Early Look

Monday, November 21, 2022

U.S. futures edge lower, with S&P futures down -0.5% as COVID-19 flare ups in China added to concerns about slowing growth. China’s capital warned on Monday that it was facing its most severe test of the COVID-19 pandemic, shutting businesses and schools in hard-hit districts and tightening rules for entering the city as infections ticked higher in Beijing and nationally. China is fighting numerous COVID-19 flare ups, from Zhengzhou in central Henan province to Chongqing in the southwest. It reported 26,824 new local cases for Sunday, nearing the country’s daily infection peak in April. Beijing reported 962 new infections on Sunday, up from 621 a day earlier, and a further 316 cases for the first 15 hours of Monday. The unwelcome news sunk Asian markets overnight. In corporate news, Dow component Disney (DIS) rises after announcing Bob Iger’s surprise comeback as CEO, returning less than a year after he retired as the company attempts to boost investor confidence and profits. Stocks are looking at a potentially quiet holiday shortened week, closed Thursday for Thanksgiving and open only until 1:00 PM on Friday, sprinkled in with a handful of key earnings reports, economic data, and Fed Minutes. For last week, the S&P fell 0.69%, the Dow was unchanged, the Nasdaq shed 1.57%. In Asian markets, The Nikkei Index climbed 45 points to 27,944, the Shanghai Index dipped -12 points to 3,085, and the Hang Seng Index fell -336 points to 17,655. In Europe, the German DAX is down -95 points to 14,335, while the FTSE 100 slips 5 points to 7,380.

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 18.92 points, or 0.48%, to 3,965.48

·     The Dow Jones Industrial Average rose 200.82 points, or 0.60%, to 33,747.14

·     The Nasdaq Composite edged higher 1.10 points, or 0.01%, to 11,146.06

·     The Russell 2000 Index advanced 10.61 points, or 0.58% to 1,849.73

Economic Calendar for Today

·     8:30 AM ET          National Activity Index for October

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

·     1:00 PM ET          US Treasury to sell $43B in 5-year notes

Earnings Calendar:

·     Earnings Before the Open: J SJM URBN

·     Earnings After the Close: A CENT DELL ENTA GBDC MMS SNEX SYM ZM

World News

·     China is fighting numerous COVID-19 flare ups, from Zhengzhou in central Henan province to Chongqing in the southwest. It reported 26,824 new local cases for Sunday, nearing the country’s daily infection peak in April

Sector News Breakdown

Consumer

·     Cost-cutting by some shoppers could be a boon to companies that offer value, such as Walmart (WMT), Dollar General (DG) and Dollar Tree (DLTR), Barron’s says

·     Traditional department stores and mall staples like Gap (GPS), Macy’s (M) and North Face parent VF Corp. (VFC) could see a negative impact since they don’t offer the same level of value, with many analysts turning bearish on their stocks in the fourth quarter, Barron’s said

Energy, Industrials and Materials

·     Jacobs (J) Q4 adj EPS $1.80 vs. est. $1.77; Q4 revs rose 8.2% y/y to $3.88B vs. est. $3.82B; Q4 Backlog increased $1.2B to $27.9B, up 5% year-over-year

·     International Paper (IP), Packaging Corp. (PKG) and Westrock (WRK): Fastmarkets RISI’s PPI Pulp & Paper Week published November U.S. containerboard, boxboard, and kraft paper prices on Friday after market close. The benchmark U.S. containerboard (kraft linerboard) price fell by $20/ton, with other containerboard grades falling by $30-$40/ton

Financials

·     FTX Trading Ltd. and about 100 affiliated companies are starting a strategic review of global assets as a part of the Chapter 11 bankruptcy process, the Wall Street Journal reported

·     Comerica (CMA) upgraded to Outperform from Market Perform at Raymond James

·     Regions Financial (RF) downgraded to Market Perform from Outperform at Raymond James

·     Federal Signal (FSS) downgraded to Sector Weight on valuation at KeyBanc

Healthcare

·     LabCorp (LH) files automatic mixed securities shelf

·     Okyo Pharma (OKYO) said it filed an investigational new drug (IND) application with the U.S. FDA seeking clearance to start a trial of OK-101 to treat dry eye disease (DED)

·     Philips (PHG) told the FDA that its Respironics Trilogy ventilators reworked as a part of a June 2021 recall have two new potential issues.

·     Optinose (OPTN) announces common stock, warrant offering, no amount given

Technology, Media & Telecom

·     Walt Disney Co.’s (DIS) board of directors on Sunday night replaced Chief Executive Bob Chapek with Robert Iger, the company’s former chairman and CEO who left the com­pany at the end of last year, according to a company announcement

·     Match Group (MTCH) mentioned positively in Barron’s saying it hasn’t been an easy year for the stock, falling -65% in 2022, far worse than the S&P 500’s -17% drop amid a stronger dollar as the company gets more than half of its sales overseas-and by delayed product rollouts – but its most recent earnings report proved that it’s beginning to execute-and moving on

·     Digital World Acquisition Corp (DWAC) shares slipped after former U.S. President was allowed to return to Twitter

·     Cell-tower REITs could climb 20% according to Barron’s, noting share prices for the REITs have fallen sharply, but their funds from operations are still growing, and American Tower’s (AMT), SBA Communications (SBAC) and Crown Castle’s (CCI) could climb

·     Elon Musk told a court in Delaware on Wednesday that his reorganization of Twitter Inc. is almost done, and he’ll spend less time on the company by the end of next week

·     MongoDB (MDB) downgraded to Equal Weight from Overweight at Morgan Stanley