Mid-Morning Look
Wednesday, September 07, 2022
Index |
Up/Down |
% |
Last |
|
||
DJ Industrials |
88.56 |
0.28% |
31,233 |
|||
S&P 500 |
12.18 |
0.31% |
3,920 |
|||
Nasdaq |
41.67 |
0.36% |
11,586 |
|||
Russell 2000 |
7.09 |
0.40% |
1,799 |
|||
U.S. stocks open higher, trying to end the recent market downtrend, but as has been the case, stocks fade early gains. Stocks are higher on the morning but remain this month as concerns about slowing economic growth and the impact of a strong dollar have weighed on U.S. tech companies in recent weeks. With the reacceleration of rising interest rates from the Fed (75 bps hike expected in 2-weeks after 150b-bps worth of hikes the last 3-months) to fight inflation, tech stocks have taken it on the chin as the Nasdaq remains down -26% YTD. Energy prices/stocks tumble as WTI crude falls to 6-month lows, breaking $84 mark as fears over global recessions reignite and concerns grow over China’s falling demand partially caused by anti-epidemic measures. Stocks are looking to snap their 3-week losing streak and the Nasdaq its 7-day losing streak (longest in 7-years), but with aggressive rate hikes by central banks today, rising yields and a dollar, stock remain pressured. The Bank of Canada hiked interest rates by 75-bps to a 14-year high, as expected, and said the policy rate would need to go higher still given the fight against raging inflation. The central bank, in a regular rate decision, increased its policy rate to 3.25% from 2.5%. Rate hike comes ahead of ECB meeting tomorrow (50 or 75 hike expected). Earlier today the Bank of Chile raised rates by 100 bps to 10.75% (expectations were 75 bps). The US dollar extends gains vs. the Japanese yen to highest level since the late 1990’2, while Treasury yields remain elevated (but down on day) ahead of several Fed speakers today.
Economic Data
· July International Trade in Goods and Services showed a deficit of (-$70.7B) vs. (-$70.5B) consensus and -$80.9B prior (revised from -$79.6B). July exports were $259.3B, $0.5B more than in June. Imports were $329.9B, $9.7B less than in June. The July decrease in goods and services deficit reflected a decrease in the goods deficit of $8.2B to $91.1B and an increase in the services surplus of $2.1B to $20.4B.
Macro |
Up/Down |
Last |
|
||
WTI Crude |
-3.27 |
83.62 |
|||
Brent |
-3.59 |
89.24 |
|||
Gold |
3.20 |
1,716.00 |
|||
EUR/USD |
0.0014 |
0.9917 |
|||
JPY/USD |
1.97 |
144.76 |
|||
10-Year Note |
-0.038 |
3.30% |
|||
Sector Movers Today
· Retailers: Piper said preliminary checks for Labor Day weekend suggest sales of both Furniture and Mattresses were better than expected (TPX, SNBR, PRPL) – falling in a broad range of 0% to +15%. This is a stark contrast to Memorial Day weekend when expectations were high, and sales were roughly -10%; PTON said the U.S. consumer safety regulator’s staff intends to recommend the agency that civil monetary penalties should be imposed on Co over recall of treadmills last year; GIII lowered its FY23 guidance citing higher supply-chain costs and the effects of inflationary pressures as sees sales $3.15B, down from prior view $3.24B and net income between $182M-$187M vs. prior view $205M-$215M; ASO mixed Q2 as EPS beat ($2.30 vs. est. $2.08) but sales fell -6% y/y and miss ($1.69B vs. est. $1.71B) on slightly weaker margins
· Healthcare Services; CDMO strong quarter of bookings ($41M vs RBC $37M; +78% YoY) that helped contribute to the fourth consecutive increase in the company’s backlog, reaffirmed FY23 revenue guidance of $140-145M (consensus $143M); HQY FQ2 revenue and EBITDA were 1% and 4% above consensus, respectively; mgmt also raised its FY guidance for both by ~1% driven primarily by higher expected custodial yields; UNH and WMT announce a 10-year healthcare collaboration to deliver high-quality, affordable health services focused on improving health outcomes and patient experience. The collaboration is set to begin with 15 Walmart health locations in FL and GA in 2023
· Transports; UAL raised its Q3 revenue growth outlook, citing continued “strong” demand exiting a “robust” summer; now expects revenue to be about 12% above the same period in pre-pandemic 2019, compared with previous growth guidance of about 11%; sees capacity to be down 10% to 11%, compared with previous expectations of down about 11%; ODFL reported Aug revenue per day increased 14.5% y/y due to an increase in LTL revenue per hundredweight that was slightly offset by a 0.9% decrease in LTL tons per day; AAL CEO says we continue to see revenue and expense and margins tracking as we expected
· Bitcoin news; SBNY released a mid-quarter update outlining current trends for 3Q22 noting spot deposits have declined by $1.64 billion driven by outflows in digital asset banking totaling $4.27 billion – but core business deposits excluding the digital asset banking team have increased by $2.64 billion 3QTD; MARA said produced 184 Bitcoin in August and total bitcoin holdings increased to 10,311 BTC with a fair market value of $206.7 mln as of August 31; RIOT said in August 2022, Riot produced 374 Bitcoin, a decrease of approximately 15% as compared to August 2021 production of 441 Bitcoin; as of August 31, 2022, riot held approximately 6,720 BTC, all produced by company’s self-mining operations
Stock GAINERS
· ASO +11%; mixed Q2 as EPS beat ($2.30 vs. est. $2.08) but sales fell -6% y/y and miss ($1.69B vs. est. $1.71B) on slightly weaker margins
· COUP +13%; after results as Q2 results beat – EPS $0.20/$211.1M vs. est. $0.09/$204.02M and guides both Q3 and year above views (sees year revs $838M-$944M vs. est. $840M)
· GKOS +17%; announces positive topline outcomes for both phase 3 pivotal trials of iDose TR, achieving primary efficacy endpoints and demonstrating favorable tolerability and safety profiles
· NFLX +1%; upgrade from Underperform to Neutral w/ $230 PT up from $170 at Macquarie as estimate Netflix can generate as much as $3.6B in ad revenue in UCAN in 2025
· PINS +5%; upgraded to Outperform and $28 tgt at Wolfe and Guggenheim said August global Pinterest Ads Manager shows a m/m increase in audience reach while Apptopia third-party app download data reflects a strong trailing 90-day trend
· SNBR +8%; after better Labor Day mattress sales (TPX also higher) – Piper said preliminary checks for Labor Day weekend suggest sales of both Furniture and Mattresses were better than expected and Wedbush said bricks-and-mortar industry sales were flat to up low-single-digits for late-August through Labor Day, a significant improvement from the Independence Day selling period
Stock LAGGARDS
· GIII -5%; lowered its FY23 guidance citing higher supply-chain costs and the effects of inflationary pressures as sees sales $3.15B, down from prior view $3.24B and net income between $182M-$187M vs. prior view $205M-$215M
· GWRE -2%; delivered a mixed F4Q with a solid topline beat offset by muted guide + commentary on softened demand
· NWL -1%; cuts FY22 EPS view to $1.56-$1.70 from $1.79-$1.86 (est. $1.84) and cuts FY22 revenue view to $9.37B-$9.58B from $9.76B-$9.98B (est. $9.90B) saying experienced a significantly greater than expected pullback in retailer orders
· OXY -3%; weakness in energy sector (APA, MRO, CVX, FANG) as oil hits 6-month lows
· PATH -16%; after $2M ARR beat was its smallest beat in six quarters as a public company. ARR of $1.04B grew 44% Y/Y (+45% in constant currency), provided disappointing guidance on full-year metrics, attributed to increasing FX headwinds, the macro environment, and repositioning
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.