Early Look

Tuesday, August 16, 2022

Futures	Up/Down	%	Last
Dow	-72.00	0.21%	33,801
S&P 500	-9.25	0.23%	4,288
Nasdaq	-28.50	0.21%	13,652

 

 

It was a quiet night for U.S. futures, with the S&P trading in a narrow 15-point range, down slightly now after bumping up against and holding just below the 4,300 on the S&P, but within striking distance of the 4,325 key 200-day moving average resistance. The Russell 2000 index has recently topped its 200-day MA technical level following a massive move for stocks over the last 6-weeks, cutting YTD losses across major averages on hopes inflation has peaked and that the Fed will ease its rate hike increases over the next few months. Earnings this morning for Dow component Home Depot (HD) comes in above consensus with investors awaiting results from retailing powerhouse Wal-Mart (WMT) shortly today as well. In Asian markets, The Nikkei Index was little changed, down -2 points to 28,868, the Shanghai Index was up one-point to 3,277, and the Hang Seng Index fell -210 points to 19,830. In Europe, the German DAX is up 75 points to 13,891, while the FTSE 100 rises about 40-points to 7,550. More housing data arrives before the bell with July start and permits. Economists look for housing starts to have dipped to an annual rate of 1.54M, with permits slipping to 1.65M. Several stocks moving this morning after 13F investment filings were released yesterday, showing what some of the biggest investors on Wall Street added, sold, raised, or lowered stakes in.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 16.99 points, or 0.40%, to 4,297.14

·     The Dow Jones Industrial Average rose 151.39 points, or 0.45%, to 33,912.44

·     The Nasdaq Composite jumped 80.87 points, or 0.62%, to 13,128.05

·     The Russell 2000 Index advanced 4.73 points, or 0.23% to 2,021.35

 

Economic Calendar for Today

·     7:45 AM ET         ICSC Weekly Retail Sales

·     8:30 AM ET         Housing Starts M/M for July…est. 1.54M

·     8:30 AM ET         Building Permits M/M for July…est. 1.65M

·     8:55 AM ET         Johnson/Redbook Weekly Sales

·     9:15 AM ET         Industrial Production M/M for July…est. +0.3%

·     9:15 AM ET         Capacity utilization for July…est. 80.1%

·     4:30 PM ET         API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ECC HD LFG LITE PINC WMT WTER

·     Earnings After the Close: A JKHY LVLU PET

 

Other Key Events:

·     Deutsche Bank 2022 Transportation Conference 8/16-8/17, in NY

·     Needham Med Tech & Diagnostics 1:1 Conference (virtual), 8/15-8/16

·     Stifel 2022 Biotech Summer Summit, 8/15-8/17 in Newport, RI

 

 

Macro	Up/Down	Last
Nymex	-0.82	88.59
Brent	-0.94	94.16
Gold	-8.70	1,789.50
EUR/USD	-0.0031	1.0129
JPY/USD	0.81	134.13
10-Year Note	+0.002	2.867%

 

 

World News

·     Berkshire Hathaway raises share stake in Ally Financial (ALLY) to 30 mln shares from 8.97 mln shares; raises share stake in Celanese Corp (CE) by 16.2% to 9.2 mln shares and cuts share stake in General Motors Co (GM) by 14.8% to 52.9 mln shares; exits Verizon (VZ); added to stakes in Apple (AAPL), Chevron (CVX) and Activision (ATVI) – as per 13F filing

·     RBA Minutes: The RBA board expect to take further steps in the process of normalizing monetary conditions over the months ahead but aren’t on a pre-set path; members noted they expect inflation to peak in late 2022; f/c inflation will fall back to the 2-3% tgt range by the end of 2024

·     German investor sentiment fell slightly in August on concerns the rising cost of living will hit private consumption. The ZEW economic research institute said its economic sentiment index fell to -55.3 points from -53.8 in July. A Reuters poll had pointed to an August reading of -53.8.

 

Sector News Breakdown

Consumer

·     Home Depot (HD) Q2 GAAP EPS of $5.05 vs. est. $4.95; Q2 revs rose 6.5% y/y to $43.79B vs. est. $43.36B; Q2 comparable sales increased 5.8% and comparable sales in the U.S. increased 5.4%; reaffirms FY2022 Guidance of total sales growth and comparable sales growth of approximately 3%; Operating margin of approximately 15.4%; Net interest expense of approximately $1.6B; and EPS growth to be mid-single digits.

·     ThredUp (TDUP) Q2 EPS loss (-$0.29) vs. est. loss (-$0.23); Q2 revs rose 27% y/y to $76.4M in-line with consensus; sees Q3 revenue $64M-$66M below consensus $82.43M and guides year revs $283M-$287M vs. est. $319M; Active Buyers of 1.7 million and Orders of 1.7 million in Q2 2022, representing growth of 29% and 40% year-over-year, respectively

·     GAN Ltd (GAN) Q2 EPS loss (-$0.91) vs. est. loss (-$0.13); Q2 revs $34.9M vs. est. $36.47M; sees year revs $142.5M-$152.5M

·     F45 Training (FXLV) Q2 EPS loss (-$0.36) vs. est. $0.14; Q2 revs rose 12% y/y to $30.0M vs. est. $48.5M; said generated same store sales growth of 6% as well as record system-wide sales of $127.1M, representing y/y growth of 23%; reaffirms year EPS

·     The Bill and Melinda Gates Foundation reported new stakes in automotive retailers Vroom (VRM) and Carvana (CVNA) and increased its holdings in Madison Square Garden Sports Corp. (MSGS) during Q2 2022, according to its 13F filing.

 

Energy, Industrials and Materials

·     Saudi Arabia’s sovereign-wealth fund has invested $7.5 billion in blue-chip American companies from Amazon.com Inc. (AMZN) to JPMorgan Chase & Co. (JPM), as the kingdom deploys windfall revenue from high oil prices to diversify its investments. The Public Investment Fund took on minority stakes across 17 companies, including Google parent Alphabet Inc., BlackRock Inc., and Microsoft Corp., in the three months ended June 30, according to U.S. securities filings. Each investment was worth $400 million to $500 million, the filings show.

·     Crane Inc. (CR) said it divested its Redco Corp. subsidiary to Spruce Lake Liability Management Holdco LLC. Crane said Spruce Lake, a long-term liability management company, will assume operational management of Redco, including the administration of all the asbestos claims and collection of existing insurance policy reimbursements.

·     Sunnova (NOVA) announces proposed private offering of $425 million of convertible senior

 

Financials

·     ZipRecruiter (ZIP) Q2 EPS $0.11 vs. est. $0.06; Q2 revs $239.9M vs. est. $234.81M; lowers FY22 revenue view to $883M-$897M from $908M-$922M (est. $914.56M) and sees FY22 adjusted EBITDA $163M-$167M

 

Healthcare

·     Ginkgo Bioworks (DNA) Q2 EPS loss (-$0.41) vs. est. loss (-$0.04); Q2 revs rose 231% y/y to $145M vs. est. $77.63M; raises FY22 revenue view to $425M-$440M from $375M-$390M (est. $383.21M) and now expects Biosecurity revenue in 2022 of at least $260M

·     GoHealth (GOCO) Q2 EPS loss (-$0.48) vs. est. loss (-$0.21); Q2 revs $158.7M vs. est. $130.21M; Q2 Adjusted EBITDA loss $31.7 million vs. profit $14.3 million y/y; suspends previously issued guidance for FY22

 

Technology, Media & Telecom

·     Compass Inc. (COMP) Q2 EPS loss (-0.24) vs. est. loss (-$0.14); Q2 revs $2.0B vs. est. $2.12B; sees FY22 revenue $6.15B-$6.45B vs. est. $7.59B; sees FY22 Adjusted EBITDA ($225M)-($150M); announces cost reduction program with approximately $320M in savings

·     Fabrinet (FN) Q4 adj EPS $1.68 vs. est. $1.54; Q4 revs $587.9M vs. est. $581.5M; guides Q1 adj EPS $1.72-$1.79 on revs $620M-$640M vs. est. $1.56 and $596.15M

·     Nerdy Inc. (NRDY) Q2 revenue $42.2M vs. est. $38.47M, exceeding the guidance range of $37-40 million, and up 29% as compared to Q2’21, driven by continued strength in the consumer 1-on-1 audiences and the addition of Nerdy’s institutional business, Varsity Tutors for Schools.

·     Snowflake (SNOW) downgraded to Neutral from Buy with $175 tgt

·     Reuters reported that Tencent Holdings (TCEHY) was planning to sell all or a bulk of its $24 billion stake in food delivery group Meituan. The report, citing four unnamed sources, said Tencent was selling to placate domestic regulators. China has been tightening regulation on the company’s technology sector in response to concerns over antitrust and privacy.

·     Zoom Video (ZM) downgraded to sell from neutral with $91 tgt at Citigroup saying it sees “new hurdles to sustaining growth,” including growing competition from services like Microsoft Teams and macro-related pressures hitting customers.