Early Look

Monday, August 3, 2020

Futures	Up/Down	%	Last
DJ Industrials	76.00	0.29%	26,395
S&P 500	14.50	0.44%	3,278
Nasdaq	95.50	0.87%	10,985

 

 

U.S. stock futures are trending higher, along with gains overseas helped by PMI data, while U.S. lawmakers reported progress on a new stimulus package over the weekend but gaps remained between Democrats and Republicans, failing to come to an official deal again. The U.S. economics calendar includes the ISM’s manufacturing index and a number of nonvoting Federal Reserve officials speaking. In Asian markets, The Nikkei Index rose 485 points to 22,195, the Shanghai Index gained 57 points to close at 3,367 and the Hang Seng Index fell -137 points to 24,458. In Europe, the German DAX is jumping over 175 points to trade just below the 12,500 level, while the FTSE 100 is up a few points above the 5,900 level. European stocks turned higher on Monday after early losses, as improving data on the economy helped offset disappointing results from HSBC Holdings and Société Générale. Markets in the U.S. brace for another busy week of earnings results as well. As for last week, the S&P unofficially rose 1.73%, the Dow lost 0.15% (despite the 10% jump on Friday from component AAPL), and the Nasdaq Composite gained 3.69%.For the month of July, the S&P 500 rose 5.52%, the Dow added 2.39%, and the Nasdaq Comp gained 6.83%. A weakening U.S. dollar also pushed money into stocks as the CFTC noted on Friday that U.S. dollar net short bets surge to largest since august 2011. Late Friday after the close, the United States had the outlook on its debt rating revised to negative from stable by Fitch, which cited the ongoing deterioration in public finances and the absence of a credible fiscal consolidation plan, but affirmed its foreign currency debt rating at AAA.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 24.90 points, or 0.77%, to 3,271.12

·     The Dow Jones Industrial Average rose 114.67 points, or 0.44%, to 26,428.32

·     The Nasdaq Composite jumped 157.46 points, or 1.49%, to 10,745.27

·     The Russell 2000 Index declined -14.67 points, or 0.98% to 1,480.43

 

Economic Calendar for Today

·     9:45 AM EST      Markit US Manufacturing PMI, July-F…est. 51.3

·     10:00 AM EST    ISM Manufacturing Index for July…est. 53.5

·     10:00 AM EST    Construction Spending for June…est. 1.0%

·     N/A                       Monthly auto sales data released for July

 

Earnings Calendar:

·     Earnings Before the Open: CLI, CMS, CNA, EME, GPN, JUD, J, KOS, L, MCK, MCY, MPC, MPLX, NBL, NBLX, RMBS, TKR

·     Earnings After the Close: AIG, AIV, APPF, AWR, BKH, BRKR, BSM, CDEV, CHGG, CLR, CRUS, CVI, CW, CWST, DLB, ESS, FANG, FIVN, H, HLIT, HPR, INVH, IPI, IR, ITRI, KLAC, LEG, MOS, NBIX, NCMI, O, REG, RNG, RRC, SALT, SBAC, SPCE, THC, TREX, TTWO, TXRH, VECO, VNO, VNOM, VRNS, VVV, WMB, YRCW

 

 

Macro	Up/Down	Last
WTI Crude	-0.40	39.87
Brent	-0.29	43.23
Gold	1.40	1,987.30
EUR/USD	-0.0052	1.1726
JPY/USD	-0.03	105.80
10-Year Note	+0.019	0.547%

 

 

World News

·     French PMI manufacturing data increased to 52.4 from 52.3 in June.

·     German manufacturing PMI jumped back into expansion zone to 51.0 in July, from 45.2 in June.

·     Five stocks — Microsoft, Apple, Amazon, Facebook and Google — now account for 21.65% of the S&P 500. During the tech bubble, the top 5 stocks in the S&P 500 only reached 18% of the index

 

Sector News Breakdown

Consumer

·     ADT Corp. (ADT) shares surge 46%; after entering into a long-term partnership with Google (GOOGL) to create the next generation of smart home security offerings; ADT, GOOG will commit an additional $150M for co-marketing, product development, technology and employee training to advance the partnership; GOOGL will make a $450M investment in ADT in exchange for shares of a newly created Class B common stock

·     Clorox (CLX) Q4 EPS $2.41 vs. est. $1.99; sees flat to low single-digit increase in FY21 sales; says Linda Rendle promoted to CEO; Q4 sales $1.98B vs. est. $1.87B

·     Floor & Decor (FND) upgraded to Buy from Neutral at Bank America

·     NIO Inc. (NIO) provided its July 2020 delivery results. NIO Inc. said in a release, “NIO delivered 3,533 vehicles in July 2020, representing a robust 322.1% growth year-over-year

·     Under Armour (UAA) upgraded to Neutral from Negative at Susquehanna

·     Car dealerships AutoNation (AN), Group 1 Automotive (GPI) and CarMax (KMX) offer a compelling play on a recovery, according to Barron’s saying while digital dealers are growing faster, AutoNation and CarMax have advantages with their used-car pipelines. Group 1’s four-day work week for technicians could help reduce turnover and lead to parts and services growth.

·     Barron’s said while consumers are less interested in apparel or jewelry, money managers see increased demand for higher-end cosmetics and skin care. That could benefit Estée Lauder (EL), LVMH (MC FP) and Kering (KER FP).

·     Lord & Taylor and its owner, clothing rental startup Le Tote Inc., have filed for Chapter 11 bankruptcy protection

 

Energy

·     Marathon Petroleum Corp. (MPC) said it has agreed to sell its gas stations to the owners of the 7-Eleven convenience store chain for $21 billion in the largest U.S. energy deal of the year.

·     Globus Maritime (GLOB) files $300M mixed securities shelf

·     Kosmos (KOS) Q2 adj EPS loss (23c) on revs $127M vs. est. loss (33c)/$165.48M; reports Q2 production 60,100 boepd with sales of 67,100 boepd

·     SolarEdge (SEDG) downgraded to Market Perform from Outperform at JMP Securities

 

Financials

·     Capital One Financial (COF) cuts quarterly dividend to 10c from 40c

·     Cboe Global Markets (CBOE) Q2 adjusted EPS $1.31/$296.9M vs. est. $1.24/$298.4M; said achieved record trading volumes in U.S. cash equities and multi-listed options, fueled by growth in retail trading activity

·     CNA Financial (CNA) Q2 Core EPS 36c in line with estimates and reports Q2 book value per share $42.91.

·     HSBC Holdings (HSBC) Q2 GAAP EPS of $0.01; Adj. revenue of $13.15B (-3.8% Y/Y) beats by $550M; net interest income of $6.9B down 9% on Q1 rate cuts. NIM of 1.33% down 21 bps; non-interest income of$6.3B reflecting strong trading revenue in GBM and positive market impacts in insurance manufacturing.

 

Healthcare

·     Siemens Healthineers, a spinoff in 2018 of Siemen’s AG (SIEGY), said it was buying Varian Medical Systems Inc (VAR) for $16.4B; Siemens, which will retain control over Healthineers, will provide bridge financing for the deal; VAR holders will receive $177.50 each in cash, representing a 24% premium to the U.S. company’s closing price on Friday https://on.mktw.net/33iI7op

·     Merck (MRK) upgraded to Buy from Neutral at Goldman Sachs and raise tgt to $105 from $91

·     U.S. online prescription drug price marketplace GoodRx Inc. has submitted paperwork with the U.S. SEC for a potential initial public offering, according to Reuters; GoodRx, which was valued at $2.8 billion in 2018 when private equity firm Silver Lake invested in the company, is in the process of hiring advisers for the IPO, the sources said

·     Tiziana Life Sciences (TLSA) 11M share Secondary priced at $5.20

·     MorphoSys and Incyte (INCY) said the U.S. FDA approved Monjuvi in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma not otherwise specified.

·     Blueprint Medicines (BPMC) files for prospectus supplement relating to $250M of common stock

 

Industrials & Materials

·     Archer-Daniels-Midland (ADM) files mixed-securities shelf

·     Boise Cascade (BCC) Q2 EPS 85c on sales $1.2B vs. est. 54c and $1.18B

 

Technology, Media & Telecom

·     Proofpoint (PFPT) Q2 EPS 51c/$258.4M vs. est. 39c/$253.3M; total billings for Q2 were $250M, an increase of 8% from last year; sees Q3 EPS 37c-40c on revs $260M-$262M vs. est. 34c/$252.8M; sees 2020 EPS $1.64-$1.70 on revs $1.035B-$1.037B vs. est. $1.49/$1.02B; free cash flow is expected to be in the range of $130.0M-$140M

·     Bilibili (BILI) has joined forces with Riot Games, the developer of leading MOBA League of Legends, among others, for three-year exclusive license for live broadcasting the League of Legend Esports global events

·     President Trump said late Friday he preferred a ban of TikTok from the U.S. rather than a sale, catching both ByteDance and Microsoft (MSFT) off-guard, the WSJ reported. For now, deal talks are dead, reports the Journal.

·     Major League Baseball which started more than 100 days later drew more than twice the viewers than a year ago in an opening weekend (July 23-26). Walt Disney (DIS) ESPN said the first 12 games it aired through late Thursday averaged 1.16M viewers, up 34% Y/Y. Fox Sports (FOX) also saw a double-digit rise in ratings

·     Panasonic intends to start supplying higher-capacity batteries for Tesla’s (TSLA) Model 3 electric vehicles in September in an effort to keep an important customer close, as per Nikkei Asian Review