Semi Equipment Analysis | Stock Discussion Forums (2025)

New Highs:

Industry Watch

Moving the Market

Dow -103.08 at 41503.10, Nasdaq -54.76 at 17573.28, S&P -16.32 at 5618.26
[BRIEFING.COM] Today's session started sluggish in front of the afternoon's headline event. The Federal Open Market Committee (FOMC) voted in favor of cutting the target range for the fed funds rate by 50 basis points to 4.75-5.00%. It was not a unanimous vote. Fed Governor Bowman preferred a 25-basis points rate cut.

The directive indicated that the Committee has "gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance."

The Summary of Economic Projections showed a shift in the median estimate for the 2024 unemployment rate to 4.4% (from 4.0% in June) and a downward shift in PCE inflation to 2.3% (from 2.6% in June) and core-PCE inflation to 2.6% (from 2.8%). The dot-plot, meanwhile, shows a median estimate for 2024 (4.40%) that implies another 50 basis points of rate cuts this year and another 100 basis points in 2025.

Fed Chair Powell defended the larger, 50-basis points cut today as a proper "recalibration" to make sure the labor market and the economy remain in a solid condition and that the intent of today's move is to make sure they remain there. He also said that the Fed doesn't feel like it is behind the curve with its policy rate and that the larger cut today can be construed as a sign of the Fed's commitment not to get behind.

There was some whipsaw trading action in the stock market and the Treasury market after the FOMC announced a 50-basis points rate cut at 2:00 p.m. ET and as Fed Chair Powell conducted his press conference, which began at 2:30 p.m. ET.

The major indices hit session highs in response, which marked fresh record highs for the S&P 500 (-0.3%) and Dow Jones Industrial Average (-0.3%), but ultimately settled lower than yesterday. Nine of the 11 S&P 500 sectors closed with declines ranging from 0.1% (industrials) to 0.8% (utilities). The energy (+0.3%) and communication services (+0.02%) sectors were alone in positive territory at the close.

The interesting action was in the Treasury market. The monetary policy rate was cut, and it is likely to get cut again (several times) based on the Fed's own projections. The interesting thing is that Treasury yields, which dropped initially, moved higher, with the 10-yr note yield settling the session higher than where it was before the 2:00 p.m. ET policy decision.

The connection here is that the Treasury market could be pricing in some inflation angst in a curve-steepening trade. The 2-yr note yield settled today's session at 3.60%, up one basis point, while the 10-yr note yield settled at 3.69%, up four basis points. They had traded down to 3.54% and 3.64%, respectively, in the initial wake of the policy announcement.

Reviewing today's economic data:

• The weekly MBA Mortgage Applications Index rose 14.2% with refinance applications surging 24% and purchase applications jumping 5%
• Housing starts increased 9.6% month-over-month to a seasonally adjusted annual rate of 1.356 million units (Briefing.com consensus 1.320 million), bolstered by a 15.8% increase in single-unit starts. Building permits increased 4.9% month-over-month to a seasonally adjusted annual rate of 1.475 million (Briefing.com consensus 1.415 million), aided by a 2.8% increase in single-unit permits.
  • The key takeaway from the report is that single-unit starts and permits were up in every region, reflecting increased activity among builders that has been facilitated by sliding interest rates and pent-up demand.
• The weekly EIA Crude Oil Inventories showed a draw of 1.63 million barrels following last week's build of 833,000 barrels

• 8:30 ET: Weekly Initial Claims (Briefing.com consensus 232,000; prior 230,000), Continuing Claims (prior 1.850 mln), Q2 Current Account (prior -$237.6 bln), and September Philadelphia Fed (Briefing.com consensus 3.0; prior -7.0)
• 10:00 ET: August Existing Home Sales (Briefing.com consensus 3.90 mln; prior 3.95 mln) and August Leading Indicators (Briefing.com consensus -0.3%; prior -0.6%)
• 10:30 ET: Weekly natural gas inventories (prior +40 bcf)

Dow +45.69 at 41651.87, Nasdaq +77.94 at 17705.98, S&P +14.68 at 5649.26
[BRIEFING.COM] The major indices are moving toward session highs amid ongoing turbulence after the latest move by the Fed.

Many stocks are participating in upside moves. Nine of the 11 S&P 500 sectors are higher and the equal-weighted S&P 500 sports a 0.4% gain. The energy (+0.8%) and consumer discretionary (+0.7%) sectors lead the pack and the materials sector (+0.2%) shows the slimmest gain.

Looking ahead to Thursday, participants receive the following data:

• 8:30 ET: Weekly Initial Claims (Briefing.com consensus 232,000; prior 230,000), Continuing Claims (prior 1.850 mln), Q2 Current Account (prior -$237.6 bln), and September Philadelphia Fed (Briefing.com consensus 3.0; prior -7.0)
• 10:00 ET: August Existing Home Sales (Briefing.com consensus 3.90 mln; prior 3.95 mln) and August Leading Indicators (Briefing.com consensus -0.3%; prior -0.6%)
• 10:30 ET: Weekly natural gas inventories (prior +40 bcf)

Choppy action continues during press conference
18-Sep-24 15:05 ET

Dow -67.89 at 41538.29, Nasdaq -35.75 at 17592.29, S&P -11.30 at 5623.28
[BRIEFING.COM] The major indices trade in a volatile fashion following to the FOMC decision and in response to Fed Chair Powell's ongoing press conference.

The Treasury market has also exhibited choppy action. The 10-yr note yield moved 3.65% immediately after the release of the policy directive, but sits at 3.70% now. The 2-yr note yield hit 3.54% after the release, but sits at 3.62% now.

The US Dollar Index is down 0.1% to 100.78.

Fed invites elation and criticism with 50-basis points rate cut decision
18-Sep-24 14:30 ET

Dow +108.20 at 41714.38, Nasdaq +112.96 at 17741.00, S&P +23.98 at 5658.56
[BRIEFING.COM] The Federal Open Market Committee (FOMC) voted in favor of cutting the target range for the fed funds rate by 50 basis points to 4.75-5.00%. It was not a unanimous vote. Fed Governor Bowman preferred a 25 basis points rate cut.

It is a decision that will be met with both elation and criticism. The larger rate cut should placate participants who think the Fed is behind the curve already in trying to forestall a hard landing. Conversely, it will elicit criticism from participants who think the larger rate cut wasn't warranted given broader economic trends that include an inflation rate that is much improved but still above target at 2.5%. The worry will be that the more aggressive rate cut risks igniting inflation again.

The directive, however, indicated that the Committee has "gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance."

That said, with stock prices at record highs and initial jobless claims -- a leading indicator -- still well below recession levels, it would seem by way of the larger rate cut to get things started that perhaps the Fed sees more of an imbalance than it is letting on.

Fed Chair Powell will have the opportunity to explain the decision at his press conference that begins at 2:30 p.m. ET, as well as the changes to the Summary of Economic Projections and so-called dot-plot. The former showed an upward shift in the median estimate for the 2024 unemployment rate to 4.4% (from 4.0% in June) and a downward shift in PCE inflation to 2.3% (from 2.6% in June) and core-PCE inflation to 2.6% (from 2.8%). The dot-plot, meanwhile, shows a median estimate for 2024 (4.40%) that implies another 50 basis points of rate cuts this year and another 100 basis points in 2025.

The 2-yr note yield, at 3.64% in front of the release, is at 3.54% now, and the 10-yr note yield, at 3.69% in front of the release is at 3.65% now. The U.S. Dollar Index is down 0.4% to 100.47.

Stock prices have moved higher after the release, albeit in choppy action before the press conference.

The Russell 2000 is up 1.6%; the Nasdaq Composite is up 0.7%; the S&P 500 is up 0.4%; and the Dow Jones Industrial Average is up 0.3%.

Gold narrowly higher in front of rate decision
18-Sep-24 13:55 ET

Dow -10.81 at 41595.37, Nasdaq +12.49 at 17640.53, S&P +1.81 at 5636.39
[BRIEFING.COM] With about two hours to go on Wednesday the tech-heavy Nasdaq Composite (+0.07%) holds the lead among the major averages, up about 12 points.

Gold futures settled $6.20 higher (+0.2%) to $2,598.60/oz, as yields and the dollar hold a mixed tape into the FOMC's rate decision, which is scheduled to hit at the top of the hour.

Meanwhile, the U.S. Dollar Index is down less than -0.1% to $100.85.

Intuitive Machines rockets to another planet after winning a $4.82 bln NASA contract (LUNR)

Intuitive Machines (LUNR +56%) is orbiting well above its flatline today after winning a $4.82 bln NASA contract yesterday after the close. This is not the first time LUNR has displayed its technological capabilities for NASA, securing a roughly $117 mln contract in August, news of which sent its shares soaring. However, nothing has compared in value to yesterday's $4.82 bln ten-year contract, a massive win for LUNR given it registered around $115 mln in total revenue through 1H24.

• What does LUNR do? LUNR is a space infrastructure firm committed to contributing to establishing infrastructure and commerce on the Moon. While its mission is ambitious, LUNR has been efficiently developing products and providing services for NASA and several other commercial payload customers. The company exited Q2 with zero debt on its balance sheet and sufficient cash to fund operations for the next 12 months.
• Details of the $4.82 bln NASA contract involve providing services supporting NASA's Artemis mission, which involves establishing a presence on the Moon. NASA's goal directly aligns with LUNR's goal, making the two an excellent pairing.
• While today's pop reflects tremendous enthusiasm, LUNR could still encounter setbacks. Space shuttle launches are extraordinarily challenging and can encounter numerous delays and problems. For example, Boeing's (BA) Starliner spacecraft has faced numerous issues, from leaks to thruster malfunctions. Additionally, it is worth noting that ten years is not a guarantee; NASA will have the option to extend the contract come September 2029.
• Furthermore, given how explosive today's move is, LUNR could take the opportunity to raise funds through stock offerings. However, LUNR has already noted that it has ample cash on hand. Also, the company booked nearly $70 mln of new backlog this year, noting it still has several sizeable opportunities on the horizon. Meanwhile, following a successful first half of the year, LUNR raised its FY24 revenue outlook to $210-240 mln from $200-210 mln. Still, stock offerings are something to keep in mind as LUNR funds its new NASA contract.

Microsoft's partnership with BlackRock to expand AI infrastructure looks like a win-win (MSFT)

Through the rapid growth of Azure, Microsoft's (MSFT) cloud platform that helps enterprises manage and run databases and applications, the tech giant is seeing firsthand how the emergence of AI is creating an ever-increasing demand for data center infrastructure. In fact, when MSFT reported Q4 results in late July, one key takeaway was that Azure's revenue growth of 30% likely would have been even stronger if not for capacity constraints.

The issue isn't that MSFT is being too conservative with its investments -- its capital expenditures were $19 bln in Q4 with nearly half of that tied to AI-related spending -- rather, the inability to build and scale data centers fast enough to keep pace with demand is the main challenge for MSFT and other hyperscalers. While MSFT expects its FY25 capex to exceed FY24 levels due to ramping infrastructure investments, the company recognizes that there is no slowdown in sight in terms of the need for more data centers for itself or for its cloud computing peers.

• Blackrock (BLK), the massive investment manager with $10.6 trillion in assets under management, sees the writing on the wall, too, and is turning to MSFT and NVIDIA (NVDA) to help it create a new vehicle for investors, insurance companies, pension funds, and corporations to invest in data centers and power infrastructure.
• Specifically, BLK announced that its forming a new AI partnership with MSFT, Global Infrastructure Partners, and MGX through the creation of the Global AI Infrastructure Investment Partnership (GAIIP). NVIDIA has agreed to provide its expertise in GPUs and AI data centers, helping the GAIIP to develop a healthy AI ecosystem in the U.S.
• Initially, the GAIIP will seek $30 bln in private equity capital -- MSFT will also be an investor -- but the partnership is ultimately targeting $100 bln in total investment potential when including debt financing.
• According to BLK, these investors will have the opportunity to earn long-term returns, while hyperscalers like MSFT are freed up to use their capital in other areas.

BJ's Wholesale higher on insider buy; co is betting that investing in new stores will pay off (BJ)

BJ's Wholesale Club (BJ) is trading modestly higher today after disclosing last night that a director bought 2,455 shares at $81.26 worth ~$199K. In fairness, this does follow some sales by its CEO in early September. However, while not a huge purchase, we see it as a sign that this person sees some value here because the stock has pulled back following its Q2 (Jul) report last month.

• This warehouse club chain beat on EPS in Q2, its largest EPS upside in five quarters. Revenue rose 4.9% yr/yr to $5.21 bln, which also was better than expected. It also reaffirmed full year EPS at $3.75-4.00. However, with its investments for the long term, BJ says this could possibly drive EPS toward the low end of that range.
• Basically, it sounds like BJ is going to sacrifice some near term earnings potential in order to invest for the future. Specifically, BJ says its real estate pipeline is growing faster than it has in years. These investments are heavy today, but in the years ahead, the company believes it will be thrilled that it made them. Just last week, BJ announced a new store opening in Palm Coast, Florida.
• The company is at the start of a stretch that will see it open 11 new clubs in just the next six months. That's a lot in a short period of time relative to its 244 locations right now. BJ made a good point on its Q2 call: The new clubs that it has opened since its IPO have delivered comp sales growth of more than 3x the chain average for the second quarter.
• In terms of the health of the consumer, BJ says its members remain focused on value. Spend per shopper remains very healthy at higher income levels and continues to improve at the lower end, especially as it has moved past the tougher laps related to government aid in Q2. Critically, in Q2, BJ drove greater trip frequency and overall spend growth across high-, mid-, and low income levels, which demonstrates that its value position in is resonating across income segments.
• Also, BJ has smartly positioned itself as sort of a hybrid between warehouse clubs and grocery stores. It combines the bulk savings of a warehouse club but offers a broader assortment of perishable and grocery products than its club competitors. With groceries in high demand these days with more people eating at home and with consumers focusing more on necessities and less on discretionary items, that is good for BJ.

General Mills' AugQ performance mostly expected ahead of time, spurring a muted response today (GIS)

General Mills' (GIS) slim earnings beat, in-line revenue, and flat volume growth in Q1 (Aug) come up stale, spurring a muted response today. The consumer packaged goods giant also reiterated its FY25 (May) financial targets. However, this was not surprising given that the company reiterated its guidance earlier this month before a consumer staples conference. With shares running hot lately, appreciating by roughly +20% since bottoming out following GIS's underwhelming Q4 (May) numbers in late June, investors were simply hungry for more buoyant headline results in Q1.

• For the quarter, net sales and organic net sales edged 1% lower yr/yr to $4.85 bln. Similarly, adjusted EPS contracted by 6% -- 2% when backing out FX impacts -- to $1.07. Organic revenue and constant currency EPS growth fell short of GIS's FY25 targets of flat to up 1% and down 1% to up 1%, respectively. However, management expected this heading into Q1, as it faced challenging yr/yr comparisons.
• On a sequential basis, GIS's numbers signaled decent improvement. Net sales expanded by 3%, and EPS moved 6% higher, leading to pound volume finishing flat compared to last year, a promising jump from the 2% drop delivered in Q4. While GIS has now gone ten consecutive quarters without registering positive yr/yr volume growth, its sequential improvement does provide some encouragement that volumes may begin to tick higher during FY25.
• The demand environment remains a problem. Consumers continue exhibiting value-seeking behaviors in light of the cumulative effects of inflation. Competitors' supply chains stabilizing is adding another wrinkle, providing consumers with several private-label alternatives. Meanwhile, in China, the situation is even worse as headwinds pick up speed, translating into a significant yr/yr drop in traffic through GIS's Haagen-Dazs shops.
• On the flip side, at-home food prices have mostly stabilized, unlike away-from-home prices, which continue to rise, shifting consumer tastes toward at-home food occasions. GIS estimates this shift contributed to 1 pt of pound volume growth in its U.S. retail categories in Q1, which is ahead of its long-term expectations.
• GIS's other segments displayed a few highlights. In Pet, where GIS is amid a turnaround, the company posted improved retail sales and market share trends in Q1, supporting a 3% lift in volumes, a stark reversal from the 7% drop posted last quarter. In Foodservice, volumes decelerated from a 3% jump in Q4 to flat growth in Q1. However, management commented that it continued to capture market share in critical away-from-home channels, including K-through-12 schools, healthcare, and universities.

Accenture slides following reports of delayed staff promotions amid slump in IT consulting (ACN)

IT consulting giant Accenture (ACN -4%) is encountering selling pressure today after Bloomberg reported that the company would delay staff promotions by six months due to an extended slump within the consultancy industry. The news is sending a shockwave across the consultancy landscape as several of ACN's peers tick lower in sympathy, including DAVA -5%, EPAM -2%, GLOB -2%, and IBM -1%.

Since reporting Q3 (May) results in late June, ACN has been mounting an impressive comeback, soaring by over +20%. Artificial intelligence kept shares of ACN afloat after delivering a rather underwhelming Q3 performance. Management was allocating significant resources to its AI division, boasting around 55,000 skilled data and AI practitioners as it heads toward its target of roughly 80,000 by the end of FY26, reflecting outsized enthusiasm for a surge in AI-related demand. Excitement was further kicked into gear after ACN posted a nearly sevenfold increase in Gen AI bookings YTD compared to all of FY23.

Against this backdrop, today's Bloomberg story is creating some uneasiness among investors, spurring profit-taking.

• Still, today's report should not be too surprising. Even though shares of ACN gapped higher, its Q3 (May) report in late June showed some cracks. The company missed earnings expectations on a 0.6% drop in revs yr/yr. Meanwhile, management lowered its FY24 (Aug) EPS guidance while narrowing its revenue growth forecast to +1.5-2.5% from +1.0-3.0%.
• Client spending developed differently than ACN anticipated at the start of FY24. Customers continue prioritizing large-scale transformations, which convert to revenue more slowly. At the same time, customers are limiting their discretionary spending, especially on smaller projects, while also delaying decisions, all adding to a sluggish pace of spending. These structural headwinds were not offset by the explosive AI-related revenue, largely because $2.0 bln in bookings is a drop in the bucket compared to ACN's $21.1 bln in total bookings last quarter.
• ACN was confident it was positioned to capture an eventual uptick in discretionary spending. However, the timeline is hazy. EPAM noted last month that there are conversations surrounding significant modernization among customers. Still, it had not turned into anything tangible. Nevertheless, ACN repeatedly cited AI as the catalyst that will ramp overall spending.

PS As planned, at 2:30 I shorted NVDA. I should know soon if that was a mistake or if I should double down.

New Highs:

Moving the Market

Dow +522.09 at 42025.19, Nasdaq +440.68 at 18013.96, S&P +95.38 at 5713.64
[BRIEFING.COM] The stock market had a decidedly strong showing. The S&P 500 (+1.7%) and Dow Jones Industrial Average (+1.3%) reached fresh all-time highs and the Nasdaq Composite climbed 2.5%.

The rally was in response to yesterday's decision by the FOMC to cut the target rate for the fed funds rate by 50 basis points to 4.75-5.00%. Today's gains also reflected a belief that the economy is in good shape and the Fed will cut rates as needed to maintain a solid economic backdrop. This morning's data supported this optimistic view.

Weekly jobless claims remain steady below recession-like levels, the Philadelphia Fed Index tipped back into expansion (i.e. above 0.0 reading) in September, and existing home sales were slightly below expectations in August, but still reflected a tight market.

Just about everything came along for the upside ride, boosted by a fear of missing out on further gains, along with strength in the mega caps and chipmakers. The Vanguard Mega Cap Growth ETF (MGK) rose 2.5% and the PHLX Semiconductor Index (SOX) jumped 4.3%.

Apple (AAPL 228.87, +8.18, +3.7%), which traded up after T-Mobile's (TMUS 199.64, +2.96, +1.5%) CEO indicated iPhone 16 sales in the first week were better than last year's models, was a winning standout from the space.

This price action led the S&P 500 information technology sector to close 3.1% higher. The consumer discretionary (+2.2%), communication services (+1.9%), and industrials (+1.8%) sectors were the next best performers.

Meanwhile, defensive-oriented sectors like utilities (-0.6%) and consumer staples (-0.6%) underperformed today, reflecting a more risk-on vibe in the market.

The 10-yr yield settled five basis points higher at 3.73% and the 2-yr yield settled unchanged at 3.60%.

• Nasdaq Composite: +20.0% YTD
• S&P 500: +19.8% YTD
• S&P Midcap 400: +12.3% YTD
• Dow Jones Industrial Average: +11.5% YTD
• Russell 2000: +11.1% YTD

• Weekly Initial Claims 219K (Briefing.com consensus 232K); Prior was revised to 231K from 230K, Weekly Continuing Claims 1.829 mln; Prior was revised to 1.843 mln from 1.850 mln
  • The key takeaway from the report is that there is nothing in the low initial claims reading that, as Fed Chair Powell might agree, suggests the likelihood of a recession, or downturn in the economy, is elevated.
• Q2 Current Account Balance -$266.8 bln; Prior was revised to -$241.0 bln from -$237.6 bln
• September Philadelphia Fed Index 1.7 (Briefing.com consensus 3.0); Prior -7.0
• August Existing Home Sales 3.86 mln (Briefing.com consensus 3.90 mln); Prior was revised to 3.96 mln from 3.95 mln
  • The key takeaway from the report is that more inventory is becoming available with mortgage rates dropping, yet it is still a tight market, evidenced by the ongoing increase in the median home price.
• August Leading Homes Sales -0.2% (Briefing.com consensus -0.3%); Prior -0.6%

Treasuries settled mostly
19-Sep-24 15:35 ET

Dow +516.78 at 42019.88, Nasdaq +461.09 at 18034.37, S&P +98.99 at 5717.25
[BRIEFING.COM] There hasn't been much up or down movement at the index level in recent action.

The 10-yr yield settled five basis points higher at 3.73% and the 2-yr yield settled unchanged at 3.60%.

Looking ahead, there is no US economic data of note on Friday.

LEN, FDX, MLKN report earnings after the close
19-Sep-24 15:05 ET

Dow +578.89 at 42081.99, Nasdaq +479.80 at 18053.08, S&P +103.90 at 5722.16
[BRIEFING.COM] The major indices have traded in fairly narrow ranges near session highs through the afternoon so far.

FedEx (FDX 302.73, +4.65, +1.6%), Lennar (LEN 191.30, +2.93, +1.6%), and MillerKnoll (MLKN 27.59, -0.09, -0.3%) report earnings after the close.

UPS (UPS 132.62, +1.97, +1.5%) also trades higher in front of FDX results. Other homebuilder stocks outperform in front of LEN results, leading the SPDR S&P Homebuilder ETF (XHB) to trade 2.2% higher.

S&P 500 in second place
19-Sep-24 14:25 ET

Dow +531.50 at 42034.60, Nasdaq +472.10 at 18045.38, S&P +100.40 at 5718.66
[BRIEFING.COM] The S&P 500 (+1.79%) is in second place on Thursday afternoon, holding gains of about 100 points.

Elsewhere, S&P 500 constituents Tesla (TSLA 243.55, +16.35, +7.20%), Advanced Micro (AMD 158.29, +10.00, +6.74%), and PayPal (PYPL 77.62, +4.50, +6.15%) pepper the top of the standings. AMD is a beneficiary of the idiom that rising tides lifts all boats, where in this case the broader strength in the chip sector also boosts AMD, with PYPL getting a shot in the arm from favorable analyst comments.

Meanwhile, Iron Mountain (IRM 113.46, -2.99, -2.57%) is today's top laggard.

Gold ends higher on Thursday, boosted by Fed's rate cut
19-Sep-24 14:00 ET

Dow +645.47 at 42148.57, Nasdaq +521.60 at 18094.88, S&P +113.56 at 5731.82
[BRIEFING.COM] With about two hours to go on Thursday, the tech-heavy Nasdaq Composite (+2.97%) is hovering near gains of 3% on the day.

Gold futures settled $16 higher (+0.6%) to $2,614.60/oz, after the U.S. Federal Reserve yesterday cut interest rates by 50 basis points.

Meanwhile, the U.S. Dollar Index is up about +0.1% to $100.67.

Terex trades lower after guidance cut, but longer-term outlook remains constructive (TEX)
Industrial company Terex (TEX) is encountering some macroeconomic headwinds as its customers scale back on planned deliveries and adjust their inventory levels, causing the provider of aerial work platforms and materials processing machines to lower its FY24 EPS and revenue guidance. So far, the losses for TEX shares have been pretty manageable considering the magnitude of the guidance cut, especially for EPS ($5.80-$6.20 from $7.15-$7.45), and some of TEX's closest peers -- CNN Industrial (CNH), Manitowoc (MTW), and Astec Industries (ASTE) -- are trading higher despite the gloomy update.

We would mostly chalk this resiliency up to yesterday's 50-bps interest rate cut from the Federal Reserve and the general expectation that rates will continue to slide lower. TEX and its competitors are highly cyclical companies with heavy exposure to construction and infrastructure projects, making them sensitive to the interest rate environment. Therefore, some participants may already be looking beyond FY24 and into FY25, when lower rates should bolster construction activity.

• With that said, the downturn that TEX has recently experienced is both sudden and considerable. Recall that when TEX reported Q2 results on July 30, it raised its FY24 EPS guidance to $7.15-$7.45, up from its prior outlook of $6.95-$7.35, while only nudging its revenue outlook slightly lower to $5.10-$5.30 bln versus its previous guidance of $5.20-$5.40 bln. In this morning's press release, TEX knocked its revenue outlook down to $4.85-$5.05 bln.
• During the Q2 earnings call, CEO Simon Meester offered a rather bright characterization of the U.S. economy, pointing to its resiliency, lower inflation, and healthy construction spending. Furthermore, he stated that TEX's U.S. rental customers are returning to more normalized ordering patterns and that he expects demand in the U.S. market to remain robust.
• Since then, conditions have clearly weakened, as reflected in TEX's guidance cut. From a longer-term perspective, though, the company is still positioned to capitalize on a number of mega trends, including the construction of data centers and EV manufacturing plants, as well as increased construction activity from road, bridge, airport, and railway infrastructure projects.
• Additionally, TEX is on track to close on its acquisition of Dover's (DOV) Environmental Solutions Group, or ESG, in early Q4. The $2.0 bln acquisition -- the largest in TEX's history -- not only will provide a major boost to the top-line (ESG is in line to generate $1.4 bln in revenue on a TTM basis), but it will also add a steady, non-cyclical North American business to the portfolio. ESG, a leader in the refuse collection and recycling markets, is also profitable and TEX expects ESG's EBITDA margins to add 130 bps of margin accretion.

Endava sinks on soft FY25 guidance; reflects continuously sluggish IT spending (DAVA)

Endava (DAVA -4%), a U.K.-based IT consulting services provider, heads lower today after running into similar obstacles that have weighed on growth throughout the past year in Q4 (Jun), leading to softer-than-expected revenue growth. Meanwhile, DAVA's Q1 (Sep) and FY25 sales projections were below expectations. In fact, the midpoint of its FY25 revenue guidance translates to a meager 8.8% lift yr/yr despite lapping a 6.8% drop. While this forecast implies sequential improvements over the next few quarters, given the buzz surrounding AI and the fact that the technology is being discussed across nearly every vertical, DAVA's guidance is disappointing.

• DAVA's Q4 performance and subsequent bearish guidance did not come as a total shock. Bloomberg ran a story earlier this week about how U.S.-based peer Accenture (ACN) would delay promotions by six months due to a sluggish IT consultancy industry. Still, given the length of DAVA's headwinds and the comments made over the past few months, including CEO John Cotterell noting in May that the company is seeing pent-up demand, investors were hoping for signs of improvement in Q4.
• AI has also been at the forefront of organizations' digital transformation plans. DAVA remarked today that it remains excited about the outsized opportunities AI presents. However, shifting toward AI is not straightforward. DAVA mentioned that its clients are encountering challenges in the process, including understanding how the technology can mesh with operations. As a result, businesses are hesitant to spend until the path regarding AI becomes clearer.
• However, this does not mean that growth cannot manifest over time. For instance, ACN stated in June that the benefits of Gen AI are becoming more apparent, and clients understand that it is a critical technology but are not ready to spend on it yet. Perhaps with the Federal Reserve loosening its monetary policy, businesses will be more willing to allocate additional resources toward implementing AI on a larger scale.
• Nevertheless, in the interim, DAVA will continue dealing with macroeconomic headwinds that are driving dampened IT spending. To contend with this climate, DAVA is diversifying its geographical presence. As of Q4, 17% of its clients were based in the APAC region compared to 9% in the year-ago period. DAVA has also invested in efficiency-enhancing tools that it believes will shift toward revenue-generating efforts, paving the way for margin expansion over time.

Mobileye drives higher after Intel reaffirms majority stake, but China-based headwinds linger (MBLY)
Intel (INTC) may be ready to make some major changes in order to hasten a turnaround that has faltered under its foundry-based strategy, but selling off part of its Mobileye (MBLY) stake isn't one of those changes that's in the cards.

On September 5, Bloomberg reported that INTC was considering selling off a portion of its 88% ownership stake in MBLY, sending shares of the ADAS chip maker spiraling lower to trade with a year-to-date loss of 76% by September 12. Earlier this morning, however, INTC released a statement, saying that it has no plans to divest a majority interest in the company and that it's excited about the future of autonomous driving and of MBLY. The news has MBLY spiking sharply higher and erasing those losses from early September.

• The commitment from INTC is certainly good news for MBLY, but the road ahead is still very bumpy. MBLY is coming off a very discouraging Q1 earnings report in which it slashed its FY24 revenue guidance to $1.60-$1.68 bln from its prior outlook of $1.83-$1.96 bln, and its adjusted operating income forecast to $152-$201 mln from $270-$360 mln.
• While the excess inventory situation at MBLY's tier one customers in North America and Europe is mostly in the rearview mirror, the company is now facing significant headwinds in China. During the Q1 earnings call, MBLY disclosed that it has seen a decline in orders for 2H24 from Chinese OEMs and that its core customers are experiencing continued share losses in China.
• From a product standpoint, second half volumes for SuperVision -- an ADAS that combines multiple sensors, cameras, radar, computer vision, and machine learning -- are expected to be lower than originally projected due to increased U.S. and European tariffs on Chinese-produced vehicles. After previously guiding for FY24 SuperVision volume of 175,000-195,000 units, MBLY is now expecting units of 110,000-130,000.
• Given MBLY's current struggles and depressed stock price, it makes sense that INTC wouldn't want to sell now. It's worth noting that Bloomberg also reported that INTC is weighing options for its Network and Edge (NEX) business. That business, which makes processors, SoCs, network adapters, and wireless connectivity devices, would likely draw stronger interest than MBLY. In Q2, NEX's revenue was essentially flat yr/yr at $1.34 bln while operating income increased by 117% yr/yr to $139 mln.

Steelcase sells off after projecting soft Q3 sales growth; expects orders to recover in 2H25 (SCS)

Steelcase (SCS -7%) is in the hot seat today despite exceeding Q2 (Aug) earnings estimates. The global commercial furniture manufacturer with ties to the office, hospital, and educational markets did come up just short of analyst revenue estimates. However, that is not what is primarily igniting a sell-off today. Instead, investors are disappointed in SCS's downbeat Q3 (Nov) revenue guidance. While management was confident that yr/yr order growth from its largest customers would return during the second half of FY25 (Feb), investors are skeptical, given the turbulence projected over the next three months.

• Turning to Q2 results, SCS enjoyed several bright spots. Adjusted EPS expanded by 25.8% yr/yr to $0.39, SCS's best bottom-line performance since 2020. Propping up earnings was SCS's ninth consecutive quarter of yr/yr gross margin improvement, reflecting continuous success surrounding cost reduction initiatives, including moving production lines and closing a distribution center.
• Revenue may have edged just 0.1% higher yr/yr to $855.8 mln, landing modestly below the midpoint of SCS's $850-875 mln forecast. However, in SCS's core Americas region, order growth climbed by 3% yr/yr, marking the fourth straight quarter of growth. Management cited robust demand from its education segment as the underlying factor. Its Smith System business, which supports U.S. K-12 customers, grew by 18% yr/yr as many school districts issue bonds for new construction or modernization.
• So, what ultimately dragged down revs and led to a bearish Q3 forecast? Soft large customer orders clipped growth in Q2 and are seeping into the next quarter. SCS noted that the decline in orders from its more prominent corporate customers followed several quarters of strong yr/yr growth, signaling a potentially short-lived hurdle as order growth cools down shortly before accelerating. Meanwhile, SCS's International business remains weak, registering an 11% drop in orders yr/yr in Q2. Most of its overseas markets outside of India exhibited weaknesses.
• Against this backdrop, SCS was prudent in its Q3 revenue outlook, projecting $785-810 mln, translating to +1-5% organic growth yr/yr. Expected adjusted EPS of $0.21-0.25 also represents a yr/yr contraction. For FY25, SCS reiterated its adjusted earnings guidance of $0.85-1.00, underscoring continuing benefits from cost reduction actions.

Lastly, keep an eye on peers MillerKnoll (MLKN), which reports AugQ results today after the close, and HNI (HNI), which is scheduled to report SepQ results next month.

Darden Restaurants trades higher despite EPS miss as Uber deal excites investors (DRI)

Darden Restaurants (DRI +7.4%) is making a strong move following its Q1 (Aug) earnings report this morning. This operator of several restaurant chains (Olive Garden, LongHorn Steakhouse, Ruth's Chris, and soon to own Chuy's) missed pretty big on EPS while revenue was generally in-line. In addition to earnings, Darden announced an exclusive multi-year delivery partnership with Uber (UBER), set to begin with Olive Garden in late 2024.

• Let's start with earnings. The company was surprised by a significant step down in traffic during July, which led to Q1 EPS being lower than expected. However, sales trends rebounded in August, resulting in flat comps for the month. The first three weeks of September have further improved, resulting in positive comps quarter-to-date for Q2 (Nov). Considering this recovery as well as planned initiatives, Darden reaffirmed FY25 EPS guidance at $9.40-9.60.
• Despite the sales softness in Q1, DRI says it delivered industry-leading margins and generated more adjusted EBITDA than the prior year, highlighting the durability and cash generation of its business model. Also, DRI outperformed the industry again this quarter with comps that were 140 bps better than the industry. Its gap relative to the industry improved from Q4, driven by the outperformance of Longhorn.
• Turning to comps, DRI posted Q1 consolidated comps of -1.1% (OG -2.9%, LS +3.7%, Fine Dining -6.0%), which was softer than Q4's flat comps (OG -1.5%, LS +4.0%, Fine Dining -2.6%). Darden said it is reaffirming all aspects of its FY25 guidance, which we read to mean it's also reaffirming FY25 comp guidance at +1-2%.
• Turning to the Uber deal, it will enable customers to order on-demand delivery via Darden restaurant channels, with delivery handled by Uber Direct. An initial pilot will begin in late 2024 with national expansion at Olive Garden expected to be complete by May 2025. DRI says customers have been asking for home delivery and have said they are willing to pay for the convenience. DRI is currently focusing on Olive Garden, but may expand to other brands.
• Quickly on the pending Chuy's (CHUY) deal, DRI is currently on track to close in mid-October, assuming approval from Chuy's shareholders. DRI has secured financing to support the closing and the team that successfully led the Ruth's Chris integration is ready to bring their expertise and lessons learned to the Chuy's integration. DRI continues to expect the deal will be neutral to adjusted EPS for this fiscal year.

I think so but I can find no explanation that tells me what close succession really is.

RtS

Sources

[PDF] Completion Time Structures of Stock Price Movements*

rady.ucsd

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1

Consecutive Up Days on the Stock Market and the Gambler's Fallacy

sixfigureinvesting

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2

Stock Prices: 6 Things That Move Them Higher And Lower - Bankrate

bankrate

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3

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Answer

Based on the search results provided, there isn't specific statistical information about what happens after two successive days where 80% of volume is associated with stocks moving up in price. The search results don't directly address this particular scenario.However, I can provide some relevant insights based on the available information:

1. Short-term patterns don't necessarily predict future movements: The article from Bankrate (result 3) emphasizes that stock prices can be volatile in the short term and move for various reasons. It cautions against trying to predict short-term movements.
2. Consecutive up days don't guarantee future direction: The article on consecutive up days (result 2) shows that even after 3-6 consecutive up days, the average next day returns were mixed, sometimes slightly positive and sometimes slightly negative. This suggests there's no clear statistical tendency for the market to continue up or reverse after a string of positive days.
3. Price shocks without news can lead to reversals: The University of Toronto study (result 4) found that sudden price jumps without apparent reasons often led to negative returns in the following year. While this doesn't directly apply to your scenario, it suggests caution in assuming short-term momentum will continue.
4. Multiple factors influence stock prices: As mentioned in result 5, stock prices are influenced by fundamental factors, technical factors, and market sentiment. Two days of positive movement might not be enough to predict future direction given all these influences.

[Note that perplexity is especially good at this particular topic. It only has access to what papers have been written and available to the public. It does not do a statistic study from the raw data. If such a study is not available to the public Perplexity does not know about it. Perplexity is not a substitute for your own independent research. It is just a starting point to let you what is known to through the information available to the public through the internet.]