Early Look

Monday, October 3, 2022

Futures	Up/Down	%	Last
Dow	102.00	0.25%	28,903
S&P 500	5.25	0.15%	3,606
Nasdaq	-29.50	0.27%	11,006

 

 

U.S. stock futures are looking modestly higher, with the S&P +0.1% to 3,605, well off overnight lows of 3,571.75 after stocks plunged late Friday. The S&P 500 extended its losing streak to 3 weeks last Friday, falling -9.3% in September for its worst month since March 2020 as markets remain concerned of the surging interest rate hike cycle by the Federal Reserve. Note the S&P has only fallen by +3% on 124 out of 16,299 days (0.8%) since the start of 1958 (first full year of data), and we’ve already had 8 such days this year. The only years with more: 2008 (23), 2020 (16) and 2009 (12) according to stats. WTI crude rises +4.2% to $82.80 as the OPEC+ alliance considered its biggest production cut since the pandemic, by more than 1 million barrels per day according to reports when it meets in person on Wednesday for the first time in more than two years. As for last Friday, an attempt by US stocks to stage a rebound faltered after the personal consumption expenditures price index, which the Federal Reserve uses for its inflation target, rose 0.3% from a month earlier, topping estimates. From a year ago, the gauge was up 6.2%, also higher than forecast and well above the central bank’s 2% goal. Purchases of goods and services, adjusted for changes in prices, increased 0.1% last month after a 0.1% decline in July. The latest figures underscore the breadth and depth of the Fed’s inflation problem, which will likely keep officials continuing to call for rates to be higher for longer. Fed officials have been diligently drilling in the message that they’ll continue to be aggressive to combat inflation. In Asian markets, The Nikkei Index gained 278 points to 26,215, the Shanghai Index fell -16 points to 3,024, and the Hang Seng Index dropped -143 points to 17,079. In Europe, the German DAX is down about -80 points to 12,033, while the FTSE 100 slides -0.5% to 6,858. UK‘s Truss makes U-turn on tax after week of market turmoil.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -54.85 points, or 1.51%, to 3,585.62

·     The Dow Jones Industrial Average fell -500.10 points, or 1.71%, to 28,725.51

·     The Nasdaq Composite tumbled -161.89 points, or 1.51%, to 10,575.62

·     The Russell 2000 Index declined -10.21 points, or 0.61% to 1,664.72

 

Economic Calendar for Today

·     9:45 AM ET           S&P Global Manufacturing PMI, Sept-F…prior 51.8

·     10:00 AM ET         Construction Spending M/M for August…est. (-0.3%)

·     10:00 AM ET         ISM Manufacturing PMI for September …est. 52.2

 

Other Key Events:

·     Fed’s Bostic Gives Opening Remarks at Technology Conference – 9:05 AM

·     Fed’s Williams Speaks to Hispanic Chamber Conference – 3:10 PM

·     American Academy of Ophthalmology, 9/30-10/4 in Chicago

·     Chardan 6th Annual Genetic Medicines Conference, 10/3-10/4 in NY

·     RBC Capital Pharmaceutical CDMO Conference (virtual), 10/3-10/4

 

 

Macro	Up/Down	Last
Nymex	3.35	82.84
Brent	3.29	88.43
Gold	0.20	1,672.30
EUR/USD	-0.0021	0.9779
JPY/USD	0.32	145.07
10-Year Note	-0.027	3.777%

 

 

World News

·     British Prime Minister Liz Truss was forced to reverse her decision after less than a month in power, reversing a cut to the highest rate of income tax that helped spark turmoil in financial markets and a rebellion in her party. Finance minister Kwasi Kwarteng said the decision to scrap the top rate tax cut had been taken with “some humility and contrition.”

·     Brazil’s presidential election is headed for a run-off vote, electoral authorities said after President Jair Bolsonaro’s surprising strength in a first-round vote spoiled rival Luiz Inacio Lula da Silva’s hopes of winning outright. With 95% of electronic votes counted, Lula was ahead with 47.6% of votes versus 43.9% for Bolsonaro, the national electoral authority reported. As neither got most of the support, the race will go to a second-round vote on Oct. 30.

·     The Federal Reserve will keep raising interest rates and cutting its balance sheet until US inflation eases, Richmond Fed President Thomas Barkin said. “Our rate and balance-sheet moves take time to bring inflation down,” he said Friday

·     The Bank of Japan said it offered to buy JGBs outright at fixed-rate with residual maturities of more than 5 years and up to 10 years from 10/4 – (Its purchased amount is unlimited) – Reuters

 

Sector News Breakdown

Consumer

·     Tesla (TSLA) reported Q3 deliveries of 343,830, with 3% subject to operating lease accounting (FactSet estimate 371K deliveries), up from about 255,000 in prior quarter (which was hurt by temp shutdown of factory in China) and production of 365,923 vehicles. Tesla delivered 18,672 Model S/X and 325,158 Model 3/Y

·     Blue Apron Holdings (APRN) said prelim net rev down “primarily due to a shift in the timing of an anticipated bulk sale of approximately $15 million to an enterprise customer, that had been expected in 3Q”; sees Q3 revs $109M-$112M vs. est. $130M

·     Cal-Maine Foods, Inc. (CALM) announced that its Board of Directors has named Sherman L. Miller President and Chief Executive Officer of the Company, effective immediately.

·     ChargePoint Holdings Inc. (CHPT) isn’t profitable, and its shares have been battered since touching a December 2020 high, but revenue for the company that runs electric vehicle charging stations has been climbing and it has almost half a billion dollars in cash on hand, said Barron’s

·     Vacasa Inc. (VCSA), a rival of Airbnb Inc. (ABNB), expects to beat its revenue targets of $1 billion this year and $1.3 billion in 2023. The SPAC stock has been hammered, probably because the company isn’t yet profitable, says Barron’s

·     Macau’s gaming bureau reported September gross revenue from games of fortune in the region was down 49.6% year-over-year to 2.962B patacas (watch WYNN, LVS, MLCO)

·     Xpeng (XPEV) reported vehicle deliveries for September of 8,468 units vs. 10,412 y/y; Vehicle deliveries 8,468 units, -19% y/y; Year to date deliveries 98,553 units, +75% y/y

 

Energy

·     Con-Ed (ED): German utility RWE AG agreed to buy Con Ed’s renewable energy assets for $6.8 billion, in one of the biggest green deals in US history.

·     OPEC+ plans to hold its first in-person meeting next week since March 2020, according to delegates, as they weigh cutting oil production to slow a recent slump in prices. The alliance, led by Saudi Arabia and Russia, is scheduled to meet on Wednesday at its headquarters in Vienna

 

Financials

·     Credit Suisse (CS) tried to assuage fears about its health in a memo to employees and in a round of phone calls to investors and clients over the weekend, according to the WSJ. Credit Suisse shares are down 21% this month and spreads on its credit-default swaps, a type of insurance against default, rose to their highest level of the year on Friday.

·     Wells Fargo (WFC) upgraded to Buy from Hold at after Goldman Sachs, while the firm downgraded Citigroup (C) to Neutral from Buy

 

Healthcare

·     Axsome Therapeutics, Inc. (AXSM) announced that Sunosi met the primary endpoint in the SHARP study and significantly improved cognitive function, as compared to placebo in cognitively impaired patients with excessive daytime sleepiness associated with obstructive sleep apnea

·     Ligand Pharmaceuticals Inc (LGND) files for mixed shelf; size not disclosed

·     Clene Inc. (CLNN) said it plans to report topline results of the CNM-Au8 regimen of the Healey ALS platform trial on Monday

·     Myovant Sciences (MYOV) said a special committee of its board rejected a $22.75/share offer from Sumitovant Biopharma to buy the remaining shares of the biopharma company it doesn’t already own. Sumitovant currently holds approximately 52% of the outstanding shares of Myovant and represents a 27% premium to its closing price on Friday. https://bit.ly/3RAaKTw

·     Moderna (MRNA) won’t share the intellectual property for its Covid-19 vaccines with China, which caused negotiations for selling it there to collapse, the Financial Times reports. Despite being “eager” to sell the mRNA vaccine in China, Moderna apparently refused in 2020 and 2021 based on commercial and safety concerns.

 

Industrials & Materials

·     L3Harris Technologies Inc. (LHX) is near a deal to buy a military-communications business from satellite specialist ViaSat Inc., (VSAT), the WSJ reported citing according to people familiar with the matter. L3Harris would pay nearly $2 billion in a deal https://on.wsj.com/3UX4Yy3

 

Technology, Media & Telecom

·     InterDigital (IDCC) raises Q3 revenue view to $112M-$115M from $96M-$100M (est. $98.83M) as includes approximately $100M of recurring revenue and reflects continuing success in the core smartphone licensing program as well as new licensing agreements

·     Intel Corp. (INTC) filed for an initial public offering (IPO) of its self-driving technology business, Mobileye Global Inc. The company didn’t give an expected size for its IPO, nor did it give an anticipated price range.

·     Luminar Technologies Inc. (LAZR) is probably the best of the lidar makers that launched via SPAC, according to Barron’s. “Wall Street expects it to generate $120 million in sales in 2023, right in line with what Luminar projected in 2020,” Barron’s said

·     Tencent (TCEHY) is resetting its M&A strategy to put more focus on buying majority stakes mainly in overseas gaming companies, as the tech giant eyes global expansion to offset slowing growth at home in China, people with direct knowledge of the matter said – Reuters

·     Paramount’s (PARA) horror movie “Smile” on the weekend at the North America box office with a $22M debut from 3,645 locations

·     Vodafone (VOD) said it was in talks with CK Hutchison about merging their businesses in Britain, to create a market leading operator that could accelerate the roll-out of 5G and expand broadband connectivity.