Early Look

Wednesday, January 25, 2023

Futures	Up/Down	%	Last
Dow	-174.00	0.51%	33,652
S&P 500	-29.25	0.73%	4,003
Nasdaq	-147.50	1.24%	11,762

 

 

U.S. futures are pointing to a lower open, as the S&P slides -0.7%, just holding above the 4,000 level and off overnight low of 3,996.50 after shares of Microsoft (MSFT) reverses overnight gains of as much as +4.5% and are now down -2.5% following revenue guidance on its conference call. The company guided Q3 revs $50.5B-$51.5B vs. est. $52.4B saying “we are seeing customers exercise caution,” which resulted in “moderating consumption growth in Azure and lower-than-expected growth in new business” in December. The commentary weighed on software stocks overnight, dragging the Nasdaq lower. Another heavy dose of earnings again today will be the focus as markets await GDP data and PCE core inflation tomorrow and then consumer prices (CPI) on Friday ahead of next week’s FOMC meeting. In Asian markets, The Nikkei Index rose 95 points to 27,395, while the Shanghai and Hang Seng Index remain closed for the lunar holiday. In Europe, the German DAX is down about -50 points to 15,045, while the FTSE 100 is down -5 points to 7,750. Bitcoin prices show weakness for the first time in this month, down -1.5% around $22,500. Treasury yields slip and the dollar edges higher.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -2.86 points, or 0.07%, to 4,016.95.

·     The Dow Jones Industrial Average rose 104.40 points, or 0.31%, to 33,733.96.

·     The Nasdaq Composite slid -30.14 points, or 0.27%, to 11,334.27.

·     The Russell 2000 Index slipped -5.16 points, or 0.27% to 1,885.61.

 

Economic Calendar for Today

·     7:00 AM ET          MBA Mortgage Applications Data

·     10:30 AM ET        Weekly DOE Inventory Data

·     1:00 PM ET           US Treasury to sell $43B in 5-year notes

 

Earnings Calendar:

·     Earnings Before the Open: ABT ADP APH BA BLFY BOKF CFFN CPF ELV EXTR FCX GD GPI HES HESM KMB LKFN LRCX MKTX MNRO MPX NDAQ NEE NEP NSC PB PGR RES T TDY TEL TXT USAP USB

·     Earnings After the Close: ALRS AMP AXTA AZPN BOOT BRKL BWB CACI CALX CASH CATY CCI CNS CSX CUBI CVLG EQBK FLEX HBNC HXL IBM INBK KNX LBRT LC LEVI LOB LVS NOW NVEC OBNK PKG PLXS RJF RLI SEIC SLG STLD STX TER TSLA URI WASH WOLF XM

 

 

Macro	Up/Down	Last
Nymex	0.15	80.28
Brent	0.07	86.20
Gold	-11.00	1,924.40
EUR/USD	-0.0027	1.0856
JPY/USD	-0.39	129.76
10-Year Note	-0.031	3.436%

 

 

World News

·     Federal Reserve Vice Chair Lael Brainard is the frontrunner to become the head of the White House’s National Economic Council, the Washington Post reported.

·     The German Ifo institute said its business climate index rose to 90.2, in line with consensus according to a Reuters poll of analysts and up from a reading of 88.6 in December.

·     Germany pledged to supply Ukraine with more than 100 Leopard 2 battle tanks in a joint effort with European allies, providing Kyiv’s forces with a significant upgrade in the firepower they can deploy against their Russian invaders – Bloomberg.

 

Sector News Breakdown

Consumer

·     Booking Holdings (BKNG) downgraded to Hold from Buy at Gordon Haskett

·     Stride Inc. (LRN) Q2 revs $458.4M vs. est. $441.3M; guides Q3 revs $445M-$465M vs. est. $436.3M; sees FY23 revs $1.775B-$1.815B vs. est. $1.73B

·     Hyzon Motors (HYZN) CFO Chong to resign effective Feb. 10

 

Energy

·     The American Petroleum Institute said weekly crude stockpiles rose +3.378mm with inventories at Cushing rising +3.928mm barrels, the biggest build since April 2020. Also, gasoline inventories with build of +620k barrels and Distillates -1.929mm drawdown.

·     Enphase Energy (ENPH) downgraded to Neutral from Overweight at Piper Sandler.

 

Financials

·     Capital One Financial (COF) 4Q adj EPS $2.82 vs est. $3.84 on NII $7.2B vs est. $7.2B; provision increased $747Mm to $2.4B

·     Hanmi Financial (HAFC) 4Q EPS $0.93 vs est. $0.83 on NII $64.6Mm vs est. $64.4Mm; allowance for credit losses $71.5Mm, ratio of allowance to loans 1.2%; tangible common equity to tangible assets 8.5%

·     Navient Corp. (NAVI) Q4 adj EPS $0.85 vs. est. $0.83; Q4 revs fall to $138M from $189M y/y and below est. $246.5M

·     QCR Holdings (QCRH) 4Q adj EPS $1.83 vs est. $1.74 on adj NII $65.1Mm vs est. $63.7Mm; nonperforming assets improved by 51% and represent 0.11% of total assets.

·     UMB Financial (UMBF) 4Q EPS $2.06 vs est. $1.99 on NII $245.17Mm vs est. $243.3Mm; says credit quality remained strong with net charge-offs of just 0.04% of avg loans.

·     Western Alliance Bancorp (WAL) Q4 EPS $2.67 vs. est. $2.66; Q4 revs $701.2M vs. est. $723.3M; Q4 net interest margin 3.98% vs. 3.33% y/y.

·     WesBanco (WSBC) Q4 adj EPS $0.84 vs. est. $0.83; Total deposits $13.13 billion, -3.4% y/y and NIM 3.49% vs. 2.97% y/y; provision for credit losses of $64.3 million

 

Healthcare

·     Intuitive Surgical (ISRG) 4Q adj EPS $1.23 vs est. $1.25 on revs rose 7% y/y to $1.66B vs est. $1.67B; co said in 2H’22 saw COVID-19 resurgences impact Da Vinci Procedure volumes in China, COVID-19 may continue to have, an adverse impact on the company’s procedure volumes; sees FY23 procedure growth up 12%-16%

·     NextGen Healthcare (NXGN) Q3 adj EPS $0.26 vs. est. $0.27; Q3 revs $161.9M vs. est. $162M; backs FY23 EPS view $0.93-$0.99 vs. est. $0.97; and boosts FY23 revenue view to $642M-$650M from $630M-$640M (est. $639.67M).

·     eHealth (EHTH) guides Q4 revs $190M-$200M vs. est. $176.5M; sees year revs $395M-$405M vs. consensus $385.6M.

·     Pliant Therapeutics (PLRX) 8.33M share Secondary priced at $30.00.

 

Industrials & Materials

·     Canadian National (CNI) Q4 EPS C$2.10 vs. est. C$2.08; $CNI Q4 revs C$4.5B vs. est. C$4.48B; qtrly operating ratio of 57.9%, an improvement of 0.4 points, or remained flat on an adjusted basis; approved an 8% increase to quarterly cash dividend; said it expects to deliver 2023 eps growth in low single-digit range due to a softer economic outlook.

·     Silgan Holdings (SLGN) Q4 EPS $0.84 vs. est. $0.82; Q4 revs $1.46B vs. est. $1.54B; sees FY23 EPS $3.95-$4.15 vs. consensus $4.08.

·     Textron (TXT) Q4 cont ops EPS $1.07 vs. est. $1.00; Q4 revs $3.64B vs. est. $3.32B; Q4 aviation backlog of $6.4B at year-end 2022, up $2.3B from year-end 2021.

 

Technology, Media & Telecom

·     Microsoft Corp. (MSFT) 2Q adj EPS $2.32 vs est. $2.29 on revs $52.7B up 2% y/y vs est. $52.9B; intelligent cloud revs $21.5B +18%, more personal computing revs $14.2B -19%, productivity and business process revs $17B +7%; cloud revs $27.1B (vs. est. $26.75B); Q2 azure and other cloud services revs +31%, driven by strong demand for consumption-based services vs. est. 30.8%; shares slipped after hours after guiding Q3 revs $50.5B-$51.5B vs. est. $52.4B and CFO said “we are seeing customers exercise caution,” which resulted in “moderating consumption growth in Azure and lower-than-expected growth in new business” in December.

·     AT&T (T) Q4 adj EPS $0.61 vs. est. $0.57; Q4 revs $31.34B vs. est. $31.39B; qtrly postpaid net adds of 656,000 and added 280,000 fiber customers in Q4; sees wireless service revenue growth of 4% or higher; sees FY23 adjusted ebitda growth of 3% or higher, adjusted eps of $2.35 to $2.45, and sees capital investment of about $24 bln, consistent with 2022 levels

·     ASML Holding NV (ASML) topped Q4 earnings and said its order backlog had grown to a record 40 billion euros ($43.62 billion) at the end of the year; reported fourth-quarter net profit of 1.82 billion euros, up from 1.77 billion a year earlier, on revenue of 6.43 billion euros.

·     F5 Networks (FFIV) Q1 EPS $2.47 vs. est. $2.33; Q4 revs $700.4M vs. est. $700.7M; guides Q2 EPS $2.36-$2.48 on revs $690M-$710M vs. est. $2.51 and $705.1M; backs FY23 revenue growth view of 9%-11%

·     Texas Instruments (TXN) 4Q EPS $2.13 vs est. $1.98 on revs $4.67B vs est. $4.62B; sees 1Q revs $4.17-4.53B vs est. $4.41B and EPS $1.64-1.90 vs est. $1.87.

·     Agilysys (AGYS) 3Q adj EPS $0.26 vs est. $0.21 on revs $49.9M vs est. $48.1M; adj EBITDA $8.1M vs est. $7.75M; says well-positioned to beat FY guidance provided at start of fiscal year.

·     News Corporation (NWS) announced that the company’s Board of Directors received a letter from K. Rupert Murdoch withdrawing the proposal to explore a potential combination of News Corp and Fox Corporation (FOX)