Early Look

Tuesday, August 22, 2023

Futures	Up/Down	%	Last
Dow	77.00	0.22%	34,601
S&P 500	16.50	0.37%	4,429
Nasdaq	82.50	0.55%	15,068

 

 

US futures are trading higher, looking to extend gains as investors snapped up shares of technology stocks ahead of Federal Reserve Chair Jerome Powell’s highly anticipated speech in Jackson Hole later this week (speaks Friday along with ECB’s Lagarde). The Nasdaq ended its 4-day losing streak Monday, jumping over 1.5% as U.S. stocks bounce back after 3 straight weekly losses. US Treasury 2-year yields extend climb, peak through 5%, while the 10-yr tops out around 4.35% yesterday, highest since 2007 before dipping to 4.31% this morning. In earnings news, home improvement retailer LOW reported better Q2 EPS and comp sales and reaffirmed its yearly outlook. In financials, S&P Global on Monday cut credit ratings and revised its outlook for multiple U.S. banks, following a similar move by Moody’s, warning that funding risks and weaker profitability will likely test the sector’s credit strength.

In Asian markets, The Nikkei Index jumped 291 points to 31,856, the Shanghai Index gained 27 points to 3,120, and the Hang Seng Index rose 167 points to 17,791. In Europe, the German DAX is up 175 points or 1.1% to 15,778, while the FTSE 100 rises about 50 points to 7,307.

 

Market Closing Prices Yesterday

·     The S&P 500 Index advanced 30.06 points, or 0.69%, to 4,399.77.

·     The Dow Jones Industrial Average fell -36.97 points, or 0.11%, to 34,463.69.

·     The Nasdaq Composite surged 206.81 points, or 1.56%, to 13,497.59.

·     The Russell 2000 Index declined -3.41 points, or 0.18% to 1,856.01.

 

Economic Calendar for Today

·     7:45 AM ET             ICSC Weekly Retail Sales

·     8:55 AM ET             Johnson/Redbook Weekly Sales

·     10:00 AM ET           Existing Home Sales M/M for July…est. 4.15M

·     10:00 AM ET           Richmond Fed Manufacturing for August…prior (-9)

·     4:30 PM ET              API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: BIDU BJ COTY CTRN DKS LOW M PINC SCSC

·     Earnings After the Close: BMTX ELMD LZB TOL URBN

 

Other Key Events:

·     DA Davidson Western Bank Summit (virtual), 8/21-8/22

·     Mizuho U.S. Investor Tour, 8/22-8/23

·     Needham 4th Annual Semiconductor & Semi Cap Conference (virtual), 8/22-8/23

·     Rosenblatt Technology Summit (virtual) “The Age of AI”, 8/22-8/24

·     Seaport Global 12th Annual Summer Investor Conference (virtual), 8/22-8/23

 

 

Macro	Up/Down	Last
Nymex	-0.18	80.54
Brent	-0.40	84.06
Gold	7.90	1,930.90
EUR/USD	-0.0007	1.0884
JPY/USD	-0.50	145.66
10-Year Note	-0.034	4.308%

 

 

World News

·     North Korea said it will launch a satellite in the period from Aug. 24 to 31 into the Yellow Sea and East China Sea, NHK public television said, quoting the Japanese Coast Guard.

 

Sector News Breakdown

Consumer

·     Lowe’s (LOW) Q2 EPS $4.56 vs. est. $4.49; Q2 revs $24.96B vs. est. $24.99B; Q2 comparable sales decreased (-1.6%) vs. est. for drop of (-2.6%); called out a “strong spring recovery” and traction in its Pro and online businesses, though it said that lumber deflation and lower do-it-yourself discretionary demand weighed on comparable sales; reaffirmed year outlook.

·     BJ’s Wholesale (BJ) Q2 adjusted EPS $0.97 vs. est. $0.90; Q2 revs $4.96B vs. est. $5.15B; Q2 comparable club sales, excluding gasoline sales, increased by 1.1% y/y vs. est. 2.15%; sees year adj EPS $3.80 to $3.92, vs. est. $3.88; Q2 Membership fees $103.7M, +5% y/y.

·     Coty (COTY) Q4 adj EPS $0.01 vs. est. $0.02; Q4 revs $1.35B vs. est. $1.31B; posts continued gross and operating margin expansion; sees FY24 sales growth outlook at top of mid-term target range, coupled with margin expansion; continues to target leverage towards 3x exiting cy23 and 2.5x exiting cy24; says fully on track with medium term growth algorithm.

·     Motorsport Games (MSGM) said as of July 31, 2023, the company’s cash and cash equivalents has reduced further to $1.4M; said it does not believe it has sufficient cash on hand to fund its operations for remainder of fiscal year 2023; said is actively exploring several options, including, but not limited to strategic alternatives for its business, further cost reduction.

 

Energy, Industrials and Materials

·     Dragonfly Energy (DFLI) Q2 EPS ($0.25) vs est. ($0.19) on revs $19.3Mm vs est. $20.8Mm; adj EBITDA $(5.5)Mm vs est. $(5.17)Mm; guides Q3 net sales $16-20Mm vs est. $36.35Mm, gr mgn improve modestly sequentially, EPS $(0.27)-$(0.21) vs est. $(0.07).

·     Flexsteel Industries (FLXS) Q4 adj EPS $0.36 vs est. $0.35 on revs $105.8Mm vs est. $103.01Mm, gr mgn 20.0%.

·     Nordson Inc. (NDSN) Q3 EPS $2.22 vs est. $2.32 on sales $648.677Mm vs est. $665.65Mm; guides FY revs +0-2% vs est. +2.45% and EPS $8.90-9.05 vs est. $9.06.

·     PureCycle Technologies (PCT) files to sell $200M of Green Convertible Senior Notes.

·     Westport (WPRT) announced that David Johnson, CEO, has decided to step down as chief executive officer and will resign from the board, effective immediately.

 

Financials

·     S&P Global on Monday cut credit ratings and revised its outlook for multiple U.S. banks, following a similar move by Moody’s, warning that funding risks and weaker profitability will likely test the sector’s credit strength. S&P downgraded the ratings of Associated Banc-Corp (ASB), Valley National Bancorp (VLY), UMB Financial Corp (UMBF), Comerica Bank (CMA) and Keycorp (KEY), citing large deposit outflows and prevailing higher interest rates.

·     Coinbase (COIN) said it will acquire equity stake in crypto operator Circle Internet Financial; said will also shut down jointly managed Centre Consortium, the operator of the stablecoin, USD Coin.

·     Iron Mountain (IRM) upgraded to Outperform from Sector Perform at RBC Capital.

 

Healthcare

·     Kenvue (KVUE) to replace Advance Auto Parts (AAP) in S&P 500 at open on 8/25 and Advance Auto Parts to replace Emergent BioSolutions (EBS) in S&P 600 at open on 8/25.

·     Teva Pharmaceuticals (TEVA) and Glenmark Pharmaceuticals agreed to pay criminal fines totaling $255M and to divest their versions of a certain cholesterol drug to resolve charges related to price-fixing. Under the DPA, which will allow Teva to avoid mandatory exclusion from participation in U.S. federal health care programs, Teva will pay a fine of $225M over five years, with $22.5M due each year from 2024 through 2027, and $135M due in 2028.

·     Pfizer (PFE) said the FDA has approved Abrysvo, its bivalent RSV prefusion F, or RSVpreF, vaccine, for the prevention of LRTD and severe LRTD caused by RSV in infants from birth up to six months of age by active immunization of pregnant individuals at 32 through 36 weeks gestational age

·     Agiliti (AGTI) announces $50M share buyback.

 

Technology, Media & Telecom

·     Baidu (BIDU) Q2 EPS $3.11 vs. est. $2.32; Q2 revs $4.7B vs. est. $4.57B; Revenue from its online-marketing services grew 15% from a year earlier to CNY21.08 billion as the number of monthly active users for its flagship Baidu app rose 8% to 677 million in June.

·     Fabrinet (FN) Q4 adj EPS $1.86 vs. est. $1.80; Q4 revs rose 12% y/y to $655.9M above est. $641.4M; guides Q1 revs $650M-$670M, vs. est. $657.2M and sees Q1 EPS $1.60-$1.67; board approved repurchase of up to an additional $47.6 mln of ordinary shares.

·     Zoom Video (ZM) Q2 EPS $1.34 vs est. $1.05 on revs $1.14B vs est. $1.12B, adj op mgn 40.5%; approx 218,100 enterprise customers +6.9%; guides Q3 revs $1.115-1.12B vs est. $1.126B, adj op Inc $000-405Mm, adj EPS $1.07-1.09 vs est. $1.03; sees FY revs $4.485-4.495B vs est. $4.483B, adj op Inc $1.685-1.695B and adj EPS $4.63-4.67 vs est. $4.30.

·     Arm Holdings Ltd. (ARM) filed to go public late Monday, registering for an offering of American depositary shares, according to a filing with the SEC.