Mid-Morning Look: April 27, 2022

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Mid-Morning Look

Wednesday, April 27, 2022

Index

Up/Down

%

Last

 

DJ Industrials

26.23

0.08%

33,265

S&P 500

9.87

0.24%

4,185

Nasdaq

15.22

0.11%

12,504

Russell 2000

11.06

0.58%

1,901

 

 

U.S. stocks bounce initially following yesterday’s sharp pullback, with shares of Visa and Microsoft helping boost the Dow on earnings results (and lifting the Nasdaq by over 1%), while component Boeing (BA) tumbles over 9% on its wider loss for quarter. However, stocks have quickly pared gains as investors continue to “sell the rip” over the last week. The S&P 500 bounce comes after dropping towards a test of its Q1 lows in the 4,100-4,200 range. The U.S. dollar index rises above 103 to its highest since Jan. 2017, while bonds rally for a third day, sending Treasury yields lower (10-yr yield 20bps move off last week highs of under 3%). Bitcoin extends rally, up over 3% as early market rally boosts several asset classes. Oil not one of them sliding after yesterday’s outperformance as investors rotate out of energy winners and into tech/consumer discretionary losers. GOOGL quarterly results miss views, weighing on Internet names early (FB dipped ahead of earnings tonight). Markets remain volatile and choppy ahead of more big earnings this week, as stock averages have already pulled back to lows. Remaining catalysts outside of earnings: the FOMC rate meeting next week, and ongoing situation in Ukraine/Russia.

 

Economic Data

·     U.S. Advance March goods trade balance -125.32 billion dollars; U.S. Advance March wholesale inventories +2.3%; U.S. Advance March retail inventories excluding autos +2.3%

·     Pending Home Sales Change MoM Actual -1.2% (vs. Forecast -1%, Previous -4.1%) and Pending Homes Index Actual 103.7 (vs. previous 104.9)

 

 

Macro

Up/Down

Last

 

WTI Crude

-1.25

100.45

Brent

-1.27

103.72

Gold

-14.00

1,890.10

EUR/USD

-0.0098

1.0538

JPY/USD

0.75

127.97

10-Year Note

0.002

2.774%

 

 

Sector Movers Today

·     Auto sector; GM reported somewhat better-than-expected 1Q22 results on strong used and new car prices, and more surprisingly reiterated its 2022 Ebit guidance, despite considerably higher commodities cost; LCID announced a deal with the Government of Saudi Arabia, pursuant to which the government will purchase up to 100K vehicles over a ten-year period; XPEV said it secured credit line of up to 7.5 bln yuan ($1.15 bln) to support business operations and expansion in China; DRVN comps +15.6%. EBITDA of $119mm vs Street at $103mm

·     Consumer Staples/Restaurants; MDLZ delivered strong 1Q organic sales growth and a solid EPS beat relative to expectations, but lowered FY22 EPS guidance; KHC posted Q1 EPS and sales beat but warns of higher inflation impact this year than previously forecast – still raised 2022 organic revs view to mid-single-digit percentage vs. prior for a low-single-digit percentage increase; CMG 1Q22 EPS of $5.70 exceeded consensus as comps accelerated in April and CMG provided ahead of consensus 2Q comp guidance, though the margin outlook was only in-line

·     Transports; JBLU downgraded to Underweight at JPMorgan following earnings disappointment; SKYW downgraded to market perform at Raymond James due to a push out in Block Hour recovery expectations, which is likely to meaningfully reduce our 2023E EPS outlook all else equal; in rails, CNI Q1/22 results were below expectations and FY2022 guidance was lowered; NSC Q1 profit and revenue that rose from a year ago and topped expectations amid strength in the intermodal and coal business segments, while expense growth outpaced revenue growth; Ryder (R) with better Q1 d earnings and sales citing higher used vehicle sales and rentals performance – helped by Ryder’s Supply Chain Solutions acquisitions rose 54%, to $1.09 billion; earnings tonight from CHRW in truckers

·     Software movers; Dow component MSFT posted 3Q beat, in-line 4Q guidance, and strong bookings metrics while Azure $44B run-rate business grew 49% Y/Y in constant currency as MSFT doubled its $100M+ deals; TENB reported strong Q1 results, beating the high-end of guidance by $5.4MM or 3.5%, which was the largest beat the company has delivered in at least 2+ years; CHKP beat estimates with a 2% gain in Q1 profit, boosted by growth in its cloud protection products and consolidated cyber security platform, but shares fall on billings miss

 

Stock GAINERS

·     BG +2%; Q1 adj EPS $4.26 vs. est. $2.79; Q1 revs $15.88B vs. est. 13.28B; raises FY22 adjusted EPS view to at least $11.50 from at least $9.50 (est. $11.04) as it benefited from higher demand for essential crops since the Ukraine crisis

·     CMG +4%; 1Q EPS of $5.70 exceeded consensus as comps accelerated in April and CMG provided ahead of consensus 2Q comp guidance, though the margin outlook was only in-line

·     ENPH +9%; Q1 adj EPS $0.79 vs. est. $0.66; Q1 revs $441.3M vs. est. $432.28M; and guides Q2 revs $490M-$520M vs. est. $474.5M

·     MAT +12%; has held ‘informal talks” with private equity firms that include Apollo Global Management (APO) and L Catterton about a potential sale, WSJ – https://on.wsj.com/3Mzw61a

·     MSFT +5%; posted 3Q beat, in-line 4Q guidance, and strong bookings metrics while Azure $44B run-rate business grew 49% Y/Y in constant currency as MSFT doubled its $100M+ deals

·     SKX +7%; raised its full year top-line ($7.2-$7.4B vs. prior $7.0-$7.2B) and EPS guidance ($2.75-$2.95 vs. prior $2.70-$2.90) even with the 2Q outlook coming in below the Street

·     TMUS +3%; Q1 EPS $0.57 vs est. $0.32; Q1 revs $20.12B vs est. $20.11B; FCF of $1.6 billion grew 26% YoY and raising guidance

·     V +8%; reported adjusted EPS of $1.79, higher than consensus at $1.65driven by revenues of $7.19B, higher than the Street $6.83B, with strength across all revenue line items

 

Stock LAGGARDS

·     BA -6%; posted a larger than expected Q1 loss (-$2.75) vs. est. (-$0.12) and missing estimates for revenues ($14B vs. est. $15.8B), hit with higher costs on commercial and defense aircraft and said it will pause production of its 777X plane through 2023

·     CHKP -4%; beat estimates with a 2% gain in Q1 profit, boosted by growth in its cloud protection products and consolidated cyber security platform, but shares fall on billings miss

·     COF -5%; reported Q1 EPS of $5.62 or $5.27 excluding a one-time gain on card portfolio sales, missing consensus $5.50 driven mostly by higher expenses and marketing, partially offset by better provision and tax

·     FFIV -10%; as guides Q3 revs $660M-$680M vs. est. $693.1M and cuts FY revenue growth view to 1.5%-4% from 4.5%-8%

·     GOOGL -3%; as Alphabet missed on both top and bottom line for the first quarter with weakness showing up especially in YouTube revenues

·     NCR -18%; reported Q1/22 results sharply below forecasts, especially on disappointing Hardware revenue and cost inflation – cuts year adjusted EPS view to $2.70-$3.20 from $3.25-$3.55 (est. $3.39) and lowers FY22 revenue view to ~$8B from $8B-$8.2B

·     SPOT -7%; total monthly active users rose 19% to 422M in Q1; posts 24% increase in Q1 revenue to 2.66B above est. of 2.62B euros; sees total monthly active users of 428 million in Q2 after closure of its Russian operations; sees Q2 revenue of 2.8 bln euros, below est. 2.81 bln euros

·     TXN -2%; reported strong results but guided well below Consensus due to COVID restrictions in China (revs guided ~10% below Street)

_________________________________________________________________

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.

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