Early Look

Wednesday, August 17, 2022

Futures	Up/Down	%	Last
Dow	-184.00	0.54%	33,934
S&P 500	-31.25	0.73%	4,276
Nasdaq	-114.50	0.84%	13,544

 

 

U.S. futures are looking lower, with the S&P down -0.7% below 4,280, pulling back slightly after briefly touching and topping its 200-day MA resistance around 4,325 yesterday. Shares of Lowe’s (LOW) and Target (TGT) are mixed following quarterly results with LOW rising on an EPS beat and reaffirmed guidance (sales missed views), and TGT slips after an EPS miss and cautious comments for its FY outlook. Oil rebounds from six-month low as traders weigh Iran supply. Despite a choppy overall session, the Dow recorded its fifth consecutive day of gains on Tuesday, thanks to strong earnings from retail bellwethers Walmart and Home Depot. The Nasdaq lagged amid a lackluster session for technology, eventually finishing the session with a mild loss. Big economic data today with July Retail Sales at 8:30 AM, expected to rise +0.1% in July while markets also await commentary from the July FOMC policy meeting where they raised rates by 75-bps. Yesterday, data showed Housing Starts fell 9.6% in July to 1.44M, lower than the anticipated 1.54M. July Building Permits gained 1.67M versus the expected 1.65M. In Asian markets, The Nikkei Index jumped 353 points to 29,222, the Shanghai Index gained 14 points to 3,292, and the Hang Seng Index rose 91 points to 19,922. In Europe, the German DAX is down -130 points to 13,780, while the FTSE 100 falls -30 points to 7,506.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 8.06 points, or 0.19%, to 4,305.20

·     The Dow Jones Industrial Average rose 239.57 points, or 0.71%, to 34,152.01

·     The Nasdaq Composite slipped -25.50 points, or 0.19%, to 13,102.55

·     The Russell 2000 Index dipped -0.82 points, or 0.04% to 2,020.53

 

Economic Calendar for Today

·     7:00 AM ET          MBA Mortgage Applications Data

·     8:30 AM ET          Retail Sales M/M for July…est. +0.1%

·     8:30 AM ET          Retail Sales Ex: Autos M/M for July…est. (-0.1%)

·     10:00 AM ET        Business Inventories M/M for June…est. +1.4%

·     10:30 AM ET        Weekly DOE Inventory Data

·     1:00 PM ET           U.S. to sell $14B in 20-year notes

·     2:00 PM ET           Fed Minutes from July FOMC Meeting

 

Earnings Calendar:

·     Earnings Before the Open: ADI CRWS DNUT LOW PFGC PLCE TGT TJX

·     Earnings After the Close: BBWI CRMT CSCO KEYS SNPS WOLF

 

Other Key Events:

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

·     Needham FinTech & Digital Transformation Conference (virtual), 8/17-8/18

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

 

 

Macro	Up/Down	Last
Nymex	-0.08	86.45
Brent	0.35	92.69
Gold	-3.50	1,786.20
EUR/USD	-0.0003	1.0167
JPY/USD	0.67	134.88
10-Year Note	+0.042	2.866%

 

 

World News

·     Rep. Liz Cheney (R-Wyo.) became the highest-profile House Republican to lose their primary to a Trump-endorsed challenger after voting to impeach the former president. The race was called for Harriet Hageman – an attorney, former Republican National Committee member and 2018 gubernatorial candidate

·     Cheney is the fourth impeachment Republican to lose renomination, on top of four others who are retiring. Reps. Tom Rice (R-S.C.), Peter Meijer (R-Mich.) and Jaime Herrera Beutler (R-Wash.) all lost to Trump-backed insurgents

·     British consumer price inflation jumped to 10.1% in July, its highest since February 1982, up from an annual rate of 9.4% in June, intensifying the squeeze on households, official figures showed on Wednesday.

 

Sector News Breakdown

Consumer

·     Target Corp. (TGT) Q2 adj EPS $0.39 misses the $0.72 estimate; Q2 sales rose 3.5% to $26.04B, in-line with consensus estimates; ​Q2 comparable sales grew 2.6% vs. est. 2.8%; Q2 digital comparable sales grew 9%; qtrly store comparable sales increased 1.3%; said inventory actions put significant pressure on near-term profitability; said ​planning cautiously for remainder of year; said ‍​current trends support prior guidance for FY rev growth in low- to mid-single digit and operating margin rate around 6% in back half of year

·     Lowe’s (LOW) Q2 EPS $4.67 tops consensus $4.59 but Q2 revenue of $27.48B misses consensus $28.12B; Q2 comparable sales decreased (-0.3%) and comp sales for the U.S. home improvement business increased 0.2%; backs FY22 EPS view $13.10-$13.60 vs. est. $13.39; backs FY22 revenue view $97B-$99B vs. est. $97.54B and sees FY22 comparable sales down 1% to up 1%

·     Lulu’s Fashion (LVLU) Q2 EPS $0.15 vs. est. $0.16; Q2 revs $131.51M, in-line with ests; Q2 active customers of 3.2M, a 52.6% increase y/y and average order values, or AOV, was $137, an increase of 13.2% y/y reaffirming year revs $440M-$480M and Ebitda %$35M-$45M

·     Jack Henry & Associates (JKHY) sees 2023 EPS of $5.05-5.09, missing the Wall Street estimate of $5.30 and guides revs $2,080B-$2,08b compared with the consensus of $2.08b; lower guidance follows a top on the top and bottom line

·     Manchester United (MANU) shares rise after tweeted that he was buying Manchester United. Four-and-a-half hours later he said that he was joking. “Also, I’m buying Manchester United ur welcome,” Musk replied in a thread. “No, this is a long-running joke on Twitter. I’m not buying any sports teams,” he replied later. “Although, if it were any team, it would be Man U. They were my fav team as a kid.” https://bit.ly/3A2vo8f

 

Energy, Industrials and Materials

·     Bloom Energy (BE) 13M share Secondary priced at $26.00

·     Boeing Co (BA) and Northrop Grumman (NOC) are joining a White House-backed compact to help smaller U.S.-based suppliers increase the use of 3D printing and other advanced manufacturing technologies. The program seeks to boost suppliers’ use of additive manufacturing

·     Hill International Inc. (HIL) rises over 60% after saying it has agreed to be bought by privately held construction manager Global Infrastructure Solutions Inc. for $173 million.

·     Sandstorm Gold (SAND) upgraded to Outperform from Market Perform at BMO Capital

·     Stanley Black & Decker (SWK) downgraded to Hold from Buy at Deutsche Bank

 

Healthcare

·     Sanofi (SNY) stopped further work on its breast cancer drug amcenestrant, after a second trial failure dealt a major blow

·     Agilent (A) Q3 adj EPS $1.34 vs. est. $1.21; Q3 revs rose 13% to $1.72B vs. est. $1.64B; raised full year revs to be in the range of $6.75B-$6.775B, representing reported growth of 6.8% to 7.2% and core growth of 9.9% to 10.3% from prior $6.67B-$6.73B and EPS to $5.06-$5.08 from prior view $4.86-$4.93 (est. $4.76) and guides Q4 above views

·     I-Mab (IMAB) said its U.S. partner AbbVie (ABBV) would discontinue a phase 1b study evaluating a combination treatment including its anti-CD47 antibody therapy lemzoparlimab for two types of cancers.

·     Endo International (ENDP) has filed for Chapter 11 bankruptcy in New York as part of a restructuring support agreement with the pharma company’s first lien debt holders. The debtholder group has agreed to provide purchase consideration of ~$6B through a credit bid, as well as assuming some liabilities, for nearly all of Endo’s assets.

·     Option Care Health (OPCH) 11M share Spot Secondary priced at $33.25; OPCH had announced that an affiliate of Walgreens Boots Alliance (WBA) has agreed to sell 11M shares of the Company’s common stock in an underwritten secondary offering

·     Invacare (IVC) files to sell 32.4M common shares for holders

·     Oak Street Health (OSH) 7M share Spot Secondary priced at $25.75

·     Unity Biotechnology (UBX) files to sell $25M in common stock

·     Viridian Therapeutics (VRDN) 9.628M share Secondary priced at $23.50

 

Technology, Media & Telecom

·     Apple Inc. (AAPL) upgraded to Outperform from Neutral at Credit Suisse (resumption of coverage) with street high $201 tgt (assumed coverage of total 20- tech companies)

·     Take-Two (TTWO) downgraded to Hold from Buy at Deutsche Bank