Early Look

Monday, May 8, 2023

Futures	Up/Down	%	Last
Dow	65.00	0.19%	33,804
S&P 500	5.25	0.13%	4,155
Nasdaq	-10.50	0.08%	13,307

 

 

U.S. futures looking mixed with S&P pointing to a slight gain, but Nasdaq down a few points ahead of a week focused on the debt ceiling and consumer price index (CPI) inflation data mid-week. Despite last Friday’s market “melt-up” behind better Apple (AAPL) results, for the week, the S&P fell -0.79%, the Dow lost -1.24%, and the Nasdaq dipped -0.07%. Energy was up +2.74% on Friday, the top sector mover (but down -5.7% on week), Technology rose +2.5% Friday (+0.2% on week), Financials rose +2.4% Friday (but down -2.59% on week) and Consumer Discretionary rose +2.02% on Friday (-0.5% for week) were biggest movers Friday though all 11-S&P sectors closed higher. In Asian markets, The Nikkei Index fell -208 points to 28,949, the Shanghai Index rose 60 points to 3,395, and the Hang Seng Index gained 247 points to 20,297. In Europe, the German DAX is up 14 points to 15,975, while the FTSE 100 was closed for Holiday. Oil is 2.24% at $72.94 per barrel, after posting its third straight weekly fall where the high last week was $76.51, and the low was $63.64. Oil prices rose last Friday, closing +4.1% on the day. A quiet start to the week thus far, but all eyes on the Fed and future rate expectations.

 

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 75.03 points, or 1.85%, to 4,136.25.

·     The Dow Jones Industrial Average rose 546.64 points, or 1.65%, to 33,674.38.

·     The Nasdaq Composite surged 269.01 points, or 2.25%, to 12,235.41.

·     The Russell 2000 Index advanced 41.07 points, or 2.39% to 1,759.88.

 

Economic Calendar for Today

·     10:00 AM ET          Wholesale inventories M/M for March

 

Earnings Calendar:

·     Earnings Before the Open: AKBA AMR AXSM BTAI DISH DK ENR FRPT GOCO HNI KKR LINC LL OSG PLUG SIX THX TSN VTRS

·     Earnings After the Close: ACAD ACM ADTN AEL ARIS ASUR BHF BKD BRBR BWXT CHRS DDD DO DOOR DRQ DVA DVN ENTA EVER GBDC HI HIMS HLIT ICUI IFF JELD KMPR LAND LCID LMB MCK MRC MWA NEO NNI OCUL PAY PCT PGNY PLTR PYPL RC SHLS SKYT SNDX SWAV SWKS TASK TDW TREX TRHC TRUE VECO WDC XNCR YMAB ZYME

 

Other Key Events:

·     Data Center World 2023 in ATX, 5/8-5/11

·     BTIG 3rd Annual Housing Ecosystem Conference, 5/8-5/9, in NY

·     Oppenheimer 18th Annual Industrial Growth Conference, 5/8-5/10 (virtual)

·     Raymond James 7th Annual Lodging Tour, 5/8-5/9, in Washington DC

·     China Imports & Exports for April

 

 

Macro	Up/Down	Last
Nymex	1.67	73.01
Brent	1.52	76.82
Gold	6.70	2,031.50
EUR/USD	0.0029	1.1047
JPY/USD	0.21	135.04
10-Year Note	+0.016	3.462%

 

 

World News

·     Secretary Janet Yellen issued another stark warning over the U.S. debt ceiling Sunday, suggesting “an economic and financial catastrophe” would follow if lawmakers failed to reach an agreement on its extension. Yellen said that the fate of the $31.4 trillion debt limit, which was breached earlier this year, lies in the hands of Congress, warning that any attempt by President Joe Biden to suspend it would trigger a “constitutional crisis”.

·     Chicago President Goolsbee spoke after the close on Friday, saying that must be data dependent on policy, and premature to make a judgement on Fed’s June decision. He added that the strain in the banking sector has to give one some pause, and tighter credit conditions help do Fed’s work for it.

 

Sector News Breakdown

Consumer

·     Churchill Downs (CHDN) noted seven horses at Churchill Downs died this week in the lead-up to the 2023 Kentucky Derby, with five horses being scratched due to veterinarian’s concerns regarding health (5 in total). Mage won the 149th running of the Kentucky Derby in Louisville, Kentucky, on Saturday to capture the first leg of U.S. thoroughbred racing’s Triple Crown.

·     LL Flooring (LL) Q1 adjusted EPS loss (-$0.31) vs. est. loss (-$0.15) and vs. $0.13 y/y; Q1 revenue $240.7M vs. $258.4M est.; said continues to navigate uncertainty in macroeconomic environment due to consumer confidence, inflation; sees 2023 full year revenues to continue to be challenged due to macro uncertainty.

·     Six Flags (SIX) Q1 EPS loss (-$0.84) vs. est. loss (-$0.85); Q1 revs grew 3% to $142.2M, above consensus $132.56M; Attendance declined 5% to 1.6 million in Q1, while total guest spending per guest increased 7.2% to $80.88, as admissions spending per guest rose 10.5% to $47.81 and in-park spending per guest rose 2.8% to $33.07.

·     Southwest Airlines (LUV) and Frontier Group (ULCC) both downgraded to Neutral from Overweight at JPMorgan, while the firm upgraded American Airlines (AAL) to Overweight.

·     Tupperware Brands Corp (TUP) shares fall -23% after saying it had engaged investment bank Moelis & Co LLC (MC) to explore strategic alternatives, adding that it expects a “material decline” in revenues for the first quarter ended April 1.

 

Energy, Industrials and Materials

·     Occidental Petroleum Corp. (OXY) shares slipped after Warren Buffett said Berkshire Hathaway Inc. won’t make an offer for full control of the energy group, lightening speculation he was seeking to own the company after spending months buying up its shares – Bloomberg.

·     Darling Ingredients (DAR), Opal Fuels (OPAL): biofuel stocks are sputtering; they could soon get a jump start, according to Barron’s. Following a selloff in the industry that has pushed several stocks down more than 20% in the past year, some analysts now see buying opportunities.

·     Carrier Global (CARR) mentioned positively in Barron’s noting the company is growing fast and its stock is a buy, as the maker of heating, cooling and ventilation products has seen earnings grow at a respectable 19.4% average over the past three years. One of its competitors, Trane Technologies (TT), has done even better with earnings increasing at a 28.5% pace over the 3 yrs

 

Financials

·     Berkshire Hathaway (BRK.B) reported a jump in Q1 earnings due in part to a rebound in the insurance business; said operating earnings totaled $8.065B in Q1, up 12.6% y/y; said its cash hoard increased to $130.616B from $128B in the fourth quarter of 2022.

·     Bank credit at all U.S. Commercial banks rises to $17.37 trln in week ending April 26, vs $17.32 trln in prior week: Fed data, not seasonally adjusted.

·     CNO Financial (CNO) raised its dividend to 15 cents a share from 14 cents and approved an additional $500 million to buy back stock.

·     PacWest Bancorp (PACW) slashed its quarterly dividend to $0.01 from $0.25 citing the volatility that has roiled the US banking sector, though said its business remains “fundamentally sound.”

·     Bitcoin prices fall over -5% to below $28,000 after Cryptocurrency exchange Binance halted bitcoin withdrawals for several hours on Monday, citing heavy volumes and a surge in processing fees, before clearing them at a higher cost (COIN, MARA, MSTR, RIOT shares lower)

 

Healthcare

·     Farallon Capital urges Exelixis (EXEL) shareholders to support change by electing its three highly qualified director candidates; files definitive proxy materials and sends letter to shareholders.

·     Nano-X Imaging Ltd (NNOX) files for shelf of up to 4.9 mln ordinary shares by selling shareholder.

 

Technology, Media & Telecom

·     Dish (DISH) Q1 EPS $0.35 vs. est. $0.36; Q1 revs $3.96B vs. est. $4.06B; said Q1 net Pay-TV subs decreased approximately 552,000 and retail wireless net subscribers decreased by approximately 81,000 in Q1.

·     Qorvo (QRVO) is winning new business and customers, and that makes the company one to watch, according to Barron’s.

·     Disney’s (DIS) “Guardians of the Galaxy Vol. 3,” from Marvel earned $114 million in ticket sales from 4,450 locations in North America. “Guardians Vol. 3” bumped “The Super Mario Bros. Movie” out of first place after four weekends atop the charts.

·     Snowflake (SNOW) upgraded to Buy from Hold at Stifel and raise tgt to $185 from $145.

·     U.S. sanctions are spurring Chinese tech companies to accelerate research to develop cutting-edge artificial intelligence without relying on the latest American chips, the WSJ reported. The review of research papers and interviews with employees found that Chinese companies are studying techniques that could allow them to achieve state-of-the-art AI performance with fewer or less powerful semiconductors. They are also researching how to combine different types of chips to avoid relying on any one type of hardware. https://on.wsj.com/42iE6vR