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Monday, February 3, 2025
Monday’s trading session resulted in slight negative closes across major indexes, but there’s good news here: whereas the Dow finished the trading day -122 points, it was -400 a half hour before this morning’s open. The S&P 500 ended -45 at the close, but an improvement from the -100 early this morning; the Nasdaq lost -235 points Monday, but this morning it was -400; the small-cap Russell 2000 completed regular trading -27, cutting the -52 ahead of the open nearly in half.
An almost immediate retraction of a 25% tariff on imported goods from Mexico prodded this relief trade. Before this announcement from the White House, it appeared a tariff war had begun with our neighbors to both the south and north fielding harsh potential export taxes. We now see there is likely some wiggle room between today’s aggressive salvo and a finalized deal via negotiation.
Economic Prints During the Trading Day
Final S&P Manufacturing PMI for January came in moderately ahead of expectations: +51.2 versus +50.1 reported a month ago, and importantly above the +50 threshold that determines growth from contraction. ISM Manufacturing, also for January, reported a stronger-than-expected +50.9%, nearly a full point above the +50.0 anticipated and +49.2% from the December print. ISM Manufacturing today reached highs not seen since September of 2022.
Manufacturing has had a very tough slog over the past few years — going back to the Covid pandemic which began five years ago. The “America First” agenda of the current Trump administration hopes to bring more jobs back home, and the Chips Act from the previous administration may yet bring a boost to goods productivity in this country. But talk is cheap; action is usually expensive.
Earnings Reports After the Bell: PLTR, NXPI, CLX
Counter-terrorist software analytics giant Palantir PLTR posted a decent earnings beat on a surprise windfall in sales for its Q4, reported after today’s close. Earnings of 14 cents per share outperformed the Zacks consensus by 3 cents, while revenues of $828 million emphatically improved over the $777.5 million analysts had been expecting. U.S. revenues increased +52% year over year.
The stock is now trading +18% in the late session. Part of the reason is also the high sales guidance for next quarter and the full fiscal year. Palantir shares are now quite richly valued at over 50x revenues, but the stock is both an AI revolution and a cybersecurity play. It doesn’t have much competition at the high levels of operation at which it resides, so some of this high valuation is warranted. The company was a Zacks Rank #2 (Buy) heading into the earnings release.
Check out the updated Zacks Earnings Calendar here.
NXP Semiconductor NXPI results for Q4 are also out after today’s close, with earnings of $3.18 per share ahead of estimates by 4 cents (though still below the $3.77 per share in the year-ago quarter) on revenues of $3.11 billion, slightly ahead of the Zacks consensus. Full-year revenue guidance is officially a penny below consensus, but NXPI shares are climbing another +1% on the news — almost making up for its full year-to-date slide.
Clorox CLX surged past earnings estimates in its fiscal Q2 — $1.55 per share versus $1.39 expected — on $1.69 billion in revenues for the quarter, slightly ahead of the $1.63 billion consensus estimate. Earnings guidance for next quarter powers ahead, however: an estimated $6.95-7.35 per share is notably out front of the consensus $6.86 per share. Perhaps on the idea that Clorox may have pulled forward business into Q2 to avoid tariffs may have inflated the quarter’s numbers. Shares are down nearly -3% in the after-market.
What to Expect from the Stock Market Tuesday
Aside from a labor market print after tomorrow’s opening bell from the Job Openings and Labor Turnover Survey (JOLTS) for December, we’ll be a tad light on economic reports tomorrow — especially in light of the big jobs reports coming Wednesday and Friday mornings. Factory Orders are expected to have slid further month over month.
We will see a full compliment of earnings reports out Tuesday, however, including PayPal PYPL, PepsiCo PEP and Spotify SPOT ahead of the open; Alphabet GOOGL and Amgen AMGN after the closing bell.
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