Early Look

Monday, August 1, 2022

Futures	Up/Down	%	Last
Dow	-25.00	0.08%	32,800
S&P 500	-9.25	0.22%	4,124
Nasdaq	-31.50	0.24%	12,939

 

 

U.S. futures are down slightly, little changed after massive gains last week, as investors brace for another heavy dose of corporate earnings, with roughly 1/3 of the S&P 500 index set to report this week. Stocks surged on Friday, capping a strong week (and month) as the S&P rose 4.26%, the Dow added 2.97%, the and the Nasdaq gained 4.70%. For the month, massive gains as the S&P rose 9.12% (best month since Nov 2020), the Dow added 6.73%, and the Nasdaq gained 12.35% (best month since April 2020). Strength in the all-important technology sector (AAPL, AMZN, MSFT, GOOGL all with good earnings last week), coupled with a more “dovish” Fed outlook (after raising interest rates by 75-bps last week) boosted stock sentiment. In Asian markets, The Nikkei Index rises 191 points to 27,993, the Shanghai Index edges higher +0.2% to 3,259, and the Hang Seng Index rises 9 points to 20,165. In Europe, the German DAX gains about 50-points to 13,534, while the FTSE 100 rises +0.4% to 7,453. Bitcoin prices drop over -3%, back near the $23K level and Ethereum -3% to $1,675. The Japanese yen advanced around 1% to 132 vs. the dollar, giving a boost to gold, while oil prices dip.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 57.86 points, or 1.42%, to 4,130.29

·     The Dow Jones Industrial Average rose 315.50 points, or 0.97%, to 32,845.13

·     The Nasdaq Composite surged 228.10 points, or 1.88%, to 12,390.69

·     The Russell 2000 Index advanced 12.20 points, or 0.65% to 1,885.23

 

Economic Calendar for Today

·     9:45 AM ET          S&P Global Manufacturing PMI for July

·     10:00 AM ET        Construction Spending for June…est. +0.2%

·     10:00 AM ET        ISM Manufacturing PMI for July…est. 52.0

 

Earnings Calendar:

·     Earnings Before the Open: AJRD ALX AMG ALP BBGI BLDR CNA GPN J JELD L LIND OLN RNGR

·     Earnings After the Close: ACT ADUS AFL AMKR AMRC ANET ATVI AWR BCC BRX BSM CACC CAR CF CLAR CNO CRK CSR, CVI DEI DVA EBS EHC EPR EQC EVER FANG GAIA GNW GOOD HLIT INST KFRC KMPR KMT LEG LSCC MATX MOS MPWR OGS OHI OTTR PINS PLOW RDN RHP RIG RMBS SANM SBAC SPG TA TMDX TTI TWI UAN UNVR VNO VNOM VRNS WMB WWD ZI

 

 

Macro	Up/Down	Last
Nymex	-1.53	97.09
Brent	-1.20	102.77
Gold	7.10	1,788.90
EUR/USD	0.0032	1.0250
JPY/USD	-1.18	132.01
10-Year Note	+0.019	2.661%

 

 

World News

·     President Joe Biden tested positive for Covid-19 for a second consecutive day as he continues to deal with a rebound case of the disease, indicating a rare instance of COVID rebound seen in those who took Pfizer (PFE) COVID-19 pill, Paxlovid

·     The Caixin/Markit manufacturing purchasing managers’ index (PMI) eased to 50.4 in July from 51.7 the previous month, well below analyst expectations, data showed on Monday.

·     Japanese manufacturing activity expanded at its weakest rate in 10 months in July, data showed on Monday; dipped to a seasonally adjusted 52.1 in July from the previous month’s 52.7 final which marked the slowest pace of growth since September and lower than a 52.2 flash reading.

·     Neel Kashkari said Friday the Federal Reserve is committed to doing what’s necessary to bring down demand to reach its 2% long-term inflation goal, a target that remains far off

·     House Speaker Pelosi didn’t include Taiwan in her official itinerary, announced today, for the delegation she is leading to Asia. The group plans to travel to Singapore, Malaysia, South Korea, and Japan – Axios

·     Saudi Arabia’s economy expanded 11.8% in the second quarter, maintaining the fastest pace of growth since 2011 buoyed by higher oil prices and production. Non-oil gross domestic product — the engine of job creation — gained 5.4% while the oil economy grew 23.1% compared to last year – Bloomberg

 

Sector News Breakdown

Consumer

·     NIO Inc. (NIO) reported deliveries rose in July from a year ago to mark a third-straight monthly increase; said July deliveries increased 26.7% to 10,052 vehicles – that comes after a 60.3% increase in July and a 4.7% rise in May

·     XPeng Inc. (XPEV) reported a 43% jump in July deliveries y/y to 11,524 vehicles

·     Li Auto Inc. (LI) reported July deliveries that grew 21.3% y/y to 10,422 vehicles

·     Norwegian Cruise Line (NCLH) announces extension of existing undrawn $1 billion commitment; said has not drawn and does not currently intend to draw under commitment

·     Opendoor (OPEN) shares mentioned positively in Barron’s saying the stock could double. At the current price, Opendoor is valued at around $3 billion, which isn’t much more than the cash on its balance sheet, or alternatively, its book value. By turning over its inventory of homes roughly once a quarter, the company has reliably produced a per-home profit of around 5%.

·     Jeld-Wen (JELD) Q2 adj EPS $0.57 vs. est. $0.64; Q2 revs $1.33B vs. est. $1.33B; cuts FY22 core revenue view to up 4%-6% from up 7%-10% and guides FY22 adjusted EBITDA $430M-$450M down from prior $520M-$565M view; sees FY22 capital expenditures $90M-$110M; approves $200M share buyback

·     Macau’s gaming bureau reported July gross revenue from games of fortune in the region was down 95.3% year-over-year to 398M patacas

·     Colgate-Palmolive (CL) upgraded to Equal Weight from Underweight at Wells Fargo

 

Energy

·     Oil prices dropped as weak manufacturing data from China and Japan weighed on the demand outlook while investors braced for this week’s meeting of officials from OPEC and other top crude producers on supply adjustments. Fresh COVID-19 lockdowns snuffed out a brief recovery for factory activity in China, the world’s largest crude oil importer. The Caixin/Markit manufacturing purchasing managers’ index (PMI) eased to 50.4 in July from 51.7 the previous month, well below analyst expectations, data showed on Monday.

·     AES Corp. (AES), Edison International (EIX), Entergy (ETR), Exelon (EXC), Fluence Energy (FLNC), and NextEra (NEE) among utilities named as safety names in Barron’s. While most companies have been busy slashing their profit estimates, as rising input prices and higher labor costs eat into margins, utilities have not

 

Financials

·     Loews Corp. (L) posted a drop in Q2 profit despite a rebound in the hotel business as market volatility weighed on the CNA Financial business; Q2 net income fell to $180M from $754M y/y (notes year-ago quarter included an after-tax gain of $438M); Q2 revs fell to $3.39B from $4B y/y

·     Blackstone Mortgage Trust Inc (BXMT) files for potential mixed shelf offering; size not disclosed

·     BlackRock (BLK) lost the largest amount of money lost by a single firm over a six-month period. In the first half of this year, it lost $1.7 trillion of clients’ money

·     HSBC Holdings Plc reported better-than-expected profits and plans to resume dividends next year

 

Healthcare

·     Moderna (MRNA) was awarded ~$1.74B firm-fixed-price contract for the purchase, storage, and distribution of COVID-19 vaccines.

·     PerkinElmer (PKI) Q2 adj EPS $2.32 vs. est. $2.02; Q2 revs $1.23B vs. est. $1.2B; raises FY22 adjusted EPS view to $7.80-$7.90 from $6.80-$7.00 (est. $7.33) and raises FY22 revenue view to $4.60B-$4.64B from $4.42B-$4.50B (est. $4.58B)

 

Industrials & Materials

·     Boeing (BA) shares rise after the Federal Aviation Administration (FAA) on Friday approved Boeing’s inspection and modification plan to resume deliveries of 787 Dreamliners, two people briefed on the matter told Reuters

·     Jacobs (J) Q3 adj EPS $1.86 vs. est. $1.81; Q3 revs $3.83B vs. est. $3.8B; Q3 backlog increased $2.7B to $28.1B, up 10.4% year-over-year and up 13% in constant currency.

·     3M Co. (MMM) mentioned cautiously in Barron’s saying the company may be taking steps to turn around its business, but the article warns investors to remain wary. It’s not clear that efforts to hive off its Aearo Technologies subsidiary and have it declare bankruptcy will stand up to legal scrutiny, while 3M also faces legal liabilities and cleanup costs

·     Valvoline (VVV) announces agreement for sale of global products business for $2.65 billion in cash; transaction will successfully complete separation of global products and retail services businesses transforming Valvoline into a pure-play automotive service provider with targeted 20%+ earnings per share (eps) growth

 

Technology, Media & Telecom

·     Ali Baba (BABA) share rise 2% after the company said it would work to maintain its New York Stock Exchange listing alongside its Hong Kong listing after the Chinese e-commerce giant was placed on a delisting watch list by U.S authorities

·     Comcast (CMCSA) and Charter Communications (CHTR) both downgraded at Barclays which said it sees the cable companies as likely past peak growth

·     Bumble (BMBL) downgraded to Hold from Buy at Jefferies but raise tgt to $39 from $30 saying while third part data checks show an acceleration in Q2 revenue and downloads for the Bumble App, still sees several reasons to be cautious at current levels

·     PubMatic (PUBM) and Taboola (TBLA) both cut to sector weight at KeyBanc as anticipates disparate 2Q results from the AdTech sector