Early Look

Wednesday, October 19, 2022

Futures	Up/Down	%	Last
Dow	-26.00	0.09%	30,550
S&P 500	-1.25	0.03%	3,731
Nasdaq	5.50	0.05%	11,204

 

 

U.S. futures are pulling back from overnight highs, as the S&P looks flat at 3,730 after touching 3,774.25 overnight (just below yesterday’s high of 3,777.25) as markets await the next round of earnings. Back-to-back winning sessions for the S&P 500 on Tuesday as all eleven S&P sectors finished green for a second straight session as the start of earnings season has so far been well received starting in the banking sector and carried over to tech (NFLX), transports (UAL) and MedTech (ISRG) overnight – though GNRC lowered guidance in the industrial sector this morning. Rising Treasury yields (10-yr above 4%) remind investors of the impact of rising rates from the Fed, keeping gains in the tech sector in check Tuesday (Nasdaq rose +0.9%). Interestingly the two-day rally for markets come as Fed speakers have been silent this week after mass commentary the prior two-weeks. In Asian markets, The Nikkei Index rose 101 points to 27,257, the Shanghai Index fell -36 points to 3,044, and the Hang Seng Index dropped -403 points or 2.38% to 16,511. In Europe, the German DAX is higher by 7 points to 12,775, while the FTSE 100 is flat at 6,937. The US dollar extends gains vs. the Japanese yen, topping the 149.50 level for the first time since 1990. Companies including consumer-goods giant Procter & Gamble, insurer Travelers Companies and pharmaceutical firm Abbott Laboratories are scheduled to report earnings ahead of the opening bell. Oil prices are higher while gold slips with the dollar advance.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 42.03 points, or 1.14%, to 3,719.98

·     The Dow Jones Industrial Average rose 337.98 points, or 1.12%, to 30,523.80

·     The Nasdaq Composite climbed 96.60 points, or 0.90%, to 10,772.40

·     The Russell 2000 Index advanced 20.20 points, or 1.16% to 1,755.96

 

Economic Calendar for Today

·     7:00 AM ET           MBA Mortgage Applications Data

·     8:30 AM ET           Housing Starts M/M for September

·     8:30 AM ET           Building Permits M/M for September

·     10:30 AM ET         Weekly DOE Inventory Data

·     1:00 PM ET            Fed’s Kashkari Takes Part in Moderated Q&A

·     2:00 PM ET            U.S. Federal Reserve Releases Beige Book

 

Earnings Calendar:

·     Earnings Before the Open: ABT ALLY BKR BMI CBSH CFG CMA ELV LAD MKTX MTB NDAQ NTRS PG PLD SCL TRV UNF WGO

·     Earnings After the Close: AA BANR CCI CNS EFX EGBN FR GSBC HCCI IBM INBK KALU KMI KNX LBRT LSTR NVEC PACW PFBC PPG REXR RLI SLG STLD TBK TCBI TSLA UMPQ WDFC

 

 

Macro	Up/Down	Last
Nymex	1.29	84.11
Brent	0.80	90.83
Gold	-15.80	1,640.00
EUR/USD	-0.0059	0.9793
JPY/USD	0.27	149.53
10-Year Note	+0.071	4.069%

 

 

Sector News Breakdown

Consumer

·     Olaplex Holdings (OLPX) guides prelim 3q adj net $71.3M-$73.3M below est. $91.9M; sees FY adj EBITDA $425M-$431M, from prior $504M-$526M; lowers FY adj net $303M-$307M, from prior view $363M-$379M

·     Lowe’s (LOW) downgraded to In Line from Outperform at Evercore ISI

·     Polaris (PII) downgraded to Neutral from Buy at Citi

 

Energy

·     The American Petroleum Institute reports that crude inventories fell 1.27M barrels last week; gasoline inventories fell 2.17M barrels

·     Exxon Mobil (XOM) assumed at Buy (up from Hold prior) at Jefferies and raise target to $133

·     Laredo Petroleum (LPI) Q3 total production averaged ~79.5 thousand barrels of oil equivalent per day, within guidance of 78.5 – 81.5 MBOEPD; oil production for the quarter averaged ~35.0 thousand barrels of oil per day (“MBOPD”), below guidance of 35.5 – 37.5 MBOPD

 

Financials

·     Citizens Financial (CFG) reports Q3 underlying EPS $1.30 vs. est. $1.22

·     First Horizon (FHN) Q3 adj EPS $0.44 vs. est. $0.43; qtrly pre-provision net revenue up 59% from prior quarter and up 37% on an adjusted basis; qtrly total revenue of $875M vs $738M; qtrly net interest income of $662M vs $492M

·     F.N.B. (FNB) Q3 non-GAAP EPS $0.39 vs. est. $0.36; Q3 revs $380M vs. est. $361.67M; Q3 net interest income (NII) increased $64.7M or 27.8% to $297.1M; Total average deposits grew $2.8 billion, or 9.0%

·     Interactive Brokers (IBKR) 3Q adj EPS $1.08 vs est. $0.96 on revs $790Mm vs est. $797.6Mm

·     M&T Bank (MTB) Q3 operating EPS $3.83 vs. estimate $4.19; Q3 provision for credit losses $115.0 million vs. recovery $20 million y/y; return on average common equity 10.4% vs. 12.2% y/y; net interest income $1.68 billion, +74% y/y

·     United Community Bank (UCBI) reported Q3 EPS $0.74 vs. est. $0.75 and revs $216.3M; return on assets (ROA) was 1.32%, and return on common equity was 11.02%; Total loans increased by $341 million during the quarter, resulting in loan growth of 9.4% on an annualized basis

·     Wintrust Financial (WTFC) 3Q EPS $2.21 vs est. $2.07 on NII $401.4Mm vs est. $391.9Mm; Q3 CET1 capital ratio 8.9%, Q3 book value per share 69.56, Q3 net charge-offs .03%

 

Healthcare

·     Intuitive Surgical (ISRG) shares rise 7%; 3Q adj EPS $1.19 vs est. $1.12 on revs $1.56B vs est. $1.52B; qtrly worldwide Da VINCI procedures grew approx 20% vs 3Q21, says place 305 Da VINCI systems vs 336 in 3Q21; raises FY22 procedure growth view to 17%-18% from 14%-16.5%

·     PTC Therapeutics (PTCT) shares slide -17% (after falling -11% during Tuesday session) after saying enrollment in its ongoing mid-stage study testing its experimental treatment in patients with Huntington’s disease has been paused in the U.S. by the FDA which requested additional data to allow the study to proceed in the country

·     Elevance Health (ELV) Q3 adj EPS $7.53 vs. est. $7.15; Q3 revs $39.6B vs. est. $39.09B; raises FY22 adjusted EPS view to greater than $28.95 per share above prior view of $28.70

·     Biohaven (BHVN) announces offering of 20M common shares

·     Denali Therapeutics Inc. (DNLI) said it intends to offer and sell $250 mln of shares of its common stock in an underwritten public offering

·     Silk Road Medical (SILK) 2.33M share Secondary priced at $43.00

 

Industrials & Materials

·     Generac (GNRC) shares fall -13%; cuts full-year 2022 net sales growth guidance range to 22 to 24% as compared to the prior year and down from its prior view of up 36%-50%, which includes approximately 5 to 7% net impact from acquisitions and foreign currency; guides prelim Q3 Ebitda $184M vs. est. $308M

·     JB Hunt (JBHT) Q3 EPS $2.57 vs. est. $2.45; Q3 revs rose 22% y/y to $3.84B vs. est. $3.80B; total freight transactions in the Marketplace for J.B. Hunt 360 increased 7% to $552M; said revenue growth was driven by a 17% increase in revenue per load in its intermodal segment and an 18% increase in average revenue producing trucks

·     United Airlines (UAL) 3Q adj EPS $2.81 vs est. $2.28 on revs $12.9B vs est. $12.75B; adj EBIT margin 11.5%; says now expects 4Q adj op margin above 2019 for first time, sees strong covid recovery trends continuing to overcome recessionary pressures through end of year; sees Q4 capacity (9%)-(10%) vs. 2019 and sees Q4 TRASM 24%-25% vs. 2019

·     Daily freight rates to ship liquefied natural gas are at a record high, and prices are expected to climb further as winter approaches. Spot rates for ships commonly used to transport LNG are at $450,000 this week, a sixfold increase since the start of this year, according to the Baltic Exchange a London-based https://on.wsj.com/3ESXMgV

·     Woodward (WWD) announces new organizational structure and leadership changes to enhance customer experience, simplify operations and increase profitability through improved execution. Aircraft turbine systems and aero systems business groups will be combined within Aerospace

·     Booz Allen (BAH) downgraded to Market Perform from Outperform at Raymond James

·     Iridium (IRDM) downgraded to Equal Weight from Overweight at Barclays

 

Technology, Media & Telecom

·     Netflix (NFLX) shares rise 11%; 3Q streaming paid net adds 2.41Mm vs est. 1.07Mm; sees 4Q global streaming paid net adds 4.5Mm vs est. 4.2Mm; starting with 4Q letter in Jan 2023, will not provide paid membership guidance for following qtr; Q3 EPS $3.10 vs. est. $2.13 and Q3 revs $7.93B vs. est. $7.85B; sees Q4 revs $7.78B vs. est. $7.98B (ROKU, DIS, PARA rise in reaction)

·     ASML (ASML) shares rise 6%; posted third-quarter sales and profit above expectations and record new bookings; reported Q3 net profit of 1.7 billion euros ($1.7 billion) on sales of 5.8 billion euros, beating analyst forecasts of profit of 1.42 billion euros and 5.41 billion euros in sales.

·     Taiwan Semiconductor Manufacturing Co. (TSM) is considering expanding its production capacity in Japan, people familiar with the matter said, in what would be a move by the world’s largest contract chip maker to reduce geopolitical risk.

·     Adobe (ADBE) reaffirming current Q4 and FY financial targets; changes to foreign exchange rates expected to result in an about $700 mln downward revaluation to total digital media ARR balance in 2023

·     Omnicom (OMC) Q3 EPS $1.77 vs. est. $1.68; Q3 revs rose 7.5% y/y to $3.44B vs. est. $3.36B; qtrly revenue from organic growth of $257.7 mln, or 7.5%