Honeywell Keeps Acting Like a Tech Company. It’s the Dow’s Top Stock Wednesday.

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Initial Vertiv-Honeywell products will focus on microgrid solutions for data centers.


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Microsoft

(MSFT).

Amazon.com

(AMZN).

Apple

(AAPL).

Honeywell International

(HON)?

Most investors don’t think of Honeywell as a tech company, but it sure is acting like one. The industrial conglomerate and data center equipment supplier

Vertiv Holdings

(VRT) are teaming up to provide new solutions for data centers. It is another example of Honeywell behaving more like a tech firm, collaborating with companies in other industries to develop new products.

Earlier in 2020, Honeywell (ticker: HON) announced a software tie-up with

SAP

(SAP.Germany), in which Honeywell married its Forge software application with the SAP Cloud for Real Estate platform. The pairing allows building operators to aggregate financial data from SAP with operational data from Forge into easy-to-use interfaces.

In the Vertiv instance, announced Wednesday morning. Honeywell is marrying its building-management systems with Vertiv’s (VRT) data center power-management systems. Honeywell stock is up 1.6% on Wednesday, while the Dow Jones Industrial Average is little changed.

Power-management systems are critical operating components of data centers. “You don’t just plug a data center server into the wall,” explains Vimal Kapur, Honeywell Building Technologies CEO. “Data centers need clean power.” Data centers need uninterrupted power with tight voltage and current specifications. Vertiv’s products enable that, and the company competes with the likes of

Schneider Electric

(SU.France) and

Eaton

(ETN).

(The news release says that data centers in 2018 consumed approximately 1% of the world’s energy use.)

A building-management system, for Honeywell’s part, is a feature of any commercial building and controls things such as heating, ventilation and air conditioning. Honeywell controls other portions of data centers, too, such as fire and safety systems.

Honeywell’s building-technology division generated about $1.2 billion in second-quarter sales, accounting for roughly 16% of the total. Vertiv

Midday Market Update: Massive Risk-On Day Wednesday

Stocks rose sharply, especially stocks that are highly levered to economic growth. Employment data was exceptionally strong and growth stocks were also in favor again.

The S&P 500 rose 1.4%, with the tech-heavy Nasdaq up 1.5%, but all sectors were contributing to gains on all indices. The 10-Year Treasury yield shot up to 0.70% from 0.65%. Inflation expectations have been rising incrementally of late, as the real yield on the 10-Year is above negative 0.9%, compared to below -1% earlier this year.

The ADP jobs report smoked expectations, with a September reading of 749,000 jobs added against economists estimates of 600,000. Even with questions lingering over whether the House’s proposed $2.2 trillion stimulus bill will be passed, consumer confidence was strong in September and businesses were adding employees, keeping the V-shaped economic and earnings recovery alive.

All large cap cyclical sectors were up meaningfully, with oil, banking, manufacturing and consumer discretionary all up between 0.5% and 1.7% by noon.

Jobless claims earlier this year looked bleak and consumer confidence readings in August were bleak, painting a mixed picture on the speed of the recovery, but the magnitude of the jobs beat, coupled with a fiscal stimulus bill moving along, was encouraging to investors.

In tech, semiconductors lagged, but still rose. The iShares PHLX Semiconductor ETF  (SOXX) – Get Report rose 0.88%. Micron  (MU) – Get Report wiped the floor clean on quarterly revenue earnings, but its current quarter revenue guidance of $5.2 billion was light compared to analysts’ hopes for $5.27 billion. 

Earnings per share was guided at 47 cents against estimates of 66 cents. Analyst not that Huawei revenue — 10% of Micron’s total — and slowing enterprise spend in cyclical customers like energy and hospitality ones are weighing on the near-term outlook. Still, management