Early Look

Friday, September 18, 2020

U.S. futures are looking at a mixed open, with the Nasdaq to recover after sharp losses the last few sessions on profit taking, while Dow futures edge slightly lower after snapping its 4-day win streak on Thursday. A combination of mixed messages around the timeline of a vaccine to fight the COVID-19 virus, as well as the caution expressed by the Fed Chairman Powell the day prior led to the increased selling pressure in markets yesterday. Economic data was also mixed heading into today’s consumer sentiment data set for release at 10:00 AM EST. In the banking sector, the Fed said it’s also weighing whether to continue capping U.S. lenders’ dividends and share buybacks as it prepares for a second round of stress tests for banks. In Asian markets, The Nikkei Index rose 40 points to 23,360, the Shanghai Index gained 114 points to 24,455, the Hang Seng Index gained 67 points to 3,338. In Europe, the German DAX is up around 20 points to 13,225, while the FTSE 100 is down around -10 points to 6,035. There isn’t much in way of earnings or events today outside of the European Society for Medical Oncology (ESMO) Virtual Congress 2020. However, volumes could increase today ahead of quadruple witching day, which refers to the simultaneous expiration of market index futures, stock futures, market index options and stock options.

Market Closing Prices Yesterday

·     The S&P 500 Index slumped -28.48 points, or 0.84%, to 3,357.01

·     The Dow Jones Industrial Average fell -130.40 points, or 0.47%, to 27,901.98

·     The Nasdaq Composite dropped -140.19 points, or 1.27%, to 10,910.28

·     The Russell 2000 Index declined -9.73 points, or 0.63% to 1,542.60

Economic Calendar for Today

·     10:00 AM EST    Leading Index MoM for August

·     10:00 AM EST    University of Michigan Confidence, Sept-P

·     1:00 PM EST       Baker Hughes Weekly Rig Count

Sector News Breakdown

Consumer

·     Beyond Meat (BYND) downgraded to Underweight from Neutral at JPMorgan with an unchanged price target of $122

·     Delta (DAL) reached a tentative agreement with its pilots’ union to reduce layoffs by 220, according to a memo to pilots seen by Reuters

·     OneWater Marine (ONEW) 3.171M share Secondary priced at $20.00

·     Uber Technologies Inc. (UBER) is bringing in a new chief technology officer from Amazon.com Inc., Sukumar Rathnam, filling a position that has been vacant for more than three months

·     XL Fleet, a provider of electric vehicle technology, said Friday it has agreed to merge with Pivotal Investment Corporation II (PIC), a special purpose acquisition corporation, or SPAC, in a deal with a pro forma enterprise value of about $1 billion. https://on.mktw.net/35MhQA1

Energy, Industrials and Materials

·     SunPower (SPWR) upgraded to Equal Weight from Underweight with a price target of $10.50, up from $5.30 at Morgan Stanley

·     Steel Dynamics (STLD) guides Q3 EPS of 46c-50c above estimate 38c as expects Q3 earnings from steel operations will come in lower than Q2 results, due to metal spread compression more than offsetting increased shipments driven by improved automotive and strong construction demand

·     Kinross Gold (KGC) said it will pay its first dividend since 2013 (3c quarterly dividend) and describes plans to raise production over the next three years; also plans to raise production 20% from 2.4M gold equiv. oz. to 2.9M oz. in 2023 by extending the life of mines and executing on projects already under its previous three-year capital spending plan

Financials

·     The Federal Reserve said it’s considering extending its caps on banks’ dividends and stock repurchase for the rest of the year due to heightened economic uncertainty. The U.S. central bank made the announcement along with its release of hypothetical scenarios for its second round of stress tests (watch BAC, C, JPM, WFC)

·     Essential Properties Realty Trust (EPRT) 8M share Spot Secondary priced at $19.00

·     Gladstone Commercial (GOOD) collects ~99% of September cash base rent, consistent with 99% of August and July cash base rents that were paid and collected and 98% of June, May, and April cash base rents.

·     London Stock Exchange Group PLC said Friday that it has entered into exclusive talks with Euronext NV for the sale of Italy’s Borsa Italiana. https://on.mktw.net/3mASlHM

Healthcare

·     Athira Pharma (ATHA) 12M share IPO priced at $17.00

·     Humanigen (HGEN) 8M share IPO priced at $8.50

·     COMPASS Pathways (CMPS) 7.5M share IPO priced at $17.00

·     BeiGene (BGNE) announces the first reported data from RATIONALE 304, the Phase 3 trial of its anti-PD-1 antibody tislelizumab in combination with chemotherapy as a first-line treatment for patients with locally advanced or metastatic non-squamous non-small cell lung cancer (NSCLC)

·     Seattle Genetics, Inc. (SGEN) and Astellas Pharma Inc. announced that a phase 3 trial of PADCEV(R) (enfortumab vedotin-ejfv) met its primary endpoint of overall survival compared to chemotherapy; trial stopped early due to positive results at planned interim analysis

·     Kezar Life Sciences (KZR) announced Phase 1b portion of the Phase 1/2 MISSION study evaluating lead candidate KZR-616 in patients with systemic lupus erythematosus (SLE) and lupus nephritis (LN); results were presented virtually at the Pan-American Congress on Rheumatology.

·     MorphoSys (MOR) and I-Mab (IMAB) jointly announced that the U.S. FDA has cleared the Investigational New Drug application for MorphoSys’ investigational human anti-C5aR1 antibody MOR210/TJ210 for the treatment of relapsed or refractory advanced solid tumors

·     Pfizer (PFE) and Merck KGaA company EMD Serono announces the publication of detailed results from the Phase III JAVELIN Bladder 100 study at the European Society for Medical Oncology (ESMO) Virtual Congress 2020.

·     Roche (RHHBY) announces the launch of a new test to quantitatively measure the level of coronavirus antibodies. The Elecsys Anti-SARS-CoV-2 S antibody test would specifically target antibodies against the SARS-CoV-2 spike protein responsible for binding to the host cell receptor

Technology, Media & Telecom

·     Unity Software Inc. (U) priced its IPO at $52 a share, which stands to bring in at least $1.3 billion at a valuation of $13.7 billion at that price

·     Ericsson AB (ERIC) announced the acquisition of Cradlepoint, a U.S.-based provider of wireless internet connectivity products, for an enterprise value of $1.1 billion. https://on.mktw.net/3ky2weF

·     NetEase Inc. (NTES) announced a ratio change for its U.S.-listed shares which effectively results in a 5-for-1 stock split

·     Texas Instruments (TXN) raises quarterly dividend 13% to $1.02 from 90c per share