Mid-Morning Look
Friday, March 04, 2022
Index |
Up/Down |
% |
Last |
|
||
DJ Industrials |
-443.73 |
1.31% |
33,350 |
|||
S&P 500 |
-63.40 |
1.45% |
4,300 |
|||
Nasdaq |
-217.64 |
1.61% |
13,319 |
|||
Russell 2000 |
-31.04 |
1.53% |
2,001 |
|||
U.S. stocks stumble out of the gate, adding to overnight losses while European stocks sank to near 1-year lows as auto and bank stocks took a battering (in both U.S. and Europe) on reports of a nuclear power plant on fire amid fierce fighting between Ukraine and Russian troops. The Euro dropped more than 1.5% to lows around the 1.09 level against the U.S. dollar in a rout in Europe. A huge blaze at the site of Europe’s biggest nuclear power station has since been extinguished and reports said the plant in southeastern Ukraine was operating normally after it was seized by Russian forces. The impact of the Russian worldwide sanction has pushed commodity prices much higher over the last 2-weeks as Wheat futures up 40% this week (into today), corn gains 17% and coal prices on course for a weekly gain of 67%. Oil prices also on track for big weekly gains. U.S. Treasury yields fell on Friday as investors again flee to the safety of defensive assets (dollar, bonds, gold all higher early). The U.S. Dollar Index (DXY) soared to its highest level in almost two years on Friday as the deepening Russia-Ukraine conflict led investors to continue flocking to safe havens, such as the greenback. Seeing more of the same today that we have seen this week, with energy names as well as agricultural (ADM, BG), fertilizers (MOS, NTR), coal stocks (BTU), metals and mining names in copper, aluminum, iron ore, etc. with big gains (X, CLF, FCX, AA) on supply concerns. Even a strong jobs number couldn’t boost markets as focus remains on Europe. The U.S. Feb. Nonfarm Payrolls rose 678K, vs. est. 400K and private payrolls +654K vs. est. +378K; manufacturing jobs +36K vs. est. 23K and the unemployment rate slips to 3.8% from 4% prior. Wages a surprise miss, not rising m/m vs. expected rise of +0.5% after a +0.7% jump in January. The revisions for employment in Dec and Jan combined is 92,000 higher than previous reported. A rough start to the trading day as major averages now lower on the week.
Economic Data
· February jobs report strong: February Nonfarm payrolls rose +678K topping consensus of +400K and January upwardly revised to +481K from +467K; private sector jobs +654K vs. est. +378K; manufacturing jobs +36K vs. est. 23K; average hourly earnings all private workers no change vs. expected to rise +0.5% after jumping +0.7% prior month; the unemployment rate slides to 3.8%
Macro |
Up/Down |
Last |
|
||
WTI Crude |
5.20 |
112.90 |
|||
Brent |
5.04 |
115.50 |
|||
Gold |
23.10 |
1,959.00 |
|||
EUR/USD |
-0.0157 |
1.0907 |
|||
JPY/USD |
-0.53 |
114.93 |
|||
10-Year Note |
-0.13 |
1.714% |
|||
Sector Movers Today
· Metals & Materials; fertilizer and potash names extend weekly gains MOS, NTR, CF, UAN as this morning IFX reported Russia recommends fertilizer makers to halt exports citing logistic issues; NTR files $5.0B mixed securities shelf; separately, NTR is asking the Canadian government to intervene and halt a potential strike at one of the nation’s largest railways, because the disruption could potentially lead to smaller harvests; grain related companies BG, ADM also extend gains given recent surge in wheat, corn, soy prices on supply disruption due to sanctions on Russia: Wheat futures up 40% this week, corn gains 17%
· Casinos, Gaming, Lodging & Leisure sector; several “reopen” names seeing pullbacks over the last few days amid surging commodity prices and impact on consumers – shares of travel, leisure and casino pressured (BKNG, EXPE, AAL, DAL, WYNN, LVS, RCL, CCL); SIX upgraded to Buy from Hold at Deutsche bank and raise tgt to $57 from $45 while reiterate Buys on SEAS, FUN saying this is a group that should be broadly owned based on an expectation that a continuation of strong consumer spends on experiences, company-specific initiatives aimed at driving total per capita spend above last year’s record levels and lapping of significant inflationary pressures in 2H
· Retailers; COST F2Q22 beat expectations and membership renewal rate continue to hit all-time highs in the US & Canada and internationally; FNKO shares jump after guiding 2022 earnings above views and after Q4 sales surged 48.5% to $336.3M, crushing estimates of $272.5M; GPS 4Q results and provided an FY adjusted EPS forecast that topped the average analyst estimate as Q4 adj EPS of $(0.02), better than consensus of (-$0.13) on Y/Y revenue up +2.3% and guides 1Q -mid-high single digits vs est. -3.8%; HIBB Q4 EPS $1.25 missed est. $1.35 on in-line sales $383.3M, comps -1%, while guiding 1H comp sales to decline in the low-teen range and FY23 adj EPS expected $9.75-10.50 vs est. $9.85 on relatively flat sales from $1.69B (est. $1.705B); BBY downgraded at Raymond James to Market Perform; Credit Suisse lowered their price targets on GPS, BURLand BJ after earnings this week; Barclays says TDUP (reports EPS Monday pre-market) is well positioned to gain market share this year as its low AOV offers attractive consumer value amidst inflation and supply chain issues; DG plans to create about 10,000 new careers in 2022, about a 6% increase to its current workforce
Stock GAINERS
· AVGO +3%; reported an in-line JanQ and guided to a solid AprQ at $7.9B (~7% above consensus), with strength highlighted in enterprise, which is accelerating, while cloud data center demand remains strong; Hardware/semi backlog remains strong and improved 14% q/q
· DUOL +9%; reported better-than-expected 4Q21 results whereby the company accelerated growth across nearly all metrics including MAUs (+15% Y/Y), DAU (+19% Y/Y), subscribers (+56% Y/Y), bookings (+59% Y/Y), and revenue (+51% Y/Y).
· FNKO +16%; after guiding 2022 earnings above views and after Q4 sales surged 48.5% to $336.3M, crushing estimates of $272.5M
· GPS ; reported 4Q results and provided an FY adjusted EPS forecast that topped the average analyst estimate as Q4 adj EPS of $(0.02), better than consensus of (-$0.13) on Y/Y revenue up +2.3% and guides 1Q -mid-high single digits vs est. -3.8%
· PBYI +17%; Q4 EPS $0.21 vs. est. loss (-$0.09); Q4 revs $55.4M vs. est. $47.2M; NERLYNX revenue for Q4 was $51M vs. $50M y/y; operating expenses fell -24% y/y to $48.6M
· SG +17%; after guiding 2022 revenue of $515M-$535M vs. $513M consensus and said sees at least 35 net new restaurant openings are anticipated by Sweetgreen for 2022.
· SPLK +5%; after private equity co Hellman & Friedman has taken a 7.5% stake in SPLK, worth $1.45 bln, co discloses on Friday
· VERI +8% after earnings beat; Q4 EPS $0.37 vs. est. $0.20; Q4 revs $55.1M vs. est. $44.8M; sees Q1 revs $32.5M-$33.5M vs. est. $29.2M; sees year revs $180M-$190M vs. est. $177.1M
Stock LAGGARDS
· AI -10%; downgraded to Sell from Hold at Deutsche Bank and cut tgt to $18 from $36 saying “all is not well” as revenue from customers unrelated to C3’s agreement with Baker Hughes declined quarter-over-quarter Q3
· BKNG -4%; trades at lowest levels in over a year, among several “reopen” names seeing pullbacks over the last few days amid surging commodity prices and impact on consumers – shares of travel, leisure and casino pressured – WYNN, EXPE, AAL, RCL
· GM -4%; autos among the worst sector performers on concerns the raging war in Ukraine will delay the recovery in the industry’s supply chain; autos have been one of the worst impacted groups amid the global supply-chain shortage
· JPM -3%; U.S. bank stocks slump, on track to finish lower for a third straight week, as the escalating war between Russia and Ukraine diminishes investor appetite for risk assets.
· OCGN -20% after saying the FDA has declined to issue an Emergency Use Authorization for Covaxin; Ocugen said it intends to continue working with the FDA to evaluate the regulatory pathway for the pediatric use of Covaxin.
· OOMA -13%; Q4 adj EPS $0.13 vs. est. $0.10; Q4 revs $50.5M vs. est. $49.97M, but shares slipped as Q1 guidance mid-point fell just short of consensus
· SWBI -17%; posted a Q3 miss with adj EPS 69c vs est. 83c on revs $177.7M vs est. $198.3M
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.