After Hours Report

The stock market registered broad based losses today. The major indices slid to session lows early in the day in response to a jump in Treasury yields after the 10:00 ET economic data was released. The market regained some upside traction, though, thanks to relative strength in some mega caps and semiconductor stocks.

Still, just about everything declined, leaving the S&P 500 with a 0.3% loss, the Nasdaq Composite down 0.2%, the Dow Jones Industrial Average 0.7% lower, and the Russell 2000 with a 1.3% loss.

Gains in NVIDIA (NVDA 693.32, +31.72, +4.8%), which was reiterated as a Buy and had its price target raised to $800 from $625 at Goldman Sachs, Apple (AAPL 187.68, +1.83, +1.0%), and Alphabet (GOOG 144.93, +1.39, +1.0%), along with outperforming semiconductor shares, helped to limit some index level losses.

The PHLX Semiconductor Index (SOX) jumped 1.2% today, due in part to strength in ON Semiconductor (ON 77.59, +6.76, +9.5%) following pleasing earnings and/or guidance.

Strength in some of the aforementioned names boosted the heavily-weighted S&P 500 information technology sector to a 0.6% gain while nine of the sectors registered a decline. The materials sector was the worst performer, sinking 2.5% on weakness in shares of Air Products (APD 218.02, -40.15, -15.6%) following disappointing earnings.  

The overall negative price action in the stock market was largely in response to the price action in Treasuries, which have logged steep declines over the last few sessions in response to ongoing strength in economic data of late that has the market repricing rate cut expectations. This also follows comments from Fed Chair Jerome Powell over the weekend, who said on 60 Minutes that the Fed needs to see more evidence that inflation is moving sustainably down to its 2% target before lowering rates.

This morning's release of the January ISM Services PMI featured an acceleration in services sector activity in January, replete with a pickup in new orders, employment, and prices. The 10-yr note yield, at 4.11% shortly before 10:00 ET, hit 4.18% at its highest level today before settling at 4.16%, which is 13 basis points higher than Friday. The 2-yr note yield, at 4.43% just before 10:00 ET, hit 4.47% at its high before settling at 4.46%.

The implied likelihood of a 25 basis points rate cut at the March FOMC meeting sits at just 16.5% now, down from 20% on Friday and 47.1% one week ago, according to the CME FedWatch Tool.

• S&P 500: +3.9%
• Nasdaq Composite: +3.6%
• Dow Jones Industrial Average: +1.8%
• S&P Midcap 400: -1.6%
• Russell 2000: -4.4%

Reviewing today's economic data:

• The S&P Global U.S. Services PMI rose to 52.5 in the final January reading from 51.4.
• The ISM Services PMI increased to 53.4% in January (Briefing.com consensus 52.0%) from 50.5% in December. The dividing line between expansion and contraction is 50.0%, so the January reading connotes services sector activity expanding at a faster pace than in December. January marked the 13th consecutive month of growth for the services sector.
  • The key takeaway from the report is that the largest sector of the U.S. economy saw an acceleration in activity in January that was accompanied by a pickup in new orders, employment, and prices, which isn't the stuff of rate cuts.

Separately, there is no US economic data of note tomorrow.

Overseas:

• Europe: DAX -0.1%, FTSE -0.0%, CAC -0.0%
• Asia: Nikkei +0.6%, Hang Seng -0.2%, Shanghai -1.0%

Commodities:

• Crude Oil +0.69 @ 72.82
• Nat Gas +unchanged @ 2.08
• Gold -10.80 @ 2042.80
• Silver -0.35 @ 22.41
• Copper -0.05 @ 3.77

After-Hours Spotlight:

• Crown (CCK) misses by $0.19, misses on revs; guides Q1 EPS below consensus; guides FY24 EPS below consensus... CCK down 12.6%
• Fabrinet (FN) beats by $0.05, beats on revs; guides Q3 EPS in-line, revs in-line... FN down 9.7%
• FMC Corp (FMC) misses by $0.01, misses on revs; guides Q1 EPS below consensus, revs below consensus; guides FY24 EPS in-line, revs in-line; FY26 financial projects unchanged... FMC down 13.3%
• Novartis AG (NVS) to acquire MorphoSys AG (MOR) for EUR 68 per share... NVS up 1.3%, MOR up 1.8%
• NXP Semi (NXPI) beats by $0.06, reports revs in-line; guides Q1 EPS in-line, revs in-line... NXPI up 2.8%
• Palantir Technologies (PLTR) reports EPS in-line, revs in-line; guides Q1 revs below consensus; guides FY24 revs above consensus... PLTR up 17.6%
• Symbotic (SYM) reports Q1 (Dec) results, revs in-line; guides Q2 revs in-line... SYM down 19.0%

Fair Value for Tuesday, February 6:

• S&P 500: 4,964
• Nasdaq 100: 17,670
• DJIA: 38,474

For a full rundown of today's market and after hours developments, see Live In Play

• Earnings/Guidance (Full Earnings Calendar):
  • Affiliated Managers (AMG) beats by $0.83, misses on revs
  • Affiliated Managers (AMG) on call guides Q1 EPS ahead of expectations
  • Air Products (APD) misses by $0.18, misses on revs; guides Q2 EPS below consensus; guides FY24 EPS below consensus
  • Allegiant Travel (ALGT) beats by $0.52, beats on revs
  • Argo Blockchain Plc (ARBK) reported Jan mining revenue decreased 19% from Dec to $5.3 mln
  • Caterpillar (CAT) beats by $0.47, reports revs in-line
  • CNA Financial (CNA) beats by $0.25
  • Estee Lauder (EL) beats by $0.34, beats on revs; guides Q3 revs in-line; guides FY24 revs above consensus
  • Humana (HUM) reaffirms FY25 EPS guidance; states that Centers for Medicare and Medicaid Services issued preliminary 2025 Medicare Advantage and Part D payment rates on Jan. 31 and now anticipates proposals would result in a change to its benchmark funding that is approximately 160 bps worse than its expectation
  • IDEXX Labs (IDXX) beats by $0.22, beats on revs; guides FY24 EPS in-line, revs in-line
  • Loews Corp (L) reports Q4 results
  • McDonald's (MCD) beats by $0.12, reports revs in-line, Global comparable sales increased 3.4%
  • Napco Security Systems (NSSC) beats by $0.08, beats on revs, increases quarterly dividend by 25%
  • ON Semiconductor (ON) beats by $0.05, reports revs in-line; guides Q1 EPS in-line although mid-point below consensus, guides Q1 revs below consensus
  • Sphere Entertainment Co. (SPHR) reports Q2 (Dec) results, beats on revs
  • Sprinklr (CXM) Chief Revenue Officer to step down, names new Chief Customer Officer; reaffirms Q4 guidance
  • Timken (TKR) beats by $0.15, beats on revs; guides FY24 EPS below consensus, revs below consensus
  • Tyson Foods (TSN) beats by $0.28, reports revs in-line; guides FY24 revs in-line
  • Vodafone (VOD) reports Q3 trading update; reaffirms guidance
• General News
  • Fed Chairman Jerome Powell in interview says Fed needs to see more evidence that inflation is moving sustainably down to 2% before lowering rates, 60 Minutes
  • China indicated it will stabilize markets, according to Bloomberg
  • Donald Trump says he will impose 60% tariffs on Chinese imports if he is elected president, according to CNN
  • President Biden easily wins South Carolina Democratic Primary, according to the New York Times
  • National security adviser Jake Sullivan is not ruling out possibility of strikes in Iran, according to Politico
  • White House issues statement from President Joe Biden on U.S. military operation in the Middle East; says response will continue
  • DoD issues statement by Secretary of Defense Lloyd Austin III on coalition strikes in houthi-controlled areas of Yemen
  • Houthis promise "escalation" after US attacks, according to the Washington Post
  • House will vote this week on a $17.6 billion Israel bill with no offsets, but White House opposes the bill without Ukraine and border funding, according to CNN
  • Senate will vote Wednesday on border security and Ukraine funding bill, but it unclear if the legislation has the necessary 60 votes to pass. The bill faces even lower chances of passing House, according to Politico
  • Federal judge cancelled March 4th trial date for Donald Trump's election interference case while higher courts hear immunity cases, according to the New York Times
  • California restaurant chains are expected to increase prices after minimum wage was increased to $20/hour, according to the Wall Street Journal
  • Hundreds of thousands without power following California storms, New York Times
  • 2seventy bio (TSVT) names William Baird as CEO; names Victoria Eatwell as CFO
  • 4D Molecular Therapeutics (FDMT) presents interim data from randomized Phase 2 PRISM Clinical Trial of Intravitreal 4D-150 demonstrating favorable tolerability & clinical activity in Wet AMD
  • Archer-Daniels (ADM) being investigated by DOJ over accounting issues, according to Bloomberg
  • Bayer AG (BAYRY): Appeals Court rules Bayer not shielded from Roundup lawsuits, according to Reuters
  • Boeing (BA): Emirates Airlines executive warns Boeing in the "last chance saloon", according to Financial Times
  • Boeing (BA) found new problem with 737 Max fuselages, according to the Wall Street Journal
  • BridgeBio Pharma (BBIO) receives FDA acceptance of NDA for Acoramidis for the treatment of patients with transthyretin amyloid cardiomyopathy
  • Bristol-Myers (BMY) and 2seventy bio (TSVT) share update on U.S. FDA Oncologic Drugs Advisory Committee Meeting for Abecma in triple-class exposed multiple myeloma based on KarMMa-3 study
  • Canadian Nat'l Rail (CNI) has achieved Mansfield Certification
  • CMS Energy's (CMS) subsidiary Consumers Energy has executed a definitive agreement to sell its internal business unit, the Appliance Service Plan to Oncourse Home Solutions
  • Cytokinetics (CYTK) CFO Ching Jaw to step down, effective Feb 23 to attend to a personal health condition
  • Estee Lauder (EL) is further expanding its Profit Recovery Plan for fiscal years 2025 and 2026 to include a restructuring program; to cut 3-5% of positions
  • Evergy (EVRG) requests to recover costs related to generation capacity, grid modernization for Evergy Missouri West customers
  • EyePoint Pharmaceuticals (EYPT) announces two presentations of topline data with additional subgroup analyses from the Phase 2 DAVIO 2 Clinical Trial of EYP-1901
  • Foxconn (FXCNY) executive expects artificial intelligence chip shortages, according to Reuters
  • HighPeak Energy (HPK) announced a 60% increase to its quarterly dividend to $0.04 per share and a $75 mln share repurchase authorization
  • Hilton (HLT) in discussions to purchase Graduate Hotels brand, according to Bloomberg
  • Lloyds (LYG): Iran used Lloyds and Santander (SAN) bank accounts to get around sanctions, according to Financial Times
  • Macerich (MAC) announced that Jackson Hsieh will become the President and Chief Executive of Macerich on March 1, 2024, following the retirement of Thomas O’Hern after 30 years of service to the Company
  • Marathon Digital Holdings (MARA) published unaudited bitcoin production and miner installation updates for January 2024
  • MarketAxess (MKTX) reports Jan metrics with ADV +6.9%
  • Nokia (NOK) signs 5G patent cross-license agreement with vivo
  • Paramount Global (PARA) follow up to reports Byron Allen has begun acquisition talks with PARA
  • Pliant Therapeutics (PLRX) reports safety and exploratory efficacy data from the INTEGRIS-PSC Phase 2a trial of Bexotegrast 320 mg
  • Rio Tinto (RIO) Canada unit to face criminal charges over an injured worker, according to Reuters
  • Samsung (SSNLF) Chairman Lee Jae yong acquitted of stock manipulation, according to Financial Times
  • Sigma Lithium (SGML) has completed loading its sixth shipment of concentrate, totalling 22,000 tonnes, at the Port of Vitoria
  • Solo Brands (DTC) appoints Laura Coffey to Chief Financial Officer
  • Stoneridge (SRI) MirrorEye Camera Monitor System receives FMCSA exemption renewal
  • Sweetgreen (SG) names Rossann Williams as COO, effective February 5
  • Tesla (TSLA): Some Tesla board members have used drugs with CEO Elon Musk, according to the Wall Street Journal
  • Valneva SE (VALN) sells Priority Review Voucher for $103 mln
  • Verrica Pharmaceuticals (VRCA) has filed a lawsuit in the Eastern District of Pennsylvania against Dormer Laboratorie requesting, among other relief, that the court enjoin Dormer Labs from marketing, selling, and distributing drugs containing cantharidin in the United States, as well as compensatory, statutory and punitive damages for Dormer Labs’ violations of the federal Lanham Act and Pennsylvania law
  • Zscaler (ZS) COO Dali Rajic resigns, effective today, February 2

(see Upgrades/Downgrades calendar for full list):

• Upgrades:
  • Adidas AG (ADDYY) upgraded to Outperform from Sector Perform at RBC Capital Mkts
  • Apellis Pharmaceuticals (APLS) upgraded to Buy from Hold at Jefferies; tgt raised to $80
  • The Cigna Group (CI) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt raised to $354
  • The Cigna Group (CI) upgraded to Overweight from Neutral at Cantor Fitzgerald; tgt raised to $372
  • Citizens Financial Group (CFG) upgraded to Buy from Neutral at Citigroup; tgt $36
  • Klaviyo (KVYO) upgraded to Buy from Neutral at Goldman; tgt $36
  • LyondellBasell (LYB) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $100
  • Minerals Tech (MTX) upgraded to Buy from Neutral at Seaport Research Partners; tgt $90
  • National Grid (NGG) upgraded to Buy from Hold at Jefferies
  • SkyWest (SKYW) upgraded to Outperform from Market Perform at TD Cowen; tgt raised to $68
  • Warner Music Group (WMG) upgraded to Neutral from Sell at Redburn Atlantic; tgt raised to $21
• Downgrades:
  • BigCommerce (BIGC) downgraded to Neutral from Buy at Goldman; tgt lowered to $9.50
  • Charter Comm (CHTR) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $370
  • Charter Comm (CHTR) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $340
  • GlobalFoundries (GFS) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $56
  • Markel Group (MKL) downgraded to Hold from Buy at Jefferies; tgt lowered to $1500
  • Mattel (MAT) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $19
  • Portland Gen Elec (POR) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $43
  • Six Flags (SIX) downgraded to Neutral from Buy at B. Riley Securities; tgt $30
  • Take-Two (TTWO) downgraded to Neutral from Buy at MoffettNathanson; tgt lowered to $167
  • TJX (TJX) downgraded to Neutral from Buy at Redburn Atlantic; tgt $100
• Others:
  • Cabaletta Bio (CABA) initiated with a Buy at Jefferies; tgt $36
  • Montrose Environmental Group (MEG) resumed with a Buy at Stifel; tgt $36
  • Smith Douglas Homes Corp (SDHC) initiated with a Neutral at BofA Securities; tgt $28
  • Smith Douglas Homes Corp (SDHC) initiated with an Equal Weight at Wells Fargo; tgt $25
  • Smith Douglas Homes Corp (SDHC) initiated with a Sector Perform at RBC Capital Mkts; tgt $26
  • Soleno Therapeutics (SLNO) initiated with an Overweight at Piper Sandler; tgt $93
  • Tencent Music (TME) initiated with a Buy at Redburn Atlantic; tgt $12
  • Tencent Music (TME) initiated with an Outperform at CLSA; tgt $10.50

• Econ Data (Tuesday):
  • No data scheduled for tomorrow