Early Look

Thursday, June 16, 2022

Futures	Up/Down	%	Last
Dow	-596.00	1.94%	30,055
S&P 500	-91.00	2.39%	3,702
Nasdaq	-328.00	2.82%	11,301

 

 

U.S. futures are down over -2%, with the S&P falling to 3,711 after hitting overnight lows of 3,692.25 (and well-off yesterday highs of 3,839), a sharp reversal of the previous session’s rally as fears of a recession grew after the Federal Reserve’s biggest rate hike in nearly three decades – rate sensitive growth stocks seeing the biggest decline with Nasdaq futures down -2.5% to 11,335. Central banks are getting more aggressive globally as the Swiss National Bank (SNB) surprised markets with its first interest-rate hike in 15 years. Meanwhile, the Bank of England is expected to deliver a fifth-straight rate hike on Thursday morning. U.S. stocks jumped yesterday after the Federal Reserve approved a 75-bps hike, its biggest interest-rate increase since 1994 but suggested moves of that scale would likely not become common. Fed Chairman Jerome Powell added that he expected either a 50 or 75-bps increase at the Fed’s July meeting as they try and get rampant inflation under control. Uncertainty about rates has been a key driver of volatility this year, helping send the S&P 500 into bear-market territory this week. U.S. Treasury prices rallied after sliding in recent weeks in a selloff that has pushed yields to their highest levels in more than a decade. The yield on 10-year Treasury slipped to 3.389% from 3.482%. While stocks may have recovered yesterday, prices are still soaring, several companies have announced job cuts/freeze hires the past 2-weeks raising job fears, and mortgage rates are soaring with housing rates peaking, making the housing industry a little shaky to say the least. In Asian markets, The Nikkei Index gained 106 points to 26,431, the Shanghai Index fell -20 points to 3,285, and the Hang Seng Index dropped -462 points or 2.17% to 20,845. In Europe, the German DAX is down -385 points or 2.85% to 13,100, while the FTSE 100 slides -2.4% below 7,100.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 54.51 points, or 1.46%, to 3,789.99

·     The Dow Jones Industrial Average rose 303.70 points, or 1.00%, to 30,668.53

·     The Nasdaq Composite spiked 270.81 points, or 2.50%, to 11,099.16

·     The Russell 2000 Index advanced 23.31 points, or 1.37% to 1,731.14

 

Economic Calendar for Today

·     8:30 AM ET         Weekly Jobless Claims…est. 215K

·     8:30 AM EST       Continuing Claims…est. 1.302M

·     8:30 AM ET         Housing Starts m/m for May…est. 1.701M

·     8:30 AM Et          Building Permits m/m for May…est. 1.785M

·     8:30 AM ET         Philly Fed Business Survey for June…est. 5.5

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

 

Earnings Calendar:

·     Earnings Before the Open: CMC, JBL, KR

·     Earnings After the Close: ADBE

 

Other Key Events:

·     Deutsche Bank Global Consumer Conference, 6/14-6/16, in France

·     Deutsche Bank Global Auto Industry Conference, 6/15-6/16

·     JMP Securities Life Sciences Conference, 6/15-6/16, in NY

·     Oppenheimer Semiconductor & Software Bus Tour (virtual), 6/13-6/16

 

 

Macro	Up/Down	Last
Nymex	-0.46	114.85
Brent	-0.38	118.13
Gold	3.60	1,823.20
EUR/USD	-0.0035	1.0408
JPY/USD	-0.73	133.10
10-Year Note	+0.042	3.437%

 

 

World News

·     The Swiss National Bank (SNB) surprised markets with its first interest-rate hike in 15 years

·     The weekly AAII investor intelligence poll shows Bulls 19.4% (-1.5) and Bears 58.3% (+11.4%)

·     U.S. Treasury capital (TIC) flows showed foreign accounts bought net $87.7B in long term U.S. assets in April versus $23.1B in March. Total net flows revealed a $1.3B increase versus the $108.7B in March. Foreigners sold -$1.2B in Treasuries with official accounts dumping -$12.1B on the month. There was a decline of -$158.3B in Treasury holdings, with a -$36.2B drop from China, and -$13.9B from Japan

·     China’s new home prices in May fell month-on-month, official data showed on Thursday, depressed by still fragile overall demand as tighter COVID-19 curbs dented buyer confidence in the property market

 

Sector News Breakdown

Consumer

·     Tesla (TSLA) increased its Model Y long-range price to $65,990 from $62,990, its website showed on Thursday, after delaying the deliveries of some long-range models in the United States by up to a month.

·     Ferrari NV (RACE) said a new larger, taller model like an SUV will be unveiled this fall and confirmed plans to release its first fully electric car in 2025, speaking at its capital markets day

·     Jefferies lowered their global EV sales estimates for 2022 and 2023; said they expect EV sales in 2022 of 8.7 million, down from a prior forecast of 9 million, and 2023 sales of 11.5 million, lower than a previous estimate of 11.8 million (watch TSLA, RIVN, LCID, NIO, XPEV, LI)

·     Lion Electric (LEV) files $350M mixed securities shelf

·     NIO Inc. (NIO) unveiled a new EV Model

·     Revlon Inc. (REV) said that it has voluntarily filed for bankruptcy; shares halted

 

Energy, Industrials and Materials

·     Boeing (BA) upgraded to Buy from Neutral at Citi

·     ITT Inc (ITT) said long-term financial targets include 5%-7% rev growth, over 10% adj eps growth

·     Republic Services (RSG) upgraded to Buy from Hold at Deutsche Bank

·     Global port congestion is set to continue until at least early 2023 and keep spot freight rates elevated, logistics executives said on Wednesday, urging charterers to switch to long-term contracts to manage shipping costs – Reuters reported

 

Financials

·     Shift4Payments (FOUR) board approved an increase to the existing stock repurchase program that will take effect on June 16, 2022

·     W. R. Berkley Corporation (WRB) boosted its regular cash dividend to an annual rate of 40 cents per share, representing a 15.3% increase from the present rate; also declared a special cash dividend on its common stock of 50 cents per share

 

Healthcare

·     AC Immune SA (ACIU) shares down -15%; reported disappointing results from a study in Alzheimer’s disease. The co and its partner, Roche Holdings AG’s Genentech unit, said the study evaluating the potential of the investigational drug crenezumab to slow or prevent Alzheimer’s in cognitively unimpaired people who carry a specific genetic mutation that causes early onset of the memory-robbing disease missed its key goals.

·     Aquestive Therapeutics (AQST) reports positive initial topline data from part 3 of epiphast trial evaluating aqst-109 epinephrine oral film; says on track to request end-of-phase 2 meeting with FDA in q4 2022 and thereafter to commence pivotal pk study

·     Karyopharm Therapeutics (KPTI) said on June 7, Co received notice from Biogen (BIIB) that Biogen elected to terminate asset purchase agreement dated January 24, 2018; as result of termination, Co is not entitled to receive any milestone payments or royalties under agreement

·     Arcellx (ACLX) 7M share Secondary priced at $16.00

 

Technology, Media & Telecom

·     KLA Corp. (KLAC) said its board raised the quarterly dividend by 24%, to $1.30 from $1.05, and authorized the repurchase of up to an additional $6 billion in stock. KLA said the new buyback is in addition to a prior program that had $699 million remaining as of March 31.