Early Look

Monday, April 26, 2021

Stock futures are pointing to early losses (albeit modest), edging lower ahead of the busiest week of earnings season, with over 30% of the S&P 500 expected to report this week alone (over 180 names). Stocks are coming off small losses the week prior as the S&P fell 0.13%, the Dow lost 0.46%, and the Nasdaq shed 0.25%, though major averages closed in strong fashion, rebounding Friday as Wall Street reassessed concerns arising from news that the White House could seek a hike to the capital gains tax. Dow Transports moved into record closing territory as Bespoke noted that in the last 120+ years, the index has never had a longer weekly winning streak than the current streak of 12. On Friday, the S&P 500 index snapped a four-week winning streak though The Nasdaq missed out on a fourth-straight weekly gain. Fear of higher cap gains taxes from the Biden Administration, which sank stocks the early part of the week, ended up being short-lived. The indexes bounced back from the selling yesterday that was sparked by the White House plan to more than double the rate. In Asian markets, The Nikkei Index rose 105 points to settle at 29,126, the Shanghai Index fell -33 points to 3,441, and the Hang Seng Index dropped -125 points to 28,952. In Europe, the German DAX is down over -20 points to 15,250, while the FTSE 100 slipped a few points to 6,930. Bitcoin prices grabbing attention overnight, rebounding to current highs around $53,400, up over 5.5%, but more impressively surging off its overnight lows of around $47,000. Tesla will kick off the action this afternoon, while Big Tech will make headlines the rest of the week, with results from Amazon, Alphabet, Apple and Microsoft. Investors will also be gauging economic reopening plays, such as Boeing, Caterpillar and Ford, which are expected to detail price pressures from rising materials and transportation costs.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 45.19 points, or 1.09%, to 4,180.17

·     The Dow Jones Industrial Average rose 227.59 points, or 0.67%, to 34,043.49

·     The Nasdaq Composite spiked 198.39 points, or 1.44%, to 14,016.81

·     The Russell 2000 Index advanced 39.24 points, or 1.76% to 2,271.86

Events Calendar for Today

·     8:30 AM EST      Durable Goods Orders MoM for March

·     8:30 AM EST      Durable Goods Orders Ex: Transports for March

·     11:00 AM EST    U.S. to sell $60 bln 2-year notes

·     1:00 PM EST       U.S. to sell $61 bln 5-year notes

Earnings Calendar:

·     Earnings Before the Open: ACI, ARLP, BCLI, BOH, CBU, DORM, LII, LFKN, OTIS

·     Earnings After the Close: AGNC, AMKR, AMP, ARE, AXTA, BRO, CATY, CDNS, FBK, HLX, HMST, HSII, HSTM, HTLF, IBTX, JBT, JJSF, KREF, MASI, MEDP, MKSI, OMF, PCH, PKG, RRC, SBAC, SSD, SSNC, TBI, TNET, TSLA, UHS

World News

·     German April IFO Biz Climate: 96.8 vs 97.8 consensus; German April IFO Current Assessment: 94.1 vs 94.4 consensus; German April IFO Expectations: 99.5 vs 101.3 consensus

·     Bitcoin jumped over 5% $53,350, down sharply from its recent $64,829 record earlier this month, largely on the back of enthusiasm for the direct listing of Coinbase Global (COIN), but well off the overnight lows around $47,000 in a massive snap back on massive volatility

Sector News Breakdown

Consumer

·     Conagra Brands (CAG), Hershey (HSY), Mondelez (MDLZ) mentioned positively in Barron’s saying the demand for packaged foods, a lockdown staple, could stick around longer than many on Wall Street expect, as these three stocks offer bond-like yields and the potential for more growth

·     Delta (DAL) said it expects to receive $3.1 billion in payroll support payments after it entered a payroll support program agreement with the U.S. Treasury.

Energy, Industrials and Materials

·      Kansas City Southern (KSU) said that its Board of Directors has unanimously determined, that the unsolicited proposal received from Canadian National Railway (CNI) to acquire KCS in a cash and stock transaction valued by CN at $325 per KCS share could reasonably be expected to lead to a “Company Superior Proposal” as vs. that of Canadian Pacific Railway (CP)

·     XPO Logistics’ (XPO) division GXO Logistics is set to be spun off during the second half of 2021, as the company hopes to unlock value in its shipping business while creating new value with GXO as play on the trend toward outsourced logistics, Barron’s noted. If all goes as planned, both stocks could be worth more alone than they are together-and both are worth owning into the split

·     Cleveland-Cliffs (CLF) downgraded to Sector Weight from overweight on valuation at KeyBanc

·     Otis Worldwide (OTIS) Q1 adj EPS 72c vs. est. 63c; Q1 revenue $3.41B vs. est. $3.18B; Q1 new equipment orders up 18.4% with backlog up 8%; raises FY21 adj EPS view to $2.78-$2.84 from $2.67-$2.77 (est. $2.74) and raises FY21 revenue view to $13.6B-$13.9B from $13.3B-$13.6B (est.) and guides FY21 organic sales up 4%-5%

·     NextEra Energy (NEE) said it wasn’t able to collect $180 million in revenue following the Texas energy crisis that left the state’s power market, and many of its power providers, in financial distress

Healthcare

·     Johnson & Johnson (JNJ) shares rose after the bell Friday after the FDA announced that following a safety review, the agency and the Centers for Disease Control and Prevention have determined that the recommended pause regarding the use of its Covid-19 vaccine in the U.S. should be lifted and use of the vaccine should resume.

·     Axsome Therapeutics Inc. (AXSM) said the FDA granted priority review to AXS-05 for the treatment of major depressive disorder. AXSM said its new drug application is supported by a pair of studies that showed statistically significant improvements in depressive symptoms with AXS-05 compared to placebo and active controls.

·     Sanofi (SNY) announces positive topline results from Phase 3 MELODY trial showing nirsevimab reduced lower respiratory tract infections requiring medical attention due to respiratory syncytial virus (RSV) in healthy preterm and term infants.

·     TG Therapeutics (TGTX) expanded a large-scale contract manufacturing deal for the supply of latter’s ublituximab, an investigational anti-CD20 monoclonal antibody.

·     Moderna (MRNA) positive mention in Barron’s noting the company has become perhaps the best-known biotech in the world over the past four months with its COVID-19 vaccine administered but says investors don’t seem to know what to make of it anymore, and the stock is stuck in a spin cycle. Barron’s notes it has the cash and the messenger RNA platform to drive years of strong growth, and its stock is inexpensive

·     Perrigo (PRGO) mentioned favorably in Barron’s saying the Dublin-based drug company, with a $5.6 billion market cap, could rise 20% or more as it returns to a pure-play consumer-health company and puts behind its tax-litigation issues

Technology, Media & Telecom

·     Check Point (CHKP) Q1 EPS $1.54 vs. est. $1.50; Q1 revenue $507.6M vs. est. $502.36M.

·     ViacomCBS (VIAC) upgraded to Neutral from Sell at MoffettNathanson

·     Alphabet (GOOGL) said it will create a bonus program for senior executives that’s partly based on their performance in supporting environmental, social and governance goals

·     Cord-cutting is set to get even worse for legacy pay TV providers this year and next, according to a report from S&P Global. Legacy MVPDs (cable, satellite and telco) are set to lose 8.2% of their subscribers, up from losing 7.9% in 2019 – and are set to shed another 10.3% in 2022

·     Netflix (NFLX) could become a surprising reopening play, according to Barron’s saying many of its popular series and blockbuster films will return in the second half, after slowdowns in production; the company still has big potential in international markets, and churn declined in the March quarter