* Stocks are down in early trading, but here’s what we’re watching for the market and the Portfolio.
* Portfolio Quick Hits for Apple, Elevance Health and Labcorp.
U.S. equity futures point to a rough open later this morning as the market digests quarterly results from Salesforce ( (CRM) ) that left many wanting and the second print for Q1 2024 GDP. While Salesforce lifted its bottom-line expectations, the company shared that it expects deal compression and slowing projects in the professional services business through the current fiscal year. That prompted a number of price target cuts to $265-$300 from $335-$360 from the likes of BofA, BMO Capital and Stifel.
Inside the updated Q1 2024 GDP figures, headline GDP dipped as expected to 1.3% from the initial 1.6% print. In a bit of somewhat-good news, the core PCE Price Index for the quarter was revised to 3.6% on a year-over-year basis, down from the initial print of 3.7%. As you can likely guess, our take is the revised figure remains too high for the Fed to contemplate rate cuts. But we’d also add the Q1 2024 figures are more than a bit "rear view" at this point, especially after the flash May PMI report from S&P Global that found inflation pressures persisted.
We would argue that tomorrow’s April core PCE figure will have a greater impact on Fed rate cut timing, it’s all a bit overshadowed by yesterday's latest Fed Beige Book that found “prices increased at a modest pace” over the April to mid-May reporting period. For our money, this means the inflation insights coming in next week’s May PMI reports from ISM and S&P Global will be more insightful, but we recognize the market will still take more than a passing interest in the Fed’s preferred inflation metric. The current market consensus sees the April core PCE price index matching March’s 2.8% figure.
Even though that aspect of the April Personal Income & Spending will be the focal point, we doubt the market will gloss over the findings on income and spending given the importance of consumer spending on the overall economy. We will also be poring over China's latest NBS Manufacturing and Non-Manufacturing PMI data, looking to see if stimulative efforts are paying off and what that could mean for the global economy as well as inflation pressures.
For the S&P 500 and positions on our shopping list, the technical support level we’re watching is the 50-day moving near 5,179. Should we breach that level, the next level of support to watch will be the 100-day near $5,075. Ahead of tomorrow’s data and the big data week that we have coming next week, we’ll be disciplined in putting incremental cash to work. Based on what we've seen so far, it suggests the market will need to further recognize that rate cuts will slip to late 2024. As that happens, we'll let the market come to us before tapping into our shopping list.
Portfolio Quick Hits
Tigress Financial upped its price target on Apple ( (AAPL) ) shares to $245 from $240
JPMorgan raised its price target on Elevance Health ( (ELV) ) to $631 from $628, keeping its overweight rating. Baird initiated coverage on ELV shares with an outperform rating and a $649 target as part of larger coverage on managed care companies. As we digest Elevance’s presentation comments at tomorrow’s Bernstein Strategic Decision Conference, we’ll revisit our price target as needed. The recent market pressure on ELV shares does give us some room to add, but we’d be more inclined to do so closer to the portfolio’s cost basis.
While JPMorgan trimmed its Labcorp ( (LH) ) price target to $243 from $261, the firm kept an overweight rating on the shares. Our price target remains $235, and LH shares remain on our shopping list. With the market expected to move lower today, we’ll continue to evaluate the timing for our next addition of LH shares.
More Pro Portfolio:
- We're Adding More Shares of This Beauty Company
- Weekly Roundup: How We Benefited From the Market Divergence
- Signals From Our Investing Notebook
At the time of publication, TheStreet Pro Portfolio was long AAPL, ELV and LH.