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Manufacturing Up, Construction Down, Q4 Earnings Mixed

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Tuesday, February 4, 2020

An improvement in yesterday’s reported manufacturing data helped spur markets forward in regular trading, and market participants in today’s early morning trading are picking up this morning where they left off. The Dow in now expected to open up a whopping 375 points, the Nasdaq +144 and the S&P 500 +42.

PMI Manufacturing for January registered a headline of 51.9 — 20 basis points higher than the original headline registered a month ago, which itself was revised upward by 0.7 in yesterday’s report, to 52.4. Last spring and summer, we’d seen PMI Manufacturing dwindle to beneath 50.5, but rebounded strongly by mid-autumn. Even though these are stronger figures than originally posted, we do see the graph heading back in a downward direction since November.

ISM Manufacturing, also for January, swung to above 50% — the rate that demonstrates expansion versus contraction — to 50.7% in yesterday’s release. This was higher than the 48.5% analysts were looking for, as well as the upwardly revised 47.8% the previous month. So while we see PMI rates of manufacturing starting to cool a bit, ISM looks stronger than we’ve seen since July 2019. Clearly, the PMI and ISM numbers do not operate in tandem.

Tomorrow, ISM Non-manufacturing results are expected for last month. We expect what we saw for December on the headline: 55.0%. This is more strongly in growth territory than the ISM Manufacturing results have been of late.

Prior to this, later this morning we expect new Factory Orders data for December. Currently, estimates are +1.5%, a bounce-back from the -0.7% posted for November.

Construction Spending numbers for December were also reported yesterday, and this data did not surprise to the upside: -0.2% was the actual, well off the +0.6% expected. This was also down from the upwardly revised headline for November of +0.7%. This also marks only the third month in the past 12 with a negative headline figure, and the first since last June.

Q4 earnings results for ConocoPhillips COP have come out mixed this morning, with a miss on the bottom line — 76 cents per share versus 81 cents expected) — but a beat on the top: $8.18 billion outpaced the Zacks consensus by nearly 4%. Both these numbers were down from the $1.13 per share and $10.36 billion in the year-ago quarter, but such is the case for a tough global oil & gas market. Shares are up marginally in pre-market trading, though still down more than 8% year to date. For more on COP’s earnings, click here.

BP (BP - Free Report) also reported Q4 earnings this morning, but its report was mixed in the opposite way: 76 cents per ADS beat the 65 cents expected, but revenues of $72.2 billion in the quarter missed the $80.2 billion analysts were looking for. The company reported its average price of oil per barrel came in at $55.90 in Q4. Share are trading up 4.75% in today’s pre-market. For more on BP’s earnings, click here.

Royal Caribbean RCL, the cruise line major, beat bottom line estimates by a penny to $1.42 per share on $2.52 billion in quarterly sales, a miss of 0.89%. Revenues were up notably from the $2.33 billion reported in the year-ago quarter, and pre-market activity is bidding up the shares upon the earnings release, +5.8%. Shares are still off 7% year to date, however. For more on RCL’s earnings, click here.

After today's market close, we expect fresh quarterly earnings reports from The Walt Disney Company DIS, Ford Motor Company F and Chipotle CMG, among others.

Mark Vickery
Senior Editor

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