Early Look

Tuesday, May 23, 2023

Futures	Up/Down	%	Last
Dow	-22.00	0.07%	33,338
S&P 500	-1.25	0.03%	4,203
Nasdaq	-7.50	0.05%	13,895

 

 

U.S. futures are edging lower, weighed down as another day passes without a debt ceiling agreement in Washington DC, while Treasury yields, and the dollar extend recent gains which cut start pressuring high growth sectors. The White House and Democrats and the Republicans who control the House of Representatives remained deeply divided about how to rein in the federal deficit. Democrats argue wealthy Americans and businesses should pay more taxes while Republicans want spending cuts. If no agreement is reached, the U.S. could default on interest it owes on its debts, sending borrowing costs soaring and shockwaves through the global economy. June 1^st remains the short-term deadline where Treasury Secretary Yellen has warned where the U.S, will run out of money to pay debts. Wall Street finished mixed on Monday, helped by gains in Alphabet and Meta Platforms, while some investors refrained from big bets ahead of a fresh round of talks about raising the U.S. debt ceiling. Treasury yields continue their slow, steady upward ascent, with the 10-yr yield hitting highs of 3.75%, while the shorter-term 2-yr yield is up 7-bps to 4.39% and 3-yr +6.5 bps to 4.05%. Investors will look for clues on monetary policy from a slew of Fed speakers and key data points this week such as the April personal consumption expenditure (PCE) index and durable goods which is expected Friday. In Asian markets, The Nikkei Index dropped -129 points to 30,957, the Shanghai Index tumbled -50 points to 3,246, and the Hang Seng Index slid -246 points to 19,431. In Europe, the German DAX is down -12 points to 16,211, while the FTSE 100 rises 24 points to 7,795.

 

Market Closing Prices Yesterday

·     The S&P 500 Index edged higher 0.70 points, or 0.02%, to 4,192.68.

·     The Dow Jones Industrial Average fell -140.08 points, or 0.42%, to 33,286.55.

·     The Nasdaq Composite climbed 62.88 points, or 0.50%, to 12,720.78.

·     The Russell 2000 Index advanced 21.67 points, or 1.22% to 1,795.38.

 

Economic Calendar for Today

·     7:45 AM ET              ICSC Weekly Retail Sales

·     8:55 AM ET              Johnson/Redbook Weekly Sales

·     9:00 AM ET              Fed’s Logan Welcome Remarks at Conference

·     1:00 PM ET              US to sell $42B in 2-year notes.

·     4:30 PM ET              API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AZO BJ CTRN DKS LOW WSM

·     Earnings After the Close: A INTU NEWR NLS OOMA PANW TOL URBN VFC

 

Other Key Events:

·     Benchmark 3rd Annual Healthcare Conference, 5/23 (virtual)

·     Goldman Sachs Eighth Annual Leveraged Finance Credit Conference, 5/22-5/24, in CA

·     Jefferies 4th Renewables & Clean Energy Conference (virtual), 5/23-5/24

·     JPMorgan Annual Global Tech, Media & Communications Conference, 5/21-5/24, in Boston, MA

·     Truist Securities 2023 Financial Services Conference, 5/23-5/24 in New York

·     UBS Global Energy Conference, 5/22-5/24, in Austin, TX

·     Wolfe Research 16th Annual Global Transportation & Industrials Conference, 5/23 in NY

 

 

Macro	Up/Down	Last
Nymex	0.25	72.33
Brent	0.09	76.08
Gold	-19.50	1,957.70
EUR/USD	-0.0041	1.0771
JPY/USD	-0.08	138.52
10-Year Note	+0.027	3.746%

 

 

World News

·     Housing market concerns: the median price for all types of previously owned homes, co-ops, and condos in April saw their values fall -1.7% YoY to $388.8K, or the third month in a row of YoY declines the NAR recently reported (haven’t seen three straight months of falling home prices YoY since Feb. 2012).

 

Sector News Breakdown

Consumer

·     BJ’s Wholesale (BJ) Q1 adj EPS $0.85 in-line with consensus while revs $4.72B missed consensus $4.81B; Q1 comparable club sales, excluding gasoline sales, increased by 5.7% y/y; reaffirmed its FY23 guidance outlook.

·     Lowe’s (LOW) Q1 adj EPS $3.67 vs. est. $3.44; Q1 revs $22.35B vs. est. $21.6B; Q1 comparable sales decreased (-4.3%); cuts FY23 EPS view to $13.20-$13.60 from 13.60-$14.00 (est. $13.73); cuts FY23 revenue view to $87B-$89B from $88B-$89B (est. $88.45B); sees year comparable sales is expected to be down 2% to 4%; Comparable sales decrease driven by lumber deflation, unfavorable weather and lower DIY discretionary sales.

·     PetMed Express (PETS) 4Q adj EPS $0.04 vs est. $0.14 on revs $62.4Mm vs est. $65.75Mm, adj EBITDA $3.6Mm vs est. $4.679Mm.

·     US Foods (USFD) announces 17.43M share offering of common stock for holders.

 

Energy, Industrials and Materials

·     HEICO Corp. (HEI) Q2 sales $687.8M vs. est. $676.94M; Q2 Ebitda $187.2M, Q2 operating income $157.1M and operating margin 22.8%.

·     Microvast (MVST) shares -20%; following the US Energy Department’s cancellation of a planned $200 million grant to the lithium-ion battery maker amid criticism over ties to China.

·     Nordson Inc. (NDSN) Q2 sales $650.1M vs. est. $638.73M; Q2 EPS $2.21 vs. est. $2.11; Q2 gross margin 54.2%; narrows year EPS view to $8.90-$9.30 while maintains prior FY23 revenue growth guidance of 0%-3%.

·     Southwestern Energy (SWN) files automatic mixed securities shelf.

 

Financials

·     RenaissanceRe Holdings Ltd. (RNR) to acquire AIG’s treaty reinsurance business, which includes Validus Reinsurance Ltd. and its consolidated subsidiaries for approximately $2.985B in total consideration, including $2.735B of cash and $250M of RenaissanceRe common shares.

 

Healthcare

·     Affimed (AFMD) announces IND Clearance for a phase 2 clinical trial investigating AFM13 and AB-101 combination therapy. Phase 2 combination study of AFM13 with AB-101 in relapsed or refractory (r/r) classical Hodgkin Lymphoma (cHL) will be an open-label, multi-center, multi-cohort study with a safety run-in followed by dose optimization and expansion phase.

·     Guardant Health (GH) 12.5M share Spot Secondary priced at $28.00.

·     Intercept (ICPT) downgraded to Hold from Buy at Needham.

 

Technology, Media & Telecom

·     Activist investor TCS Capital Management has built a stake in Yelp (YELP) and is calling on the service-recommendation site to explore strategic alternatives including a sale, according to people familiar with the matter. WSJ reports

·     Alibaba’s (BABA) cloud arm is said to cut 7% of staff in overhaul – Bloomberg.

·     Paramount+ (PARA) will officially integrate with Showtime on June 27, and streaming subscribers can expect a price hike at the same time.

·     Tegna (TGNA) said in a regulatory filing that it terminated its merger agreement with Standard General; Tegna announced a $300M ASR program and a 20% increase in its quarterly dividend.

·     Zoom Inc. (ZM) 1Q EPS $1.16 vs est. $0.99 on revs $1.105B vs est. $1.084B, adj op mgn 38.2%; guides 2Q revs $1.11-1.115B vs est. $1.108B, adj op Inc $405-410Mm vs est. $402.5Mm, adj EPS $1.04-1.06 vs est. $1.05; guides FY revs $4.465-4.485B vs est. $4.453B, adj op Inc $1.63-1.65B vs est. $1.607B, adj EPS $4.25-4.31 vs est. $4.22.