Early Look
Thursday, May 25, 2023
|
Futures |
Up/Down |
% |
Last |
|
Dow |
-45.00 |
0.14% |
32,809 |
|
S&P 500 |
27.25 |
0.67% |
4,153 |
|
Nasdaq |
248.50 |
1.82% |
13,898 |
U.S. futures are looking much higher, on track to snap the modest two- day losing streak for the S&P 500 and Nasdaq after a massive beat and raise by semiconductor chip maker NVDA last night boosts Nasdaq futures by roughly 2% (NVDA +26% after results) and on reports Republicans feel very good about a deal to lift the debt limit. @JakeSherman reports that Republicans “expect the compromise will come together sometime in the next few days. intense pressure to wrap negotiations up as soon as possible in order to get a bill through in timely fashion.” Stocks fell Wednesday as U.S. lawmakers struggled to reach a deal on the country’s debt ceiling, heightening worries of a potential default.
The White House and congressional Republicans on Thursday are expected to resume negotiations on a deal to raise the government’s $31.4 trillion debt ceiling, with as little as a week remaining until a potential economically catastrophic default. Democratic President Joe Biden and House of Representatives Speaker Kevin McCarthy are at odds over spending, taxes, and work requirements for anti-poverty programs. But both sides say they believe they can find common ground
Back to stocks, NVDA shares surge to a new all-time high, pushing European and U.S. semi stocks higher across the board on its massive upside guidance for Q2 revs helping boost the “AI” growth driven trade. SNOW shares slide in software space after results while NTNX, SPLK shares rise on their results. In Asian markets, The Nikkei Index rose 118 points to 30,801, the Shanghai Index dipped -3 points to 3,201, and the Hang Seng Index declined -369 points to 18,746. In Europe, the German DAX is nearly flat on day at 15,839, while the FTSE 100 is down a few points to 7,618.
Market Closing Prices Yesterday
· The S&P 500 Index dropped -30.34 points, or 0.73%, to 4,115.24.
· The Dow Jones Industrial Average slid -255.59 points, or 0.77%, to 32,799.92.
· The Nasdaq Composite slipped -76.08 points, or 0.61%, to 12,484.16.
· The Russell 2000 Index declined -20.71 points, or 1,16% to 1,767.00.
Economic Calendar for Today
· 8:30 AM ET Weekly Jobless Claims…est. 245K
· 8:30 AM ET Continuing Claims…est. 1.8M
· 8:30 AM ET Gross Domestic Product (GDP) Q1…est. +1.1%
· 8:30 AM ET GDP Consumer Spending…prior +3.7%
· 8:30 AM ET GDP Price Deflator for Q1…est. +4.0%
· 8:30 AM ET PCE Prices prelim-Q1…prior +4.2%
· 8:30 AM ET Core PCE Prices Prelim-Q1…est. +4.9% (same as prior month)
· 10:00 AM ET Pending Home Sales M/M for April
· 10:30 AM ET Weekly EIA Natural Gas Inventory Data
· 11:00 AM ET Kansas City Fed Manufacturing for May
· 1:00 PM ET US to sell $35B in 7-year notes.
Earnings Calendar:
· Earnings Before the Open: AMWD BBY BBW BURL CMCO DLTR CSWI DXLG GCO HLNE RL TITN
· Earnings After the Close: ADSK COST DECK DOMO GPS LGF/A ME MRVL ULTA WDAY
Other Key Events:
· B. Riley 23rd Annual Institutional Investor Conference, 5/24-5/25, in CA
· Goldman Sachs TechNet Conference Asia Pacific 2023 (virtual), 5/24-5/25
· Mizuho 2nd Annual Industrials and Basic Materials Bus Tour, 5/24-5/25
|
Macro |
Up/Down |
Last |
|
Nymex |
-1.25 |
73.09 |
|
Brent |
-0.97 |
77.39 |
|
Gold |
-1.50 |
1,963.10 |
|
EUR/USD |
-0.0024 |
1.0724 |
|
JPY/USD |
0.06 |
139.53 |
|
10-Year Note |
+0.04 |
3.759% |
World News
· Fitch Ratings warned the nation’s AAA rating was under threat from a political standoff that’s preventing a deal. Fitch may downgrade its assessment to reflect the increased partisanship that is hindering a resolution despite the fast-approaching so-called X date, it said in a statement.
· German gross domestic product (GDP) fell by 0.3% in the first quarter of the year when adjusted for price and calendar effects, a second estimate from the statistics office showed on Thursday. This follows a decline of 0.5% in the fourth quarter of 2022.
· The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -12.3 vs -16.8 last week. Bulls rise to 27.4% from 22.9%, Neutrals fall to 32.9% from 37.4%, Bears remain unchanged at 39.7%
Sector News Breakdown
Consumer
· American Eagle Outfitters (AEO) Q1 adj EPS $0.17 in-line as revs rose 3% y/y to $1.1B, vs. consensus $1.07B; Aerie posted all-time high first quarter revenue and profitability, with positive comp growth; American Eagle continued to see a sequential improvement in revenue trends with year-over-year growth in operating income; sees FY24 sales flat to down low single digits.
· Elf Beauty (ELF) Q4 EPS $0.42 vs. est. $0.20; Q4 revs $187.4M vs. est. $156.1M; sees FY sales between $705M-$720M or 24% growth vs. est. of $637.7M; guided FY EPS $1.73-$1.76 vs. est. $1.66; reports a surge in profit and revenue in the latest quarter without increasing prices.
· Guess Inc. (GES) Q1 adj EPS loss (-$0.07) vs. est. loss (-$0.28); Q1 revs $570M vs. est. $555.63M; raises quarterly dividend to 30c per share from 22.5c; Q1 Delivered Operating Margin of (0.2%); Adjusted Operating Margin of 0.3%; raises FY24 EPS view to $2.60-$2.90 from $2.45-$2.80 and boosts FY24 rev growth view to 2%-4% from 1%-3%.
· Red Robin Gourmet (RRGB) Q1 adj EPS $0.25 vs. est. loss (-$0.57); Q1 revs $418M vs. est. $405.58M; Q1 comparable restaurant revenue up 8.6% y/y; raises FY23 revenue view to at least $1.3B from roughly $1.3B and sees FY23 comparable restaurant revenue up 2%-4%.
· Carnival (CCL) was upgraded from Neutral to Buy at Citigroup and price target raised from $10 to $14.
Energy, Industrials and Materials
· EnerSys (ENS) Q4 adj EPS $1.82 vs. est. $1.38; Q4 revs rose 9% y/y to $989.9M vs. est. $950.98M; Achieved 24.9% GM, +340 bps, including $17M reduction to COGS from Inflation Reduction Act (IRA) tax credits under IRC 45X; $1.3B backlog eased slightly, -7%.
· Modine Manufacturing (MOD) Q4 adj EPS $0.67 vs. est. $0.45; Q4 revs $618.1M vs. est. $583.71M; sees FY24 revenue growth 4%-10% and sees FY24 adjusted EBITDA $240M-$260M, up 13%-23% y/y.
· Air Products (APD) said it has struck a $1 billion deal with the government of Uzbekistan and a state-owned company to buy, own and operate a natural gas-to-syngas processing facility in Qashqadaryo Province.
Financials
· Royal Bank of Canada (RY) missed analysts’ estimates after setting aside more money than expected to cover bad loans; Canada’s largest bank took provisions for credit losses of C$600 million ($441 million), lower than analysts’ forecasts of C$574.5 million.
· TD Bank (TD) Q2 adjusted EPS C$1.94, vs. estimate C$2.08; said provision for credit losses C$599M, Common equity Tier 1 ratio 15.3%, adjusted efficiency ratio 53.4%; net income C$3.35 billion and Q1 revenue C$12.37B vs. est. C$12.21B.
Healthcare
· Annexon (ANNX) announces ARCHER trial endpoint did not reach statistical significance. Said topline results from the 12-month treatment period of ARCHER showed that patients treated monthly and every-other-month with ANX007 were protected against vision loss as measured by changes from baseline in the widely accepted functional endpoint of best corrected visual acuity.
· Medtronic (MDT) Q4 adj EPS $1.57 vs. est. 41.56; Q4 revs rose 5.6% y/y to $8.54B vs. est. $8.25B; to acquire wearable insulin patch maker EOFlow at price of KRW 30,000; sees FY organic revenue growth of 4%-5% and EPS of $5.00-$5.10 vs. est. $5.28; raises dividend.
Technology, Media & Telecom
· Nvidia (NVDA) shares rise 14%; Q1 EPS $1.09 tops est. $0.92; Q1 revs fell -13% y/y to $7.19B vs est. $6.52B; 1Q Data center revenue rose 14% y/y to $4.28B vs. est. $3.91B; guides Q2 revenue $11.0B plus/minus 2% vs est. $7.15B; Q2 GAAP and non-GAAP gross margins are expected to be 68.6% and 70.0%, respectively, plus or minus 50 basis points.
· Snowflake (SNOW) Q1 EPS $0.15 vs. est. $0.05; Q1 revs $623.6M vs. est. $608.4M; lowered Prod Revs for F’24 by 3% vs. prior guidance; sees Q2 Product revenue $620M-$625M or 33-34% growth; sees FY Product revenue $2.6B, up 34% y/y.
· Splunk (SPLK) Q1 EPS loss (-$1.19) vs. est. loss (-$0.13); Q1 revs rose 11% y/y to $752M vs est. $722.39M; Q1 Free cash flow was $486M above forecast of $475M; sees FY24 revenue roughly $3.9B vs. est. $3.89B; raises FY24 adjusted operating margin view to 18%-18.5% from 16.5%-17.5%; still sees see FY23 ARR of between $4.125 billion and $4.175 billion.
· UiPath (PATH) Q1 EPS $0.11 vs. est. $0.02; Q1 revs $289.6M vs. est. $271.1M; Q1 net new ARR of $45.0M and dollar based net retention rate of 122%; boosts FY24 revenue view to $1.267B-$1.272B from $1.253B-$1.258B.
· Digital Turbine (APPS) Q4 EPS $0.14 vs. est. $0.18; Q4 revs $140.1M vs. est. $138.66M; sees Q1 adj EPS $0.11-$0.13 vs. est. $0.22; Q1 revs guided $140M-$145M vs. est. $148.53M.
· LiveRamp Holdings (RAMP) Q4 adj EPS $0.32 vs. est. $0.18; Q4 revs $149M in-line with estimates; guides Q1 revenue roughly $147M vs. est. $146.02M; sees FY24 revenue $610M-$620M vs. est. $614.41M and sees FY24 adjusted operating income $90M-$93M.
· Nutanix (NTNX) Q3 adj EPS $0.04 vs. est. $0.03; Q3 revs $448.6M vs. est. $432.9M; guides Q4 revenue $470M-$480M, consensus $432.91M while raises FY23 revenue view to $1.84B-$1.85B from $1.8B-$1.81B and ups FY23 ACV Billings view to $915M-$925M from $905M-$915M.
· Zuora Inc. (ZUO) Q1 EPS $0.05 vs. est. 0c; Q1 revs rose 11% y/y to $103.1M vs. est. $102.1M; guides Q2 EPS and revs above views and sees FY24 EPS $0.15-$0.17 vs. est. $0.08 and sees FY24 revenue $431M-$440M vs. consensus $433.2M; Q1 subscription revenue grew 14% y/y.
· Stratasys (SSYS) and Desktop Metal (DM) to combine in all-stock deal valued at about $1.8 billion that will create new player in 3-D printing space (confirms Bloomberg report late yesterday) https://tinyurl.com/4sj9nuss
Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.