Early Look

Tuesday, August 30, 2022

Futures	Up/Down	%	Last
Dow	216.00	0.67%	32,291
S&P 500	33.25	0.82%	4,064
Nasdaq	140.50	1.12%	12,633

 

 

U.S. futures are looking at a nice bounce early, rising 35 points or +0.87% to 4,066 (high 4,072.75 and low 4,026.75) following a two-day market decline. Stocks steadied most of Monday until a late day pullback uneased investors’. All main U.S. stock indexes ended lower, extending losses from Friday as Treasury yields climbed and investors worried about the impact of rising interest rates on growth. Pain continued Monday as the tech heavy and growth sensitive Nasdaq composite led losses, falling around 1%, as Treasury yields briefly reached two-month highs. Markets are pointing to a nice rebound now as the dollar and yields pullback along with oil. Major stock indexes had dropped by more than 3% on Friday after Federal Reserve Chairman Jerome Powell said that the U.S. economy will need tight monetary policy “for some time” before inflation is under control, a fact that means slower growth, a weaker job market and “some pain” for households and businesses. In Asian markets, The Nikkei Index jumped 316 points to 28,195, the Shanghai Index fell -13 points to 3,227, and the Hang Seng Index declined -74 points to 19,949. In Europe, the German DAX is surging about 250 points to 13,140, while the FTSE 100 is up about 20 points to 7,446. Few key economic data points after a quiet day Monday as Conference Board releases its measure of August consumer confidence, along with a few housings related data points. Volumes remain light in the final week of summer trading.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -27.05 points, or 0.67%, to 4,030.61

·     The Dow Jones Industrial Average fell -184.41 points, or 0.57%, to 32,098.99

·     The Nasdaq Composite tumbled -124.04 points, or 1.02%, to 12,017.67

·     The Russell 2000 Index declined -16.89 points, or 0.89% to 1,882.94

 

Economic Calendar for Today

·     7:45 AM ET          ICSC Weekly Retail Sales

·     8:55 AM ET           Johnson/Redbook Weekly Sales

·     9:00 AM ET           Monthly Home Prices M/m for June

·     9:00 AM ET           CaseShiller 20 City for June…est. 1.0%

·     10:00 AM ET         Consumer Confidence for August…est. 97.9

·     10:00 AM ET         JOLTs Job Openings for July…est. 10.475M

·     11:00 AM ET         Fed’s Williams speaks on US economic outlook

·     4:30 PM ET            API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AMWD BBY BIDU BIG CONN KIRK PLAB REX

·     Earnings After the Close: AMBA AMRK CHPT CHWY CRWD HPE HPW PVH

 

Other Key Events:

·     Mizuho Storage & AI Conference (virtual), 8/30-9/1

·     Piper Houston & Midland Texas Energy Tour, 8/29-8/31

·     Piper Texas Bank Tour, 8/30-9/1, in Dallas

·     William Blair MedTech & Life Sciences Trip, 8/29-9/1, in San Francisco

·     China NBS Manufacturing PMI for August

 

 

Macro	Up/Down	Last
Nymex	-1.76	95.25
Brent	-2.76	102.33
Gold	-3.00	1,746.70
EUR/USD	0.0037	1.0033
JPY/USD	-0.42	138.27
10-Year Note	-0.045	3.065%

 

 

World News

·     Minneapolis Fed President Neel Kashkari said he was “happy” to see the stock market’s reaction to Jackson Hole late yesterday

·     Stephen Roach, who served as chair of Morgan Stanley Asia, warns the U.S. needs a “miracle” to avoid a recession. “We’ll definitely have a recession as the lagged impacts of this major monetary tightening start to kick in,” Roach told CNBC’s “Fast Money” on Monday. “They haven’t kicked in at all right now.” – CNBC

·     Gordon Johnson of GLJ Securities noted in a tweet last night that “when CPI was >4% dating back 70yrs, the avg. forward multiple on the $SPX was 13.38x, suggesting a fair value for the $SPX today of 3,251, or -19.3% downside from today’s close. Thus, assuming valuations matter again, & J. Powell doesn’t “blink”, things could get interesting”

 

Sector News Breakdown

Consumer

·     Big Lots (BIG) Q2 adj EPS loss ($2.28) vs. est. loss ($2.47); Q2 revs $1.35B vs. est. $1.34B; sales decline to last year was driven by a comparable sales decrease of (-9.2%); Q2 inventory ended at $1.16B compared to $943.8M for the same period last year, with the 22.8% increase encompassing significantly higher unit costs and a significant increase in in-transit inventory

·     Conn’s (CONN) Q2 adj EPS $0.04 vs. est. $0.09; Q2 revs fell -17.1% y/y to $346.6M, below consensus $370.23M; Q2 comp store sales decreased (-22.0%); eCommerce sales increased 11.5% to a second quarter record of $19.3M; conducting an extensive review and prioritization of its cost structure

·     Peloton Interactive (PTON) said it will not be able to timely file with the Securities and Exchange Commission its Annual Report on Form 10-K for the year ended June 30, 2022

·     FREYR Battery (FREY) announces the execution of 38 GWH li-ion battery binding cell sales agreement and entry into module & pack joint venture for energy storage solutions with Nidec Corporation

·     Lucid Group (LCID) files $8.0B mixed securities shelf

 

Energy, Industrials and Materials

·     Boeing (BA) wins $2.1B order from Taiwan’s China Airlines China Airlines to purchase 16 Boeing 787-9 widebody aircraft; Order comes weeks after US House Speaker Pelosi visited Taiwan per Bloomberg

·     First Solar (FSLR) will spend $1.2 billion to expand its solar panel manufacturing operations in the U.S., creating hundreds of jobs including with a new factory in the Southeast, the company said

·     SolarEdge Technologies Inc’s (SEDG) solar power optimizers and inverters could face an import ban, as the U.S. International Trade Commission (ITC) said on Monday it would investigate a few products after a smaller rival alleged patent infringement.

·     Canada invoked a 1977 cross-border pipeline treaty with the U.S. on Monday to defend Enbridge’s (ENB) Line 5 pipeline for the second time in less than a year, this time to prevent a shutdown of Line 5 in Wisconsin

·     The European Union is set to meet its gas storage filling goal two months ahead of target as the bloc braces for a tough winter with Russia limiting supplies and soaring energy prices raging through the continent – Bloomberg

·     Gran TierraEnergy (GTE) said it would buy back as many as 36m shares.

 

Financials

·     Bank of Montreal (BMO) missed analysts’ estimates for Q3 profit, with earnings falling from a year earlier as revenue from its capital markets business slumped; Q3 net income excluding one-off items fell to C$2.13 billion ($1.64 billion), or C$3.09 a share, from C$2.29 billion, or C$3.44 a share, a year earlier; took PCL of C$136 million, compared with a recovery of C$70 million a year ago. Analysts had expected it to set aside C$202 million.

 

Healthcare

·     Sangamo Therapeutics (SGMO) announced updated preliminary results from the Phase 1/2 STAAR clinical study; one patient withdrawn from enzyme replacement therapy, demonstrated significantly elevated levels of alpha-gal a activity at 12 weeks post withdrawal; additional five patients have been dosed and an additional four patients in the dose escalation phase have been withdrawn from ERT

 

Technology, Media & Telecom

·     Twitter (TWTR) shares slip after Elon Musk says additional letter of termination sent if the first notice sent on July 8 is deemed invalid. Musk says allegations regarding certain facts, known to Twitter prior to July 8 but undisclosed have come to light that provide additional and distinct bases to terminate acquisition

·     Baidu (BIDU) Q2 EPS $2.36 vs. est. $2.28; Q2 revs fell -5% y/y to $4.43B vs. est. $4.45B; Baidu AI Cloud revenues maintained rapid growth momentum of 31% year over year and 10% quarter over quarter; said its autonomous ride-hailing service Apollo Go had 287,000 rides in Q2

·     Avid Technology (AVID) will replace Plantronics (POLY) in the S&P SmallCap 600 effective prior to the opening of trading on Thursday, September 1

·     Zendesk, Inc. (ZEN) confirmed that it received an unsolicited non-binding recapitalization proposal from Light Street Capital Management, LLC. Light Street indicated it currently owns approximately 2% of Zendesk common stock. Based on the letter from Light Street, the non-binding proposal contemplates a recapitalization of Zendesk consisting of a $2 billion preferred equity investment to be arranged by Light Street, a $2 billion incremental debt facility and $1 billion of cash from Zendesk’s balance sheet.