Early Look

Monday, May 9, 2022

More losses for U.S. stocks on tap here with U.S. futures sharply lower following another dreadful week for major averages, with the 10-year yield topping 3.2% and concerns of a “hard landing” from the Fed rises and Covid lockdowns in China adding to investor nervousness. The U.S. Federal Reserve’s effort to tame inflation with aggressive interest-rate hikes has some investors worried that a recession is inevitable, leading to a plunge in stock prices this year. The Dow Jones Industrial Average comes into Monday with a 6-week losing streak, while the S&P 500 and Nasdaq Composite have been down 5-straight weeks. No investment has been safe over this stretch, outside of maybe energy as oil prices remain higher, with investors unloading both winners and losers to start 2022, with the S&P 500 index coming into the day down roughly -13.5% YTD, the Nasdaq -22.3% YTD (semis down over -24% YTD), the Dow -9.5% YTD and the Russell 2000 down -18% YTD). Crypto-currency assets also tumble, with Bitcoin down -7.4% to $33,400 (lowest levels since July 2021) and Ethereum (ETH) down about -10% to $2,450. In Asian markets, The Nikkei Index falls -2.5% or 684 points to 26,319, the Shanghai Index was little changed at 3,004, while the Hang Seng Index declines -3.8% or 791 points to 20,000. In Europe, the German DAX slides -1% to 13,530, while the FTSE 100 is down nearly -100 points to drop below 7,300. Commodity prices are broadly lower, with oil dropping over 2% as the U.S. dollar extends 2-year highs.

Market Closing Prices Yesterday

·        The S&P 500 Index dropped –23.53 points, or 0.57%, to 4,123.34

·        The Dow Jones Industrial Average fell -98.60 points, or 0.30%, to 32,899.37

·        The Nasdaq Composite slumped -173.03 points, or 1.40%, to 12,144.66

·        The Russell 2000 Index declined -31.58 points, or 1.69% to 1,839.56

Earnings Calendar:

·        Earnings Before the Open: ACM, APRN, BBGI, BTAI, CANO, COTY, DUK, ELAN, ENR, FOLD, HEP, HSKA, JLL, JOUT, KOS, LINC, MAC, MSGE, PLTR, PRTY, RCM, RIDE, THS, TSN, VRTV, VRTV, WOW

·        Earnings After the Close: ADES, AKBA, AMC, AMWL, ANGI, APPF, ARCT, ASUR, ATER, BBAI, BHF, BLFS, BLNK, BODY, BW, BWXT, CARG, CLOV, DDD, DNB, EQH, ESE, FGEN, FSK, GDRX, GERN, GOEV, GRPN, HE, HHC, HI, IAC, IFF, III, IIIV, IVAC, IVC, LIFE, LMND, LOTZ, LPSN, MAXR, MBI, MCHP, MEG, MESA, MGY, MTRX, NCMI, NVAX, OCUL, PETS, PLUG, PRA, PUBM, QSI, RNG, SDC, SPG, SUPN, SWAV, TASK, TDUP, TREX, TRUE, TUSK, UNVR, UPST, VECO, VRM, VVV, XPO, YMAB, ZNGA

Economic Calendar for Today

• 10:00 AM ET     Wholesale Inventories M/M for March

World News

·        Chinese State Media citing China’s Prem Li (May 8) warned of a complicated & grave employment situation as Beijing & Shanghai tightened Covid restrictions; wants govt depts to aim measures at helping firms keep jobs & get over current difficult situation

·        Bank of Japan March Minutes showed members agreed the economy was likely to recover due to increasing external demand & accommodative monetary pol; several said the chance was low of recent import rises leading to sustained increase in consumer inflation; several members said the BoJ need to conduct mkt ops to curb long term interest rates; most members agreed the BoJ expects short- & long-term policy rates to move and current or lower levels

Sector News Breakdown

Consumer

·        Ford Motor (F) plans to sell 8 million of its 102 million shares of Rivian Automotive (RIVN) when the lockup period for early investors in the electric vehicle maker expires on Sunday – CNBC. Ford holds 102 mln RIVN shares, nearly 11.4% as of Dec. 12, per Refinitiv data

·        Uber (UBER), Grab (GRAB) among stocks to play future of transportation, according to Barron’s this weekend, which explores the outlook for auto makers old and new, and the technologies shaping the industry’s future, other stocks aside from Tesla (TSLA) including UBER, GPC, GRAB, ORLY, MNRO, UTI, CPRT and SNA

·        Uber (UBER) CEO Tells Staff Company Will Cut Down on Costs: CNBC reports. “We will treat hiring as a privilege and be deliberate about when and where we add headcount. We will be even more hardcore about costs across the board,”

Energy

·        Southwest Gas (SWX) announced that it has entered into a settlement agreement with Carl Icahn and his affiliated entities. Pursuant to the Agreement, at least three, and up to four, new directors will join the Southwest Gas Board of Directors

·        Energy prices jumped 4.9% last week to $109.77 per barrel and Brent added 4.9% to $112.39 per barrel and gasoline futures finished at a record high $3.76 per gallon. U.S. natural gas prices fell 8.4% on Friday to $8.043 per MMBtu, but still surged 11% for the week

·        Japanese Prime Minister Fumio Kishida said it would take time to phase out imports of Russian oil, hours after he joined other G7 leaders to impose a ban on crude over the Kremlin’s invasion of Ukraine

Healthcare

·        BioNTech (BNTX) reported Q1 earnings and sales that topped Wall Street expectations; earned EUR14.24 a share in the quarter on revenue of EUR6.37 billion. Which compared to earnings of EUR9.16 a share on revenue of EUR4.34 billion. A year earlier, the company earned EUR4.39

·        Cigna (CI) upgraded to Outperform from Market Perform and tgt raised to $329 from $242 at Cowen

·        Allakos (ALLK) files $250M worth shares shelf offering

·        Cogent Biosciences (COGT) filed for a $300M mixed shelf offering

·        Kiniksa Pharma (KNSA) files $400M mixed securities shelf

·        Hospital chains including HCA Healthcare Inc. (HCA) and Universal Health Services Inc. (UHS) are said to be among hospital operators requesting higher payments from payors. Neither firm did not specify the level of the price hikes they seek, the WSJ reports. People familiar with the talks say that some healthcare providers are seeking a 7.5% – 15% increase in their prices compared to the 4% to 6% price increases that hospitals typically seek. https://bit.ly/387pVDe

·        Myovant (MYOV) and Accord Healthcare Enter into Exclusive License Agreement to Commercialize ORGOVYX for Advanced Hormone-Sensitive Prostate Cancer in Europe; Myovant to receive an upfront payment of $50M

·        Prestige Consumer Healthcare (PBH) upgraded to outperform from perform at Oppenheimer, saying the over-the- counter medications maker looks attractively valued after a recent pullback

Industrials & Materials

·        Air Lease (AL) Chairman says new airline startups hampered by serious pilot shortages in U.S.; says looked at buying lessors, but not interested unless accretive and price is below book value; says more interested in adding more airplanes than more staff; says had to cancel some Boeing 787, every customer can cancel after 12 months delay; says analyzed Boeing 777x freighter, too many questions and delays to place order

Technology, Internet, Media & Telecom

·        Rogers Communications Inc. (RCI) said Canada’s antitrust agency is opposed to its $16 billion takeover of rival Shaw Communications Inc., (SJR) casting significant doubt on whether the companies will be able to close one of the country’s biggest-ever deals – Bloomberg https://bit.ly/3P75AOJ

·        Dish Networks (DISH) downgraded to Neutral from Overweight at JPMorgan and cut tgt to $30 from $40 citing the weaker than expected Pay-TV and wireless results in Q1 and says a lack of guidance at the upcoming investor meeting and “softer launches” remove share catalysts. Meanwhile DISH was upgraded to Outperform from Neutral at Credit Suisse

·        Liberty Formula One (FWONA) tracking stock mentioned positively in Barron’s noting shares had been racing ahead, but a recent pullback before the Miami Grand Prix could be a buying opportunity; notes the motor sport’s rising popularity has spurred renewed interest in the tracking stock

·        iHeartMedia (IHRT) downgraded to Neutral from Overweight at JPMorgan

·        Match Group (MTCH) upgraded to Overweight from Equal Weight at Wells Fargo

·        Marvel Studios and Disney’s (DIS) “Doctor Strange in the Multiverse of Madness” grossed $185M in its debut as it scored one of the biggest openings of all time at the domestic box office