Early Look

Wednesday, May 22, 2024

US equity futures are slightly lower after the S&P 500 and Nasdaq hit yet another record high Tuesday, dipping early ahead of Nvidia (NVDA) earnings tonight after the close, one of the most highly anticipated earnings results of the quarter. US Treasuries slipped ahead of minutes from the Federal Reserve’s latest policy meeting later today, with the 10-yr yield edging higher to 4.44%, as markets look for more clues on when the central bank will start cutting interest rates. Shares of retailing giant Target (TGT) drop over -8% this morning following softer guidance and continued sales declines. If you followed the adage of “Sell in May, Go Away” you would be missing out on big gains so far, as the S&P 500 comes into the day +5.6% month to date, the Nasdaq +7.5% MTD, the Dow +5.4% and the Russell 2000 +6.3% MTD with zero market fears on inflation, rates, earnings, or geopolitical landscape. Charlie Bilello tweeted last night: "The S&P 500 ended the day at a new all-time high, its 24th of the year. Over the last 12 years, the S&P 500 has hit 371 all-time highs, which is more than any 12-year period in history. $SPX https://tinyurl.com/35xyj5a8 . In Asian markets, The Nikkei Index dropped -329 points to 38,617, the Shanghai Index was little changed at 3,158, and the Hang Seng Index slipped -25 points to 19,195. In Europe, the German DAX is down -45 points to 18,681, while the FTSE 100 dips -24 points to 8,391. China signaled it’s ready to unleash tariffs as high as 25% on imported cars with large engines, as trade tensions escalate with the US and European Union.

• The Dow Jones Industrial Average rose 66.22 points, or 0.17%, to 39,872.99.
• The Nasdaq Composite climbed 37.75 points, or 0.22%, to 16,832.62.
• The Russell 2000 Index declined -4.14 points, or 0.20% to 2,098.36.

• 9:40 AM ET                  Fed’s Goolsbee Gives Opening Remarks
• 10:00 EM ET                Existing Home Sales M/M for April…est. 4.21Mm
• 10:30 AM ET                Weekly DOE Inventory Data
• 1:00 PM ET                   US Treasury to sell $13B in 20-year notes.
• 2:00 PM ET                   FOMC Minutes from May Fed meeting

• Earnings After the Close: ELF ENS NVDA PLUS RAMP SNOW SNPS UVV VFC ZUO

• Goldman Sachs TechNet Conference Asia Pacific 2024, 5/21-5/22, in Hong Kong
• JP Morgan 52nd Annual Global technology, Media, and Comm Conference, 5/19-5/22, in Boston, MA
• TD Cowen 2nd Annual Sustainability Week, 5/21-5/23 (virtual)

• Lululemon (LULU) announces evolved structure of product and brand teams; elevates global creative director and establishes chief brand & product activation officer role; announces departure of chief product officer.
• Toll Brothers (TOL) Q2 EPS $4.55 vs est. $4.14 on home sales revs $2.65B vs est. $2.533B, adj home sales gr mgn 28.2%; guides Q3 deliveries 2,750-2,850 units, avg delivered price $950-960K, adj home sales gr mgn 27.7%; sees FY deliveries 10,400-10,800 units, avg delivered price $960-970K, adj home sales gr mgn $28%.
• Urban Outfitters (URBN) Q1 adj EPS $0.69 vs est. $0.52 on sales $1.2B vs est. $1.175B, retail comps +4.6% vs est. +2.6; Q4 Anthropologie net sales $526.4M, and Free People net sales $318.7M.
• Shopify (SHOP) upgraded to Buy from Neutral at Goldman Sachs and raise tgt to $74 from $67 noting shares are down 23% year-to-date due to an investment cycle weighing on margin expansion in 2024 and more mixed consumer spending data point.
• Skyline Champion (SKY) Q4 adj EPS $0.62 vs est. $0.68, adj EBITDA $53.1Mm vs est. $58.64Mm on net sales $536.4Mm vs est. $560.92Mm; announces new $100Mm repurchase program.

• Modine Manufacturing (MOD) Q4 adj EPS $0.77 vs est. $0.76, adj EBITDA $78.8Mm vs est. $74.83Mm on revs $603.5Mm vs est. $605.36Mm; sees FY net sales +5-10% vs est. +7.32%, adj EBITDA $365-385Mm vs est. $355.18Mm and adj EPS $3.55-3.85 vs est. $3.81.

• Lincoln National (LNC) and Prudential (PRU) both upgraded to Buy from Hold at Jefferies in the insurance sector.
• XP Inc. (XP) reported 29% increase in Q1 net profit y/y at 1.03 billion reais net profit; Q1 net revenue of 4.05 bln reais (vs. est. 4.03 bln reais); Q1 gross margins 67.5%; Q1 net inflow was R$15 billion, and retail Net Inflow was R$13 billion, 7% higher QoQ; Q1 Active clients grew 16% YoY and 1% QoQ, totaling 4.6 million.

• LifeStance (LFST) 20M share Spot Secondary priced at $6.25.
• Neurocrine Biosciences (NBIX) announced the publication of data from a post hoc analysis of the Phase 3 KINECT-4 study of INGREZZA capsules in the Journal of Clinical Psychopharmacology.
• Novo Nordisk (NVO) said an office building in Bagsvaerd, Denmark, was hit by fire on Wednesday, while adding that the fire brigade was working at the site to extinguish the blaze.
• Rezolute (RZLT) shares soared after saying its study of a potential eye-disease treatment met its primary endpoints; said that RZ402, a potential Diabetic Macular Edema treatment, had met its primary endpoints of change in macular edema and a good safety profile in the Phase 2 proof-of-concept study.
• Stryker (SYK) upgraded to Buy from Hold at Needham with a $392 price target as expects new product launches combined with Stryker’s capital equipment backlog to allow it to deliver upside to consensus revenue estimates and overcome any potential recon market slowdown.

• Photronics reports (PLAB) Q2 EPS $0.46 vs. $0.54 last year and revs $217.0M vs. $229.31M last year; sees Q3 non-GAAP EPS $0.53-$0.59 on revs $221M-$229M.
• Samsung Electronics (SSNLF) replaced the head of its semiconductor business, who had also served as co-CEO, after the South Korean company has lagged rivals in the recent artificial-intelligence boom; Samsung, without elaborating, called the leadership change a "pre-emptive measure" aimed at strengthening the company’s competitiveness during an uncertain global business environment.
• ViaSat Inc. (VSAT) Q4 revenue rose 73% y/y to $1.15B vs. est. $1.09B; said Q4 net loss from continuing operations of $90M increased compared to net loss of $62M y/y; forecasts FY25 adj EBITDA growth low to mid-single digit and forecasts FY25 revenue roughly flat y/y excl. $95M settlement; FY26 capex is expected to continue to decline to a range of $1.1 billion to $1.2 billion.
• Industry sources cited in a report from Commercial Times indicate that due to capacity crowding effects, DRAM products may face shortages in the second half of the year, according to TrendForce.