Early Look

Thursday, June 8, 2023

Futures	Up/Down	%	Last
Dow	-4.00	0.01%	33,705
S&P 500	1.25	0.02%	4,275
Nasdaq	4.50	0.03%	14,366

 

 

After posting mixed results on Wednesday, as the Nasdaq and S&P 500 ended lower with Nasdaq falling more than 1% driven by a drop in shares of tech-related mega cap names as Treasury yields rose, markets are looking flat to start the day. Yields gained after the Bank of Canada raised interest rates, adding to the view that the Federal Reserve could keep its hawkish stance when it meets next week. The outlier was Smallcaps as the Russell 2000 extended its gains against large caps to start the month. The Russell is up nearly 8% in the first few days of June vs. Nasdaq +1.3%. Financials, Energy, Materials, Industrials, REITs, and Utilities paced the gains yesterday as mega cap tech took a breather, which are generally sensitive to higher rates. The Nasdaq is up about 25% year-to-date, strongly outperforming the other two major U.S. stock indexes. The Russell 2000 rallied 1.8% and closed at its highest level since March 6. The KBW regional banking index jumped more than 3% and hit its highest closing level since March 29. In Asian markets, The Nikkei Index declined -272 points to 31,641, the Shanghai Index rose 15 points to 3,213, and the Hang Seng Index rose 47 points to 19,299. In Europe, the German DAX is up 48 points to move back above 16,000, while the FTSE 100 is flat at 7,623. Another generally quiet day with only jobless claims in the US, no Fed speakers as we await next week’s meeting. The biggest story the last few days after the wildfires that have burned across Canada sending smoke throughout the Northeast that has hurt the air quality.

 

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -16.33 points, or 0.38%, to 4,267.52.

·     The Dow Jones Industrial Average rose 91.74 points, or 1.65%, to 33,674.38.

·     The Nasdaq Composite tumbled -171.52 points, or 1.29%, to 13,104.90.

·     The Russell 2000 Index advanced 33.05 points, or 1.78% to 1,888.45.

 

Economic Calendar for Today

·     8:30 AM ET              Weekly Jobless Claims…est. 235K

·     8:30 AM ET              Continuing Claims…est. 1.8M

·     10:00 AM ET            Wholesale Inventories M/M for April…est. (-0.2%)

·     10:30 AM ET            Weekly EIA Natural Gas Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ALOT DBI HOFT HYZN KIRK REVG SCWX SIG TTC

·     Earnings After the Close: AGX AMSWA AVO BBCP BRZE CMTL DOCU MTN NAPA ODC PL

 

Other Key Events:

·     Bank America Global Tech Conference, 6/6-6/8, in San Francisco, CA

·     Deutsche Bank Global Consumer Conference, 6/6-6/8, in Paris

·     Deutsche Bank Basic Materials, Industrials & Building Products Conference, 6/7-6/8, in New York

·     NAREIT REITweek, 6/6-6/8, in New York

·     RBC Capital Consumer Day 6/8, in New York

·     TD Cowen Sustainability Week 2023 (virtual), 6/6-6/9

·     William Blair 43^rd Annual Growth Stock Conference, 6/6-6/8, in Chicago, IL

·     China CPI, PPI for May

 

 

Macro	Up/Down	Last
Nymex	0.57	73.10
Brent	0.53	77.48
Gold	3.70	1,962.10
EUR/USD	0.0032	1.0729
JPY/USD	-0.39	139.72
10-Year Note	+0.025	3.809%

 

 

World News

·     Poor quality of air grips the Northeast as there were 137 wildfires in Quebec, 83 in British Columbia, 64 in Alberta, 31 in Ontario and 21 in the Northern Territories as of late Wednesday.

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was 20.2 vs -7.7 last week. Bulls rise to 44.5% from 29.1%, Neutrals fall to 31.2% from 34.1%, Bears fall to 24.3% from 36.8%.

·     Japan GDP rose a stronger-than-expected 0.7% (QoQ) to be 1.9% YoY. Domestic demand drove the increase (1.0%), while net exports subtracted (-0.3%) from growth, as exports fell 4.2%.  

·     Treasury Secretary Yellen warns of commercial real estate ‘issues’ that could strain banks ‘; “Well, I do think that there will be issues with respect to commercial real estate,” Yellen said. “Certainly, the demand for office space since we’ve seen such a big change in attitudes and behavior toward remote work has changed and especially in an environment of higher interest rates.” – Marketwatch.com

 

Sector News Breakdown

Consumer

·     GameStop (GME) announced Matt Furlong has been terminated as CEO and the board has appointed billionaire Ryan Cohen as Executive Chairman, effective immediately.; Q1 sales $1.24B below consensus $1.36B; Q1 adj EPS loss (-$0.14) vs. est. loss (-$0.12); said will not be holding a conference call today.

·     Hooker Furnishings’ (HOFT) liquidation of the Accentrics Home line and other obsolete inventories at its Home Meridian business was 80% complete as of the end of May, CEO Jeremy Hoff says in the company’s 1Q earnings report.

·     Oxford Industries (OXM) 1Q adj EPS $3.78 vs est. $3.74 on revs $420Mm vs est. $419.11Mm, gr mgn 65.5%; guides 2Q net sales $415-435Mm vs est. $440.59Mm and adj EPS $3.30-3.50 vs est. $4.11; sees FY net sales $1.59-1.63B vs est. $1.641B and adj EPS $10.80-11.20 vs est. $11.76.

·     Rent the Runway (RENT) 1Q adj EBITDA $4.5Mm vs est. $1.54Mm on revs $74.2Mm vs est. $73.19Mm, record high subscriber count of 145,220; guides 2Q revs $77-79Mm vs est. $81Mm and adj EBITDA mgn 7-8%; sees FY ending active subs growth more than 25%, revs $320-330Mm vs est. $325.68Mm, adj EBITDA mgn 7-8% and y/y reduction in cash consumption by almost 50%.

·     Torrid (CURV) 1Q EPS $0.11 vs est. $0.12 on revs $293.854Mm vs est. $309Mm, comps -14%, adj EBITDA $38.3Mm vs est. $39.98Mm; guides 2Q net sales $280-295Mm vs est. $333.13Mm and adj EBITDA $32-38Mm vs est. $47.61Mm; sees FY net sales $1.095-1.145B vs est. $1.309B and adj EBITDA $115-130Mm vs est. $148.24Mm.

·     American Outdoor Brands (AOUT) files patent infringement complaint vs. Vista Outdoor (VSTO).

 

Energy, Industrials and Materials

·     Blue Bird (BLBD) 4.5M share Secondary priced at $20.00.

·     Fortive Corp (FTV) files for mixed shelf offering.

·     Greif Inc. (GEF) 2Q adj EPS $1.77 vs est. $1.32 on revs $1.309B vs est. $1.422B, adj EBITDA $228.6Mm vs est. $189.48Mm; guides FY adj EBITDA $780-830Mm vs est. $758.76Mm and adj FCF $390-440Mm.

·     Helmerich & Payne (HP) expands the buyback program to 7m shares from 5M.

 

Financials

·     Chinese commercial banks began cutting their yuan deposit rates; cuts across overnight and term-deposit rates; overnight deposit rates fell on average by 5bp to 0.2%, with larger cuts on the term-deposits.

 

Healthcare

·     GE HealthCare (GEHC) 25M share Secondary priced at $78.00.

·     Merck (MRK) said the FDA has accepted for review a new supplemental Biologics License Application (sBLA) seeking approval for KEYTRUDA, Merck’s anti-PD-1 therapy, in combination with standard of care chemotherapy (gemcitabine and cisplatin) for the treatment of patients with locally advanced unresectable or metastatic biliary tract cancer.

 

Technology, Media & Telecom

·     Mobileye (MBLY) 38.5M share Secondary priced at $42.00.

·     Apple’s (AAPL) AirDrop and similar file-sharing programs that were used by protesters in China and Hong Kong in recent years face tighter controls under rules proposed by Beijing, the latest communications technology to fall foul of a broadening national-security clampdown. – WSJ

·     HashiCorp. (HCP) Q1 EPS loss (-$0.07) vs. est. loss (-$0.14); Q1 revs rose 37% y/y to $137.98M vs. est. $133.11M; sees Q2 revs $137M-$139M vs. est. $141.4M and year revs $564M-$570M vs. est. $593.46M; cuts workforce by about 7%.

·     Semtech (SMTC) 1Q adj EPS $0.02 vs est. ($0.08) on revs $236.5Mm vs est. $234.99Mm, adj gr mgn 48.5%, adj op mgn 9.3%; guides 2Q net sales $233-243Mm vs est. $242.66Mm, adj gr mgn 47.5-49.5%, adj EPS ($0.02)-$0.06 vs est. ($0.03).

·     Smartsheet (SMAR) Q1 EPS $0.18 vs. est. $0.08; Q1 revs $219.9M vs. est. $214.1M; Q1 billings rose 20% y/y to $215.5M; dollar-based net retention rate was 123%; Number of all customers with annualized contract values (“ACV”) of $100,000 or more grew 42% y/y to 1,569; raises FY24 EPS view while backs FY24 revenue view of $943M-$948M.

·     Verint (VRNT) 1Q adj EPS $0.53 vs est. $0.47 on revs $216.566Mm vs est. $216.15Mm; guides FY revs $935Mm +/- 2% vs est. $934.97Mm, SaaS revs +25-30% y/y, EPS $2.65 at midpoint of revs guide range vs est. $2.65.

·     Acer (ACEYY) announced its consolidated revenues for May at NT$18.08B, up 30.8% month-on-month, with businesses other than computers and displays contributing 29.9% of total revenues.