Mid-Morning Look: August 08, 2022

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Mid-Morning Look

Monday, August 08, 2022

Index

Up/Down

%

Last

 

DJ Industrials

254.06

0.77%

33,057

S&P 500

33.60

0.81%

4,178

Nasdaq

160.60

1.27%

12,818

Russell 2000

34.63

1.80%

1,956

 

 

U.S. stocks open the trading week with big gains, broad-based strength ahead of key inflation data Wednesday (CPI) and after the Senate passes the White House “Inflation Reduction Act” which included details including new incentives for clean energy, extends ACA subsidies, and Medicare can renegotiate drug prices among other items. Stocks defying recent market calls for a pause following a massive July stock market rally, ahead of an expected continued aggressive interest rate hike cycle from the Fed (now for calls of a 75-bps hike in Sept after the strong jobs report Friday) to try and stifle inflation that remains at 40-year highs. Markets recently “squeezing” higher, with several companies pushing on pure momentum (not necessarily news), as short squeezes on thinner than normal volume at the end of summer trading boosts names. Markets seeing run-ups in shares of old Wall Street Bets “meme” stocks such as AMB, BBBY, GM in recent days along with spikes in high “short interest” names (BYND, CVNA) despite recent disappointing quarters and outlooks. The Nasdaq jumps as much as 1.5% this morning despite a big revenue warning from one of the largest semiconductor players in the world today (NVDA guides Q3 revs $6.7B vs. est. $8.1B) following weak guidance from AMD and INTC recently. No major economic data today in the U.S. and Fed speakers light this week, while earnings season begins to slow down with only about 25 S&P companies reporting this week. The S&P still just shy of its June highs (4,202.25 on May 31st). Even crypto bouncing of late, with bitcoin +5% above $24,000. Yields fall along with the dollar, giving a modest boost to precious metals early.

 

 

Macro

Up/Down

Last

 

WTI Crude

0.00

89.01

Brent

0.17

95.09

Gold

10.60

1,801.80

EUR/USD

0.0022

1.0203

JPY/USD

-0.52

134.45

10-Year Note

-0.077

2.763%

 

 

Sector Movers Today

·     Consumer Staples: in food, TSN mixed as EPS at $1.94 misses estimates of $1.98 amid higher input and supply-chain costs across its divisions including beef and chicken while sales beat but lowers pork segment’s FY adj op margin to 3%-5% from 5%-7% prior; THS posts smaller-than-expected Q2 EPS loss of (-$0.04) vs. est. loss (-$0.14) while sales rose more than 19% to $1.2B, above the $1.11B estimate and now expects full-year 2022 net sales growth of mid-to-high teens, compared to previous forecast of a growth of about 11%; APRN surges on mixed results as loss narrows and revenue rises but miss expectations as orders fell, full-year outlook was cut

·     Utilities & Solar; in solar, several stocks open high initially after the Senate narrowly passed President Joe Biden’s Inflation Reduction Act, boosting climate-change spending; FSLR was upgraded by two analysts (JPM and Guggenheim, $126 tgt and $135 respectively) as believe FSLR appears positioned to benefit the most from the provisions of the Inflation Reduction Act that passed the Senate yesterday; seeing strength in EV stocks LCID, QS, TSLA, RIVN, BLNK, CHPT on bill as well as solar, RUN, SEDG, ARRY.

·     Semiconductors: NVDA slips as guides Q2 revs Q2 $6.7B, well below consensus $8.1B, down -19% sequentially and up 3% y/y saying gaming revs of $2.04B, down 44% sequentially and down 33% y/y while Data Center revenue was $3.81B, up 1% sequentially and up 61% y/y; LSCC expands stock repurchase program with new $150M authorization; WDC downgraded from Buy to Hold at Benchmark after posted upside June results, but the September quarter guidance was well below expectations and said a sharp inventory correction is underway in the client segment impacting both HDDs and flash

 

Stock GAINERS

·     CINC +64%; er Q2 results and said its experimental drug, baxdrostat, for treatment-resistant hypertension or high blood pressure meets main goal in mid-stage trial

·     CYBE +28%; after agreeing to be acquired by NDSN for $54 per share https://bit.ly/3df7yOP

·     FSLR +11%; upgraded by two analysts (JPM and Guggenheim, $126 tgt and $135 respectively) as believe FSLR appears positioned to benefit the most from the provisions of the Inflation Reduction Act that passed the Senate yesterday

·     GBT +4%; as PFE agreed to acquire GBT for $68.50 per share in deal valued at $5.4B to enhance presence in rare hematology, confirming multiple reports released last week in media

·     KRTX +60%; announced that its late-stage trial for experimental schizophrenia therapy KarXT met the primary endpoint

·     MRTX +8%; after AMGN posted Phase 1 data for the rival KRAS inhibitor Lumakras, highlighting liver side effects of the cancer drug in combination with immunotherapies.

·     SGFY +16%; after the WSJ reported CVS is seeking to buy the company according to people familiar with the matter. Others also are in the mix, they said, and CVS could face competition from others https://on.wsj.com/3BMivS4

 

Stock LAGGARDS

·     BNTX -9%; after Q2 profit and revenue that fell below expectations but affirmed its full-year COVID-19 revenue outlook; Q2 net income dropped to EUR1.67 billion ($1.70 bln), or EUR6.45 a share, from EUR10.77 a share y/y vs. est. EUR7.08

·     CG -4%; said CEO Kewsong Lee, 56, has stepped down with immediate effect months before the scheduled end of his five-year contract (no reasons disclosed)

·     NVDA -4%; guides Q2 revs Q2 $6.7B, well below consensus $8.1B, down -19% sequentially and up 3% y/y saying gaming revs of $2.04 bln, down 44% sequentially and down 33% y/y while Data Center revenue was $3.81 billion, up 1% sequentially and up 61% y/y

·     PLTR -14%; cuts Q3 revenue view to range $474M-$475M below the est. of $506.9M while forecasts full-year revenue between $1.9B-$1.902B vs. estimate of $1.96B saying forecast cut due to uncertain timing of large government contracts this year

·     QURE -25%; shares fall after Q2 results fell well short of consensus and reported Q2 loss of (-$39.1M), down from profit of $399.5M y/y

·     TSN -9%; mixed as EPS at $1.94 misses estimates of $1.98 amid higher input and supply-chain costs across its divisions including beef and chicken while sales beat but lowers pork segment’s FY adj op margin to 3%-5% from 5%-7% prior

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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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