Early Look

Friday, December 2, 2022

U.S. futures are down slightly, while the dollar extended declines against its peers and Treasury yields dipped, as investors await the November jobs report at 8:30 AM, where 200K jobs are expected to be added and the unemployment rate to hold steady at 3.7%. Stocks finished mixed on Thursday in more muted trading action in the afternoon, but the S&P 500 has risen nearly 14% from its mid-October lows, a move that has effectively halved the benchmark’s year-to-date decline. Economic data has been plentiful (and mixed) amid softening inflation, weakening manufacturing activity and weaker private sector hiring but the market driver this week has been Fed Chairman Jerome Powell’s suggesting that smaller rate hikes are likely to form the basis of the Central bank’s inflation fight going forward provided some decent risk sentiment. The 10-year yield declined 17-bps yesterday to 3.525% and hit 3.5% this morning while the CBOE Volatility index moves back above 20 after hitting Aug lows yesterday. In Asian markets, The Nikkei Index drops -448 points to 1.59% to 27,777, the Shanghai Index dips -9 points to 3,156, and the Hang Seng Index slips -61 points to 18,675. In Europe, the German DAX is up 40-points to 14,530, while the FTSE 100 slips -15 points to 7,543.

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -3.54 points, or 0.09%, to 4,076.57

·     The Dow Jones Industrial Average fell -194.76 points, or 0.56%, to 34,395.01

·     The Nasdaq Composite gained 14.45 points, or 0.13%, to 11,482.45

·     The Russell 2000 Index dipped -4.90 points, or 0.26% to 1,881.68

Economic Calendar for Today

·     8:30 AM ET          Nonfarm Payrolls for November…est. +200K

·     8:30 AM ET          Private Payrolls for November…est. +190K

·     8:30 AM ET          Manufacturing Payrolls for November…est. +20K

·     8:30 AM ET          Unemployment Rate for Nov…est. 3.7%

·     8:30 AM ET          Average Hourly Earnings for Nov…est. +0.3%

·     10:15 AM ET        Fed’s Evans Speaks at Event on Financial Regulation

·     1:00 PM ET           Baker Hughes Weekly rig count data

Earnings Calendar:

·     Earnings Before the Open: CBRL GCO KIRK

Sector News Breakdown

Consumer

·     Ulta Beauty (ULTA) Q3 EPS $5.34 vs est. $4.15 on sales $2.34B vs est. $2.21B, comps +14.6%; sees FY sales $9.95-10B vs est. $9.77B, op mgn 15.5-15.6% vs est. 14.97%

·     ChargePoint (CHPT) Q3 EPS loss (-$0.25) vs. est. loss (-$0.19); Q3 revs rose 92% y/y to $125M vs. est. $132.12M; Q3 gross margin 18%; sees Q4 revenue $160M-$170M vs. est. $160.91M and narrows FY23 revenue view to $475M-$485M from $450M-$500M

·     Tilly’s (TLYS) Q3 EPS $0.17 vs. est. $0.07; Q3 sales fell -13.7% y/y to $177.8M vs. est. $166.1M; Q3 comp store sales fell (-14.9%); guides Q4 EPS $0.02-$0.06 vs. est. $0.12 and revs $183M-$188M vs. est. $192.7M

·     Zumiez (ZUMZ) 3Q EPS $0.36 vs est. $0.17 on revs $237.6Mm vs est. $225.4Mm; guides 4Q sales $258-265Mm vs est. $298.3Mm; November comps -24.8%

·     Smith &Wesson (SWBI), Sturm Ruger (RGR): U.S. unadjusted criminal background checks rose 11% to 2.79 million in November, the highest in eight months, according to data from the FBI’s National Instant Criminal Background Check System (NICS)

Energy, Industrials and Materials

·     President Vladimir Putin is open to talks on a possible settlement to the conflict in Ukraine and believes in a diplomatic solution, the Kremlin said on Friday after Joe Biden suggested he was prepared to speak to the Russian leader

·     CSX Corp. (CSX), Union Pacific (UNP): In an 80-15 vote, lawmakers agreed to force unions to adopt an earlier labor agreement, exceeding the 60-vote threshold for the measure to pass. The move is expected to end the long-running labor dispute between UNP, CSX and other freight railroads and more than 115,000 workers

Financials

·     Crypto exchange FTX lent billions of dollars’ worth of customer assets to fund risky bets by its affiliated trading firm, Alameda Research, setting the stage for the exchange’s implosion, a person familiar with the matter said. FTX former CEO Sam Bankman-Fried said in investor meetings this week that Alameda owes FTX about $10 billion, people familiar with the matter said. FTX extended loans to Alameda using money that customers had deposited on the exchange for trading purposes, a decision that Mr. Bankman-Fried described as a poor judgment call, one of the people said. https://on.wsj.com/3VKePqF

·     Unum Group’s (UNM) board authorizes $200 million share repurchase program for 2023

·     CIBC (CM) downgraded to Sector Perform from Outperform at RBC Capital

Healthcare

·     ANAVEX (AVXL) phase 2B/3 study met primary and key secondary endpoints, showing statistically significant reduction of clinical decline in global clinical study of patients with early Alzheimer’s Disease

·     Glaxo (GSK) Jemperli (dostarlimab) RUBY Phase 3 trial met its primary endpoint in a planned interim analysis in patients with primary advanced or recurrent endometrial cancer.

·     Cigna Corp (CI) files mixed securities shelf

·     Beam Therapeutics (BEAM) announced the U.S. FDA has lifted the clinical hold and cleared the Investigational New Drug application for BEAM-201 for the treatment of relapsed/refractory T-cell acute lymphoblastic leukemia/T-cell lymphoblastic lymphoma.

Technology, Media & Telecom

·     Marvell Technologies (MRVL) 3Q adj EPS $0.57 vs est. $0.59 on revs $1.54B vs est. $1.56B, gross margin 50.6%; sees 4Q revs $1.4B vs est. $1.6B, adj gross margin approx 64%, adj EPS $0.41-0.51 vs est. $0.62

·     Ambarella (AMBA) 3Q adj EPS $0.24 vs est. $0.20 on revs $83.1Mm vs est. $83Mm; sees 4Q revs $81-85Mm vs est. $85.4Mm, adj gr mgn 63-64%, op exp $46-49Mm

·     Asana Inc. (ASAN) Q3 EPS loss (-$0.26) vs. est. loss (-$0.32); Q3 revs $141.4M vs. est. $139.4M; sees Q4 EPS loss (-$0.28-$0.27) vs. est. loss (-$0.29) and revs $144M-$146M vs. est. $151.1M; cuts FY revenue to $541M-$543M from $544M-$547M (est. $545.6M)

·     PagerDuty (PD) Q3 adj EPS $0.04 vs. est. loss (-$0.04); Q3 revs $94.2M vs. est. $92.85M; sees Q4 adjusted EPS $0.02-$0.03 vs. est. 0c and revs $98M-$100M vs. est. $99.03M; raises year EPS view and narrows FY23 revenue view $368M-$370M from $365M-$370M

·     Samsara Inc. (IOT) Q3 adj EPS loss (-$0.02) vs. est. loss (-$0.06); Q3 revs rose 49% y/y to $169.8M vs. est. $155.3M; boosts FY23 EPS view to loss of (17c)-(16c) from (23c)-(21c) and raises FY23 revenue view to $636M-$638M from $610M-$614M (est. $612.87M)

·     Smartsheet (SMAR) 3Q adj EPS ($0.01) vs est. ($0.15) on revs $199.6Mm vs est. $194.3Mm; guides 4Q revs $205-207Mm vs est. $204.4Mm, adj EPS ($0.02)-$0.00 vs est. ($0.09)

·     UiPath (PATH) 3Q adj EPS $0.05 vs est. ($0.03) on revs $262.7Mm vs est. $248.5Mm, adj gr mgn 86%; sees 4Q revs $277-279Mm vs est. $275Mm, adj op Inc $35Mm vs est. $33Mm

·     Veeva Systems (VEEV) 3Q adj EPS $1.13 vs est. $1.07 on revs $552.4Mm vs est. $546Mm; sees 4Q revs $551-553Mm vs est. $556.9Mm and adj EPS approx $1.05 vs est. $1.07

·     Zscaler (ZS) Q1 adj EPS $0.29 vs. est. $0.26; Q2 revs $355.5M vs. est. $340.7M; sees FY calculated Billings $1.93B-$1.94B vs. est. $1.94B; guides Q2 revs $364M-$366M vs. est. $356M; with 5% rev beat but billings beat guide by 5% vs. 11% last Q, likely weighing on shares