Early Look

Wednesday, June 29, 2022

Futures	Up/Down	%	Last
Dow	-34.00	0.011%	30,899
S&P 500	-10.25	0.28%	3,814
Nasdaq	-49.00	0.42%	11,625

 

U.S. markets looking slightly lower, with the S&P trading in a narrow range overnight (3,835 hi and 3,812 low) after reversing more than 1% gains on Tuesday to settle -2% on renewed worries about economic growth as monetary policy tightens in much of the world to fight inflation. U.S. stock markets tumbled in a broad sell-off on Tuesday as weaker consumer confidence data (lowest levels since Feb 2021) dampened investor optimism and fueled worries that the Federal Reserve’s aggressive battle against inflation could tip the economy into recession. All three major U.S. stock indexes closed sharply lower, with the Nasdaq declining the most along with Consumer Discretionary. Only 2-days left to the month, quarter and 1H as the benchmark S&P 500 is on track for its biggest first-half percentage drop since 1970 and all three indexes are on course to notch two straight quarterly declines for the first time since 2015. Bespoke Investment noted with the S&P 500 closing down 1% today, it marked the 4th time already this year that it has traded up as much as 1% intraday but finished down over 1%. In Asian markets, The Nikkei Index declined -0.9% to 26,804, the Shanghai Index fell -1.4% to 3,361, and the Hang Seng Index dropped -1.88% or -422 points to just under 22,000. In Europe, the German DAX is down -255 points to drop under 13,000, while the FTSE 100 falls -0.58% to 7,280.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -78.56 points, or 2.01%, to 3,821.55

·     The Dow Jones Industrial Average fell -491.27 points, or 1.56%, to 30,946.99

·     The Nasdaq Composite tumbled -343.01 points, or 2.98%, to 11,181.54

·     The Russell 2000 Index declined -32.90 points, or 1.86% to 1,738.85

 

Economic Calendar for Today

·     7:00 AM ET          MBA Mortgage Applications Data

·     8:30 AM ET          Gross Domestic Product (GDP) Q1-Final…est. (-1.5%)

·     8:30 AM ET          GDP Consumer Spending for Q1-Final…

·     8:30 AM ET          GDP Price Deflator for Q1…est. +8.1%

·     8:30 AM ET          PCE Prices Q1-Final…

·     8:30 AM ET          Core PCE Prices, Q1-Final…est. +5.1%

·     9:30 AM ET          ECB Lagarde, Fed Powell, Bailey, Carstens Speak in event

·     10:30 AM ET        Weekly DOE Inventory Data

·     11:30 AM ET        Fed’s Mester Speaks on Panel at ECB Forum

·     1:05 PM ET           Fed’s Bullard Makes Introductory Remarks

 

Earnings Calendar:

·     Earnings Before the Open: BBBY, BNED, GIS, MKC, MSM, PAYX, PDCO, SCHN, UNF

·     Earnings After the Close: CDMO, CULP, DCT, FC, MLKN, PETV, POWW, SGH

 

Other Key Events:

·     Stifel Virtual Cell Therapy Summit (virtual), 6/29-6/30

·     Truist Las Vegas Gaming Bus Tour (in person) 6/28-6/29

·     Wells Fargo “Bricks to Clicks” Digital Conference (virtual), 6/28-6/29

·     European Society for Medical Oncology (ESMO) 6/29-7/2, in Spain

·     China NBS Manufacturing PMI for June

 

 

Macro	Up/Down	Last
Nymex	0.82	112.58
Brent	0.14	118.12
Gold	5.60	1,826.80
EUR/USD	0.0000	1.052
JPY/USD	0.28	136.40
10-Year Note	-0.041	3.166%

 

 

World News

·     Germany is doing everything it can to make sure it swiftly ratifies plans for Finland and Sweden to join the NATO defense alliance, a foreign ministry spokesperson said after Turkey lifted a veto on them joining – Reuters

·     ECB’s Simkus wants half-point July hike as option if data worsen- Bloomberg

·     Eurozone economic sentiment falls to 104.0 in June from 105.0 in May; Eurozone June consumer sentiment -23.6 vs -21.2 in May; June consumer inflation expectations +42.6 vs revised +45.5 in May, producer price expectations +50.4 in June vs revised +55.5 in May

·     Britain announced sanctions on oligarch Vladimir Potanin on Wednesday, describing him as Russia’s second-richest man.

 

Sector News Breakdown

Consumer

·     Carnival Cruise (CCL) shares lower early despite a bullish init at Barclays (named top pick with OW and $14 tgt) following a report out of Morgan Stanley saying CCL shares can plunge to zero in a bear case scenario/in event of another demand shock

·     Tesla Inc (TSLA) closes office in San Mateo, California and lays off about 200 employees working on its Autopilot driver-assistant system as part of a move to rein in costs – Reuters

·     McCormick (MKC) Q2 adj EPS $0.48 vs. est. $0.65; Q2 sales -1.3% Y/Y to $1.54B vs. est. $1.61B; lowers year EPS view to $3.03-$3.08 from $3.17-$3.22 (est. $3.15) driven by updated adjusted operating income outlook and an optimization of company’s debt portfolio; expects to grow sales 3% to 5% compared to 2021, which in constant currency is expected to be 5% to 7%

·     Gaming and Leisure Properties, Inc. (GLPI) announces public offering of 6,900,000 shares of common stock; to acquire real property assets of Bally’s (BALY) two Rhode Island assets for $1.0 billion; transaction to be completed at 7.6% capitalization rate

·     FREYR Battery (FREY) board approved the expansion of the planned Giga Arctic project under development in Mo i Rana, Norway, to an annual nameplate capacity of 29 GWh

·     Frontdoor (FTDR) to replace Southwestern Energy in S&P 600 at open on 7/6

·     Stride (LRN) to replace Omnicell (OMCL) in S&P 600 at open on 7/5

·     The U.S. Federal Trade Commission said on Tuesday that it had sued Walmart (WMT), alleging the company had allowed scam artists to use its money transfer services for fraud that cost consumers “hundreds of millions of dollars.”

 

Energy

·     The American Petroleum Institute (API) showed weekly crude inventories fell -3.799M barrels, Cushing with a drawdown of -650K barrels; gasoline with a weekly build of +2.852M barrels and distillates with a weekly build of +2.613M Barrels (ahead of EIA data later this morning)

·     Imperial (IMO) announced that together with ExxonMobil Canada (XOM), it has entered into an agreement with Whitecap Resources for the sale of XTO Energy Canada, which is jointly owned by Imperial and ExxonMobil Canada, for a total cash consideration of C$1.9B

·     Southwestern Energy (SWN) to replace CDK Global (CDK) in S&P 400 at open on 7/6; Brookfield Business Partners (BBU) is acquiring CDK Global (CDK)

·     Uncertainty in global oil and gas markets could stay for some time to come as spare capacity is very low while demand is still recovering, Shell (SHEL) Chief Executive Officer said

 

Financials

·     Goldman Sachs (GS) upgraded to Buy from Neutral at Bank America and raise tgt to $380

·     Upstart Holdings (UPST) downgraded at Morgan Stanley to underweight from equal weight amid rising cyclical headwinds and cut tgt to $19 from $88

·     Marathon Digital Holdings, Inc. (MARA) said because of a storm that passed through Hardin, MT earlier this month, the Company’s mining operations in the region are currently without power and likely to remain offline until the damaged power generating facility can be repaired.

 

Healthcare

·     Beyond Air (XAIR) shares rise 15% after receives FDA approval for LungFit, its device for treating a type of respiratory failure in newborn babies; says the first phase of U.S. commercial launch of the product has begun

·     89Bio Inc. (ETNB) reports positive topline results from ENTRIGUE phase 2 trial of pegozafermin in patients with severe hypertriglyceridemia saying the trial met primary endpoint demonstrating statistically significant and clinically meaningful reductions across all doses

·     89bio (ETNB) 18.7M share Spot Secondary priced at $3.55

·     Novavax (NVAX) said its prototype COVID vaccine NVX-CoV2373 showed broad immune responses, including against Omicron and other variants, amid a majority vote by an FDA panel

·     ObsEva (OBSV) announced that the UK Medicines and Healthcare Products Regulatory Agency, MHRA, has granted marketing authorization for Yselty or linzagolix, an oral GnRH antagonist, for the management of moderate to severe symptoms of uterine fibroids

 

Industrials & Materials

·     AeroVironment (AVAV) 4Q adj EPS $0.30 vs est. $0.39 on sales $132.6Mm vs est. $135.3Mm; guides FY revs $490-520Mm vs est. $514Mm and FY adj EPS $1.35-1.65 vs est. $1.75

·     MSC Industrial (MSM) Q3 EPS $1.82 adj vs. est. $1.74; Q3 sales rose 10.7% to $958.6M vs. est. $960.5M; expects double digit average daily sales growth to continue in fiscal Q4

 

Technology, Media & Telecom

·     Pinterest (PINS) longtime CEO is stepping down and a Google (GOOGL) commerce executive is taking over the top job, the social-media company said Tuesday. Ben Silbermann, who Co-founded Pinterest in 2010 and served as its CEO ever since, is transitioning to executive Chairman of the board, a newly created position. His replacement, Bill Ready, comes from Alphabet Inc.’s Google, where he had been president of commerce since 2020.

·     The Walt Disney Company (DIS) Board of Directors unanimously voted to extend Bob Chapek’s contract as Chief Executive Officer for three years

·     Progress Software (PRGS) 2Q adj EPS $1.04 vs est. $0.95 on revs $148.7Mm vs est. $146.9Mm; guides 3Q adj revs $147-150Mm vs est. $160.2Mm and adj EPS $0.96-0.98 vs est. $1.11; sees FY adj revs $609-617Mm vs est. $614.8Mm and adj EPS $4.05-4.11 vs est. $4.06

·     Qorvo (QRVO) downgraded to Underperform from Neutral at Bank America

·     Skyworks (SWKS) downgraded to Underperform from Neutral at Bank America

·     Teradyne (TER) downgraded to Neutral from Buy at Bank America