equity markets finished the day mixed. India’s SENSEX gained 0.26%, Japan’s Nikkei rose 0.18%, and Taiwan’s TAIEX added 0.15% while both Australia’s ASX All Ordinaries and South Korea’s KOSPI fell 0.23%, China’s Shanghai Composite gave back 0.95%, and Hong Kong’s Hang Seng closed 2.16% lower in a broad decline led by Health Services, and Transportation names. European markets are mixed in midday trading and U.S. equity futures are pointing to a higher open.

Following another record-setting day for the stock market’s major averages, and no pre-market developments on either the earnings front or the economic data calendar, the market surge looks to continue. We would note, however, that as the market has put in these fresh highs, it once again flirts with being overbought as investor sentiment flashing “Extreme Greed” per the Fear & Greed Index. This helps explain the largest outflow of funds, nearly $22 billion, since late 2022 for U.S. stocks for the week ending Wednesday, March 20.

Helping the market was the Fed’s updated economic projections that continued to show the central bank penciling in 3 rate cuts this year. However, Fed Chair Powell pointed out January and February inflation data did not bolster the Fed’s confidence we are moving closer toward its 2% target.

And if the Fed is truly being data-dependent in its thinking, it will not be like what was revealed in yesterday’s U.S. Flash March PMI report from S&P Global: “Respective rates of output price inflation accelerated sharply across both manufacturing and services, quickening to 13- and eight-month highs as companies passed through higher input costs to their customers.”

We will want confirmation in the final version of the data as well as the corresponding March report from the Institute for Supply Management, but today the market may not like what Fed Chair Michael Barr has to say should he touch on those findings.

And dear readers, this will be the last edition of Daily Markets. We wish you prosperous returns as you continue on your investing and trading journey. Feel free to follow us at @ChrisJVersace and @AbssyMark.

Data Download

International Economy

Today saw an upside surprise from UK Retail Sales in February as the MoM figures turned positive since 0.00% is considered a positive number, which is what the top line figure posted, besting the expected -0.30% decline. MoM Retail Sales ex-Autos & Fuel reported a 0.10% increase, also 0.30% better than the expected 0.20% decline.

German sentiment measures continued to improve as ifo Current Assessment, ifo Business Climate, and ifo Expectations all ticked one to two points higher in the March survey.

Domestic Economy

There are no market-moving economic data releases today. However, at 12 PM ET, Fed Vice Chair Michael Barr will be discussing International Economic and Monetary Design at the Transnational Law Conference on the International Law of Money.

Markets

Yesterday saw equities end on a positive note with Utilities (-0.16%) being the only down sector. Leadership came from Industrials (0.99%) and Financials (0.82%) and we saw a few sectors, including Consumer Staples, Technology and Communication Services end the day flat. The Nasdaq Composite rose 0.20%, the S&P 500 gained 0.32%, the Dow added 0.68% and the Russell 2000 closed 1.14% higher.

While it was a mild day overall there were some movers, like Micron Technology (MU) which popped 14.13% after a strong reported quarter, and Factset Research Systems (FDS) which fell 7.63% as reported revenue fell short of expectations although earnings posted a beat and guidance remained unchanged. Here’s how the major market indicators stack up year-to-date:

• Dow Jones Industrial Average: 5.55%
• S&P 500: 9.89%
• Nasdaq Composite: 9.26%
• Russell 2000: 3.53%
• Bitcoin (BTC-USD): 56.09%
• Ether (ETH-USD): 52.08%

Stocks to Watch

It’s all quiet on the earnings front this morning with no companies expected to report quarterly results. Pre-market breadth is lighter today as 232 names in the S&P 500 have traded hands so far this morning with 156 gainers and 76 decliners. Standouts in both segments include FedEx (FDX) (more below), which is poised to open over 12% higher, and lululemon (LULU) (more below) which is tracking to open roughly the same amount lower.

Despite a mixed performance for its February quarter and a narrower fiscal 2024 outlook, FedEx (FDX) shares surged over 12% in aftermarket trading last night, driven by cost-cutting measures in its Express business and improved margins in the quarter. The Express segment notably achieved an operating margin of 2.5%, surpassing Street expectations by 150 basis points and marking an 80 basis point improvement from the previous quarter. The company's overall adjusted operating margin also rose to 6.2% from 5.3% in the same quarter last year.

For 2024, FedEx anticipates a slight decrease in revenue. It has adjusted its profit guidance to $17.25 to $18.25 per share, excluding MTM retirement plans, compared to the previous range of $17 to $18.50 per share, with the consensus at $17.44. Also giving its shares a boost, FedEx announced plans to increase its share repurchase in the current quarter by $500 million and authorized a new $5 billion share repurchase program.

Nike (NKE) shares dropped as much as 7% following its lackluster revenue outlook, which overshadowed its better-than-expected quarterly earnings report last night. During the earnings call, CFO Matthew Friend confirmed the company's expectation of approximately 1% growth in FY2024 revenue. However, he also shared the company sees a low single-digit decline in revenue for the first half of fiscal 2025.

Despite surpassing analysts' expectations for its January quarter, Lululemon Athletica (LULU) shares plummeted double digits as the market digested its outlook for the current quarter. The company anticipates revenue to range between $2.18-$2.20 billion, below the consensus estimate of $2.26 billion. EPS for the April quarter is targeted between $2.35-$2.40 compared to the $2.35 consensus forecast. The company’s top line forecast for its fiscal 2025 is $10.7- $10.8 billion, also below the $11 billion consensus.

Reports point to Tesla (TSLA) opting to curtail electric car production at its plant in China amid slower EV sales growth.

After Today’s Market Close

Whew! The end of another trading week is at hand and that means no companies are expected to report quarterly results after equities stop trading today. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar.

Thought for the Day

"Don't cry because it's over. Smile because it happened." —Dr. Seuss

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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