Daily Markets: January Data for Retail Sales, Manufacturing on Tap

Today’s Big Picture

Asia-Pacific equity markets finished the day higher except for South Korea’s KOSPI which fell 0.25%. India’s SENSEX gained 0.32%, Hong Kong’s Hang Seng rose 0.41%, and Australia’s ASX All Ordinaries added 0.79%. Japan’s Nikkei gained an additional 1.21%, extending generational highs even as it was announced that the country has slipped into a recession. Taiwan’s TAIEX posted an outsized 3.03% gain to hit an all-time high today driven largely by Taiwan Semiconductor (TSM) and other companies with AI exposure. China’s markets are still closed as the Lunar New Year celebration continues. European markets are up across the board in midday trading.

The January Retail Sales Report was released this morning, and it showed that consumer spending dropped sharply, declining 0.8% for the month, much more than the 0.3% drop, according to CNBC. Excluding auto sales, spending dropped 0.6% against expectations of 0.2%. That data will be baked into the Atlanta Fed’s GDPNow model when it updates that rolling forecast for the current quarter later today. On February 9, that model forecasted GDP for the current quarter at 3.4%. The Retail Sales report is closely watched for signs on how well the Fed is navigating its way towards a soft landing for the economy, and when to begin cutting rates.

Data Download

International Economy

The preliminary reading showed the Japanese economy unexpectedly contracted 0.4% on an annualized basis during the fourth quarter of 2023, missing market estimates of a 1.4% expansion. This preliminary finding follows the 3.3% contracting in 3Q 2023. And speaking of Japan, the ruling party there will propose that the government introduce a new law regulating generative AI technologies within 2024, addressing issues such as disinformation and rights infringement.

Turning to the UK, preliminary estimates put 4Q2024 GDP at -0.2%, below the market consensus of 0.1%, and compared to +0.2% in 3Q 2023. For all of 2023, the UK economy grew 0.1%.

Domestic Economy

In addition to the January reports for Retail Sales and Industrial Production discussed above, we have the usual weekly jobless claims data and natural gas inventory figures coming later today as well. The market will also pick over the January Import and Export pricing data at 8:30 AM ET and the NAHB Housing Market Index figures for February at 10 AM ET.

Markets

While investors were looking for something a little lower from yesterday’s January CPI print the overall consensus was that it didn’t materially change thinking on rates. From a sector perspective, Industrials had a strong day, up 1.67% while mega-caps propped up Communication Services (1.60%), Consumer Discretionary (1.06%), and Technology (1.06%). The only two down sectors were Consumer Staples (-0.19%) and Energy, which fell 0.10%. Broad indexes were up across the board, led by the Russell 2000 which gained 2.44%, followed by the Nasdaq Composite (1.30%), the S&P 500 (0.96%), and the Dow (0.40%).

In individual names, shares of IQVIA Holdings (IQV) gained 13.10% after the company announced consensus beating earnings and revenues for the QoQ and YoY periods as well as providing a positive outlook for 2024. Here’s how the major market indicators stack up year-to-date:

• Dow Jones Industrial Average: 1.95%
• S&P 500: 4.84%
• Nasdaq Composite: 5.65%
• Russell 2000: -0.74%
• Bitcoin (BTC-USD): 23.15%
• Ether (ETH-USD): 21.17%

Stocks to Watch

Arch Coal (ARCH), Cedar Fair (FUN), Crocs (CROX), Deere (DE), Hanesbrands (HBI), InterDigital (IDCC), Lab Corp. (LH), Shake Shak (SHAK), SunPower (SPWR), US Foods (USFD), Wendy’s (WEN), YETI Holdings (YETI), and Zebra Tech (ZBRA) are expected to release quarterly earnings before equities begin trading later this morning. Pre-market breadth is higher today as 290 names in the S&P 500 have traded hands so far this morning with 198 gainers and 92 decliners. Names poised to open at least 4% higher include Snap-On Incorporated (SNA), EPAM Systems (EPAM), and Catalent (CTLT). Names coming under pressure this morning include Rollins (ROL), Paramount Global (PARA), Albemarle Corporation (ALB), and Cisco (CSCO) (more below).

While Cisco’s (CSCO) January quarter results came in ahead of market forecasts, the company issued downside guidance and announced a restructuring plan that will cut ~5% of the company’s global workforce. For the current April quarter, Cisco sees EPS of $0.84-$0.86 compared to the $0.92 consensus on revenue in the range of $12.1-$12.3 billion, below the $13.09 billion consensus. Its 2024 outlooks call for $51.5-$52.50 billion in revenue and EPS of $3.68-$3.74, below the $54.41 billion and $3.86 consensus forecasts. On its earnings call, Cisco shared it is being cautious with its forecast given uncertainties in the macro environment and customer caution.

Shares of Fastly (FSLY) tumbled in after-market trading after its quarterly results missed market revenue forecasts and telegraphed revenue for the current quarter will decline due to lower traffic patterns. For 2024, the cloud company expects revenue in the range of $580-$590 million, up 16% YoY at the midpoint compared to the $585.50 million consensus forecast.

Despite consensus topping December quarter results, Twilio (TWLO) shares were also under pressure following mixed guidance for the current quarter. Revenue and EPS for the December quarter came in at $1.08 billion and $0.86, respectively, compared to the $1.5 billion and $0.57 consensus forecasts, but the number of active consumers came in below estimates at 305,000 versus the 311,000 expected. For the current quarter, Twilio sees EPS of $0.56-$0.60 vs. the $0.55 consensus with revenue in the $1.025-1.035 billion range versus the $1.05 billion consensus.

Beauty and wellness company Nu Skin (NUS) saw its shares fall in after-market trading last night after issuing guidance that fell well short of market expectations. While its December quarter revenue cleared expectations, Nu Skin sees EPS of $(0.07)-$0.03 compared to the $0.35 consensus with revenue of $400-$435 million compared to the $479.67 million consensus. Also hitting NUS shares were management comments it will be “rebalancing” its dividend payout ratio to “effectively seize forthcoming growth opportunities.”

In an SEC filing, Tesla’s (TSLA) Elon Musk disclosed that as of December 31, he held a 20.5% stake in the company.

In filings with the SEC, Nvidia (NVDA) disclosed investments in Arm Holdings (ARM), voice AI recognition firm SoundHound AI (SOUN), Chinese self-driving truckmaker TuSimple (TSPH), biotech company Recursion Pharmaceuticals (RXRX) and medical imaging developer Nano-X Imaging (NNOX).

Japanese chip company Renesas Electronics (RNECF) reached an agreement with software company Altium Limited, a global leader in electronics design systems, to acquire all outstanding shares of Altium in a $5.91 billion transaction.

IPOs

Readers who want to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

AMN Healthcare (AMN), Applied Materials (AMAT), BJ Restaurants (BJRI), Coinbase Global (COIN), Digital Realty Trust (DLR), DoorDash (DASH), DraftKings (DKNG), Dropbox (DBX), Roku (ROKU), Tanger Factory Outlet (SKT), Texas Roadhouse (TXRH), The Trade Desk (TTD), Toast (TOST), and Yelp (YELP) 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.

On the Horizon

Friday, February 16

• UK: Retail Sales - January
• US: Producer Price Index – January
• US: Housing Starts & Building Permits – January
• US: University of Michigan Consumer Sentiment Index (Preliminary)

Thought for the Day

“People calculate too much and think too little.” ~ Charlie Munger

Disclosures

• Nvidia (NVDA), Digital Realty Trust (DLR), Cisco (CSCO), Fastly (FSLY) are constituents of the Tematica BITA Digital Infrastructure & Connectivity Index
• Tanger Factory Outlet (SKT) is a constituent of the Tematica BITA Big Spenders & Savers Index

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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