Early Look

Tuesday, January 24, 2023

Futures	Up/Down	%	Last
Dow	-64.00	0.19%	33,663
S&P 500	-7.25	0.19%	4,028
Nasdaq	-43.50	0.37%	11,890

 

 

U.S. stock futures looking a little lower after rallying on Monday as quarterly earnings take center stage, including results from five Dow Jones Industrial Average components today. JNJ reports a beat, MMM shares slide after a miss and lower guide, while investors await TRV and VZ results later this morning and tech giant MSFT after the close tonight. Outside of the Dow, GE shares slip in the industrial sector after lower guidance. U.S. stocks surged yet Monday, closing at the best levels in a month helped by strong performances in technology (AMD, NVDA) and consumer discretionary names as the Nasdaq gained roughly 223 points, or 2%, to finish at around 11,364, bringing the tech-heavy index’s year-to-date gain to 8.6%. The S&P 500 gained 47 points, or 1.2%, to 4,020, up roughly 4.7%. The tech-heavy Nasdaq has outperformed the other major U.S. indexes since the start of 2023, a reversal of the trend from 2022. With the Fed in their blackout period ahead of their FOMC meeting next week, the attention turns squarely to earnings, as over 17% of the SPX scheduled to report this week led by Industrials, TMT, & Financials. Some highlight names include: AAL, AXP, BA, BKR, CMCSA, COF, CSX, DHI, FCX, GE, HAL, IBM, INTC, JNJ, LMT, LUV, LVS, MA, MSFT, NDAQ, NOC, RTX, STX, SYF, T, TSLA, V, VLO, & VZ.

 

The Asian trading session was very quiet with most of Asia out celebrating the Lunar new Year holiday. The only major markets open were Australia, New Zealand, and Japan. In Asian markets, The Nikkei Index rose 393 points to 27,299, while the Shanghai and Hang Seng Index were closed. In Europe, the German DAX is down -0.4% at 15,040, while the FTSE 100 slides -38 points to 7,745. The US dollar is broadly unchanged from its New York close, while Bitcoin prices slip modestly after a huge run to start the year (up 38% YTD). Crude oil prices touched a 7-week high in New York, as optimism on the China re-opening and stronger economic outlook generated further support for oil prices.

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 254.07 points, or 1.19%, to 4,019.81.

·     The Dow Jones Industrial Average rose 254.07 points, or 0.76%, to 33,629.56.

·     The Nasdaq Composite surged 223.98 points, or 2.01%, to 11,364.41.

·     The Russell 2000 Index advanced 23.43 points, or 1.25% to 1,890.77.

 

Economic Calendar for Today

·     7:45 AM ET          ICSC Weekly Retail Sales

·     8:55 AM ET          Johnson/Redbook Weekly Sales

·     9:45 AM ET          S&P Global Manufacturing PMI, Jan-F

·     9:45 AM ET          S&P Global Services PMI, Jan-F

·     10:00 AM ET        Richmond Fed Index for January

·     1:00 PM ET           US Treasury to sell $42B in 2-year notes

·     4:30 PM ET           API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AUB CBU COLB DHI DHR FOR GATX GE HAL IVZ JNJ LMT MMM ONB PCAR PEBO RTX SFNC TRV UNP VZ

·     Earnings After the Close: AGYS BUSE COF FCF FFIV HAFC ISRG LRN MSFT NAVI NBHC NXGN PFC QCRH SLGN TRMK TXN UMBF VBTX WAL WSBC

 

 

Macro	Up/Down	Last
Nymex	0.35	81.97
Brent	0.19	88.38
Gold	10.60	1,939.20
EUR/USD	0.0003	1.0871
JPY/USD	-0.50	130.16
10-Year Note	-0.024	3.499%

 

 

Sector News Breakdown

Consumer

·     D.R. Horton (DHI) Q1 EPS $2.76 vs. est. $2.26; Q1 revs $7.26B vs. est. $6.4B; Q1 net sales orders decreased 38% to 13,382 homes and 40% in value to $4.9 billion compared to 21,522 homes and $8.3 billion in the same quarter of the prior year.

·     Lululemon (LULU) downgraded to Underperform from Market Perform at Bernstein and lower price tgt to $290 from $340.

·     Inter Parfums (IPAR) raises FY23 EPS view to $3.75 from $3.70 (est. $3.74) and boosts FY23 revenue view to $1.15B from $1.11B (est. $1.14B).

·     Magna Int’l (MGA) takes auto suppliers lower after narrows 2022 revenue view to $37.8B from $37.4B-$38.4B (est. $37.79B) and said 2022 Adjusted EBIT Margin is expected to be about 4.3%, which is below the 4.8% to 5.0% range disclosed in November.

 

Energy

·     Halliburton (HAL) Q4 EPS $0.72 vs. est. $0.67; Q4 revs $5.58B vs. est. $5.58B; Cap-ex $350M, +11% y/y; N.A. rev. $2.61B, +46% y/y, and Middle East and Asia revenue $1.37B, +25% y/y.

·     HighPeak Energy, Inc. (HPK) said that its Board of Directors voted to initiate a process to evaluate certain strategic alternatives to maximize shareholder value, including a potential sale.

·     APA Corp. (APA) downgraded to Equal Weight from Overweight at Morgan Stanley

·     Marathon Oil (MRO) upgraded to Overweight from Equal Weight at Morgan Stanley

 

Financials

·     Enterprise Financial (EFSC) 4Q EPS $1.58 vs est. $1.35 on NII $138.8Mm vs est. $131.3Mm; CET1 capital ratio 12.1%; ROATCE 22.62%; tangible BV/shr $28.67

·     FNB Corp. (FNB) 4Q adj EPS $0.44 vs est. $0.42 on NII $334.9Mm vs est. $320.1Mm; annualized net charge-offs to total average loans 0.16%; efficiency ratio 45.8%

·     Hope Bancorp. (HOPE) Q4 EPS $0.43 vs. est. $0.45; Q4 net income $51.7M; Q4 ROE 10.35%; NIM 3.36% vs. 4.113% y/y; NCO’s $6.4M

·     NBT Bancorp (NBTB) 4Q EPS $0.84 vs est. $0.93 on NII $99.8Mm vs est. $97.2Mm; says board approved 1Q cash dividend of $0.30/shr (increase of $0.02, or 7.1% y/y)

·     ServisFirst Bancshares (SFBS) 4Q EPS $1.25 vs est. $1.24 on NII $122.4Mm vs est. $128.9Mm, credit loss provision $7.135Mm, BV/shr $23.89

·     Selective Insurance Group (SIGI) 4Q sees adj EPS $1.46 vs est. $1.38, pre-tax net catastrophe losses approx $45.7Mm, 4Q combined ratio 94.7%

·     Zions Bancorp (ZION) Q4 EPS $1.84 vs. est. $1.64; Q4 provision for credit losses $43M and Q4 net interest income $720M, up 30% y/y

 

Healthcare

·     Johnson & Johnson (JNJ) Q4 adj EPS $2.35 vs. est. $2.23; Q4 revs $23.7B vs. est. $23.94B; sees FY23 adjusted operation EPS $10.50 vs. est. $10.33; sees FY23 adjusted operational sales growth excluding COVID-19 Vaccine of 4.0% vs. est. $97.84B

·     Amazon (AMZN) is adding a prescription drug discount program called RxPass, a subscription service for customers who have Prime memberships. Amazon said people will pay $5 a month to fill as many prescriptions as they need from a list of about 50 generic medications, which are generally cheaper versions of brand-name drugs.

·     Axcella Therapeutics (AXLA) said it had submitted an investigational new drug application to the U.S. FDA for a mid-to-late-stage trial of its long COVID fatigue treatment AXA1125.

·     CymaBay Therapeutics (CBAY) announces proposed public offering of common stock and pre-funded warrants.

·     Danaher (DHR) Q4 adj EPS $2.87 vs. est. $2.51; Q4 revs $8.37B vs. est. $7.88B; sees Q1 base business core revenue up mid-single digits and sees FY23 base business core revenue up high-single digits.

·     Pliant Therapeutics (PLRX) announces $175M common stock offering.

 

Industrials & Materials

·     3M (MMM) Q4 adj EPS $2.28 vs. est. $2.36; Q4 revs $8.1B vs. est. $8.04B; Q4 Operating margin 7.8%, vs. est. 20.2%; said slower-than-expected growth was due to rapid declines in consumer-facing markets along with significant slowing in China due to COVID-related disruptions; will reduce approximately 2,500 global manufacturing roles; sees year EPS $8.50-$9.00 vs. est. $10.22

·     General Electric (GE) Q4 adj EPS $1.24 vs. est. $1.13; Q4 revs $21.8B vs. est. $21.59B; Q4 total orders $25.4B; guides FY organic rev growth mid-to-high teens; sees FY adj EPS $1.60-$2.00 below consensus $2.37; sees FY23 Aerospace organic revenue growth mid to high teens.

·     Concrete Pumping Holdings (BBCP) 4Q EPS $0.14 vs est. $0.13, adj EBITDA $36.3Mm vs est. $33.5Mm, revs $114.9Mm vs est. $103.2Mm; sees FY23 revs $420-445Mm vs est. $424.6Mm

·     Crane Inc. (CR) Q4 EPS $2.13 tops consensus $1.90; Q4 revenue $824M vs. est. $822.57M; sees FY23 EPS $3.40-$3.70 and sees FY23 revenue $1.98B, both post-separation

·     Rocket Lab USA, Inc. (RKLB) said it is proceeding with a launch attempt tomorrow of the Company’s first Electron mission from U.S. soil.

 

Technology, Media & Telecom

·     The U.S. Justice Department is poised to sue Alphabet Inc’s (GOOGL) regarding the company’s dominance over the digital advertising market space, Bloomberg News reported.

·     Logitech (LOGI) Q3 EPS $1.14 vs. est. $1.18; Q3 revs $1.27B vs. est. $1.31B; compared to Q3 of the prior year, Gaming sales declined 16 percent and 10 percent respectively; sees FY23 revenue down 15% to down 13% vs. est. $4.7B; sees FY23 operating income $550M-$600M.

·     Yext Inc (YEXT) said it plans to reduce size of company’s workforce by approximately 8% of full-time employees; implemented restructuring plan intended to reduce operating expenses, improve operating margins, & position c0 for profitable future growth