Mid-Morning Look

Tuesday, July 09, 2024

U.S. stocks open at new all-time highs for the S&P 500 and Nasdaq, a common occurrence this year led by strength in technology stocks, as markets await Fed Chairman Powell testimony on Capitol Hill on the economy and monetary policy and key inflation data later this week (CPI, PPI). Nasdaq 100 (QQQ’s) hit lifetime high of $500.00 on the dot this morning as the Mag 7 names continues their latest surge along with new record highs for the Semiconductor index (SOX) topping 5,800 today for the first time, taking out prior high 5,792.86 on June 18^th. Bond yields edged slightly higher after the prepared text of Powell’s semiannual economic testimony on Capitol Hill, speaking before the Senate Banking Committee today and the House Financial Services Committee on Wednesday. Investors are also watching closely any fresh news/speculations regarding President Biden, who is determined to stay in the race despite growing concerns about his health amongst House Democrats. Other factors of note this week, $58B 3-year note auction at 1:00 9then 10-yr tomorrow), China CPI and PPI data tonight and U.S. CPI on Thursday and PPI on Friday. Much like in prior weeks, early leaders the same as Technology (XLK), Communications (XLC) and Consumer Discretionary (XLY) leading while broader NYSE breadth negative as other sectors floundered.

Fed Chairman Powel provided prepared text ahead of his testimony this morning in Washington DC noting “’more good data would strengthen our confidence” on inflation while notes “elevated inflation is not the only risk we face”. Powell said policy rate cuts are not appropriate until the Fed gains greater confidence inflation headed sustainably toward 2%. Powell noted that the first quarter data ‘did not support’ the greater confidence in inflation path that Fed needs to cut rates. He did note we have made considerable progress toward the 2% inflation goal; recent monthly readings show ‘modest further progress’.

• CC +3%; was upgraded to Buy from Neutral at UBS and raised tgt to $30 as believes the market has become too negative on the stock (down 22% over last 1.5 months vs XLB down 5%) and see potential for the stock to outperform.
• GLW +2%; among leaders in S&P, adding to recent gains after raising guidance yesterday.
• KYMR +21%; said SNY is taking steps to expand ongoing Phase 2 trials of its targeted protein degrader KT-474 in skin conditions hidradenitis suppurativa (HS) and atopic dermatitis (AD).
• NVDA +3%; as semiconductors index (SOX) makes new all-time highs in continuation of strength in sector.
• PFG +2%; was upgraded to Strong Buy from Market Perform at Raymond James as sees the company’s revenue growth accelerating as it becomes a “one-stop shop” for business solutions.
• QURE +50%; shares jumped as announces updated 24 months’ follow-up data from its ongoing early-stage study of its experimental therapy to treat Huntington’s disease; said patients receiving high-dose of the therapy showed 80% slowing of disease progression at 24 months, assessed by a scale that measures symptoms of the disease.
• TEM +1%; the recent IPO was initiated coverage by several Wall Street firms with Buy equivalent ratings from Stifel ($45 tgt), Loop Capital ($48 tgt), Morgan Stanley ($44 tgt), JP Morgan ($42 tgt), TD Cowen ($50 tgt), Bank America ($41 tgt), and Needham ($47 tgt).

• BP -3%; shares fell after warning that its Q2 earnings would take a hit of up to $700 million from significantly lower refining margins; BP also said results would be hit by after-tax asset impairments and one-off contract provisions of between $1 billion and $2 billion.
• CSX -2%; TD Cowen modestly lowers Q2 ests for the U.S. Rails (CSX, NSC, UNP – with small tgt changes), as volumes QTD were slightly below prior estimates and included a mix headwind that was somewhat offset by a drop in diesel.
• HELE -30%; as reported Q1 EPS/sales below consensus (EPS $0.99 vs. est. $1.59 and sales fell -12% y/y to $416.8M vs. est. $445.8M) while lowered its FY net sales view to $1.89B-$1.94B from prior forecast $1.97B-$2.03B and cuts FY adj EPS view to $7.00-$7.50, from the prior forecast $8.70-$9.20.
• HLIO -12%; after the company put its CEO on leave following an investigation of potential violation of Co’s code of business conduct and ethics and appointed Sean Bagan as interim President/CEO in addition to CFO role.
• HTLD -7%; along with weakness in WERN as both names were downgraded at both JP Morgan and UBS in trucking sector saying they believe that a recovery in truckload rates will be pushed out to 2026.
• INDV -35%; as cuts FY24 revenue view to $1.15B-$1.22B from $1.24B-$1.33B (est. $1.25B) and lowered its FY24 adjusted operating profit view to $285M-$320M from $330M-$380M to reflect continued adverse market dynamics impacting near-term Sublocade NR growth as well as the initial commercial adoption of Opvee.