Early Look

Wednesday, July 17, 2024

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 10^th 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 5^th 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.

• 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.

• 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 After the Close: BANR CCI CNS DFS EFX FNB FR HBCP HOMB KMI LBRT MMLP NVEC OZK REXR SLG SNV STLD TFIN UAL WTFC

• Republican National Convention 7/15-7/18, in Milwaukee, WI

• 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.

• 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,

• 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.

• 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%.

• 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.

• 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