Early Look

Wednesday, June 1, 2022

Futures	Up/Down	%	Last
Dow	94.00	0.29%	33,065
S&P 500	1.00	0.02%	4,132
Nasdaq	-19.50	0.15%	12,627

 

 

U.S. S&P futures are flat to slightly higher to start the month after a late day decline Tuesday left major averages lower for the day, but for the month of May, the S&P 500 rose 0.01%, the Dow rose 0.04% and the Nasdaq fell 2.05%. Treasury yields ended the day sharply higher but still posted monthly declines, driven by softening economic reports and indications U.S. inflation may have peaked. The U.S. 2-year yield dropped 18.4 bps in May (largest monthly decline since March 2020), while the 10-year yield fell 9.3 bps, its’ first monthly decline since November 2021 after hitting highs above 3.2% earlier in the month. Fears of soaring inflation and a potentially harsher crackdown than previously expected by the Federal Reserve on sharply rising consumer prices remains a market concern. European stocks and US futures struggled for direction amid sustained inflation and rising oil prices ahead of OPEC+ ministers’ meeting on the group’s supply policy. Note 9 of the 11 major S&P 500 sectors fell on Tuesday, with energy leading the decline after it earlier topped gainers. Consumer discretionary rose the most paced by a 5% gain in Amazon, followed by communication services. Oil prices retreated after the Wall Street Journal reported some producers were exploring the idea of suspending Russia’s participation in the OPEC+ production deal – but prices are back on the move higher today. Last week’s rally from 14-month lows in the S&P 500 pushed the benchmark to finish May up 0.01%. In Asian markets, The Nikkei Index rose +0.65% to 27,457, the Shanghai Index slipped a few points to 3,182 and the Hang Seng Index lost -120 points to 21,294. In Europe, the German DAX is up +0.25% to 14,425, while the FTSE 100 is down about -20 points to 7,585. Beijing reported 14 symptomatic C-19 cases & 1 asymptomatic case and in Shanghai, reported 5 symptomatic C-19 cases & 10 asymptomatic cases; no cases reported outside the quarantined zone. Gas at new all-time high of $4.671 average.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -26.09 points, or 0.63%, to 4,132.15

·     The Dow Jones Industrial Average fell -222.84 points, or 0.67%, to 32,990.12

·     The Nasdaq Composite slipped -49.74 points, or 0.41%, to 12,081.39

·     The Russell 2000 Index declined -23.85 points, or 1.26% to 1,864.04

 

Economic Calendar for Today

·     7:00 AM ET         MBA Mortgage Applications Data

·     8:15 AM ET         ADP Private Payroll report for May…est. 300K

·     9:45 AM ET         S&P Global Manufacturing PMI, for May

·     10:00 AM ET       ISM Manufacturing PMI for May…est. 54.5

·     10:00 AM ET       Construction Spending M/M for April…est. +0.5%

·     10:00 AM ET       JOLTs Job Openings for April…est. 11.4M

·     11:30 AM ET       Fed’s Williams Makes Opening Remarks

·     1:00 PM ET         Fed’s Bullard Discusses the Economic and Policy Outlook

·     2:00 PM ET         U.S. Federal Reserve Releases Beige Book

·     4:30 AM ET          The American Petroleum Institute (API) weekly inventory data

 

Earnings Calendar:

·     Earnings Before the Open: CONN, CPRI, DCI, HOV

·     Earnings After the Close: AI, AMSC, CHWY, CRDO, ESTC, GME, HPE, ITI, MDB, NCNO, NTAP, PATH, PSTG, PVH, S, SMTC, VEEV

 

Other Key Events:

·     Bernstein 38th Annual Strategic Decisions Conference, 6/1-6/3, in NY

·     Cowen 50th Annual Technology, Media & Telecom Conference, 6/1-6/2, in NY

·     Deutsche Bank Global Financial Services Conference, 5/31-6/1, I NY

·     Jefferies Software Conference, 6/1-6/2, in San Francisco

·     Loop Capital 2022 Investor Conference (virtual), 6/1-6/2

·     Piper Philadelphia MedTech Bus Tour, 5/31-6/1, in Philadelphia

·     RBC Capital Consumer & Retail Conference, 6/1-6/2, in Boston

·     Wells Fargo Energy Conference, 6/1-6/2, in Texas

·     Wells Fargo West Coast MedTech Tour, 5/31-6/3, in Menlo Park, CA

 

 

Macro	Up/Down	Last
Nymex	1.60	116.27
Brent	1.98	117.56
Gold	-16.80	1,831.60
EUR/USD	-0.0011	1.0722
JPY/USD	0.71	129.40
10-Year Note	+0.02	2.864%

 

 

World News

·     China May Caixin/Markit Manufacturing PMI (final) reported at 48.1 vs 48.0 consensus

·     Australian Q1 GDP beat at +0.8% q/q vs 0.7% consensus: 3.3% y/y vs. 3.0% consensus

·     The Bank of Japan must maintain its massive monetary stimulus as inflation has yet to sustainably achieve its 2% target, deputy governor Masazumi Wakatabe said on Wednesday, stressing the need to create an environment in which wages can rise faster.

 

Sector News Breakdown

Consumer

·     Capri Holdings (CPRI) authorized new $1B share buyback program; Q4 adj EPS $1.02 vs. est. $0.82; Q1 revs $1.49B vs. est. $1.41B; sees 2023 revs about $5.95B from $6.1B prior and est. $6.08B; Versace revenue $315M, +34% Y/Y and Jimmy Choo revenue $156M, +26% Y/Y

·     ChargePoint (CHPT) Q1 EPS loss (-$0.27) vs. est. loss (-$0.19); Q1 revs rose 102% to $81.6M vs. est. $75.7M; sees Q2 revs $96M-$106M vs. est. $105.6M; sees year revs $450M-$500M vs. est. $$471.6M; Over 188,000 activated ports under management as of April 30, with approximately 57,000 in Europe

·     Sportsman Warehouse (SPWH) Q1 EPS $0.05 vs. est. $0.00; Q1 revs $309.5M vs. est. $305.3M; Q1 comp store sales fell (-11.6%) vs. +24.1% Y/Y; guides Q2 EPS $0.22-$0.30 vs. est. $0.34 and Q2 sales $330M-$350M vs. est. $361.2M

·     Victoria’s Secret (VSCO) 1Q adj EPS $1.11 vs est. $0.84 on revs $1.484B vs est. $1.479B, comps -8%; guides 2Q EPS $0.95-1.25 vs est. $1.19 and sales -low-single to +low-single digit vs est. -0.84%, sees 2Q op Inc $125-155Mm vs est. $150.4Mm

·     DoorDash (DASH) sees marketplace gross order value $12.5B-$12.7B, up from $12.1B-$12.5B prior and still sees adjusted EBITDA $0 to $100 million

·     Li Auto Inc. (LI) said it delivered 11,496 Li ONEs in May 2022, up 165.9% year over year. The cumulative deliveries of Li ONE have reached 171,467 since the vehicle’s market debut in 2019.

·     NIO (NIO) delivered 7,024 vehicles in May 2022, representing 38% growth sequentially and +4.7% Y/Y; May deliveries consisted of 5,317 premium smart electric SUVs, including 746 ES8s, 2,936 ES6s and 1,635 EC6s, and 1,707 ET7s.

·     XPeng (XPEV) delivered 10,125 Smart EVs in May 2022, representing a 78% increase Y/Y; May deliveries consisted of 4,224 P7 smart sports sedans, 3,686 P5 smart family sedans, as well as 2,215 G3 smart compact SUVs. As of May 31, 2022, year-to-date total deliveries reached 53,688, representing a 122% increase year-over-year.

·     BARK Inc. (BARK) 4Q EPS ($0.15) vs est. ($0.05) on revs $128.8Mm vs est. $126.7Mm; guides 1Q revs $130Mm vs est. $138.5Mm, adj EBITDA ($18)Mm vs est. ($2.15)Mm; sees FY revs $556Mm vs est. $650.8Mm and adj EBITDA ($36)Mm vs est. ($18.25)Mm

·     Conn’s (CONN) Q1 EPS $0.25 vs. est. $0.17; Q1 revs $339.8M vs. est. $360.78M; Q1 comp sales fell -9.5%; announce strategic partnership with Belk to pilot store-within-a-store concept

·     Tesla (TSLA) CEO Elon Musk sent an email to workers saying they must be in the office for a “minimum (and I mean *minimum*) of 40 hours per week or depart Tesla. The CEO went on to specify that the office “must be a main Tesla office, not a remote branch office unrelated to the job duties, for example being responsible for Fremont factory human relations, but having your office be in another state.”

·     Six Flags Entertainment Corporation (SIX) announced that it has appointed Gary Mick as Chief Financial Officer effective June 1, 2022

·     Sunstone Hotel (SHO) announced that it has entered into a definitive agreement with an affiliate of Park Hotels & Resorts (PK) to acquire Park’s 25% interest in the joint venture that owns the leasehold interest in the 1,190-room Hilton San Diego Bayfront

 

Energy

·     Daqo New Energy (DQ) approves $120M in share repurchase program

·     Laredo Petroleum (LPI) announces $200M share repurchase program

·     Noble Corp. (NE) upgraded to Buy from Neutral at BTIG

·     Patterson-UTI (PTEN) downgraded to Neutral on valuation at Piper Sandler

 

Healthcare

·     AmerisourceBergen (ABC) announces new $1B share repurchase program

·     Concert Pharmaceuticals (CNCE) files to sell 10M shares of common stock

·     CONMED (CNMD) announces private offering of $600M of conv senior notes

·     Sage Therapeutics (SAGE) and Biogen (BIIB) announced that the Phase 3 SKYLARK Study of zuranolone, an investigational oral drug being evaluated in women with postpartum depression, met its primary and all key secondary endpoints

·     Sonoma Pharmaceuticals Inc. (SNOA) and partner MicroSafe Group DMCC said that Nanocyn hospital grade disinfectant has been added to the list of Covid-19 disinfectants maintained by the U.S. Environmental Protection Agency’s List N.

 

Industrials & Materials

·     Donaldson (DCI) Q3 EPS $0.67 vs. est. $0.72; Q3 revs $853.2M vs. est. $823.99M; narrows FY22 GAAP EPS view to $2.67-$2.73 from $2.66-$2.76 (est. $2.70); sees FY22 sales to increase 14.5%-16.5% Y/Y and up from previous guidance of 11%-15%; currency translation is forecast to negatively impact sales by approximately 3%

·     Wesco (WCC) Announces $1b Share Buyback

 

Technology, Media & Telecom

·     Ambarella Inc. (AMBA) Q1 adj EPS $0.44 vs. est. $0.36; Q1 revs rose 29% Y/Y to $90.3M vs. est. $90.1M; sees Q2 revs $78M-$82M vs. est. $91.4M; Q1 Adjusted gross margin 63.8% vs. 62.9% Y/Y; sees Q2 gross margin 63%-64%.

·     HP Inc. (HPQ) Q2 adj EPS $1.08 vs. est. $1.05; Q2 revs rose 3.9% Y/Y to $16.5B vs. est. $16.14B; guides Q3 EPS $1.03-$1.08 vs. est. $1.04; raising its previous estimate of EPS to be in range of $4.24-$4.38 for 2022 from $4.18-$4.38 prior and vs. est. $4.25; anticipates generating free cash flow of at least $4.5B

·     Salesforce.com (CRM) 1Q adj EPS $0.98 vs est. $0.94 on revs $7.41B vs est. $7.38B; guides 2Q revs $7.69-7.7B vs est. $7.77B, adj EPS $1.01-1.02 vs est. $1.14; sees FY revs $31.7-31.8B below est. $32.06B, adj op margin about 20.4%

·     Digital Turbine (APPS) 4Q adj EPS $1.66 vs est. $0.39 on revs $184.1Mm vs est. $337Mm; sees 1Q revs $183-187Mm vs est. $357Mm, adj EBITDA $49-51Mm vs est. $60Mm and adj EPS $0.34-0.35 vs est. $0.44

·     Meta Platforms Inc., the parent company of Facebook, said Tuesday it will change its ticker symbol to META prior to the start of trading on June 9 (from FB)