Early Look

Thursday, October 6, 2022

Futures	Up/Down	%	Last
Dow	-180.00	0.59%	30,130
S&P 500	-26.25	0.71%	3,767
Nasdaq	-87.50	0.75%	11,536

 

 

U.S. stocks are looking lower early, as S&P futures decline roughly 0.7% to 3,767 – near the overnight lows of 3,763.75 and off highs of 3,819.50 (just missing the prior day high of 3,820). The dip follows a late day pullback that dropped the S&P 500 back below 3,800 after erasing hefty losses early in the session on Wednesday. The Dow Jones Industrial Average erased a loss of more than 400 points before the intraday comeback. Stocks have so far rallied sharply this week after indexes on Friday logged their lowest finishes since 2020. Major averages, heading into today, are on track for gains of more than 5% this week as investors brace for an important jobs data point tomorrow and the unofficial start to earnings season next week. In Asian markets, The Nikkei Index rose 190 points to 27,311, the Shanghai Index remained closed for holiday, and the Hang Seng Index dropped -75 points to 18,012. In Europe, the German DAX is down -55 points to 12,460, while the FTSE 100 is down -0.5% to 7,015. Oil prices are down slightly after rising 10% the last 3-days on OPEC+ production cut news, gold is little changed, the dollar edges slightly higher and Treasury yields up a few bps.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -7.28 points, or 0.19%, to 3,783.65

·     The Dow Jones Industrial Average fell -41.52 points, or 0.14%, to 30,274.80

·     The Nasdaq Composite slipped -27.77 points, or 0.25%, to 11,148.64

·     The Russell 2000 Index declined -13.08 points, or 0.74% to 1,762.69

 

Economic Calendar for Today

·     7:30 AM ET            Challenger Layoffs for September

·     8:30 AM ET            Weekly Jobless Claims…est. 203K

·     8:30 AM EST          Continuing Claims…est. 1.345M

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

 

Earnings Calendar:

·     Earnings Before the Open: ANGO CAG LNDC MKC STZ

·     Earnings After the Close: ACCD AEHR IDT LEVI

 

Other Key Events:

·     Fed’s Evans Takes Part in Moderated Q&A – 1:00 PM

·     Fed’s Cook Speaks at Peterson Institute – 1:00 PM

·     Fed’s Mester Discusses the Economic Outlook – 6:30 PM

·     JMP Securities Internet Forum in NY

 

 

Macro	Up/Down	Last
Nymex	-0.54	87.22
Brent	-0.15	93.22
Gold	1.40	1,722.20
EUR/USD	-0.0003	0.9879
JPY/USD	0.12	144.75
10-Year Note	+0.018	3.777%

 

 

World News

·     Atlanta Fed’s Bostic said late yesterday the inflation fight “still in early days” as he repeats wants rates at a “moderately restrictive” level from 4 to 4.5%, then hold to assess impact. Fed should not be quick to cut rates if economy weakens but stay “purposeful and resolute” in seeing inflation lowered. August inflation report shows price pressures still “broad and stubborn”. Said low unemployment rate means Fed has “maneuvering room” to continue tightening policy without “undue damage” to job market.

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -30.9 vs -40.8 last week. Bulls rise to 23.9% from 20%, Neutrals rise to 21.3% from 19.2%, and Bears fall to 54.8% from 60.8%

 

Sector News Breakdown

Consumer

·     Costco Wholesale Corporation (COST) reported net sales of $21.46 billion for the retail month of September, the five weeks ended October 2, 2022, an increase of 10.1% from $19.50B y/y; said total comp sales rose +8.5% vs. est. +6.3% and US comps ex-gas +8.6% vs. est. +7.3%

·     Ford (F) is raising the price of its electric F-150 Lightning Pro for the 2023-year model to $51,974, compared to $46,974 earlier

·     McCormick (MKC) Q3 adj EPS $0.69 vs. est. $0.76; Q3 revs rose 3% y/y to $1.6B, in-line with estimates; said continues to expect foreign currency rates in 2022 to unfavorably impact net sales by 3% and unfavorably impact adjusted operating income and adjusted earnings per share by 2%; Still sees adjusted EPS $2.63 to $2.68 vs. estimate $2.75

·     LGI Home (LGIH) announced it closed 574 homes in September 2022, resulting in a total of 1,547 homes closed during the third quarter of 2022

 

Energy, Industrials and Materials

·     Russia could cut its oil production by as much as 3m b/d if the EU and US proceed with a plan to cap prices. The OPEC+ supply cut has added another element of uncertainty for oil traders weighing Chinese demand and a potential energy squeeze during winter – Bloomberg

·     Shell (SHEL) said Q3 profit would be pressured by a near halving of oil refining margins, crumbling chemical margins and weaker natural gas trading; said refining margins look to drop to $15 a barrel compared with $28 a barrel in the previous three months, and indicative margins for chemicals dropped to negative $27 per tonne versus a positive $86 in Q2

·     Air Lease (AL) announced long-term lease placements for six Boeing (BA) 737-8 aircraft with LOT Polish Airlines.

·     Ingersoll Rand (IR) has entered into an agreement to acquire SPX Flow’s Air Treatment business for approximately $525M

·     Westrock Co (WRK) said it will permanently close corrugated medium manufacturing operations at its St. Paul, Minnesota, recycled paper mill; production of coated recycled board at this location will remain in operation; shutdown of assets will result in reduction of 200,000 tons of annual corrugated medium production

·     Richardson Electronics (RELL) reported year-over-year growth in net sales and earnings per share for the fiscal first quarter

·     ArcelorMittal (MT) downgraded to Neutral from Buy at UBS

·     Venator Materials (VNTR) cut to Sell at UBS on reduced TiO2 demand

·     Westlake (WLK) upgraded to Neutral from Sell at UBS and raise tgt to $95 from $92

 

Financials

·     Apollo Global Management (APO) is no longer looking to lead preferred financing for Elon Musk’s proposed buyout of Twitter (TWTR), Reuters reported after the close yesterday

·     Equity Residential (EQR) downgraded to Market Perform from Outperform at BMO Capital

 

Healthcare

·     Eli Lilly (LLY) receives U.S. FDA fast track designation for tirzepatide for the treatment of adults with obesity, or overweight with weight-related comorbidities. Receives U.S. FDA fast track designation for tirzepatide for the treatment of adults with obesity, or overweight with weight-related comorbidities; results from surmount-2, -3 and -4 are anticipated in 2023

·     Integer Holdings (ITGR) lowers Q3 and year outlook; sees FY adj EPS $3.57-$3.97, below prior view of $4.20-$4.50 and FY sales $1.35B-$1.38B, down from prior $1.37B-$1.40B)

 

Technology, Media & Telecom

·     Verizon (VZ) upgraded to Outperform from Perform at Oppenheimer with $50 tgt and raises FY23 revenue and adj EBITDA estimates for company as expects strong mobile bundling conversion in addition to accelerating enterprise adoption for Verizon

·     Pinterest (PINS) upgraded to Buy from Neutral at Goldman Sachs and raise price target to $31

·     Take-Two (TTWO) upgraded to Buy from Neutral at Goldman Sachs and up tgt to $165 from $131

·     United Microelectronics (UMC) Sept revs NT$25.22B vs NT$18.75B