Mid-Morning Look

Tuesday, March 26, 2024

U.S. stocks seeing resumption of upward momentum after back-to-back down days by the S&P 500, helped by end of month/quarter buying/positioning, as major averages resume move back near all-time highs for the S&P 500, Dow, and Nasdaq. Overnight headlines were light, and volumes followed suit early like yesterday ahead of key GDP, PCE inflation data later in this holiday shortened week (markets closed Friday for Easter). The end of quarter brings lots of drug related trial data, with big moves in shares of VKTX, STOK, PRAX, MESO and EFT (details below). Reminder more gov’t debt auctioned off today and tomorrow after $66B in 2-year notes at a yield of 4.59%, in-line with 4.590% when issued prior, with the bid-to-cover (demand) at 2.62 (vs. prior auction 2.49). Next up, a $67B five-year note auction on Tuesday followed by $43B of seven-year notes on Wednesday. Reminder the bond market will close early at 2 P.M. on Thursday for the Easter holiday (markets closed Friday). One of the top stories today was in the transportation sector, specifically the shipping sector after a major bridge (Francis Scott Key) collapsed in the U.S. port of Baltimore in the early hours of Tuesday after being struck by a container ship. Bloomberg notes it is the deepest harbor in Maryland’s Chesapeake Bay with five public and 12 private terminals. More than 40 ships remained inside Baltimore port, including small cargo ships, tugboats and is the busiest U.S. port for car shipments, handling more than 750,000 vehicles in 2023, according to data from the Maryland Port Administration. The news is having an impact on shipping, rails, and truckers. Absolutely no fear with recent IPOs (ALAB, RDDT) surging, AI plays (NVDA, SMCI, ARM) extending gains, crypto rising again with Bitcoin back above $70,000 as investors continue to trade some of the riskiest/high growth plays and continue to be rewarded.

• S&P CaseShiller January 20-metro area home prices +6.6% (consensus +6.7%) from year ago vs revised +6.2% in December (previous +6.1%); Us January home prices in 20 metro areas +0.1% seasonally adj (consensus +0.2%) vs revised +0.3% in December (previous +0.2%).
• Richmond Fed composite manufacturing index -11 in March vs -5 in February and manufacturing shipments index -14 in March vs -15 in February; services revenues index -7 in March vs -16 in Feb.

• In Credit Cards: MA and Visa (V) announced a settlement for U.S. interchange fees; reached an agreement to reduce its U.S. credit card interchange rates for at least a five-year period as part of a legal settlement with merchants; the settlement also features a set of adjustments to Mastercard’s network rules, allows small businesses and all merchants to continue to benefit from accepting electronic payments while delivering consumers a simple and secure way to pay.

• DJT +39%; shares jump premarket, ahead of debut after merger with blank check firm DWAC; warrants of TMTG to begin trading with ticker "DJTWW" TMTG owns social media platform Truth Social and is backed by former U.S. president Donald Trump. Trump to own between 58.1% and 69.4% of TMTG, valued at about $3.3B.
• DNUT +17%; and MCD announce expanded national partnership as DNUT to provide fresh doughnuts daily at MCD’s restaurants across the country. The phased market roll-out to begin in the second half of 2024 with nationwide availability expected by the end of 2026, companies say.
• MESO +27%; FDA says phase III trial data appear sufficient to support BLA submission for Remestemcel-L in Children with steroid-refractory acute graft versus host disease.
• MKC +7%; reported a top and bottom line beat for Q1 and reaffirms their FY 2024 outlook saying they are still confident of hitting the mid- to high-end constant currency sales growth target.
• NOVA +15%; after saying it had struck a deal with HD to be “the sole provider of solar and battery storage services” in the company’s US stores.
• PRAX +30%; after reports positive results of PRAX-628 study evaluating Photo Paroxysmal Response (PPR) achieving 100% response in treated patients.
• RDDT +12%; shares volatile just one week after 22M share IPO priced last week at $34, shares opened at $47, and moved above $74 this morning.
• STOK +95%; following data from the Dravet Syndrome (DS) program as STK-001 update showed the FDA will now allow 3 loading doses of 70mg STK-001 (reducing impact of partial hold) which is key according to TD Cowen given updated data showing highly encouraging 85% seizure reduction w/ 2-3 doses of 70mg.
• VKTX +20%; said its obesity drug VK2735 showed up to 3.3% mean weight loss compared to placebo during an early-stage trial and plans to initiate a mid-stage trial later this year, based on the early-stage data; Oral VK2735 demonstrated encouraging safety and tolerability following 28 days of once-daily dosing.

• CEIX -8%; after the Maersk shipping vessel crashed into Baltimore Bridge which collapsed; seen as potentially impacting Baltimore Marine Terminal, a coal exporting terminal. The Terminal is inland of this bridge.
• EFTR -5%; shares fell after saying topline data from randomized phase 2B kickstart trial of Tomivosertib combined with pembrolizumab in expected in early Apr 2024 (vs late Q1).
• GDS 21%; after Q4 results and guidance, announces $587M equity raise for international business and announced the appointment of Ms. Jamie Khoo, currently the COO of GDS, as the CEO of DigitalLand Holdings, the holding company for GDS’s international data center assets and operations.
• UPS -2%; provides guidance ahead of investor and analyst day.