Morning in New York: investors in search of new benchmarks

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

Participants of the upcoming trades will pay special attention to the weekly statistics of applications for unemployment benefits (consensus: 223 thousand, previous value: 231 thousand). After the strong report of the Ministry of Labor released the day before, this indicator will allow to assess whether the current dynamics in the market is still in place or whether signs of its cooling are beginning to appear. The value near consensus will confirm the balance of the employment situation and the absence of additional risks for the realization of the basic forecast for the Fed Funds rate. A lower than expected result will indicate the stability of the economy, but may reduce estimates of the likelihood of a rapid easing of monetary policy.

An additional macro benchmark will be the publication of housing sales data on the secondary market (consensus: 4.15 thousand, previous value: 4.35 thousand). The December jump on the background of a slight decrease in mortgage rates and stabilization of prices is generally considered by investors as a one-off. The report will allow assessing the process of normalization in the residential real estate sector, the state of consumer demand and the sensitivity of households to the current level of rates, however, by itself is unlikely to cause strong fluctuations in indices in the absence of a significant surprise.

Prior to the main session , Nebius Group (NBIS), Howmet Aerospace (HWM), Zoetis (ZTS), Alnylam Pharmaceuticals (ALNY), American Electric Power (AEP), PG&E (PCG) and Exelon (EXC) will report quarterly results. Applied Materials (AMAT), Coinbase Global (COIN), Arista Networks (ANET), Vertex Pharmaceuticals (VRTX), Agnico Eagle Mines (AEM), Expedia Group (EXPE) and Airbnb (ABNB ) will report after the market close.

Futures on the S&P 500 show moderately positive dynamics, reflecting investors' cautious optimism regarding macro statistics releases and a busy corporate reporting calendar. We assess the balance of risks for the upcoming session as neutral with moderate volatility. If the broad market index goes below 6900 points, it will be a signal to revise the assessment to the negative side, while consolidation above 6990 will open the space for the continuation of growth and shift to the positive side.

- Shares of Cisco (CSCO) are falling by more than 7% before the opening of the main trades, although the company's revenue exceeded the average forecasts. Pressure on quotes was exerted by the dynamics of gross margin, which was below the consensus due to the increase in the cost of memory chips and individual components for AI infrastructure.

- AppLovin (APP) quotes are losing more than 4% before the start of the main session, despite strong quarterly results. Investors fear increased competition from Meta Platforms in the digital advertising segment, which could put pressure on the issuer's revenue growth and profitability. Additional negativity is formed by the ongoing SEC investigation and risks for the gaming sector associated with competitors' developments in the field of AI.

- Equinix (EQIX) shares rose more than 8% after the close the day before, as the company's own full-year revenue guidance came in above market expectations. This signals resilient demand for data center services. The company expects full-year revenue in the range of $10.12-10.22 billion, with consensus around $10.07 billion.

- Rollins (ROL) stock reacted with a 13% drop on the release of its fourth quarter financial results. Its revenue and adjusted EPS came in at around $0.25 million and $913 million, with consensus estimates of $0.26 million and $927 million, respectively.

- AST SpaceMobile (ASTS) shares are down nearly 10% in the post-market after the company announced plans to offer convertible bonds totaling $1 billion. Investors' negative reaction is not only due to the increased debt load, but also to the risk of potential dilution of stakes if the bonds are converted into shares.

- Cognex (CGNX) stock is gaining over 20% in the premarket after posting a strong financial report. Revenue for the fourth quarter amounted to $252.3 mln with adjusted EPS of $0.27, while the average market expectations were $239 mln and $0.22, respectively. Additional support was provided by the announcement of buyback increase up to $615 mln.

Trading on February 11 on the U.S. stock exchanges ended multidirectionally near the neutral zone. S&P 500 closed at zero, NASDAQ 100 added 0.29%, Dow Jones decreased by 0.13%, Russell 2000 lost 0.38%. By the end of the trades the indices lost part of the growth of the beginning of the day, high volatility remained inside them. Pressure on the broad market was exerted by the dynamics of Microsoft (MSFT: -2.15%) and Alphabet (GOOGL: -2.39%), members of the "Magnificent Seven". Positive dynamics of NASDAQ was caused by quotations of semiconductor companies.

The energy sector (XLE: +2.61%) emerged as the leader of the growth, supported by WTI prices, which rose by 1.3% and amid rising geopolitical tensions. The financial industry (XLF: -1.51%) was again the outsider, pressured by weak results from online brokers, large banks and credit card companies sensitive to rising short-term rates and increased volatility in the bond market after strong employment data.

According to the January report from the US Department of Labor, the number of new nonfarm payroll jobs totaled 130k with a consensus of around 70k, and unemployment fell from December's 4.4% to 4.3%, although no change was expected. Despite downward revisions to previous months' data, the overall result was stronger than forecast.

Against this background, the yields of treasuries went up. At the short end of the curve, the growth amounted to about 6 bp, while at the same time its flattening. Placement of 10-year USTs was accompanied by lower demand, which additionally supported the upward movement of rates. More cautious signals from the Fed officials reinforced expectations of continued tight financial conditions, which put pressure on risk appetite.

-T-Mobile (TMUS: +5.1% at the close of trading on February 11) reported weaker-than-expected net growth in its contracted subscriber base for the quarter, also recording higher customer churn. Nevertheless, the financial results and forecasts were generally in line with market expectations, which supported telecom quotes given the high predictability of its cash flow.

-Vertiv Holdings (VRT: +24.5%) beat consensus on earnings and operating margin with revenue within expectations. Management noted strong order inflows from hyperscalers and colocation data center operators. Its guidance for the current quarter and year was above market average guidance, reinforcing the AI-related investment case.

- Generac (GNRC: +17.9%) reported revenue and EPS down against guidance and a 450 bps year-on-year margin decline. However, the management presented stronger than expected guidance for 2026 and gave optimistic comments on data center demand.

- Solstice Advanced Materials (SOLS: +17.5%) fourth-quarter revenue beat estimates, although earnings came in below consensus. The company sees solid demand from the data center, AI and nuclear industries. Annualized revenue guidance was in line with average market expectations. In addition, a quarterly dividend payment was announced.

- The US Food and Drug Administration (FDA) declined to review the application for Moderna's (MRNA: -3.5%) influenza vaccine. This increased uncertainty around the timing of the product's commercialization and created short-term valuation pressure on the company's biotech portfolio.

This article was AI-translated and verified by a human editor