Early Look

Thursday, September 3, 2020

Futures	Up/Down	%	Last
DJ Industrials	-41.00	0.14%	29,049
S&P 500	-13.50	0.36%	3,566
Nasdaq	-101.50	0.82%	12,310

 

 

Stock futures are sliding for the first time this week, with Nasdaq futures sharply lower in a bout of profit taking after the Nasdaq Composite recorded yet another all-time record high, closing above the 12,000 level for the first time ever on Wednesday, the Dow surged back above the 29,000 level, within roughly 500 points of its February all-time best and the S&P 500 extended its gains to close at a record high for the 22^nd time this year. The weakness comes ahead key economic data the next few days in the jobs sector. The stock market move off the March low has been nothing short of remarkable, rebounding on good, bad or indifferent news with the pain trade pushing stock markets above and beyond anyone’s expectations given that we remain in a global pandemic. Yesterday’s gains were led by some of the more unlikely sectors as defensive utilities, consumer staples and real estate helping pace the advance as large cap names took a breather (AAPL, TSLA, NFLX). Shares of Visa, NKE, UPS, PYPL, LULU, GOOGL, MSFT and AMZN all touched record highs of their own. Stocks kept the momentum going Wednesday even with some new disappointing data on the labor market as ADP private payrolls fell short of consensus. The data comes ahead of first-time unemployment claims today (est. 950K) and continuing claims to dip to 14.0M, while the nonfarm payroll report is due Friday. In Asian markets, The Nikkei Index rose 218 points to 23,465, the Shanghai Index declined -19 points to 3,384 and the Hang Seng Index fell -112 points to 25,007. In Europe, the German DAX is up over 140 points to trade around the 13,400 level, while the FTSE 100 is up around 40 points to 5,980. European markets are outperforming after France unveiled a EU100B dose of stimulus to get the economy moving again (GDP contracted 14% following pandemic-induced lockdowns in Q2). In COVID-19 news, the CDC has notified public health officials in all 50 states and five large cities to prepare for distribution of a vaccine that could come in late October or early November.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 54.19 points, or 1.54%, to 3,580.84

·     The Dow Jones Industrial Average surged 454.84 points, or 1.59%, to 29,100.50

·     The Nasdaq Composite spiked 116.78 points, or 0.98%, to 12,056.44

·     The Russell 2000 Index advanced 13.71 points, or 0.87% to 1,592.29

 

Economic Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims…est. 905K

·     8:30 AM EST      Continuing Claims…est. 14.0M

·     8:30 AM EST      Nonfarm Productivity, Q2-F…est. 7.5%

·     8:30 AM EST      Unit Labor Costs, Q2-F…est. 12.0%

·     8:30 AM EST      Trade Balance for July…est. (-$58.0B)

·     9:45 AM EST      Markit US Services PMI, Aug-F…est. 54.7

·     9:45 AM EST      Markit US Composite PMI, Aug-F…prior 54.7

·     10:00 AM EST    ISM Non-Manufacturing Index for Aug…est. 57.0

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

 

Earnings Calendar:

·     Earnings Before the Open: BNED, CIEN, CONN, CPB, DBI, DCI, DLTH, GCO, GMS, HOFT, HOV, KFY, KIRK, MEI, MIK, SIG, TTC

·     Earnings After the Close: AVGO, COO, DOCU, DOMO, MDLA

 

Other Key Events:

·     BMO Capital Real Assets virtual conference, 9/2-9/3

·     Deutsche Bank European TMT virtual conference, 9/3-9/4

 

 

Macro	Up/Down	Last
WTI Crude	-0.80	40.71
Brent	-0.80	43.63
Gold	-9.20	1,935.50
EUR/USD	-0.0033	1.1822
JPY/USD	0.21	106.39
10-Year Note	+0.006	0.654%

 

 

World News

·     France plans to spend €100B ($118B) to pull its economy out of a deep coronavirus-induced slump. The stimulus equates to 4% of GDP.

·     Eurozone service activity barely expanded in August. The IHS Markit eurozone services PMI registered 50.5 in August versus 54.7 in July, slightly above the flash reading

 

Sector News Breakdown

Consumer

·     Costco (COST) reported total comparable sales for August rose +13.2% vs. est. +10.4%; Aug U.S. comparable sales excluding fuel, currencies +14.3% vs. est. +12.9%

·     Five below (FIVE) 2Q EPS $0.53 vs. est. $0.14 on revs $426.1Mm vs. est. $405.8Mm, comps -12.2% for full qtr., comps +6% for reopened period, expects to open 110-120 net new stores in 2020; not providing guidance for 3Q or FY

·     E-cigarette maker Juul Labs Inc. said it is cutting about one-third of its 3,000 workers and considering halting sales across Europe and Asia; could mean pulling out of as many as 11 countries and shrinking the startup’s footprint to its core markets of the U.S., Canada and UK

·     Nio (NIO) deliveries grew 104.1% to 3,965 vehicles in August; said the company delivered 21,667 vehicles YTD, +109.9% YoY

·     PVH Corp. (PVH) Q2 adj EPS 13c on sales $1.58B (fell -34% YoY); sees 2H revs down about 25% due to COVID

·     Sabre Corporation (SABR) reports gross air bookings were down ~85% in July and August, and net air bookings were down ~90% in July and 85% in August; passengers boarded were down ~80% and 75% in July and August

·     Sportsman’s Warehouse (SPWH) Q2 adjusted eps 76c on revs $381M vs. est. 27c/$281.6M; 2q comparable sales +61% vs. +1.70% y/y; Adjusted EBITDA was $53.6M vs. $15.8M a year ago

·     XPeng (XPEV) said its ADS’ representing its Class A ordinary shares will be included in The MSCI China All Shares Indexes and The MSCI Global Standard Indexes, effective September 11, 2020.

 

Energy, Industrials and Materials

·     Matrix Service (MTRX) 4Q adj EPS ($0.01) vs. est. $0.06 on revs $195.8Mm vs. est. $244.4Mm, backlog $758.5Mm

·     Culp Inc. (CULP) Q1 adj EPS 8c on sales $64.5M; expects sales and operating income for q2 of fiscal 2021 to be materially improved as compared to q1; cautiously optimistic, based on current demand trends, that business will continue its solid return in q2 of fiscal 2021

·     UPS Inc. (UPS) and eBay (EBAY) teaming up to launch new shipping options for EBAY marketplace, will be available to all sellers by end Sept

·     United States railroads fell 19.5% to 898,227 carloads in August while intermodal volumes recorded 3% growth through consumer-centric product transports. On combined basis down 5.8% Y/Y (watch shares of CSX, NSC, UNP, KSU)

 

Financials

·     JPMorgan (JPM) upgraded to buy from hold at Deutsche Bank

·     MarketAxess (MKTX) reported trading volume for Aug. of $450.0 billion vs. $172.8 billion YoY; Aug U.S. high-grade volume $95.67 billion, +12% YoY and Aug other credit volume $82.97 billion vs. $83 billion YoY

·     Rocket Companies (RKT) 2Q adj revs $5.31B vs. est. $3.75B; guides 3Q net rate lock volume $93-98B, sees 3Q closed loan volume $82-85B, sees 3Q gain on sale margins 4.05-4.3%

 

Healthcare

·     Sanofi (SNY) and GlaxoSmithKline (GSK) have started the Phase 1/2 clinical trial for their COVID-19 adjuvanted recombinant protein-based vaccine candidate

·     Fulgent Genetics (FLGT) and New York City Health and Hospitals will provide COVID-19 testing to hundreds of thousands of students across approx. 1600 locations as they return to school in September and over the next several months

·     Novavax (NVAX) announces the publication of Phase 1 data from its Phase 1/2 trial of COVID‑19 vaccine candidate NVX‑CoV2373, adjuvanted with Matrix‑M, in 131 healthy adults 18-59 years of age in The New England Journal of Medicine

·     Applied Genetic Technologies (AGTC) will provide a management update on its planned Phase 2/3 X-Linked Retinitis Pigmentosa (XLRP) clinical trial design, a re-analysis of dose Groups 2 and 4 data, and new preliminary visual sensitivity data from Group 5 on September 9, 2020

 

Technology, Media & Telecom

·     Ambarella (AMBA) Q2 adj EPS 6c on revs $50.1M vs. est. loss (2c) and $50M; guides q3 res 452M-$56M vs. est. $54.9M and adj gross margins 60%-62%

·     Cloudera (CLDR) 2Q adj EPS $0.10 vs. est. $0.06 on revs $214.3Mm vs. est. $208.1Mm; guides 3Q revs $207-210Mm vs. est. $205.5Mm, sees 3Q adj EPS $0.08-0.10 vs. est. $0.07; guides FY revs $839-853Mm vs. est. $838.7Mm, sees FY adj EPS $0.32-0.35 vs. est. $0.28

·     CrowdStrike (CRWD) 2Q adj EPS $0.03 vs. est. ($0.01) on revs $199Mm vs. est. $188.5Mm; sees 3Q revs $210.6-215Mm vs. est. $195.75Mm, sees 3Q adj EPS ($0.01)-$0.00 vs. est. ($0.05); guides FY revs $809.1-826.7Mm vs. est. $772.5Mm, FY adj EPS $0.02-0.08 vs. est. ($0.04)

·     Guidewire (GWRE) Q4 adj EPS 83c vs. est. 45c on revs $243.7M vs. est. $209M; guides Q1 revs $162M-$166M (est. $167.5M) and year $723M-$733M vs. est. $771.5M

·     Interdigital (IDCC) guides Q3 revs $83M-$88M vs. est. $85M

·     MongoDB (MDB) Q2 adj EPS loss (22c) on revenue $138.3M vs. est. loss (39c) and $126.9M; raises year rev view to $549M-$554M from prior $520M-$530M

·     PagerDuty (PD) shares fell -23%; Q2 adjusted EPS loss (4c) on revs $50.7M vs. est. loss (7c) and $50.7M; narrows FY21 adj. EPS view to (30c)-(27c) from (30c)-(25c) vs. est. (27c) and narrows FY21 revenue view to $206M-$211M from $204M-$213M (est. $208.25M)

·     Smartsheet (SMAR) 2Q adj EPS ($0.06) vs. est. ($0.16) on revs $91.2Mm vs. est. $86.6Mm; guides 3Q adj EPS ($0.23)-($0.22) vs. est. ($0.14), sees 3Q revs $94-95Mm vs. est. $92.8Mm; guides FY adj EPS ($0.54)-$(0.49) vs. est. ($0.50), sees FY revs $367-373Mm vs. est. $364.6Mm

·     Zuora (ZUO) shares fell -19%; Q2 adj EPS flat on revs $75M vs. est. loss (7) and $73.5M; 2q cash and cash equivalents $118.6M vs. $56.6M YoY; guides Q3 revs $73M-$75M vs. est. $75.5M; sees Q3 subscription revenue $59M-$60M

·     Verizon (VZ) and Amazon.com (AMZN) may invest more than $4B to take a stake in India’s Vodafone Idea (VOD) after a court ruling, according to India’s Mint newspaper https://bit.ly/2EKLKK8