Early Look

Wednesday, February 1, 2023

Futures	Up/Down	%	Last
Dow	-139.00	0.41%	34,017
S&P 500	-13.25	0.32%	4,076
Nasdaq	-24.50	0.20%	12,127

 

 

US equity futures are lower, after the strong run-up into NY close on touted month-end buying. S&P futures slide -0.3% to 4,076.50, trading in a narrow 15-point range overnight (4,086 high and 4,071 low) ahead of key economic data this morning and the FOMC policy meeting at 2:00 PM ET. It has been a volatile start to a busy week with a downward trend day Monday followed by stocks surging all day Tuesday to close at highs, but the real fun begins today! The FOMC policy meeting details released at 2:00 PM ET (25-bps hiked expected) followed by Fed Chairman Powell press conference, key earnings (AAPL, AMZN, GOOGL, META next 2-days), jobs data on Friday, BOE decision and ECB decision all coming up. The Dow Jones Industrial Average rose 1.1%, the S&P 500 gained 1.5%, the Nasdaq rallied 1.7% and the small-cap Russell 2000 outperformed the major indexes, rising 2.4% yesterday. For the month, the Nasdaq composite lifted into leadership to start the year, rising 10.5% this month, the small-cap Russell 2000 came in second, up 9.8%. The Dow gained 2.6% in January while the S&P 500 added 6%. This month the S&P 500 traded above its 200-day moving average and the Nasdaq reclaimed its 200-day line yesterday. The Q4 employment cost index rose 1%, slightly below the 1.1% consensus which includes total employee compensation including wages and benefits. Ahead of the FOMC meeting we get ADP Private payrolls, January ISM manufacturing and services numbers, and the Job Openings and Labor Turnover Survey (JOLTS). Asian equities climb for the first time in three days as the Nikkei Index rose 19 points to 27,346, the Shanghai Index gained 29 points to 3,284, and the Hang Seng Index climbed 229 points to 22,072. In Europe, the German DAX rises 25 points to 15,153, while the FTSE 100 gains 15 points to 7,787.

 

Economic Calendar for Today

·     7:00 AM ET            MBA Mortgage Applications Data

·     8:15 AM ET            ADP Employment Change for January…est. 178K

·     9:45 AM ET            S&P Global Manufacturing PMI for January

·     10:00 AM ET          Construction Spending M/M for December…est. 0.0%

·     10:00 AM ET          ISM Manufacturing PMI for January…est. 48.0

·     10:00 AM ET          JOLTs Job Openings for December…est. 10.25M

·     10:30 AM ET          Weekly DOE Inventory Data

·     2:00 PM ET             FOMC Policy Meeting – estimates for 25 bps hike to 4.5%-4.75%.

 

Earnings Calendar:

·     Earnings Before the Open: ABC ATKR BSX CMCO DT EAT EPD EVR FTV HUM JCI MHO MO NS ODFL OTIS PTON RGS SLAB SMG SR TECH TGI TMO TMUS WM WRK

·     Earnings After the Close: AFG AFL ALGN ALGT ALL AMSC ARAY AVNW AVT BDN BHE CCS CHRW CSGS CTVA DXC EGHT ELF ENVA GAIN GL HOLX IVAC LCI LFUS LSTR MAA MCHP MCK MET META MOD MSTR MTG MTH MUSA MXL NTGR PTC QRVO RYN SITM SLM TBI THG TTEK UGI VSTO

 

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 58.83 points, or 1.46%, to 4,076.60.

·     The Dow Jones Industrial Average rose 368.95 points, or 1.09%, to 34,086.04.

·     The Nasdaq Composite spiked 190.74 points, or 1.67%, to 11,584.55.

·     The Russell 2000 Index advanced 46.22 points, or 2.45% to 1,931.94.

 

 

Macro	Up/Down	Last
Nymex	0.05	78.92
Brent	-0.29	85.17
Gold	-0.80	1,944.50
EUR/USD	0.0032	1.0895
JPY/USD	-0.31	129.78
10-Year Note	-0.044	3.485%

 

 

World News

·     China’s Caixin manufacturing activity improved in January but remained in contractionary territory for the sixth straight month as the purchasing managers index rose to 49.2 in January from 49.0 in December. The official manufacturing PMI rose to 50.1 from 47.0 in December.

 

Sector News Breakdown

Consumer

·     Mondelez (MDLZ) Q4 adj EPS $0.73 vs. est. $0.70; Q4 revs $8.70B vs. est. $8.32B; Q4 adj gross margin 36% and adjusted operating margin 15%; expects organic net revenue growth of 5 to 7 percent, high single-digit adjusted eps growth on a constant currency basis.

·     Match.com (MTCH) Q4 adj EPS $0.30 vs. est. $0.54; Q4 revs fell -2% y/y to $786.2M vs. est. $788.5M; payers declined 1% yoy to 16.1 mln as of qtr-end; guides Q1 revenue $790M-$800M below est. $816M and sees adjusted operating income $250M-$255M vs. est. $212.6M

·     Tesla (TSLA) plans to ramp up Giga Shanghai production after surge in orders, report says, Electrek reports – https://bit.ly/3HNqpx9

·     Hawaiian Holdings (HA) 4Q adj EPS ($0.49) vs est. ($0.70) on revs $731Mm vs est. $733Mm; sees 1Q ASM +14-17%, RASM +7.5-10.5%, CASM -1% – +2%; guides FY23 ASM +9.5-12.5%, CASM ex fuel and non-recurring +1.0-5.0%

·     Casey’s General Stores (CASY) said Q3 Same-store Inside Sales are in the lower half of our annual range of a 5-7% increase; same-store fuel gallons for 3q are near the low end of the annual range of a flat to 2% increase.

·     Li Auto (LI) reported vehicle deliveries for January rose 23% y/y to 15,141 units vs. 12,268 y/y.

·     NIO Inc. (NIO) reported deliveries for January of 8,506.

·     Xpeng (XPEV) reported vehicle deliveries for January of 5,218 units.

·     Foot Locker (FL) upgraded to Outperform from Neutral at Credit Suisse.

·     Funko (FNKO) downgraded to Sell from Neutral at Goldman Sachs.

 

Energy

·     Transocean (RIG) said ultra-deepwater drillship, Dhirubhai deepwater KG2 has been awarded 910-day contract by national oil company for work offshore Brazil valued at $392M.

 

Financials

·     Chubb Inc. (CB) Q4 Core operating EPS $4.05 vs. est. $4.25; Q4 Net premiums written $10.23 billion, +12% y/y and net premiums earned $10.55 billion, +13% y/y; Q4 Book value per share $121.90 vs. $139.99 y/y; Property & casualty combined ratio 88% vs. 85.5% y/y.

·     Credit Acceptance Corp. (CACC) Q4 EPS $11.74 vs. est. $7.16; Q4 revs $459M vs. est. $452.89M; Q4 net $127.3M; Consumer loan unit volume +25.6%

·     Boston Properties (BXP)

·     Renaissance Holding (RNR) 4Q EPS $7.33 vs est. $6.40, gross premiums $1.59B vs est. $1.54B, combined ratio 80.5%

·     Unum (UNM) 4Q adj EPS $1.43 vs est. $1.47 on revs $3.0B vs est. $3.0B

 

Healthcare

·     Amgen Inc. (AMGN) Q4 adj EPS $4.09 in-line with consensus and revs $6.8B vs. est. $6.77B; sees FY23 adjusted EPS $17.40-$18.60 vs. consensus $18.33 and revs $26B-$27.2B vs. est. $27.3B; sees FY23 CapEx about $925M ex Horizon.

·     AmerisourceBergen (ABC) Q1 adj EPS $2.71 vs. est. $2.63; Q1 revs $62.8B vs. est. $62.67B; raises FY23 adjusted EPS view to $11.50-$11.75 from $11.30-$11.60 prior (est. $11.51).

·     Boston Scientific (BSX) Q4 adj EPS $0.45 vs. est. $0.47; Q4 revs $3.24B vs. est. $3.24B; Sees Q1 revenue up 3%-5%.

·     Edwards Lifesciences (EW) Q4 adjusted EPS $0.64 vs. est. $0.61; Q4 revs rose 1% y/y to $1.35B vs. est. $1.33B; backs FY23 adjusted EPS $2.45-$2.60 (est. $2.50) and backs FY23 revenue view $5.6B-$6B (est. $5.78B); Q4 TAVR sales were flat; constant currency sales grew 5%.

·     Humana (HUM) Q4 adj EPS $1.62 vs. est. $1.46; Q4 revs $22.44B vs. est. $22.5B; qtrly benefits expense ratio 87.3% vs 87.9%; guides FY23 adjusted EPS ‘at least’ $28.00 (in-line w/consensus) and affirms strong 2023 individual Medicare Advantage membership growth of at least 625,000, or 13.7% growth over FY22 ending membership

·     Stryker (SYK) 4Q adj EPS $3.00 vs est. $2.84 on revs $5.2B vs est. $4.96B; sees organic net sales +7.0-8.5% vs est. +5.7% and adj EPS $9.85-10.15 vs est. $9.86.

·     Thermo Fisher (TMO) Q4 adj EPS $5.40 vs. est. $5.19; Q4 revs $11.45B vs. est. $10.43B; sees FY23 adjusted EPS $23.70 vs. est. $23.21; sees FY23 revenue $45.3B vs. est. $43.96B.

·     Varex Imaging (VREX) 1Q adj EPS $0.21 vs est. $0.20 on revs $206Mm vs est. $205.4Mm, adj op mgn 9%; guides 2Q revs $205-225Mm vs est. $223.8Mm and adj EPS $0.05-0.25 vs est. $0.31.

 

Industrials & Materials

·     IDEX Corp. (IEX) 4Q adj EPS $2.01 vs est. $1.98 on sales $810.7Mm vs est. $773Mm, adj gr mgn 43.6%; guides 1Q organic sales +3-5% vs est. +6.9% and adj EPS $1.98-2.03 vs est. $2.11; sees FY23 organic +1-5% vs est. +6.4% and adj EPS $8.50-8.80 vs est. $8.63.

·     Mercury Systems (MRCY) 2Q adj EPS $0.26 vs est. $0.33 on revs $229.6Mm vs est. $232.5Mm; guides 3Q revs $245-260Mm vs est. $266.6Mm, adj EBITDA $40-47Mm vs est. $59.7Mm and adj EPS $0.32-0.42 vs est. $0.61; guides FY adj EPS approx $1.90-2.08 vs est. $2.02.

·     O-I Glass (OI) Q4 EPS $0.38 vs. est. $0.32; Q4 revs $1.7B vs. est. $1.6B; guides Q1 adj EPS $0.85 vs. est. $0.53; said Net price realization and margin expansion initiative benefits exceeded our original target; sees 2023 adj EPS at least $2.50 vs. est. $2.28.

·     Otis Worldwide (OTIS) Q4 adj EPS $0.75 vs. est. $0.74; Q4 revs $3.44B vs. est. $3.37B; sees FY23 adjusted EPS $3.35-$3.50 vs. est. $3.44; sees FY23 revenue $13.8B-$14.1B vs. est. $13.88B.

 

Technology, Media & Telecom

·     AMD Corp. (AMD) Q4 EPS $0.69 vs. est. $0.67; Q4 revs $5.6B vs. est. $5.5B; forecast Q1 revenue $5.3B plus/minus $300M vs. est. $5.48B citing fears of fewer orders due to worsening PC demand and slowing data center market; Q4 GMs 51% and sees Q1 GMs 50%.

·     EA Inc. (EA) 3Q qtrly bookings $2.34B; sees 4Q net bookings approx $1.675-1.775B, net revs $1.7-1.8B vs est. $2.2B; guides FY revs $7.25-7.35B vs est. $7.76B; Cuts FY23 net bookings view to $7.07B-$7.17B. Said that it has made the strategic decision to stop development on “Apex Legends Mobile” and “Battlefield Mobile.”

·     Juniper Networks (JNPR) 4Q adj EPS $0.65 vs est. $0.65 on revs $1.45B vs est. $1.48B, adj op mgn 19.1%; guides 1Q revs $1.34B vs est. $1.3B, adj op mgn 13.7% and adj EPS $0.37-0.47 vs est. $0.40.

·     Snap Inc. (SNAP) Q4 EPS $0.14 vs. est. $0.11; Q4 DAUs up 17% y/y to 375M, up from 375M in Q4; sees Q1 DAUS 382-384 mln; co’s internal forecast assumes Q1 rev to drop 2-10%; on track to realize full $500 mln in cost reductions as part of strategic reprioritization by Q1; said believe co has path to adj ebitda breakeven in Q1.

·     Super Micro (SMCI) 2Q adj EPS $3.26 vs est. $3.03 on sales $1.8B vs est. $1.78, adj gr mgn 18.8%; guides 3Q net sales $1.42-1.52B vs est. $1.6B and adj EPS $1.88-2.14 vs est. $2.12; guides FY adj EPS $9.00-11.30 vs est. $10.49.

·     Western Digital (WDC) 2Q adj EPS ($0.42) vs est. ($0.12) on revs $3.1B vs est. $2.99B, adj gr mgn 17.4%; guides 3Q revs $2.6-2.8B vs est. $3.0B, adj gross margin 9.0-11.0%, adj EPS ($1.70)-($1.40) vs est. ($0.30).

·     Civeo (CVEO) announces a 5-year contract award in Australia with expected revenues of approximately a$337 million.