Market Review: August 04, 2022

Auto PostDaily Market Report

Closing Recap

Thursday, August 04, 2022





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     After surging in July and posting one of its best days of the year on Wednesday, momentum continued to the upside for U.S. stocks on Thursday, with investors showing no fear ahead of tomorrow’s nonfarm payroll report where +250K nonfarm payrolls and +230K private jobs are expected to be added. Markets have shown no concern this week despite ratcheted up tensions with China after they fired multiple missiles near Taiwan in its biggest ever military drills in the Taiwan Strait, a day after U.S. House of Representatives Speaker Nancy Pelosi visited the self-ruled island. Fed officials this week have been on the hawkish side for sure, with several warnings that hikes were still in the cards and thoughts of easing next year are unfounded. Still, stocks have managed to push higher, with the S&P approaching the June highs of around 4,200. The benchmark index has now rallied more than 13% from its June 16 low on a closing basis and investor sentiment has risen as the weekly American Association of Individual Investors (AAII) weekly survey showed Bulls rise to 30.6% from 27.7% and Bears fall to 38.9% from 40.1%. the Nasdaq holds at 6-month highs as large cap tech continues to lead the way as many analysts have classified this earnings quarter “better-than-feared”, but outlooks still express caution. The Bank of England raised its key rate by 50bps to 1.75%, its biggest rate hike snice 1995 as they follow the Federal Reserve in giving priority to the fight against inflation over the risk of hurting growth. Over 400 S&P companies have reported with another blast again tonight. Treasury yields fall, the dollar finished at lows, oil tumbles and precious metal prices finish strong.


Economic Data:

·     Weekly Jobless Claims rose to 260,000 from 254K last week and in-line with estimates for 259K; the 4-week moving average rose to 254,750 from 248,750 prior week; continuing claims rose to 1.416M from 1.368M and insured unemployment rate unchanged at 1.0%.

·     June International Trade in Goods (Advance) at -$79.6B vs. -$81.9B consensus and -$98.18B prior; U.S. June exports +1.7% vs May +1.5%, imports -0.3% vs May +0.6%; US/China June trade deficit $36.95B vs may deficit $31.54B.

·     Mortgage rates fell to their lowest level since April this week, according to Freddie Mac’s weekly survey. The drop is a bit of positive news for buyers who had seen rates rise to nearly 6% earlier this year. The average rate on a fixed 30-year loan fell to 4.99% as of today.


Commodities, Currencies & Treasuries

·     Oil prices fall to the lowest levels since before the Russia/Ukraine conflict began, with WTI crude down -$2.12 or 2.34% to settle at $88.54 per barrel – fresh 6-month lows. Recession fears, slowing demand concerns, tensions with China, and general momentum among catalysts. Brent crude futures settle at $94.12/bbl, down $2.66, 2.75%; Natural Gas September Futures settle at $8.1220/MMBtus.

·     Gold prices rise $30.50 or 1.7% to settle at $1,806.90 an ounce, its best close in over a month following a pullback in the dollar ahead of the payroll report tomorrow morning. Gold recently touched 15-month lows amid a surge in the dollar but has rallied, underpinned by a retreat in the dollar and U.S. Treasury yields, and as investors kept a close tab on U.S.-China tensions.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; COST reported total and U.S. core July comp growth of 7.0% and 5.8%, respectively, compared to consensus of 6.6% and 6.8%; CROX sees FY adj EPS $9.50 to $10.30, down from prior view of $10.05 to $10.65; YETI cuts FY22 view to adj eps $2.34-adj EPS $2.46 vs prior outlook $2.86-$2.91 and lowers year sales growth outlook to +15%-17% from prior +18%-20%; Wayfair (W) posted wider-than-expected loss as revs fell -15% y/y to $3.3B while saying active users were down 24% to 23.6 million in the quarter – said overall US revs fell -9.7% and int’l revs dropped over -35% y/y; RVLV tumbles Q2 EPS $0.22 vs. est. $0.31; Q2 revs rose 27% y/y to $290.05M vs. est. $293.13M and analysts note inventory levels (+75% y/y in 2Q) remain concerning; LEVI downgraded at Morgan Stanley on more balanced risk reward; KSS downgrade to Market Perform and tgt cut to $35 at Cowen as a weakening and inflationary consumer backdrop could drive EPS downside and cloud long-term visibility to EBIT expansion; also other earnings results from EPC, ETD, GIL and SBH

·     Auto sector; LCID slides as missed 2Q delivery guide and reduced FY production vs. prior guide due to supply chain/logistics bottleneck – Deliveries: 679 vehicles vs. cons of 1,011 and reduced 2022 production volume outlook to a range of 6k to 7k vehicles vs. 12k to 14k previously; auto supplier APTV sinks after lowering year EPS and sales forecasts below views with lower capex; RIDE reports its first quarterly profit of $63.7M in Q2, compared with a loss of $108.2M y/y

·     Consumer Staples; CLX stumbles after guiding FY23 adj EPS $3.85-$4.22 below estimate $5.26, sees net sales -4% to +2% and guides FY organic sales -3% to +3%, vs. estimate +3.1%; ELF a strong FQ1 report that beat across the board and raised guidance ((sales +26% y/y vs. Street’s expected +12% y/y and top line guidance raised by 4% at the midpoint); Kellogg (K) raises FY22 EPS growth to 2% from 1%-2%, raises FY22 organic-basis sales growth to 7%-8% from 4% and boosts FY22 cash flow guidance to $1.2B from $1.1B-$1.2B all after posting Q2 EPS and sales beat; TWNK net sales were ($340.5M vs est. $325M) and adjusted EBITDA was ($68.9M vs. est. $67M) largely due to higher prices, favorable product mix, and volume growth

·     Restaurants: SHAK missed Q2 revenue of $230.8M missed estimates of $238M saying June sales were below our expectations and guides Q3 revs $221M-$226.5M vs. est. $245.1M; PZZA slips as Q2 revs $522.7M missed the $529.8M estimate; QSR outperforms on EPS beat of $0.28 vs. est. $0.73 and revs +14% y/y to $1.64B above views

·     Casinos, Gaming, Lodging & Leisure sector; in casinos, MGM reported an upside 2Q22 revenue and EBITDAR result on strong Las Vegas performance while EPS missed consensus – Total adj. EBITDAR was $920m, above the Street’s $833m, with Las Vegas’ $825m as margins were solid at 38.6%; PENN another mover on earnings; in leisure, SEAS reported quarterly results in-line with prior year comp and announces share buyback; in online travel, BKNG reported strong 2Q results, but provided an outlook for 3Q that was below expectations as growth in bookings and room nights meaningfully decelerated in July



·     E&P and Majors; Energy firms slipped as crude prices were pressured by concerns that economic weakness in the United States and Europe would cut demand; COP Q2 earnings and revenue beat estimates, making it the latest oil company to post strong results in the wake of soaring oil prices; MRO delivered 2Q22 adj EPS and EBITDA that came in ahead of cons expectations, maintained FY22 capex and production guidance and raised EG equity income 8% at the midpoint; APA reported adjusted 2Q22 EPS and EBITDA that beat cons estimates, while FCF fell a little short. The company maintained FY22 capex guidance of $1.725bn but reduced adjusted oil and total production guidance 3%/2%; LPI 2Q results came in better than consensus on EPS, EBITDA and FCF, with the variance primarily driven by lower opex and better realized oil prices. The company maintained FY22 capex at $550mm

·     Pipelines: PAA reported 2Q22 EBITDA of $615mm, beating Cons estimates of $537mm as both the crude oil & NGL segments outperformed expectations; ET posted 2Q22 results of $3.23 billion above street consensus of $3.08B and raised its FY22 EBITDA guidance to $12.7B at the midpoint, from $12.4 billion, previously; LNG raises 2022 adj core earnings outlook to $9.8B-$10.3B from $8.2B-$8.7B forecast prior after reports record quarterly profit helped by a surge in demand from buyers seeking to offset gas shortages from Russia

·     Utilities & Solar; SO upgraded to Buy at UBS saying the post-Vogtle growth profile should accelerate on fleet transformation opportunities to achieve SO’s 2050 net zero carbon emissions goal; in solar, RUN exceeded MW expectations for 2Q’22 by ~2%, delivered an 11% sequential improvement in net subscriber margins, reiterated 2H’22 NSV guide of >$10K per customer, and reiterated Cal’22 MW guide



·     Bank & Insurers: CS executives are discussing reducing thousands of roles globally as they seek to slash its overall cost base by an additional $1 billion, Bloomberg reported; Insurance: MET reports Q2 results in-line to ahead of expectations, with this quarter’s showing broad-based upside across almost every division; LNC Q2 adj op EPS $2.23 vs. est. $2.21; Q2 book value per share $53.97 but shares tumbled following its conference call; ALL slides initially after Q2 results

·     Bitcoin, FinTech & Payments; COIN surged after saying it has partnered with BLK to provide institutional clients with access to crypto trading and custody services; MQ shares slip after FIS disclosed an expanded network deal with SQ (MQ’s largest client), leveraging FIS’ NYCE network for switching, which would be in competition with Visa Direct (but JPM said not MQ).

·     Financial Services: WU reduced its expectations for FY 2022, with adjusted revenues now guided to be down ~MSD (vs. prior expectations of down ~LSD, on pro-forma basis), with management citing the macroeconomic backdrop; ICE rises on quarterly profit beat



·     Pharma movers; LLY miss and lower guide as Q2 EPS $1.25 vs. est. $1.68; Q2 revs $6.48B vs. est. $6.67B due to lower prices of diabetes drug Humalog and Insulin Lispro injection and cuts FY22 EPS view to $7.90-$8.05 from $8.15-$8.30 (est. $8.08); AZN said its Lynparza treatment has been approved in the European Union for patients with early breast cancer; said the treatment is the first PARP inhibitor to improve overall survival in early-stage, high-risk breast cancer; PSTX 20M share Spot Secondary priced at $3.50; ZTS cuts FY22 adjusted EPS view to $4.97-$5.05 from $4.99-$5.09 – Narrows FY22 revenue view to $8.23B-$8.33B from $8.23B-$8.38B (est. $8.29B); JAZZ reported 2Q22 adjusted diluted EPS of $4.30 on revenue of $932.9M, compared to Street estimates of $4.19 and $902.5M, respectively. Notably, Xywav continues to gain traction; GBT shares jump after Bloomberg reported the company is attracting takeover interest, citing people familiar with the matter

·     Biotech movers: CCXI to be acquired by AMGN for $52 per share in cash, in deal valued at $3.7B, a 116% premium from yesterday’s closing price ; RCUS reported 2Q results and provided a pipeline update of its six clinical-stage assets; BMRN Q2 rev. was $534MM vs consensus of $524MM and increased FY guidance for Voxzogo to $130-$160MM (+~30%) based on strong demand. Roctavian’s BLA filing is planned for late Sept and an EMA approval is expected in Q3; NTLA slides following earnings results earlier and following an update on development of its drug candidate, NTLA-2001, which is being tested in early-stage trial for two types of a rare disease called amyloidosis – said one patient in one part of trial showed significant increase in liver enzymes on day 28 at a particular dose

·     MedTech Equipment; BDX rises after quarterly results; TNDM reported Q2 results, which missed slightly on the top-line (though pump shipments were even lighter) and markedly on the bottom and lowered revenue estimates for the year by ~$17M at the mid-point; NUVA Q2 sales of $310.5M were up 5.3% reported and 7.8% ex-FX, topping Consensus by ~$4M, despite incremental currency/mix headwinds

·     Healthcare Services; in managed care, CI boosts FY operating EPS after Q2 top and bottom-line beat (Q2 adj EPS $6.22 vs. est. $5.48; Q2 revs $45.48B vs. est. $44.41B); raises FY22 adjusted EPS view to at least $22.90 from at least $22.60; MCK 1Q adj EPS $5.83 vs est. $5.28 on revs $67.2B vs est. $65.1B; guides FY adj EPS $23.95-24.65 vs prior $22.90-23.60 and est. $23.35; says reached agreements to settle, opioid-related claims of 50 stats, DC, and all eligible territories


Industrials & Materials

·     Industrial & Machinery; PWR lowers the top end of Ebitda view to $1.45b-$1.53b, from $1.45b-$1.56b, while raises its rev outlook for the year following a Q2 earnings beat; IR Q2 adj EPS $0.54 vs. est. $0.52; Q2 revs $1.44B vs. est. $1.39B; raising full-year 2022 organic revenue growth expectation by 300 bps to 11% to 13%

·     Transports; AAWW to be acquired by an investor group led by funds managed by affiliates of Apollo (APO) in an all-cash transaction of about $5.2 billion, with Atlas Air Worldwide shareholders to receive $102.50 per share in cash (confirms prior media reports); WERN reported 2Q22 adj. EPS of $0.87, below consensus’ $1.03 estimates and revs increased 29% y-y to $836 million, while operating expenses increased an even-faster +33% y-y to $759M and raised outlook for +6-8% growth in revenue per truck per week (prior 4%-6%) ; YELL surges on results

·     Metals & Materials; in paper space, WRK reported in-line revs and a slight beat on EPS but guidance weighs; in lithium, ALB reported 2Q adjusted EPS of $3.45, above consensus of $3.05 and raised its FY EPS / EBITDA guide to $19.25 – $22.25 (from $12.30 – $15.00) and $3.2-$3.5bln (from $2.2-$2.5bln), respectively; BALL tumbles to lowest levels since March 2020 after earnings miss and said is delaying construction of new beverage can manufacturing plant in North Las Vegas, Nevada and stops production at plants in Phoenix, St. Paul, Minny citing deceleration in customer demand late in 2q; in chemicals, APD outperforms on earnings


Technology, Media & Telecom

·     Media, Internet; BABA Q1 adj EPS $1.75 vs. est. $1.53; Q1 revs $30.69B vs. est. $29.97B; $25B share buyback program is effective through March 2024; Q1 China commerce revenue $21.19b, down 1%; Q1 cloud revenue $2.64b, up 10%; EBAY 2Q22 rev/Adj. EPS was $2.42b/$0.99 vs. cons. $2.37b/$0.89, respectively and provided mixed guidance for rev/Adj. EPS; PARA 2Q adj EPS $0.64 vs est. $0.61 on revs $7.8B vs est. $7.6B, advertising revs $2.17B vs est. $2.37B, paramount+ subs grew to over 43Mm (add 4.9Mm subs and remove 1.2Mm Russia subs); MELI impressed with strong execution, delivering upside in transaction payment volumes, credit and profitability. TPV grew 135% in local currency to $30.2B vs. our estimate for 105% growth to $28.4B. The Street was at $26.8B

·     Semiconductors: it has been a less than exciting quarter of results and guidance for many of the big players with AMD slipping recently on a lower outlook and INTC plunging recently after a disaster quarter, but the semi-index (SOX) has still managed a 20% push since the beginning of July after tumbling the 1H of the year; QRVO beat expectations for the June quarter, but the company provided September quarter EPS guidance below expectations

·     Software movers: internet Security stocks get hit (PANW, CRWD) after FTNT Q2 results as fell slightly short of expectations with revenue roughly in-line and more modest billings beat; DDOG shares slide as 2Q adj EPS $0.24 vs est. $0.15 on revs $406Mm vs est. $380.9Mm; sees 3Q revs $410-414Mm vs est. $412Mm and adj EPS $0.15-0.17 vs est. $0.16; sees FY revs $1.61-1.63B vs est. $1.62B and adj EPS $0.74-0.81 vs est. $0.76; RPD reported 2Q22 top-line results modestly ahead of consensus/guidance, aided by demand for the company’s Security Transformation solutions (70% of net new ARR); UBSFY shares rise after Reuters reports TCEHY planned to raise its stake in the video game maker

·     IT Services & Consulting; DXC F1Q23 EPS was below guidance/consensus and management lowered FY23 (Mar) EPS and FCF guidance 10-12% to reflect currency headwinds and higher expenses; FSLY slips as Piper notes Q2 upside was only 1%, net-additions were down materially Q/Q and implies low new-dollar business, GPM missed due to long-term efficiency investments, and operating losses increased

·     Telecom movers; ATUS reported 2Q subscribers below (broadband at -40k Q/Q vs. our -13k), revenue ahead (-2.1% Y/Y vs. our -3.1%), EBITDA in line (at -8.8% Y/Y) and FCF ahead (by $39M at $191M). Higher ARPUs offset the slower customer growth; LUMN reported weaker than expected adjusted EBITDA, called out cost pressures and supply chain issues, but maintained guidance


Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

Live Trading

Open an Account

Paper Trading