Early Look
Wednesday, July 17, 2024
Futures |
Up/Down |
% |
Last |
Dow |
-62.00 |
0.15% |
41,193 |
S&P 500 |
-42.00 |
0.73% |
5,675 |
Nasdaq |
-251.50 |
1.22% |
20,346 |
For the first time in more than a week, U.S. futures are pointing to a lower open following strength in the U.S. dollar and weakness in semiconductors as ASML shares fell on guidance, clouded by the prospect of severe U.S. restrictions on its business in China after White House comments. The U.S. dollar falls with the DXY -0.5% to 103.75 after Trump view on the currency, saying recently that the dollar’s strength has hurt American competitiveness and that the weakness of the yen and yuan was a trading advantage for Japan and China (as per Bloomberg). The weakness comes after major averages posted an incredible day on Tuesday that saw the Dow Jones Industrial Average reach an all-time closing high after U.S. retail sales data supported the narrative that the Federal Reserve is approaching its easing cycle, reining in inflation while avoiding a recession. The S&P 500 index climbed for the 10th time in the last 11 days (and S&P futures made it 10 consecutive intraday record highs with the late day rally). The Russell 2000 Smallcap index surged 3.5%, its 5th straight day of gains of more than 1% and climbing over 12% during that stretch since the CPI data last week boosted interest rate sensitive names. The Nasdaq finished higher but lagged as tech took a mild breather, though S&P sectors for Industrials, Financials, and Healthcare all finished at record highs. Even gold finished just shy of its all-time best and Bitcoin prices rose 12% in a 2-day stretch. It has been a remarkable run for global stock markets into earnings. Dow transportation stocks also outperformed the broader indexes, rising 500 points as investors increasingly focused on undervalued areas of the market. In Asian markets, The Nikkei Index dropped -177 points to 41,097, the Shanghai Index dropped -13 points to 2,962, and the Hang Seng Index rose 11 points to 17,739. In Europe, the German DAX is down -60 points to 18,457, while the FTSE 100 is flat at 8,163.
Market Closing Prices Yesterday
- The S&P 500 Index gained 35.98 points, or 0.64%, to 5,667.20.
- The Dow Jones Industrial Average surged 742.76 points, or 1.85%, to 40,954.48.
- The Nasdaq Composite climbed 36.77 points, or 0.20%, to 18,509.34.
- The Russell 2000 Index spiked 76.65 points, or 3.50% to 2,263.67.
Economic Calendar for Today
- 7:00 AM ET MBA Mortgage Applications Data
- 8:30 AM ET Housing Starts M/M for June…est. 1.3M
- 8:30 AM ET Building Permits M/M for June…est. 1.395M
- 9:00 AM ET Fed’s Barkin Speaks on Economy, Q&A
- 9:15 AM ET Industrial Production M/M for June…est. +0.3%
- 9:15 AM ET Capacity Utilization June…est. 78.4%
- 10:30 AM ET Weekly DOE Inventory Data
- 1:00 PM ET US Treasury to sell $13B in 20-year notes
- 2:00 PM ET Federal Reserve Releases Beige Book
Earnings Calendar:
- Earnings Before the Open: ALLY CFG ELV FCCO FHN JNJ NTRS PLD SYF USB
- Earnings After the Close: BANR CCI CNS DFS EFX FNB FR HBCP HOMB KMI LBRT MMLP NVEC OZK REXR SLG SNV STLD TFIN UAL WTFC
Other Key Events:
- Amazon’s annual Prime Day event to take place July 16th and 17th
- Republican National Convention 7/15-7/18, in Milwaukee, WI
Macro |
Up/Down |
Last |
Nymex |
0.44 |
81.20 |
Brent |
0.24 |
83.97 |
Gold |
5.70 |
2,473.50 |
EUR/USD |
0.0043 |
1.0942 |
JPY/USD |
-1.73 |
156.61 |
10-Year Note |
+0.008 |
4.175% |
World News
- UK inflation held at 2% in June (vs. est. 1.9%) while strong underlying price pressures prompted investors to reduce bets that the Bank of England will cut interest rates in two weeks. Inflation for services was 5.7%, the Office for National Statistics said, unchanged from May.
- Federal Reserve Bank of New York President John Williams said inflation data over recent months has been encouraging, but he needs to see more progress.
Sector News Breakdown
Consumer
- Five Below Inc (FIVE) Joel Anderson steps down as president and CEO; cuts Q2 sales view to $820M-$826M; total sales for 10-week period ended July 13 increased by 9.5%; forecasts Q2 comp sales -6% to -7%, vs. est. -4.66%; lowers Q2 EPS forecast to $0.53-$0.56 from $0.57-$0.69 prior (est. $0.63).
- Abercrombie & Fitch Co. (ANF) will replace Equitrans Midstream Corp. (ETRN) in the S&P MidCap 400, and Gates Industrial Corporation plc (GTES) will replace Abercrombie & Fitch in the S&P SmallCap 600 effective prior to the opening of trading on Monday, July 22. S&P 500 constituent EQT Corp. (EQT) is acquiring Equitrans Midstream in a deal expected to close soon, pending final closing conditions.
- EssilorLuxottica (ESLOY) has agreed to buy streetwear brand Supreme from VF Corporation (VFC) for $1.5 billion, both companies said on Wednesday,
Energy, Industrials and Materials
- Boeing’s (BA) Washington state factory workers will vote on Wednesday on whether to give their union a strike mandate as they seek a 40% raise in their first full negotiation with the planemaker in 16 years. Many of the estimated 30,000 workers will rally in support of a mandate at Seattle’s T-Mobile Park.
- Chevron (CVX) downgraded to Market Perform from Outperform at Bernstein.
- Fluor (FLR) upgraded to Overweight from Sector Weight at KeyBanc.
- American Airlines (AAL) downgraded to Hold from Buy at TD Cowen and Spirit (SAVE) downgraded to Sell from Hold in the airline sector.
- Bloom Energy (BE) said it will provide CoreWeave with power solutions for an AI data center.
- JB Hunt (JBHT) Q2 EPS $1.32 below consensus $1.52 and Q2 revs $2.93B vs. est. $3.04B; said the decline in revenue was primarily driven by a 5% decrease in gross revenue per load in Intermodal and a decline in load volume of 25% in Integrated Capacity Solutions, 9% in Truckload, and 9% in Dedicated Contract Services.
- Spirit Airlines (SAVE) said Q2 total revenue estimated to be approximately $1.28B (vs. prior $1.32B-$1.34B) vs. consensus of $1.33B; said forecasts AOG credits to be issued by Pratt & Whitney based on AOG days in Q2 2024 of $37M.
Financials
- Citizens Financial (CFG) Q2 EPS $0.82 vs. est. $0.78; Q2 revs $1.96B vs. est. $1.95B; Q2 Net interest margin, FTE 2.87% vs. 2.91% in Q1 and 3.17% last year; outlook Q3 NII down about 1-2% vs estimates $1.42B and expect NII/NIM to rebound in Q424, with return to positive operating leverage in Q424.
- Fulton Financial (FULT) Q2 operating EPS $0.47 vs. est. $0.30; Q2 net interest income $241.7M vs. $212.9M last year and reports Q2 net interest margin 3.43% vs. 3.40% last year.
- Hancock Whitney (HWC) Q2 EPS $1.31 vs. est. $1.20; Q2 revs $362.5M vs. est. $359.1M; Q2 loans decreased $59.3M, or 1% linked quarter annualized, deposits decreased $575.2 million, or 8% LQA, NIM 3.37%, up 5 bps compared to prior quarter; CET1 ratio estimated at 13.25%, up 60 bps linked quarter.
- Interactive Brokers (IBKR) Q2 EPS $1.76 vs. est. $1.73; Q2 adj revs $1.29B vs. est. $1.273B; said Q2 customer accounts increased 28% to 2.92M y/y, customer equity increased 36% to $497.2B y/y, total DARTs increased 28% to 2.39 million y/y and customer margin loans increased 32% to $55.1B y/y; Q2 commission revenue increased 26% to $406M on higher customer trading volumes; customer trading volume in options, stocks and futures rose 35%, 26% and 10%, respectively.
- Morgan Stanley (MS) downgraded to Perform from Outperform at Oppenheimer.
- Synchrony (SYF) Q2 EPS $1.55vs. est. $1.35; Q2 revs $3.71B vs. est. $4.29B; Q2 CET1 capital ratio 12.6%; Q2 book value per share $36.24; Net interest income $4.41B vs. $4.41B q/q, total deposits $83.10B, -0.5% q/q, vs. est. $84.85B and net interest margin 14.5% vs. 14.6% q/q, vs. est. 14.4%.
Healthcare
- Johnson & Johnson (JNJ) Q2 adjusted EPS $2.82 vs. est. $2.70; Q2 revenue $22.4B vs. est. $22.31B; J&Js global oncology sales rose 16% to $5.09 billion for the second quarter; J&Js other main unit, medical devices, posted sales growth of 2.2% for the quarter; Overall J&Js pharma unit posted sales growth of 5.5%; cuts FY24 adjusted EPS to $10.00-$10.10 from $10.60-$10.75 (est. $10.01); raises FY24 operational rev view to $89.2B-$89.6B from $88.7B-$89.1B (est. $88B).
- Elevance Health (ELV) Q2 adjusted EPS $10.12 vs. est. $10.01; Q2 revenue $43.2B vs. est. $43.05B; sees FY24 adjusted EPS ‘at least’ $37.20 per share vs. prior view (est. $37.28).
- Roche (RHHBY) reported promising early-stage data from an experimental obesity pill acquired as part of its $2.7B buyout of Carmot Therapeutics; Roche’s once-daily pill, CT-996, helped patients lose 6.1% of their body weight on average within four weeks in an early-stage study. LLY’s orforglipron, an oral obesity drug, had resulted in weight loss of about 6% to 7% in patients over 12 weeks in a mid-stage study. Shares of obesity drug names LLY, NVO, VKTX lower.
- UnitedHealth (UNH) upgraded to Buy from Hold at Jefferies and raised tgt to $647 from $481.
Technology, Media & Telecom
- Aehr Test Systems (AEHR) announced it entered into a stock purchase agreement to acquire all the outstanding capital stock of Incal Technology for $21M in cash/stock; receives $12.7M in orders for WaferPak full wafer contactors.
- ASML (ASML) shares stumble -7% pre mkt after Net income of 1.6B euros ($1.74B) for the quarter ended June 30 was down 19% from a year earlier but beat the 1.41B expected by analysts; Revenue fell 9.5% to 6.2B euros but topped an analyst’s estimate of 6.04B; shares fell after Bloomberg reported on Tuesday that the U.S. is telling allies, including the Netherlands, it may take unilateral action to restrict exports of chip equipment to China if they fail to do so themselves.
- Omnicom (OMC) Q2 adj EPS $1.95 vs. est. $1.93; Q2 operating profit fell -7.3% y/y to $510.3M vs. est. $573.7M; Q2 revs $3.85B vs. est. $3.82B; said 5.2% organic growth in Q2 drove solid growth in adjusted EBITA & EPS, with good performance in our larger markets and disciplines; Q2 operating expenses increased $284.3M, or 9.3%.
- GitLab (GTLB) shares rise pre mkt after the U.S. provider of cloud-based software development tools whose investors include Google parent Alphabet, is exploring a sale after attracting acquisition interest, according to people familiar with the matter. https://tinyurl.com/3v3ab4k9
Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.