- Morning Briefing w/ KevinD
- Posts
- Friday May 3 @ 9:00am
Friday May 3 @ 9:00am
Stocks strongly higher on strong earnings and weak jobs data
KevinD
May 03, 2024
"Always more questions than answers there are."
📈 The Markets Overnight
🌏 Asia: Mixed
🌍 Europe: Up
🌎 US Index Futures: Up strongly
🛢 Crude Oil: Up a bit
🪙 Gold: Up a bit
🧐 Yields: Down a lot
💵 Dollar: Down
🔮 Crypto: Up
🌏 Major Global Catalysts
Non-Farm Payrolls data reports lower than expected. (link)
💵 Economic Reports and Events Today
Consensus forecasts shown
8:30am Average Hourly Earnings m/m 0.3% expected, 0.2% reported. Change in the price businesses pay for labor, excluding the farming industry. (link)
8:30am Non-Farm Employment Change 238K expected, 175K reported. Change in the number of employed people during the previous month, excluding the farming industry. (link)
8:30am Unemployment Rate 3.8% expected, 3.9% reported. Percentage of the total work force that is unemployed and actively seeking employment during the previous month. (link)
9:45am Final Services PMI 50.9 Level of a diffusion index based on a survey of about 400 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. (link)
10:00am ISM Services PMI 52.0 Level of a diffusion index based on a survey of about 300 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. (link)
8:15pm FOMC Member Williams participates in a panel discussion titled "Policy Panel" at an event hosted by the Hoover Institution, in California. (link)
📰 Selected Earnings Releases
Consensus Estimates shown
After Hours Today:
None
Pre-Market Monday:
🔮 Selected Analyst Ratings Changes
EL Estee Lauder Cos Morgan Stanley Targets Equal-Weight to 140.00
EXPE Expedia Group Piper Sandler Targets Neutral to 145.00
OLLI Ollie's Bargain Outlet Truist Securities Upgrades Buy Target to 86.00
OTEX Open Text BMO Capital Targets Market Perform to 38.00
SPT Sprout Social Piper Sandler Targets Neutral to 40.00
📉 Stocks In Play
AAPL Up 7% on a small earnings beat, increased dividend payout, and the largest share buyback ever at $110B. (link)
SQ Block Up 9% after CEO Jack Dorsey announces the company will use 10% of gross profits monthly to buy Bitcoin. (link)
AMGN Amgen Up 13% on positive news about their new weight loss drug the CEO shared in the conference call after their earnings beat and raised guidance. (link)
IBRX ImmunityBio Up 5% as the company and Serum Institute of India agree on an exclusive arrangement for the global supply of Serum's cancer drug. (link)
SPT Sprout Social Down 31% on numerous analyst downgrades followed by the company's revenue miss. (link)
Other Notable Earnings Movers: NET -12%, DKNG +5%, MELI +7%, DLR +4%, MGA -3%, FUBO +10%
💬 Commentary
Another volatile day yesterday, but this one was different. After a strong gap higher at the open, the market immediately sold off, relinquishing all of the overnight gains and testing important support at the previous day's low and close. A failure there would have been disastrous, and we'd be considering how serious a correction we're facing. Instead, the market found support right where it needed to as buyers stepped in—tentatively at first, and later more convincingly. By the afternoon stocks were rallying strongly with yields and the dollar pulling back sharply. Chinese stocks had one of their best days in recent memory, as "risk on" was the flavor of the day, with IWM small caps strongly outperforming, up nearly 2%. The icing on the cake was the after-hours reaction to Apple’s earnings and massive share buyback announcement. It's an excellent setup for the market to have a strong leg higher, possibly to test the all-time high.
Only three pieces of the puzzle are missing. Apple has to follow through and continue its upward trajectory today. We need to see a decent jobs report, and the market must break through Wednesday's Jay Powell press conference high and hold above it. If these conditions are met, shorts will be scrambling to cover. Step one was accomplished with this morning’s jobs report printing below expectations, triggering a strong pre-market rally, with IWM leading with a nearly 2% burst higher and yields sharply lower confirming the move.
⛵ When you’re ready…
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