Early Look

Wednesday, May 19, 2021

Futures	Up/Down	%	Last
Dow	-216.00	0.64%	33,780
S&P 500	-33.25	0.81%	4,089
Nasdaq	-156.50	1.18%	13,055

 

 

Major averages are looking sharply lower as persisting worries over inflation weighed on markets along with a recent bout of weaker economic data (housing starts yesterday), pushing major averages below key technical levels. All three major U.S. stock averages ended Tuesday’s trading session with declines as the Nasdaq dropped 0.6%, the S&P 500 slipped down 0.9%, and the Dow lost 0.8%, led by industrials, energy and technology shares (defensive Staples and Utilities fared the best). Oil prices are looking lower after sliding yesterday off 2021 highs while the U.S. dollar bounces off multi month lows. In Asian markets, The Nikkei Index dropped -362 points to 28,044, the Shanghai Index slipped -18 points to 3,510, and the Hang Seng Index was closed (last settled at 28,593). In Europe, the German DAX is lower by -200 points to 15,185, while the FTSE 100 is down over -70 points to 6,960. Market participants await the minutes from the latest federal reserve meeting later today which is likely to show yet more dovish commentary as the Fed has maintained the stance that a jump in inflation only will be transitory as the U.S. economy reopens. Bitcoin tumbled to below $40,000 after the people’s bank of China published a warning over the use of virtual currencies. Strong earnings results this morning from retailers Target (TGT) and Lowe’s (LOW), following better numbers the day prior from Wal-Mart (WMT) and Home Depot (HD) but remain pressured with broader market weakness.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -35.46 points, or 0.85%, to 4,127.83

·     The Dow Jones Industrial Average fell -267.13 points, or 0.78%, to 34,060.66

·     The Nasdaq Composite slumped -75.41 points, or 0.56%, to 13,303.64

·     The Russell 2000 Index declined -16.24 points, or 0.73% to 2,210.88

 

Events Calendar for Today

·     7:00 AM ET         MBA Mortgage Applications Data

·     10:30 AM ET      Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ADI, EXP, LOW, TGT, TJX, WLMS

·     Earnings After the Close: CPRT, CSCO, KEYS, LB, SCVL, SNPS

 

Other Key Events:

·     JPMorgan Homebuilding & Building Products Conference (virtual), 5/19-5/20

·     UBS Financial Institutions Conference (virtual), 5/19-5/21

·     American gas Association Financial Forum (virtual), 5/19-5/20

·     RBC Capital Automotive, Industrials & Transportation Conference (virtual), 5/17-5/19

·     Virtual American Thoracic Society Conference, 5/14-5/19

·     Virtual Display Week 2021, 5/17-5/21

 

 

Macro	Up/Down	Last
Nymex	-1.33	64.16
Brent	-1.34	67.37
Gold	-13.50	1,855.90
EUR/USD	-0.0012	1.2210
JPY/USD	0.29	109.19
10-Year Note	+0.015	1.657%

 

 

World News

·     Bitcoin: as investors pile into rivals, Bitcoin’s share of the crypto market has slumped to around 45% from 70% this year, according to U.S. researcher Coin Metrics, while its trading volume share at major exchange Binance has halved to 23%, data provider CryptoCompare says. Its market cap remains around $800 billion, Second-largest coin Ethereum is catching up, having risen more than four-fold this year to around $380 billion – Reuters

·     The New York attorney general’s office said on Tuesday it has now opened a criminal investigation into former President Donald Trump’s company. Attorney General Letitia James has been investigating whether the Trump Organization falsely reported property values to secure loans and obtain economic and tax benefits.

·     Euro zone inflation accelerated as expected in April because of a sharp rise in the costs of energy and services, as Eurostat said consumer prices rose 0.6% month-on-month for a 1.6% year-on-year increase, up from 1.3% year-on-year in March

 

Sector News Breakdown

Consumer

·     Lowe’s Cos Inc (LOW) Q1 EPS $3.21 vs. est. $2.62; Q1 sales $24.4B vs. est. $23.86B; posted a 25.9% jump in Q1 comp store sales vs. est. 19.2%; continues to plan for $9 bln in share repurchases and $2 bln in capital expenditures in fiscal 2021

·     Target Corp. (TGT) Q1 EPS $3.69 vs. est. $2.25; Q1 sales grew 23.4% to $24.2B vs. est. $21.81B; Q1 comp sales rose 22.9%, Digital comp sales up 50%; expects Q2 mid-to-high single digit growth in comp sales; said Q2 operating margin will be well above the 2019 rate of 7.2%

·     Eagle Materials (EXP) Q4 EPS $1.56 vs. est. $1.23; Q1 revs $343M vs. est. $333.6M; decided not to pursue proposed separation of eagle materials; average net cement sales price for quarter increased 2% to $112.77 per ton

·     Southwest Airlines (LUV) sees May revenue down 35%-40% YoY, sees June revenue down 20%-25% YoY and April revenue fell about 42% YoY; based on current bookings, leisure fare levels in June 2021 are approaching June 2019 levels, says continues to experience increase in bookings farther out the bookings curve

·     Lithia Motors & Driveway (LAD) intend to offer, subject to market, other conditions, $500 mln of senior notes due 2029

·     Container Store (TCS) Q4 EPS 69c vs. est. 57c; Q4 revs $314.7M vs. est. $295.19M; sees Q1 EPS about 9c vs. est. 3c; sees Q1 revs up about 50% from last year (est. $222.6M); Q4 gross margin up 30bps at 59.3%

·     Purple Innovation (PRPL) files for resale of up to 8.41 mln shares of class a common stock by the selling stockholders

 

Energy, Industrials and Materials

·     The American Petroleum Institute (API) shows a surprise build of 620K barrels of oil for the week ended May 14; gasoline inventories a draw of 2.84M barrels, distillate inventories show a draw of 2.58M barrels and Cushing inventories show a build of 53K barrels.

·     Frontline (FRO) said it bought six very large crude carriers, currently under construction at Hyundai Heavy Industries shipyard in South Korea, for $565.8M; the five vessels to be delivered during 2022 starting in Q1 and last vessel in Q1 2023

·     Valvoline (VVV) announces $300M share buyback

·     Northrop Grumman (NOC) raises quarterly dividend 8% to $1.57 per share

 

Financials

·     Bitcoin prices extend declines dropping over 8% to move under the $40K level while Ethereum drops about 15% to move below $3,000

·     Futu Holdings (FUTU) Q1 estimates topped views with total revenue growth of 349.4% YoY, number of Futu users increased 69.7% YoY to 14.2M; the number of registered clients expanded 140.2% YoY to 1,957,436; the number of paying clients grew 231% YoY to 789,652.

 

Healthcare

·     Akoya Biosciences (AKYA) 1Q EPS ($3.54) vs. est. $0.17) on revs $12.2Mm vs. est. $12Mm; guides 2Q revs approx +45%; guides FY revs at least $52Mm vs. est. $51.3Mm

·     Bristol-Myers Squibb (BMY) and Exscientia, a clinical-stage artificial Intelligence (AI)-driven pharma tech company have formed a collaboration to use AI to speed up the discovery of small molecule drug candidates in areas such as oncology & immunology. The deal valued includes up to $50M in upfront payments and up to $125M dependent on near to mid-term milestones

·     Idera pharmaceuticals (IDRA) said it will not continue illuminate-301 trial; co had previously announced illuminate-301 did not meet endpoint

·     Iovance Biotherapeutics (IOVA) biologics license application submission for lifileucel is now expected to occur during first half of 2022; following FDA feedback, will continue ongoing work developing and validating its potency assays

·     Galapagos (GLPG) announces that the first patient has been enrolled in its study to evaluate the effectiveness and safety of filgotinib in treating patients with rheumatoid arthritis (RA) in a real-world setting

·     Steris (STE) Q4 adj EPS $1.63 vs. est. $1.77; Q4 revs $873.5M vs. est. $876.21M; guides FY revs approx $4.5B vs. est. $3.7B, sees FY adj EPS $7.40-7.65 vs. est. $7.00

 

Technology, Media & Telecom

·     Take-Two (TTWO) 4Q EPS $1.88 vs. est. $0.67 on net revs $839.4Mm vs. est. $664Mm, net bookings +8% to $784.5Mm; guides 1Q revs $730-780Mm vs. est. $592Mm, sees 1Q net bookings $625-675Mm and EPS $1.00-1.10 vs. est. $0.88; guides FY revs $3.14-3.24B vs. est. $3.5B and net bookings $3.2-3.3B

·     Agilisys (AGYS) Q4 adj EPS 21c vs. est. 19c; Q4 revs $36.3M vs. est. $36.7M; sees FY revs $160M-$170M vs. est. $165.7M and fiscal 2022 adjusted ebitda is expected to be slightly better than 15% of revenue

·     Squarespace (SQSP) is set to start trading today through a 40M share direct listing rather than a traditional IPO, as the NYSE has set a reference price of $50 per share

·     Trip.com (TCOM) posts Q1 surprise profit, revenue turnaround, falling -13.4%, to 4.1B yuan (about $628M) citing a “resilient” recovery in the Chinese domestic market; revenues from corporate travel management grew 101% year-over-year, and rose 6% from the same period in 2019.