Early Look

Wednesday, September 1, 2021

Futures	Up/Down	%	Last
Dow	109.00	0.31%	35,449
S&P 500	15.25	0.34%	4,536
Nasdaq	33.50	0.22%	15,616

 

 

New trading month, same results as U.S. futures are pointing to a higher open, looking to build on its gains in August as investors continue to bet on a resilient economic recovery from the pandemic with help from the dovish Fed who keep rates at record lows and adds liquidity. Markets slipped Tuesday as investors trimmed positions due to month-end rebalancing and ahead of Friday’s likely market-moving jobs report. Treasury yields edge slightly higher, while the price of a barrel of oil rose past $69 ahead of an OPEC+ meeting that could result in an increase in output. Busy morning of economic data as U.S. ADP private payrolls preview: analysts expect a 700k increase in private payrolls in August after the disappointing 330k rise in July, while the ISM manufacturing index expected to rise to 59.8 in August after slipping -1.1 point to 59.5 in July and Construction spending is expected to rise 0.3% in July. In Asian markets, The Nikkei Index jumped 361 points to 28,451, the Shanghai Index rose 23 points to 3,567, and the Hang Seng Index climbed 149 points to move back above the 26,000 level. In Europe, the German DAX is higher about 25 points to 15,860, while the FTSE 100 is up 45 points to 7,165. At the conclusion of August, the S&P 500 ended higher for a 7th straight month, which is its longest such streak since a 10-month run of gains ending in January 2018. Additionally, it has now been 342 calendar days since the SPX lasted ended a decline of more than 5% on a closing basis.

 

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -6.11 points, or 0.13%, to 4,522.68

·     The Dow Jones Industrial Average fell -39.11 points, or 0.11%, to 35,360.73

·     The Nasdaq Composite edged lower -6.65 points, or 0.04%, to 15,259.24

·     The Russell 2000 Index advanced 7.78 points, or 0.34% to 2,273.77

 

Events Calendar for Today

·     7:00 AM ET         MBA Mortgage Applications Data

·     8:15 AM ET         ADP Employment for Aug…est. 613K

·     9:45 AM ET         Markit Manufacturing PMI-Aug-F…

·     10:00 AM ET      ISM Manufacturing PMI, for Aug…est. 58.6

·     10:00 AM ET      Construction Spending…est. 0.2%

·     10:30 AM ET      Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: BF/B, CONN, CPB, DY, REX, VRA

·     Earnings After the Close: AI, ASAN, CHPT, CHWY, EGAN, FIVE, GEF, NCNO, NTNX, OKTA, PHR, RYAN, SMTC, SPWH, SWBI, VEEV

 

Other Key Events:

·     Jefferies Semiconductor, IT Hardware & Comm Infrastructure Summit 2021 (virtual), 8/31-9/1

·     Piper Sandler 2021 Texas Bank Forum (virtual), 8/30-9/1

·     Barclay’s Media & Telecom Forum (virtual), 9/1-9/2

·     Stephens Auto investor Field Trip, 9/1-9/2

 

 

Macro	Up/Down	Last
Nymex	0.07	68.57
Brent	0.10	71.73
Gold	-0.10	1,813.50
EUR/USD	0.0013	1.1822
JPY/USD	0.30	110.32
10-Year Note	+0.013	1.316%

 

 

World News

·     In China, the Caixin/Markit manufacturing PMI for August came in at 49.2 vs. expectations of 50.2, prior 50.3; gauges for output, total new orders and new export orders all dropped into negative territory

·     In Japan, Manufacturing PMI for August 52.7 vs. prelim 52.4, prior 53.0.

·     Australia’s Q2 GDP came in at +0.7% QoQ compared to forecast of 0.5%, and prior 1.8%; GDP rose +9.6% YoY vs. estimate of 9.2% and vs. prior 1.1%

·     Australia Markit Manufacturing PMI for August (final) 52.0 vs. prelim of 51.7, prior 56.9

·     German Retail Sales (MoM) for July, -5.1% vs. expected -1.0% and previous 4.5%; German Retail Sales NSA (YoY) for July -0.3% vs. expected +3.6%; and previous +6.5%

·     Eurozone Aug Manufacturing PMI (final) 61.4 vs 61.5 consensus; German Aug Mfg PMI (final) 62.6 vs 62.7 consensus; French Aug Mfg PMI (final) 57.5 vs 57.3 consensus

 

Sector News Breakdown

Consumer

·     Nio (NIO) shares fall -4% on lower production view; delivered 5,880 vehicles in August 2021, representing growth of 48.3% Y/Y but lower 25.9% from July deliveries of 7,931 units; adjusts the vehicle production and expects to deliver ~22,500 to 23,500 vehicles in Q3 2021, revised from the previous outlook of 23,000 to 25,000 units.

·     XPeng (XPEV) delivered 7,214 Smart EVs, representing a 172% increase year-over-year. Deliveries in August consisted of 6,165 P7s, the company’s sports smart sedan, and 1,049 G3s, its smart compact SUV

·     Caleres (CAL) Q2 adj EPS $1.19 vs. est. $0.54; Q2 sales rose 34.7% to $675.5M vs. est. $640.0M; sees full-year EPS $3.25-$3.50; Famous Footwear achieved a more than e8% increase in revenue, a more than 100% increase in return on sales, and a 670-basis-point increase in gross margin

·     PVH Corp. (PVH) Q2 EPS $2.72 vs. est. $1.20; Q2 revs $2.31B vs. est. $2.14B; raising our full year outlook, which continues to reflect gross margins above 2019 pre-pandemic levels and further improvement in our operating margin; revenue in 2021 is projected to increase 26% to 28% (increase 24% to 26% on a constant currency basis) as compared to 2020; said Q2 saw a 41% increase in Tommy Hilfiger business, a 56% increase in Calvin Klein business

·     Playtika (PLTK) has acquired Helsinki-based Reworks for $400 million in cash, giving it an entry into the growing “Design Entertainment” app market. Reworks is the developer of Redecor, which has grown to the sector’s No. 2 app in terms of in-app purchase revenue.

·     Walmart (WMT) intends to make grocery delivery available to customers in parts of New York City, the WSJ reported

·     Winnebago Industries (WGO) completed its purchase of Barletta Pontoon Boats, the industry’s fastest-growing, premium pontoon boat manufacturer for $225M in cash and stock.

 

Energy, Industrials and Materials

·     The American Petroleum Institute (API) showed a draw of 4.04M barrels of oil for the week ending August 27; gasoline inventories show a build of 2.71M barrels, distillate inventories show a draw of 1.96M barrels and Cushing inventories show a build of 2.13M barrels.

·     Marathon Petroleum Corp (MPC) said that only minor damage from Hurricane Ida has been found at its 578,000 barrel-per-day Garyville, Louisiana, refinery.

·     L3 Harris (LHX) has been awarded an indefinite-delivery/indefinite-quantity contract in the amount of $947.29M for the AN/ALQ-172 Countermeasures Program and modernization

·     Dycom (DY) Q2 adj EPS $0.60 vs. est. $0.73; Q2 revs $787.57M vs. est. $810.47M; said as of July 31, the company had cash and equivalents of $261.9M; says expects contract revenues to be in-line and non-Gaap adjusted Ebitda to decrease as a percentage of contract revenues for q3

·     Allison Transmission (ALSN) announces the addition of its eGen Power 100S and 130D e-Axles to its fully electric portfolio of propulsion solutions.

 

Financials

·     ARK Investment Management is looking to debut a new ETF that will focus on transparency in companies and shun vice and sectors that run afoul of ESG investing like fossil fuels. In an SEC filing, Cathie Wood’s shop outlines the fund, which looks to be at least 80% invested in stocks in its benchmark Transparency Index. “Companies operating in the following industries, as determined by the Index provider, are excluded from the Index: (i) alcohol, (ii) banking, (iii) chemicals, (iv) confectionary, (v) fossil fuel transportation, (vi) gambling, (vii) metals, (viii) mineral, (ix) natural gas, (x) oil, and (xi) tobacco,” ARK says in its filing

·     Intuit (INTU) is in talks to buy email marketing company Mailchimp for more than $10B, Bloomberg reports though no final decision has been made and discussions could fall through. https://bloom.bg/3kLoRa8

·     Riot Blockchain (RIOT) files for stock shelf of up to $600M

·     Robinhood Markets Inc (HOOD) said the SEC was reviewing a filing of share sale by a group of its shareholders. Shares of the newly public company had taken a hit in early August after it said early investors may sell nearly 98M shares, noting that the company will not receive any of the proceeds. Robinhood said it submitted an amended resale filing on Wednesday, adding that no sales can be made off the filing until the SEC staff completes their review and declares it effective

 

Healthcare

·     Teva Pharmaceuticals (TEVA) and MedinCell said the U.S. FDA accepted their new drug application for TV-46000/mdc-IRM to treat schizophrenia. The companies said the acceptance of TV-46000/mdc-IRM, or risperidone extended-release injectable suspension for subcutaneous use, was based on Phase 3 data from two studies which “evaluated the efficacy and long-term safety and tolerability of TV-46000 as a treatment for patients with schizophrenia.”

·     Ascendis Pharma (ASND) files to sell $400M of ADSs

·     Merck (MRK) announced a label update for KEYTRUDA, Merck’s anti-PD-1 therapy, for its indication in first-line advanced urothelial carcinoma (bladder cancer) in the U.S.

 

Technology, Media & Telecom

·     Ambarella (AMBA) shares rise 8%; Q2 EPS $0.35 vs. est. $0.25; Q2 revs $79.33M vs. est. $75.68M; said IoT cameras, primarily security, and automotive, representing ~90% of total Q2 revenue; sees Q3 revenue $88M-$92M above est. $78.74M; sees Q3 gross margin 61%-63%; Q2 gross margin under GAAP was 62.3%, compared with 61.8% for the same period in fiscal 2020

·     Crowdstrike (CRWD) Q2 Non-Gaap EPS $0.11 vs. est. $0.09; Q2 revs $337.7M vs. est. $323.2M; sees Q3 revs $358M-$365.3M vs. est. $350.3M; for the year, FY adj EPS $0.43-$0.49 above prior $0.35-$0.41 and est. $0.39; sees year revs $1.391B-$1.409B vs. est. $1.36B; Q2 Annual Recurring Revenue (ARR) increased 70% YoY and grew to $1.34B as of July 31, 2021, of which $150.6M was net new ARR added in the quarter; Q2 GAAP subscription gross margin was 76%, compared to 76% in the second quarter of fiscal 2021

·     Anaplan (PLAN) shares rose 15%; Q2 adj EPS loss (-$0.09) vs. est. loss (-$0.14); Q2 revs $144.3M vs. est. $134.02M; raises FY21 revenue view to $571.5M-$573.5M from $555M-$560M (est. $558.7M); sees Q3 revenue $145.5M-$146.5M vs. est. $142.35M; sees Q3 billings $179M-$181M; said Q2 Subscription Revenue up 34.6% YoY; remaining performance obligation of $905.6 million, up 28.8% YoY