Early Look

Thursday, May 5, 2022

Futures	Up/Down	%	Last
Dow	-136.00	0.40%	33,833
S&P 500	-24.25	0.56%	4,271
Nasdaq	-98.50	0.73%	13,433

 

 

U.S. stock futures are giving back some of yesterday’s gains in a bout of profit taking, but bouncing off overnight lows ahead of another busy day of earnings, economic data and an OPEC meeting. The squeeze was on yesterday, as U.S. stocks rallied, scoring their biggest one-day gain since 2020, after Federal Reserve Chairman Jerome Powell alleviated fears that the central bank might be considering bigger interest-rate increases in the coming months. The Fed announced it would raise interest rates by 50-bps (to 0.75%-1% from 0.25%-0.5%) and begin to shrink its $9 trillion asset portfolio next month, with up to $30 billion in Treasury’s allowed to run off in June, July and August, followed by $60 billion in subsequent months. This did not come as a big surprise. However, markets soared after the Fed Chair said he wasn’t “actively considering” raising interest rates by 75 bps at a future meeting. Federal-funds futures, which traders use to track interest-rate expectations, had previously shown the market pricing in a 95% chance of the Fed making such a move in June. Stocks soared following the remarks, with the Dow Jones Industrial Average boasting its biggest one-day gain since November 2020. The two-year yield, seen as particularly sensitive to the near-term interest-rate outlook, fell to 2.614% from 2.768% Tuesday while the 10-year held above 2.9% after earlier highs above 3%. Oil prices advanced as the European Union threatened to cut off Russian supplies by the end of this year.

 

In Asian markets, Chinese stocks return from a three-day break, as the Nikkei Index slipped -0.1% to 26,818, the Shanghai Index advanced 20 points to 3,067, and the Hang Seng Index finishes lower by -76 points to 20,793. In China, Caixin services PMI slumps to lowest since 2020. In Europe, the German DAX is up 1.3% or over 180 points to 14,155, tracking the strength in U.S. markets yesterday, while the FTSE 100 gains roughly +0.8% to 7,550 ahead of the Bank of England (BoE) rate decision later this morning where a 25-bps hike is expected. There is an OPEC and non-OPEC Ministerial meeting today and in economic data, we get weekly jobless claims, and Q1 non-farm productivity. There are also a total of 5 central bank meetings today (BoE, Norway, Chile, Czech and Poland).

Market Closing Prices Yesterday

·    The S&P 500 Index jumped 124.69 points, or 2.99%, to 4,300.17

·    The Dow Jones Industrial Average rose 932.27 points, or 2.81%, to 34,061.06

·    The Nasdaq Composite surged 401.10 points, or 3.19%, to 12,964.86

·    The Russell 2000 Index advanced 51.07 points, or 2.69% to 1,949.92

 

Economic Calendar for Today

·       7:30 AM ET         Challenger Layoffs for April

·       8:30 AM ET         Weekly Jobless Claims

·       8:30 AM EST       Continuing Claims

·       8:30 AM ET         U.S. Nonfarm Productivity for Q1

·       8:30 AM ET         Unit Labor Costs for Q1

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

 

Earnings Calendar:

·      Earnings Before the Open: AAWW, ABUS, ADT, AGIO, ALE, AMCX, AMR, APD, APO, ARW, BALY, BCRX, BDX, BERY, BLD, BLL, BV, CAH, CARS, CBRE, COMM, COP, CRC, DDOG, DEN, DLX, DNOW, EPAM, EVRG, GCI, GOLF, HAIN, HBI, HII, IDCC, K, LAMR, LXP, MGPI, MMP, MYE, NKLA, NS, PENN. PH, PWR, PZZA, RRD, SEAS, SLQT, SRE, SWI, TMX, TREE, UFCS, USPH, W, WCC, WD, WRK, XXII, ZTS

·      Earnings After the Close: AAOI, AEYE, AGS, ALEX, ALRM, ALTR, AMH, AMN, APPN, BE, BGS, BILL, BKD, BOOM, BRBR, CABO, CDNA, CDXS, CGNX, CHUY, CLNE, CNXN, DASH, DBX, DLB, DVA, DVAX, ED, EGLE, FND, FOXF, FUBO, G, GDEN, GDOT, GH, GPRO, HCC, HUBS, IHRT, ILMN, INGN, IOVA, IRTC, KTOS, LAZR, LCID, LESL, LPRO, LYV, MCK, MDRX, MP, MTZ, NET, NLOK, NNBR, NWSA, OLED, OPEN, PBH, PCTY, PLYA, PODD, POST, PRI, RDFN, RELY, RGA, RSG, SAIL, SHAK, SPCE, SPWR, SQ, SYNA, TDC, TXRH, UNM, USX, VRAY, VVI, WMC, WW, WWE, Y, YELP, ZEUS, ZG

 

Other Key Events:

·       BMO Capital Global Reserve & Asset Managers Conference, 5/3-5/6, in Toronto

·       DA Davidson Annual Financial Institutions Conference, 5/4-5/6, in Colorado

·       Piper Spring Biotech Symposium, 5/3-5/5, in Boston, MA

 

 

Macro	Up/Down	Last
Nymex	0.15	107.96
Brent	0.46	110.60
Gold	17.75	1,898.00
EUR/USD	-0.0018	1.0604
JPY/USD	0.49	129.58
10-Year Note	+0.017	2.952%

 

 

World News

·    China April Caixin/Markit Services PMIs below expected; 36.2 vs 40 consensus

·    Brazil’s central bank raised its benchmark Selic interest rate to 12.75%, as expected. “For its next meeting, the Committee foresees as likely an extension of the cycle, with an adjustment of lower magnitude,” policymakers wrote in the statement announcing their decision.

 

Sector News Breakdown

Consumer

·    Booking Holdings (BKNG) 1Q adj EPS $3.90 vs est. $0.90 on revs $2.7B vs est. $2.5B; says gross bookings in Western Europe, N. America for summer period now over 30% ahead of this point in 2019

·    Costco (COST) April U.S. Comp sales ex-gas, FX +8.1%, vs. est. +7.7%; Costco April total comp sales +12.6%, vs. est. +9.1%

·    eBay (EBAY) 1Q adj EPS $1.05 vs est. $1.03 on revs $2.483B vs est. $2.46B; sees 2Q revs $2.35-2.4B vs est. $2.54B and adj EPS $0.87-0.91 vs est. $1.01

·    Etsy (ETSY) 1Q EPS $0.60 vs est. $0.60 on revs $579.3Mm vs est. $575.4Mm; sees 2Q revs $540-590Mm vs est. $627.8Mm

·    Hostess (TWNK) 1Q adj EPS $0.27 vs est. $0.22 on revs $332.1Mm vs est. $296.8Mm; raises FY guide, sees FY adj EPS $0.93-0.98 vs est. $0.97, revs at least +12% vs est. +7.45% and adj EBITDA toward higher end of $280-290Mm vs est. $289.7Mm

·    Host Hotels & Resorts (HST) 1Q adj FFO/shr $0.39 vs est. $0.23 on revs $1.07B vs est. $952.2Mm; announces doubling qtrly dividend to $0.06/shr

·    iRobot (IRBT) 1Q adj EPS ($0.66) vs est. ($1.35) on revs $292Mm vs est. $302.5Mm; sees FY revs $1.64-1.74B vs est. $1.77B and adj EPS $1.50-2.10 vs est. $1.59

·    Nio (NIO) and XPeng Motors (XPEV) have joined the list of Chinese companies after Li Auto (LI) who are all facing possible delisting. The SEC list, updated on May 4, indicates that 88 companies, including NIO, XPeng, EHang Holdings (EH), JD.com (JD), and Pinduoduo (PDD), were added to the provisional list of issuers identified. https://bit.ly/3KNM1HQ

·    Summit Materials (SUM) 1Q EPS ($0.29) vs est. ($0.38) on revs $392.5Mm vs est. $423.4Mm; sees FY adj EBITDA approx $529-557Mm vs est. $541.3Mm

·    VICI Properties (VICI) 1Q adj FFO/shr $0.44 vs est. $0.44 on revs $416.6Mm vs est. $412.2Mm; sees FY adj FFO/shr $1.89-1.92 vs est. $1.93

·    Vista Outdoor (VSTO) Q4 adj EPS $2.04 vs. est. $1.80; Q4 revs $808.6M vs. est. $760.87M; Q4 sporting products sales $464M, up 56% and Q4 outdoor products sales $345M, up 15%; guides Q1 EPS $1.85-$1.95 vs. est. $1.77 and revs $770M-$790M vs. est. $748.9M

 

Energy, Industrials and Materials

·    Albemarle (ALB) 1Q adj EPS $2.38 vs est. $1.63 on revs $1.13B vs est. $1.03B; guides FY net sales $5.2-5.6B vs est. $4.4B, adj EBITDA $1.7-2.0B vs est. $1.25B and adj EPS $9.25-12.25 vs est. $6.22; guides up on increased prices in lithium and bromine businesses

·    APA Corp. (APA) Q1 EPS was 4.7% below consensus and APA cut its 2022 production guide by 1.7% due to the impact of production sharing contracts in Egypt but raised its 2022 capex guide by 7.8%. 1Q22 production was 0.4% below consensus

·    Axon Enterprises (AXON) announced yesterday its CFO has resigned and the company simultaneously increased its guidance for FY22; raised the guided range for FY22 EBITDA by $5M to $190M-$200M and raised the revenue outlook from $1.04B to a range of $1.05B-$1.10B

·    CF Industries (CF) 1Q EPS $4.21 vs est. $4.35, adj EBITDA $1.65B vs est. $1.43B

·    Corteva (CTVA) 1Q adj EPS $0.97 vs est. $0.82 on sales $4.6B vs est. $4.5B; sees FY sales $16.7-17B vs est. $16.9B and EPB $2.35-2.55 vs est. $2.44

·    Marathon Oil (MRO) 1Q adj EPS $1.02 vs est. $0.92, oil-equivalent production 345,000 net boed, oil production 168,000 net boepd, unit production cost avg $5.59 per BOE during 1Q, raises qtrly base dividend by about 15%; 2022 production guidance unchanged

·    Phillips 66 (PSX) and Marathon Petroleum (MPC) were cleared by California regulators Wednesday to convert their petroleum refineries into the two largest renewable diesel production facilities in the U.S.

·    Warren Buffett’s Berkshire Hathaway (BRK.A) bought more Occidental Petroleum (OXY) stock this week purchasing 5.9 million shares for about $345 million

·    SunRun (RUN) 1Q EPS ($0.42) vs est. ($0.17) o revs $495.8Mm vs est. $401.3Mm; sees FY over 25% growth in solar energy capacity installed; announces CFO stepping down at end of May, appointed Danny Abajian to act as new CFO as of May 30 and files a mixed shelf offering

·    Billionaire Carl Icahn is said in discussions to reach a settlement with Southwest Gas (SWX) that would allow the activist investor to get as many as four seats on the board. Talks are still taking place and could still fall apart before the company’s annual meeting next week – Bloomberg

 

Financials

·    MetLife (MET) 1Q adj EPS $2.08 vs est. $1.65 o revs $15.76B vs est. $16.78B; qtr-end book value $61.55/share; announces new $3B share repurchase authorization, says is incremental to $475Mm remaining under prior authorization

·    Intercontinental Exchange Inc., (ICE), parent company of the New York Stock Exchange, agreed to buy mortgage-data firm Black Knight Inc. (BKI) in a cash-and-stock deal valued at $13.1 billion, stepping up its involvement in the U.S. mortgage market.

 

Healthcare

·    ACADIA Pharmaceuticals Inc (ACAD) reported 1Q22 results slightly behind consensus, while reiterating 2022 guidance. NUPLAZID sales fell somewhat short of expectations (-5%)7% vs. consensus; issued unchanged sales guidance for 2022

·    Jazz Pharma (JAZZ) 1Q adj EPS $3.73 vs est. $3.84 on revs $813.7Mm vs est. $852.8Mm; guides FY revs $3.5-3.7B vs est. $3.58B and adj EPS $16.70-17.70 vs est. $16.54

·    Novavax (NVAX) submitted a request to the U.K.’s Medicines and Healthcare products Regulatory Agency to expand the authorization of its COVID-19 vaccine Nuvaxovid for use in in adolescents aged 12 years to 17 years.

·    Tandem Diabetes (TNDM) 1Q EPS ($0.23) vs est. ($0.07) on revs $175.9Mm vs est. $168.2Mm; sees FY sales +21-23% vs est. +21%

 

Technology, Media & Telecom

·    Fortinet (FTNT) 1Q adj EPS $0.94 vs est. $0.79; qtrly booking $1.28B, revs $954.8Mm vs est. $885Mm; sees 2Q adj EPS $1.05-1.10 vs est. $1.13 and revs $1.005-1.035B vs est. $1.01B, guides FY revs $4.35-4.40B vs est. $4.3B and adj EPS $5.00-5.15 vs est. $4.96

·    Silicon Motion (SIMO) rises after-hours on report that MaxLinear Inc. (MXL) is in talks to purchase the chipmaker; a deal may be announced in the coming days if negotiations are successful, according to a Bloomberg report. https://bit.ly/3MNI5s8

·    Twilio (TWLO) 1Q adj EPS $0.00 vs est. ($0.22) on revs $875.4Mm vs est. $863.6Mm; guides 2Q revs $912-922Mm vs est. $916Mm and adj EPS ($0.23)-($0.20) vs est. ($0.13)

·    Qorvo (QRVO) adj 4Q EPS $3.12 vs est. $2.93 o revs $1.166B vs est. $1.15B; guides 1Q adj EPS $2.00-2.25 vs est. $2.78 and revs $1.0-1.05B vs est. $1.127B

·    Qualys (QLYS) 1Q adj EPS $0.89 vs est. $0.80 on revs $113.4Mm vs est. $113Mm; sees 2Q revs $117-117.8Mm vs est. $117.3Mm and FY revs $484-486.5Mm vs est. $483.6Mm

·    Vimeo (VMEO) 1Q EPS ($0.16) vs est. ($0.15) on revs $108.4Mm vs est. $106.7Mm; sees 2Q revs +12-14% vs est. +13.9%

·    Bandwidth (BAND) reported better-than-expected 1Q22 results, with non-GAAP EPS of $0.09 (consensus ($0.08)) on revenue of $131M, up 16% y/y (consensus $126M) an increase from 12% last quarter and with messaging revenue of ~$16M, up 35% year over year