Early Look

Tuesday, July 12, 2022

Futures	Up/Down	%	Last
Dow	-204.00	0.66%	30,936
S&P 500	-22.25	0.58%	3,834
Nasdaq	-41.50	0.35%	11,842

 

 

U.S. equities looking lower after falling Monday, as Wall Street braced for big company earnings reports slated for later in the week which could signal how inflation is impacting businesses as well as rising inflation fears ahead of the consumer price index (CPI) data tomorrow morning. The tech heavy Nasdaq was down 2% Monday as expectations are for the CPI inflation to increase from the 8.6% level in May. The Core CPI, which excludes food and energy, should show fractional improvement from the 6.0% in May. White House spokeswoman Jean-Pierre said late last night “I expect new CPI data to be highly elevated.” Bitcoin prices looking lower for a 4^th day, dropping below $20,000 overnight to $19,600 last. The euro sank to just within parity of the dollar on Tuesday and stock markets fell as the prospect of further central bank tightening and worries about the health of economies worldwide. Oil extended losses as a Covid-19 resurgence in China added to concerns about a global economic slowdown, with the International Energy Agency warning the worst of the energy crisis may be ahead. In Asian markets, The Nikkei Index dropped -475 points or 1.77% to 26,336, the Shanghai Index slides nearly 1% to 3,281, and the Hang Seng Index declines -279 points or 1.32% to 20,844. In Europe, the German DAX is down -0.65% to 12,750, while the FTSE 100 slips -0.3% to 7,175.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -44.95 points, or 1.15%, to 3,854.43

·     The Dow Jones Industrial Average fell -164.31 points, or 0.52%, to 31,173.84

·     The Nasdaq Composite tumbled -262.71 points, or 2.26%, to 11,372.60

·     The Russell 2000 Index declined -37.36 points, or 2.11% to 1,732.01

 

Economic Calendar for Today

·     6:00 AM ET          NFIB Small Business Optimism Index for June

·     7:45 AM ET          ICSC Weekly Retail Sales

·     8:55 AM ET          Johnson/Redbook Weekly Sales

·     4:30 PM ET          API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ANGO, PEP

·     Earnings After the Close: none

 

Other Key Events:

·     Amazon (AMZN) 2-day “Prime Day” event, 7/12-7/13

·     China Imports & Export data for June

·     SEMICon West 2022, 7/12-7/14, in San Francisco

·     Mizuho Therapeutics Expert Seminar (virtual), 7/12

·     William Blair Biotech Focus Conference (virtual), 7/12-7/14

 

 

Macro	Up/Down	Last
Nymex	-2.61	101.48
Brent	-2.45	104.65
Gold	-0.80	1,730.80
EUR/USD	-0.0028	1.0012
JPY/USD	-0.51	136.91
10-Year Note	-0.069	2.923%

 

 

World News

·     U.S. small-business confidence dropped to the lowest level in nearly 9-1/2 years in June; the National Federation of Independent Business (NFIB) said its Small Business Optimism Index fell 3.6 points last month to 89.5, the lowest level since January 2013.

·     The head of the International Energy Agency (IEA) said on Tuesday the G7 proposal to impose a price cap on Russian oil should include refined products as well. The Group of Seven rich nations are considering imposing a price cap on Russian oil to keep oil flowing and curb inflation, while still limiting revenue to Moscow for the war on Ukraine – Reuters

·     Russia confirmed earlier reports that they are seeking payments for LNG in roubles, expanding the existing gas-for-roubles plan to include LNG as well as pipeline gas

·     Australia’s July consumer confidence reading fell further another 3% (MoM) to be -23% (YoY). Australia’s NAB business survey showed business conditions fell 2pts to 13 in June, from a downwardly revised 15 last month. Business confidence fell 5pts to an index level of 1

 

Sector News Breakdown

Consumer

·     Gap Inc. (GPS) announced CEO Sonia Syngal stepped down after spending a total of 18 years at the retailer, rising to the role of CEO in March 2020; her exit from the company is effective immediately; said sees Q2 net sales to decline in the ~high-single digit range, relatively in-line with its prior expectations

·     PepsiCo reports (PEP) Q2 core EPS $1.86 vs. est. $1.74; Q2 revs rise 5.2% to $20.23B vs. est. $19.51B; raises 2022 organic revenue to rise 10%, up from previous forecast of an 8% increase, helped by sustained demand for sodas and snacks even in the face of rising prices

·     GameStop (GME) has introduced an NFT marketplace that will enable gamers, creators, collectors, and other community members to buy, sell and trade NFTs

·     PriceSmart (PSMT) Q3 EPS $0.62 on revs $1.03B vs. $895.3M a year ago; Q3 22, net merchandise sales increased 16.5% to $999M from $857.5M Y/Y

·     Canoo Inc. (GOEV) shares rise over 20% after the electric car maker said it has signed a purchase agreement with retailer Walmart Inc. (WMT) which will purchase 4,500 of its all-electric delivery vehicles, with the option to purchase up to 10,000 units

·     Peloton (PTON) to stop in-house bike production as part of turnaround, reported Bloomberg. PTON will rely solely on partners for manufacturing in bid to cut costs and simplify operations and will stop building its bikes and treadmills at its own factories

 

Energy, Industrials and Materials

·     Oil extended losses as a Covid-19 resurgence in China added to concerns about a global economic slowdown, with the International Energy Agency warning the worst of the energy crisis may be ahead

·     In trucking and logistics, Wolfe Research upgraded KNX from Underperform to Peer Perform, but downgrading UPS, EXPD and ODFL from Peer Perform to Underperform based on a mix of earnings and valuation risk. We’re also downgrading CHRW from Outperform to Peer Perform as we expect net revenue/load to peak in 2Q

·     New Gold (NGD) lowered full-year guidance for gold equivalent production to 325K-365K oz from 380K-440K oz previously, including gold production of 260K-290K oz and copper output of 25M-35M lbs from prior guidance of 295K-335K oz and 35M-45M lbs, respectively

·     Union Pacific (UNP) and Norfolk Southern (NSC) both downgraded to Neutral from Overweight at JPMorgan in railroads

·     For airlines, Heathrow airport asks airlines to stop selling summer tickets

 

Financials

·     American Express (AXP), Capital One (COF) both downgraded to Equal Weight from Overweight at Morgan Stanley and cutting estimates across U.S. banks and consumer finance coverage as recession risks rise and taking some consumer chips off the table

·     JPMorgan (JPM) upgraded to Buy from Neutral at Citigroup

·     Regions Financial (RF) downgraded to Neutral from Buy at Citigroup

·     Billionaire hedge fund investors Bill Ackman said late Monday that he will unwind his $4 billion blank check company, the biggest on record, and return cash to shareholders after being unable to find a suitable takeover Target. Ackman has raised the cash through Pershing Square Tontine Holdings (PSTH) in July of 2020, and had hoped to use the investment structure to search for companies to either merge with or purchase completely

 

Healthcare

·     Cano Health (CANO) files $500M mixed securities shelf

·     Pliant Therapeutics (PLRX) announces $150M common stock offering

·     1Life Healthcare (ONEM) downgraded to Hold from Buy at Deutsche Bank

 

Technology, Media & Telecom

·     Cohu (COHU) narrows Q2 revenue view to $216M-$218M from $205M-$221M (est. $213.5M) saying Q2 ending backlog is expected to be approximately $342 million, substantially shipping over the next three quarters