Monday, April 29, 2024
We have a very important week ahead for the markets. In addition to being another jobs week – with private sector ADP payroll and JOLTS numbers on Wednesday and the economic situation report on Friday – the next meeting of the Federal Open Market Committee (FOMC) takes place, starting tomorrow and ending on Wednesday afternoon ends. Additionally, more than 1,200 companies are reporting their earnings this week. Indices are out of the ditch they were in a week and a half ago, but can they continue to rise?
Of course, everyone knows that interest rates will stay where they are. While we would likely see our first or perhaps second quarter-point interest rate cut from the Fed at the start of the year, overall economic data in the first three-plus months of 2024 has been exceptionally strong. Even though overall trends are still flat to declining, there seems to be no reason to cut interest rates and risk inflation creeping back into our economy.
Domino's Pizza (DPZ – Free Report) is releasing its first quarter results this morning. The company beat estimates on both revenue and profit, with earnings of $3.58 per share on quarterly sales of $1.085 billion, beating estimates of $3.36 per share and $1.080 billion, respectively . That represents +15.9% year-over-year sales growth, while same-store sales rose +5.6% in the quarter, above the +3.1% expected. Shares are up more than +4% in early trading today, adding to +21% gains year-to-date.
On semiconductors (AT – Free Report) also exceeded sales and profit expectations this morning. Earnings of $1.08 per share beat the Zacks Consensus by 4 cents, while revenue of $1.863 billion beat analysts' expectations of $1.85 billion. Gross margins increased +45.9% in the quarter, although estimates for next quarter are lower for both revenue and profit. However, investors are buying the story: +1% in premarket trading after a -16% decline year to date.
Chinese solar energy major JinkoSolar (JKS – Free Report) published a mixed Q1 report before trading began. A better-than-expected ADR loss of -39 cents (from expected -44 cents) came on revenue of $3.19 billion for the quarter, below the Zacks Consensus Consensus of $3.27 billion. The company has provided guidance for solar module shipments: 24-26 gigawatts for the second quarter, 100-110 GW for the full year. Shares rose +4% on the news after suffering a dramatic -31% sell-off year-to-date.
American personal finance company SoFi (SOFI – Free Report) beat first quarter estimates on both the high and low ranges. Earnings of +$0.02 per share beat expectations of +$0.01 (and -$0.05 in the year-ago quarter) on quarterly revenue of $645 million, easily exceeding expectations $567.2 million, up +37% year over year. Modest full-year sales forecasts – in line with previous expectations, despite the first-quarter beat – send shares down -3% in early trading today, adding to the stock's -18% decline year to date.
We'll see earnings reports later this week after the market closes Amazon (AMZN – Free report) and Apple (AAPL – Free report) and – two of the largest companies in the world, but they haven't performed nearly as well this year as they did in 2023. After today's closing, we'll see the quarterly results of NXP Semiconductor (NXPI – Free report) and Yum China (YUMC – Free report). These will give us insights into both the chip manufacturing space and take the temperature of the average Chinese consumer.
However, the important market reports don't stop there. A new Case-Shiller home price survey is out tomorrow morning, with releases from ISM Services and Manufacturing at different times this week. In addition, the trade deficit and productivity/unit labor cost numbers for the first quarter are on the tape. All in all, a hodgepodge of data that helps us understand how quickly the economy is moving in a particular direction. Remember: weaker-than-expected numbers in this data would increase the likelihood of an earlier rate cut by the Fed.
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