Morning Preview: May 02, 2022

Auto PostDaily Market Report

Early Look

Monday, May 2, 2022

Futures

Up/Down

%

Last

Dow

160.00

0.49%

33,042

S&P 500

19.25

0.46%

4,146

Nasdaq

73.50

0.57%

12,925

 

 

U.S. futures are looking at a modest bounce to start the week after major averages staged their worst sell-off in nearly 2-years on Friday in another bidless trading day. On Friday, the S&P 500 fell 3.63% at 4,131, the Nasdaq tumbles -4.17% to 12,334 and the Dow drops -2.77% to 32,977. For the week, the S&P fell -3.28%, the Dow lost -2.46%, and the Nasdaq fell -3.93%. For the month, the S&P fell -8.80%, the Dow fell -4.90% (both with biggest monthly drop since March 2020), and the Nasdaq dropped -13.26% (worst month since Oct 2008). S&P lowest close since May ’21. According to Bespoke Invest: 2022 – the worst start to a year on record for the Nasdaq. YTD thru April: 2022: -19.8%, 1973: -19.4%, 2001: -14.3%, 2002: -13.4%, 2005: -11.7%, 1984: -11.2%. Consumer Staples the only sector positive for the month of April. Another very busy week of quarterly earnings on tap this week, but an FOMC policy meeting mid-week is the top story of the week as the Federal Reserve is set to hike by 50-bps at the May FOMC meeting. What happens after that is highly uncertain. In Asian markets, The Nikkei Index slipped -0.1% to 26,818, the Shanghai Index was closed, along with the Hang Seng Index at 21,089. In Europe, the German DAX is down -0.6% to just above 14,000, while the FTSE 100 is closed. China’s manufacturing and services PMI plummeted to their lowest levels since February 2020 after the government imposed strict lockdowns. Bitcoin prices rise +0.65% to $38,800 despite cautious comments by Warren Buffett this weekend.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -155.57 points, or 3.63%, to 4,131.93

·     The Dow Jones Industrial Average fell -939.18 points, or 2.77%, to 32,977.21

·     The Nasdaq Composite plunged -536.89 points, or 4.17%, to 12,334.64

·     The Russell 2000 Index declined -53.84 points, or 2.81% to 1,864.10

 

Economic Calendar for Today

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

·     10:00 AM ET        Construction Spending for March…est. +0.7%

·     10:00 AM ET        ISM Manufacturing PMI for April…est. 57.6

 

Earnings Calendar:

·     Earnings Before the Open: AKTS, AMG, ARLP, AXSM, CNA, EPD FSS, GPN, GPRE, ITRI, JELD, L, MCO, ON, PK, SAIA, SXC, WEC

·     Earnings After the Close: ADUS, AGNC, AMKR, AMRC, ANET, BGCP, BIGC, BRX, BXP, CACC, CAR, CBT, CC, CHGG, CLX, CNO, CTRA, CVI, DVN, EVER, EXPE, FANG, FLS, FMC, FRPT, HLIT, HVT, KMT, LEG, MGM, MOS, MPWR, MWA, NE, OHI, OTTR, OUT, PSB, PLOW, QTWO, RIG, RMBS, SANM, TA, TCMD, VNO, VNOM, VRNS, WMB, WWD, ZI

 

 

Macro

Up/Down

Last

Nymex

-2.98

101.71

Brent

-2.93

104.21

Gold

-32.40

1,879.30

EUR/USD

-0.0023

1.0519

JPY/USD

0.13

129.96

10-Year Note

+0.013

2.922%

 

 

World News

·     Warren Buffett said this weekend at the Berkshire Annual Shareholder meeting: ‘If you offered me all the world’s Bitcoin for $25, I wouldn’t take it’ https://bit.ly/39kHJuy

·     China April Non-Manufacturing PMI: 41.9 vs 48.4 previous; China Apr Manufacturing PMI 47.4 vs 48 consensus and China Caixin Manufacturing PMI: 46 vs 47 consensus

·     ECB Rate Hike Possible but not likely in July, Guindos Says ‘; July is possible but that’s not to say it’s likely, A July rate rise will depend on the data and new macroeconomic projections in June, a significant weakening of growth was already noticeable – Bloomberg

·     Chinese regulators have held emergency meetings with domestic and foreign banks to discuss protecting assets from US led sanctions like those imposed on Russia. Officials are concerned that the same measures could be taken against Beijing if a regional military conflict or other crisis took place – FT

 

Sector News Breakdown

Consumer

·     Li Auto (LI) delivers 4,167 Li ONEs, down 62% M/M; reported 5,539 deliveries in April 2021; overall deliveries of Li ONE have reached 159,971 since the vehicle’s market debut in 2019.

·     NIO (NIO) delivers 5,074 vehicles in April down from 9,985 in March, however YTD deliveries of 30,842 vehicles is up 13.5% Y/Y; overall deliveries reached 197,912 vehicles.

·     XPeng (XPEV) delivers 9,002 Smart EVs in April 2022, representing a +75% Y/Y and down- 41.6% M/M; YTD total deliveries reached 43,563, up 136% Y/Y

·     Lithia Motors (LAD) shares could rise 65%, good reason to buy, according to Barron’s saying Lithia is growing fast, while margins, which shot higher because of shortages, might be more resilient than the market is giving it credit for

·     Jeld-Wen (JELD) Q1 adj EPS $0.16 vs. est. $0.33; Q1 revs $1.17B vs. est. $1.2B

·     Cruise lines mentioned positively in Barron’s saying although the cruise ship industry continues to struggle in the face of surging inflation and rising fuel costs, summer bookings have picked up, and names like Carnival (CCL) trades roughly 55% below where it was at in late January 2020

·     Tesla (TSLA) shares have stalled since Elon Musk decided to buy Twitter (TWTR) but Barron’s said jitters are overdone-and the stock might be primed for a new charge. Musk agreed to finance a bit more than half of the deal with debt and the rest with equity, which means $21 billion worth.

 

Energy, Industrials and Materials

·     Berkshire Hathaway revealed it owned $25.9 bln Chevron (CVX) stock as of March 31, 2022

·     Crude oil rose a fifth consecutive month in April, up 2.6% for the week and 4.4% for the month to $104.69/bbl, while June natural gas soared 28.4% in April to $7.244/MMBtu for its best monthly gain since 2009 a supply challenges outweighed worries over demand

 

Financials

·     Berkshire Hathaway (BRK.B) Q1 operating earnings rose slightly from a year ago, but insurance underwriting earnings declined; had cash and short-term securities holdings of ~$106.3B at March 31, 2021, down 28% from ~$146.7B at Dec. 31, 2021; used about $3.2B of its cash to buy back its common stock in Q1, less than the $6.9B of stock it repurchased in Q4 2021

·     Comerica (CMA) upgraded to overweight, and KeyCorp (KEY) cut to underweight at Piper Sandler as the analyst shuffled ratings to reflect its post-earnings preferences; Community Bank System (CBU) downgraded to underweight

·     A close ally of President Joe Biden said congressional Democrats will keep up pressure on him to use his executive authority to forgive as much as $50,000 in student loan per borrower rather than the more limited plan being considered by the White House – Bloomberg

 

Healthcare

·     Healthcare Realty Trust Incorporated (HR) and Healthcare Trust of America, Inc. (HTA) today provided an update on their previously announced $18 billion strategic combination, creating the preeminent medical office building REIT.

·     The XBI plunged 18% in April 2022 — the second-worst month ever for the closely tracked biotech stock index. Only January 2016, when the XBI fell 28%, was worse.

·     Horizon Therapeutics’ (HZNP) Uplizna was approved by the European Commission as a standalone therapy for adult patients with neuromyelitis Optica spectrum disorder (NMOSD) who are anti-aquaporin-4 immunoglobulin G seropositive (AQP4-IgG+)

 

Technology, Media & Telecom

·     Activision Blizzard (ATVI): Berkshire Hathaway Inc. started buying more shares of Activision Blizzard Inc. since Microsoft Corp. announced its plan to acquire the videogame maker in January and now has a 9.5% stake, Warren Buffett said Saturday at Berkshire’s annual meeting. Buffett said those purchases were his decision and are a bet that the deal will close

·     Global semiconductor sales rose 1.1% M/M in March to $50.6B, according to new data from the Semiconductor Industry Association. Q1 sales totaled $151.7B, an increase of 23.0% over the first quarter of 2021, but 0.5% less than the fourth quarter of 2021.

·     Qualcomm (QCOM) rises after German daily Handelsblatt reports car maker Volkswagen has set up a years-long partnership with company; Volkswagen will use QCOM’s SoC, developed specifically for automated driving, across all brands worldwide starting in 2026 – Handelsblatt https://reut.rs/3s7T482

·     Spotify (SPOT) mentioned somewhat cautiously in Barron’s this weekend noting shares dropped to new all-time lows last week after reporting disappointing results and they’re down more than 50% for the year; says Spotify is falling short in ways that bode poorly for the stock

·     Ceragon (CRNT) to provide microwave and millimeter wave transport solutions for rapid deployment of DISH’s (DISH) nationwide 5G Smart Network(TM)

·     EU antitrust regulators charged Apple (AAPL) on Monday with restricting rivals’ access to its NFC chip technology in a move that could result in a hefty fine for the iPhone maker and force it to open its mobile payment system to competitors. – Reuters

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Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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