Early Look

Friday, May 17, 2024

After big market swings to start the week, pushing major averages to all-time highs for the Dow, S&P and Nasdaq, overnight futures are flat to little changed ahead of today’s option expiration. Softer CPI, PPI inflation, coupled with weaker economic growth data (retail sales, manufacturing, housing) has boosted market expectations of the Fed cutting rates sooner this year. Yesterday, the Dow Jones Industrial Average jumped above 40,000 for the first time, but a late day stock market fade pushed it below 39,900. The CBOE Volatility index (VIX) fell to 5-month lows around 12.42 yesterday and is lower this morning. Bitcoin prices surge to end the week, rising above $66,000. In Asian markets, The Nikkei Index dropped -132 points to 38,787, the Shanghai Index rose 31 points to 3,154, and the Hang Seng Index gained 177 points to 19,553. In Europe, the German DAX is lower by -70 points to 18,668, while the FTSE 100 is down -32 points to 8,406. China and Hong Kong stocks ended on a buoyant note on Friday after China announced a raft of measures spanning from allowing local governments to buy "some" apartments, relaxing mortgage rules, to pledging to deliver unfinished homes. The U.S. dollar index (DXY) has weakened by 1.62% so far in May, with USD the weakest G-10 currency, following underwhelming labor market and inflation data. Oil prices are rising, with Brent set to finish the week up on positive economic data and a fall in inventories. Eyes will be on comments from Fed officials Christopher Waller and Neel Kashkari today for further clues about the path of interest rates, after several of their peers said the central bank should keep borrowing costs high for longer. No major U.S. economic data or earnings could lead to a relatively quiet/slow day after all-time high excitement this week.

• The Dow Jones Industrial Average fell -38.62 points, or 0.10%, to 39,869.38.
• The Nasdaq Composite dropped -44.07 points, or 0.26%, to 16,698.32.
• The Russell 2000 Index declined -13.21 points, or 0.63% to 2,096.25.

• 1:00 PM ET                   Baker Hughes Weekly rig count data

• China’s crude steel output in April fell 2.6% from the previous month and dropped 7.2% from the previous year, statistics bureau data showed on Friday, missing expectations. Many market participants had forecast a monthly rise. China, the world’s largest steel producer, manufactured 85.94 million metric tons of crude steel last month, which represents an average daily output of 2.86 million tons, compared with 2.85 million tons in March.
• Atlanta Fed’s Bostic said in an interview last night he was pleased with inflation progress in April, but Fed is not yet there; notes lower shelter inflation was a significant development, but one data point is not a trend. He said firms can’t 100% pass through prices, economy slowing, and said it could be appropriate to reduce rates toward year end.

• Cracker Barrel (CBRL) cuts quarterly dividend to $0.25 from $1.30 a share in February; revised its long-term fiscal outlook, saying it expects adj earnings next fiscal year to be flat or slightly below this year’s levels before increasing in 2026 and 2027; said sees Q3 and Q4 financial results below previous expectations.
• Despegar.com (DESP) Q1 EPS $0.07 vs. est. $0.13; Q1 revs $173.7M vs. est. $171.6M; sees FY24 revenue ‘at least’ $820M vs. consensus $821.7M and guides FY24 adj EBITDA view ‘at least’ $155M vs. prior guide of at least $150M.
• Flowers Foods (FLO) Q1 adj EPS $0.38 vs est. $0.41, adj EBITDA $159.4Mm vs est. $168.26Mm on revs $1.577B vs est. $1.579B; sees FY sales $5.091-5.172B vs est. $5.16B, adj EBITDA $524-553Mm vs est. $535.36Mm and adj EPS $1.20-1.30 vs est. $1.24.
• Gaming and Leisure Properties (GLPI) announces the acquisition of three casino resorts in South Dakota and Nevada for $105M and establishes new tenant relationship with strategic gaming management.

• Range Resources (RRC) files mixed securities shelf.

• Coinbase (COIN) upgraded to Neutral from Underperform at Bank America and raise tgt to $217 from $110 saying the current macro environment has been a positive for cryptocurrency market cap appreciation and trading volumes and the co’s expense discipline and ability to benefit from operating leverage following large expense cuts in 2022 will help it maintain profitability going forward.
• Reddit (RDDT) shares rise after announces they will build partnership with OpenAI; OpenAI will become a reddit advertising partner and OpenAI will bring reddit content to ChatGPT and new products.
• Robinhood (HOOD) upgraded to Buy from Underperform at Bank America and raise tgt to $24 from $14 saying the firm has monitored a rebound in multiple metrics, including organic growth, margin loan utilization, and year over year trading activity and payment for order flow, and expects this to continue through 2026.

• Nuvalent (NUVL) announced that the FDA has granted breakthrough therapy designation to NVL-655 for the treatment of patients with locally advanced or metastatic ALK-positive non-small cell lung cancer who have been previously treated with two or more ALK tyrosine kinase inhibitors.

• DXC Technology (DXC) Q4 adj EPS $0.97 vs est. $0.83, adj EBIT $283Mm vs est. $242.84Mm on revs $3.386B vs est. $3.366B; guides Q1 revs $3.1-3.15B vs est. $3.301B, adj EBIT mgn 5.5-6.0% and adj EPS $0.55-0.60 vs est. $0.76; sees FY revs $12.67-12.95B vs est. $13.191B, adj EBIT mgn 6.0-7.0% and adj EPS $2.50-3.00 vs est. $3.49.
• Globant SA (GLOB) Q1 adj EPS $1.53 vs est. $1.53 on revs $571.1Mm vs est. $570.79Mm, adj gr mgn 38%; sees Q2 revs $585-589Mm vs est. $590.5Mm and adj EPS $1.47-1.52 vs est. $1.57; sees FY revs $2.405-2.44B vs est. $2.441B and adj EPS $6.20-6.50 vs est. $6.53.
• Take-Two Interactive (TTWO) forecasts fy25 net bookings $5.55B to $5.65B, est. $6.92B; Q4 adj EBITDA ($19.6Mm) vs est. $89.45Mm on revs $$1.399B vs est. $1.299B; guides $Q1 revs $1.3-1.35BB vs est. $1.239B and adj EBITDA $26-47Mm vs est. $136.9Mm; narrows ‘GTA VI’ release window to Fall 2025.
• DoubleVerify (DV) announces $150M share repurchase program.