Early Look

Thursday, May 28, 2020

Futures	Up/Down	%	Last
DJ Industrials	102.00	0.04%	25,636
S&P 500	2.50	0.08%	3,038
Nasdaq	-31.50	0.33%	9,401

 

 

U.S. stocks futures are pointing to a mixed open as technology shares are drifting slightly lower, while the S&P and Dow look to add to yesterday’s gains ahead of a widely expected weak GDP report later this morning and data to show another 2M individuals filed for first time unemployment, bringing the total to around 40Mm people since the coronavirus began. The big overnight action seen over the last couple of days was not present despite the latest tensions with China. A flare-up in tension between the U.S. and China over the status of Hong Kong has so far done little to shake conviction in the rally. In Asian markets, The Nikkei Index rose 497 points to 21,916, the Shanghai Index gained 9 points to 2,846 and the Hang Seng Index fell -168 points to 23,132. In Europe, the German DAX is higher by 30 points to 11,690, while the FTSE 100 is up about 25 points to 6,175. It was another stellar day for U.S. stocks on Wednesday as the Dow Jones Industrial Average tallied its second straight 500-point gain, surging 2.2% to close above 25,000 for the first time since March, led by shares of financials JPM, GS and AXP. The S&P 500 traded 1.5% higher to close above its 200-day moving average and over the 3,000 level for the first time since March, while the Nasdaq Composite lagged, though added 0.7%, rising more than 250 points off its intraday lows. The tech bounce was aided by Micron Technology which posted a rosy outlook for its Q3, which gave the tech sector a late boost while still lagging the broader market. Oil prices slipped over 4% while Treasury yields edged lower. The ongoing U.S.-China tensions that weighed markets last week were shrugged off, even as Secretary of State Pompeo said the U.S. certified that Hong Kong is no longer politically autonomous from China. The rally off the March lows has been sharp and volatile as the recent gains saw the S&P 500, which fell 34% from its all-time closing high on Feb. 19 to its March 23 low, finish just 10.3% away from its all-time high. The S&P 500 and Dow closed at their highest levels since early March.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 44.36 points, or 1.48%, to 3,036.13

·     The Dow Jones Industrial Average rose 553.16 points, or 2.21%, to 25,548.27

·     The Nasdaq Composite gained 72.14 points, or 0.77%, to 9,412.36

·     The Russell 2000 Index advanced 43.28 points, or 3.11% to 1,436.36

 

Economic Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims…est. 2.1M

·     8:30 AM EST      Continuing Claims…est. 25.5M

·     8:30 AM EST      Gross Domestic Product QoQ for Q1-Q…est. (-4.8%)

·     8:30 AM EST      GDP Price Index for Q1-S…est. 1.3%

·     8:30 AM EST      Personal Consumption for Q1-S…est. (-7.5%)

·     8:30 AM EST      Core PCE QoQ for Q1-S…est. 1.8%

·     8:30 AM EST      Durable Goods Orders, April-P…est. (-19.3%)

·     8:30 AM EST      Durable Goods Ex: Transportation, April-P…est. (-15%)

·     10:00 AM EST    Pending Home Sales MoM for April…est. (-15.0%)

·     10:30 AM EST    Weekly EIA Natural Gas Inventory Data

·     11:00 AM EST    Weekly EIA Oil Inventory data (pushed out a day due to holiday)

·     11:00 AM EST    Kansas City Fed Manufacturing for May…est. (-22)

 

Earnings Calendar:

·     Earnings Before the Open: BURL, CTRN, DG, DLTR, HLNE, MNRO, SAFM, SPTN, TECD, TH

·     Earnings After the Close: COST, CRM, DELL, DXC, JWN, MARK, MOD, MRVL, OKTA, OLLI, PSTG, ULTA, VEEV, VMW, WDAY, ZS

 

Other Key Events:

·     KeyBanc Industrials and Materials Virtual Conference, 5/26-5/29

·     Cowen Technology, Media and Telecom Conference, 5/27-5/28

 

 

Macro	Up/Down	Last
WTI Crude	-0.51	32.30
Brent	-0.49	34.25
Gold	11.10	1,737.90
EUR/USD	-0.0009	1.0997
JPY/USD	0.03	107.75
10-Year Note	-0.011	0.67%

 

 

Sector News Breakdown

Consumer

·     Boyd Gaming (BYD) plans to resume operations at 13 properties in Nevada, Missouri and Iowa, pending receipt of final regulatory approvals. On June 1, Boyd Gaming plans to resume operations at its two Missouri properties, Ameristar St. Charles and Ameristar Kansas City; and its two Iowa properties

·     Delta Air Lines (DAL) files automatic mixed securities shelf

·     Hertz Global Holdings (HTZ) tumbles after disclosing that Carl Icahn offloads its entire stake of 55.34M common shares for significant loss at $0.72 on May 26; Icahn held nearly 39% stake in the car rental company

·     Lumber Liquidators (LL) Q1 adj EPS 42c/$267M vs. est. 3c/$272.21M; 1Q comparable sales -0.9% vs. -0.80% YoY; says as markets have begun to reopen, comparable store sales declines of approximately 45% in the last week of March have improved and through May 23, 2020 second quarter-to-date comparable store sales are down approximately 30%

·     SpartanNash (SPTN) Q1 adj EPS 67c/$2.86B vs. est. 47c/$2.62B; Q1 adj. EBITDA $74.0M vs. $54.7M last year; raises FY20 cont ops EPS view to $1.48-$1.81 from 93c-$1.04 prior (est. $1.68); raises FY20 adj EBITDA view to $205M-$215M from $180M-$190M

·     Toll Brothers (TOL) Q2 EPS 59c/$1.55B vs. est. 44c/$1.51B; 2Q deliveries 1,923, +0.6% YoY with Q2 backlog $5.49 billion, -3% YoY; 2Q cancellation rate 3.1% vs. 5.30% YoY; 2Q adj. home sales gross margin 21%; Q2 net signed contract units were 1,886, down 22%; contract value was $1.55 bln, down 22%

·     United Airlines (UAL) said Greg Hart will step back from the role of chief operations officer to focus on critical medium and long-term issues, including safety, hygiene, and operating efficiency

 

Energy, Industrials & Materials

·     Boeing (BA) said it has resumed production of the 737 MAX at the Renton, Wash., factory; says the 737 program began building airplanes at a low rate as it implements more than a dozen initiatives focused on enhancing workplace safety and product quality, and will gradually ramp up production this year; watch shares of supplier Spirit AeroSystems (SPR)

·     The American Petroleum Institute (API) showed a surprise build of 8.73M barrels of crude oil for the week ending May 22, following last week’s 4.8M-barrel draw; gasoline inventories show a build of 1.12M barrels, distillate inventories show a build of 6.91M barrels, and Cushing inventories show a draw of 3.37M barrels.

·     Apache (APA) says it elects to list its stock solely on Nasdaq and discontinue its NYSE listing, beginning June 9.

·     Canadian Solar (CSIQ) reports Q1 EPS C$1.84 vs. (C$0.29) last year and reports Q1 revenue $825.6M up 70% YoY; guides Q2 revs $630M-$680M and gross margins 18.5%-20.5%

·     Triumph Group (TGI) Q4 EPS 69c/$693.1M vs. est. 54c/$660.1M; said it is not providing guidance at this time

·     Amerco (UHAL) Q4 EPS $6.24 and revs rose 13% YoY to $821.5M; enters into $200m secured credit facility with PNC

·     Watts Water (WTS) guides Q2 sales down 20%-25% vs. prior view of down 25%-30%

 

Financials

·     Credit Acceptance (CACC) Q1 revs $389.1M up 10% YoY vs. est. $373.7M; 1Q adjusted EPS $9.66 vs. $8.08 YoY and estimate $5.04; 1Q consumer loan unit volume -10.1% vs. +0.40% YoY and 1Q consumer loan dollar volume -4.5% vs. +5.10% YoY

·     Ally Financial (ALLY) upgraded to overweight from equal-weight at Morgan Stanley

 

Healthcare

·     Argenx (ARGX) 2.584M share Secondary priced at $205.00

·     BioCryst (BCRX) 18.711M share Spot Secondary priced at $4.50

·     Penumbra (PEN) 753K share Spot Secondary priced at $166.00

·     Viela Bio (VIE) 3.6M share Secondary priced at $47.00

·     Arena (ARNA) announces offering of $250M of common stock

·     PhaseBio Pharma (PHAS) said the U.S. FDA has cleared a trial to test its experimental drug for hospitalized patients with COVID-19; the co’s drug PB1046 targets receptors in the cardiovascular, pulmonary and immune systems

·     Iovance Biotherapeutics (IOVA) announced interim data on TIL therapy lifileucel in melanoma, namely (1) a 32.4% investigator-assessed response rate in pivotal Cohort 4 at 5.3 months of median follow-up and (2) a median duration of response (mDOR) not yet reached after 18.7 months of follow-up in non-registrational Cohort 2

 

Technology, Media & Telecom

·     Autodesk (ADSK) Q1 adjusted EPS 85c/$886M vs. est. 81c/$879.24M; sees Q2 adjusted EPS 86c-92c on revs $890M-$905M vs. est. 98c/$935.1M; Sees FY21 Adj. EPS $3.52-$3.90 vs $4.15 Est., Sales $3.675B-$3.775B vs $3.86B Est., Billings $4.07B-$4.22B

·     Box (BOX) Q1 adjusted EPS 10c/$183.6M vs. est. 5c/$181.91M; lowers year rev view to $760m-$768m, below its prior forecast of $771m-$777m while raises year EPS view to 47c-52c from 38c-44c; boosts FY adj. operating margin 11-12%, from prior 9-10%; 1Q billings $128.1m, +8% YoY, 1Q deferred revenue $368.3m, +11% YoY and 1Q free cash flow $39.8m vs $13.4m YoY

·     Coherent (COHR) Q2 adjusted EPS 61c/$293.1M vs. est. 52c/$306.08M; Q2 includes goodwill impairment and other items

·     HP Inc. (HPQ) Q2 EPS 51c/$12.47B vs. est. 45c/$12.85B; sees Q3 EPS 39c-45c vs. est. 49c (Q3 EPS estimates exclude 4c per diluted share, primarily related to restructuring and other charges, acquisition-related charges, defined benefit plan settlement charges, amortization of intangible assets, non-operating retirement-related credits/charges, tax adjustments and the related tax impact on these items)

·     NetApp (NTAP) Q4 EPS $1.19/$1.40B vs. est. $1.15/$1.43B; sees Q1 EPS 36c-44c on revs $1.09B-$1.24B below the est. 62c/$1.17B

·     Nutanix (NTNX) Q3 adjusted EPS loss (69c)/$318.3M vs. est. loss (88c)/$307.41M; withdraws its FY20 guidance and says to resume formal guidance when visibility improves

·     Semtech (SMTC) Q1 adjusted EPS 35c/$132.7M vs. est. 32c/$129.28M; sees Q2 adjusted EPS 40c-44c on revs $138M-$146M vs. est. 35c/$132.65M

·     Workday (WDAY) Q1 EPS 44c/$1.02B (up 23% YoY) vs. est. 47c/$1B; 1Q subscription revs $882M, +26% YoY and 1Q backlog $8.19 billion, +20% YoY; 1Q adjusted operating margin 12.8%; announces new partnership with Salesforce (CRM) and strategic partnership prioritizing enterprise planning in the cloud and expanding the business solutions customers with MSFT; reduces FY21 subscription revenue guidance to $3.67B-$3.69B

·     Zuora, Inc. (ZUO) announced Todd McElhatton will join as the company’s CFO, effective June 22, 2020. Currently serving as senior vice president and CFO of SAP Cloud Business Group, McElhatton will bring more than 25 years of corporate finance leadership to his role at Zuora.

·     Bilibili (BILI) announces offering of $650M of convertible senior notes

·     Cerence (CRNC) announces offering of $150M of convertible senior notes

·     Twitter Inc. (TWTR) files for shelf of up to 24.1 mln shares of co’s common stock by Silver Lake Partners

·     Google (GOOGL) explores Vodafone (VOD) idea of 5% stake as part of India push, the Financial Times reported this morning

·     President Donald Trump will sign an executive order on social media companies on Thursday after Trump threatened to shut down websites he accused of stifling conservative voices, Reuters reports (watch shares of TWTR, FB, SNAP)