Early Look

Wednesday, August 26, 2020

Futures	Up/Down	%	Last
DJ Industrials	-47.00	0.17%	28,146
S&P 500	0.50	0.01%	3,443
Nasdaq	39.50	0.34%	11,765

 

 

U.S. stock futures are mixed a day after the S&P 500 and Nasdaq Composite notched new record closing highs, with Nasdaq futures looking to make it a fifth straight day of gains following better earnings results from software company Salesforce.com (CRM), as the newly announced Dow component gains over 12% on better guidance. The S&P 500 edged higher on Tuesday, amid positive developments on the U.S.-China trade front and fresh progress in the battle against the coronavirus pandemic. Despite a pandemic low reading in consumer confidence on Tuesday, stocks climbed all afternoon to finish at their best levels of the day in another stounding move for technology giants. With yesterday’s close, the S&P 500 finished in record territory for the 17^th time this year while the Nasdaq Composite logged its 38th new closing high for the year vs. 31 for all of last year. In Asian markets, The Nikkei Index fell -5 points to 23,290, the Shanghai Index fell -43 points to 3,329 and the Hang Seng Index rose 5 points to 25,491. In Europe, the German DAX is up around 60 points to 13,120, while the FTSE 100 is down a few points to 6,025. Hurricane Laura is also on watch with WQTI crude oil holding at a five-month high above $43 per barrel amid a threat that some of the largest oil refineries could be shut for months. Markets also await Fed Chair Jerome Powell speaking virtually at Jackson Hole tomorrow in a meeting of global central bankers. European stocks moved higher on Wednesday, as Germany extended its coronavirus stimulus package.

Market Closing Prices Yesterday

·     The S&P 500 Index plunged -81.72 points, or 0.81%, to 3,830.75

·     The Dow Jones Industrial Average fell -622.01 points, or 0.55%, to 28,723.69

·     The Nasdaq Composite dropped -284.60 points, or 0.20%, to 11,904.95

·     The Russell 2000 Index declined -50.18 points, or 0.83% to 1,560.48

 

Economic Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Durable Goods Orders for July-P

·     8:30 AM EST      Durable Goods Ex: Transportation, July-P

·     10:30 AM EST    Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: CHS, DKS, DY, EV, EXPR, PLAN, REX

·     Earnings After the Close: BOX, ESTC, GEF, LCI, NTAP, PAHC, QADB, SMTC, SPLK, WSM

 

Other Key Events:

·     BMO Capital Virtual Technology Summit, 8/24-8/28

·     Davidson Virtual West Coast Bank tour, 8/25-8/27

·     Piper Annual Medtech and Diagnostics Bus Tour, 8/25-8/27

·     Raymond James Virtual Diversified Industrials Conference, 8/25-8/26

·     Seaport Global Virtual Summer Conference

 

 

Macro	Up/Down	Last
WTI Crude	-0.10	43.25
Brent	-0.06	45.80
Gold	-8.00	1,920.00
EUR/USD	-0.0016	1.1819
JPY/USD	-0.18	106.21
10-Year Note	+0.024	0.71%

 

 

Sector News Breakdown

Consumer

·     Bed Bath & Beyond (BBBY) said it will eliminate 2,800 jobs as part of a restructuring plan to cut costs and streamline operations.

·     Nordstrom (JWN) 2Q EPS ($1.62) vs. est. ($1.48) on revs $1.78B vs. est. $2.3B, says sales constrained by inventory flow which improved thru quarter

·     Toll Brothers (TOL) 3Q EPS 90c tops the 70c est. and revs fall -6.5% YoY to $1.65B, but tops $1.51B estimate; 3Q backlog $6.09B, +4.1% YoY, 3Q cancellation rate 3.8% vs. 6.50% YoY and 3Q adj home sales gross margin 21.9%; attribute surge in demand to a number of factors, including historically low interest rates, a continued undersupply of homes

·     Urban outfitters (URBN) shares rise 12%; Q2 EPS 35c on sales $803.3M (-17.7% YoY) vs. est. $668.4M and 2Q gross margin 29.6% vs. 32.8% YoY; 2Q comparable retail segment sales -13% vs. -3% YoY and vs. estimate -28%

·     Tesla (TSLA) tgt raised to $2,500 from $1,200 at Jefferies saying while TSLA’s edge in cars may soon start to shrink, it has leverage in other dimensions such as software and battery capacity; expects TSLA to unveil a battery designed to last for a million miles of use on Sept. 22, at the firm’s “Battery Day” event

·     K12 Inc (LRN) announced intention to offer $300m of convertible senior notes due 2027

·     Carnival Cruise (CCL) said due to restrictions, limitations with border and port access determined by government and health authorities and the continued uncertainty of airline travel, Princess Cruises is cancelling its early 2021 World Cruises and Circle South America cruises on two ships

 

Energy, Industrials & Materials

·     The energy sector fell the most Tuesday even while crude oil prices climb to five-month highs as U.S. producers shut more than 80% of production in the Gulf of Mexico ahead of Hurricane Laura (October WTI settled +1.7% to $43.35, while October Brent closed +1.8% to $45.96)

·     The American Petroleum Institute (API) showed a draw of 4.52M barrels of oil for the week ending Aug. 21, gasoline inventories a draw of 6.39M barrels, distillate inventories show a build of 2.26M barrels and Cushing inventories show a draw of 646K barrels.

·     Dycom (DY) announced a new $100M share buyback plan; sees Q3 contract revenues, margins in-line to modestly lower after mixed Q2 results as EPS beat and revs missed

·     Heico (HEI) Q3 EPS 40c on sales $386.4M (down -27% YoY) vs. est. 33c and $384.6M; 3Q operating margin 17.7% vs. 22.4% YoY; continue to forecast positive cash flow from operations for remainder of fiscal 2020

·     Marathon Petroleum (MPC) is shutting some process units in front of a potential shutdown at its 585K bbl/day Galveston Bay refinery in Texas ahead of Hurricane Laura

 

Financials

·     Intuit (INTU) Q4 adj EPS $1.81 on revs $1.82B vs. est. $1.09 and $1.55B; 4Q product sales $294M, +20% YoY; 4Q Service and other revenue $1.52B vs. $749 million YoY; Q4 R&D expenses $393 million, +26% YoY; TurboTax Online and total TurboTax units increased 11%, the highest customer growth in four years

·     The Federal Housing Finance Agency has instructed Fannie Mae (FNMA) and Freddie Mac (FMCC) to hold off on the implementation of a new fee that is aimed at covering losses caused by the coronavirus pandemic.

 

Healthcare

·     Fluidigm Corp (FLDM) shares jump 30%; after its saliva-based COVID-19 test received emergency approval from the FDA; the test is a less invasive method to detect the novel coronavirus compared with the commonly available nasal swab method

·     Hologic (HOLX) announced that it has acquired Acessa Health Inc., a privately-held company in minimally invasive treatment for fibroids, for approximately $80M in cash plus contingent payments

·     Metacrine’s (MTCR) lead program, MET409 designated for Fast Track review by the FDA for the treatment of non-alcoholic steatohepatitis (NASH).

 

Technology, Media & Telecom

·     Autodesk (ADSK) 2Q adj EPS $0.98 vs. est. $0.90 on revs $913Mm vs. est. $899.3Mm, qtrly billings -12% to $787Mm; guides FY21 billings $4.07-4.17B, guides FY21 revs $3.715-3.765B vs. est. $3.78B, sees FY21 adj EPS $3.90 vs. est. $3.78

·     HP Enterprise (HPE) Q3 adjusted EPS 32c on revs $6.8B (down -5.6% YoY) vs. est. 23c and $6.06B; sees 4Q adjusted EPS 32c-36c vs. est. 32c and year EPS $1.30-$1.34 vs. est. $1.20; 3Q adjusted operating margin 7.1% vs. 9.90% YoY

·     Ooma Inc. (OOMA) 2Q adj EPS $0.13 vs. est. $0.07 on revs $41.4Mm vs. est. $40.2Mm; guides 3Q adj EPS $0.07-0.09 vs. est. $0.03, sees 3Q revs $41-41.8Mm vs. est. $40.8Mm; sees FY adj EPS $0.34-0.40, sees FY revs $163-164.5Mm vs. est. $163.1Mm

·     Palantir filed Tuesday for a direct listing, which allows the company’s shares to be sold on the open market but does not involve the sale of fresh shares like an initial public offering

·     Pure Storage (PSTG) 2Q adj EPS $0.06 vs. est. $0.00 on revs $403.7Mm vs. est. $395.3Mm; sees 3Q total revs flat sequentially ($403.7M) vs. est. up 12% to $443.83Mm

·     Salesforce.com (CRM) shares rise 10%; Q2 adjusted EPS $1.44 on revs $5.15B vs. est. 67c and $4.9B; sees Q3 revenue adjusted EPS 73c-74c vs. est. 76c and guides Q3 revenue $5.24B-$5.25B above consensus $5.01B; raises year revs to $20.7B-$20.8B from prior view about $20B

·     Super Micro Computer (SMCI) and its former CFO, Howard Hideshima were charged by the SEC with prematurely recognizing revenue and understating expenses over a period of at least three years

·     Apple (AAPL) price tgt raised to $600 at Wedbush

·     21Vianet (VNET) 17M share Secondary priced at $20.75