Morning Preview: August 08, 2024

Early Look

Wednesday, August 7, 2024

Futures

Up/Down

%

Last

Dow

-83.00

0.21%

38,822

S&P 500

-10.25

0.20%

5,217

Nasdaq

6.75

0.04%

17,973

 

 

U.S. futures are edging lower, adding to the late day swoon that saw major averages end on their lows, with S&P futures (Spuz) down 4 of the last 5 trading sessions, and down overnight as well -0.17% to 5,218 (overnight high 5,239.50 and low 5,182) into some economic data and more earnings. In Asian markets, The Nikkei Index fell -258 points to 34,831, the Shanghai Index was flat at 2,869, and the Hang Seng Index edged higher 13 points to 16,891. In Europe, the German DAX is down about -100 points to 17,511, while the FTSE 100 declines -75 points to 8,091. On Wednesday, early stock market gains were wiped out, losing steam all day only to close at the lows as any/and all rallies were met with intensifying selloffs. Stock markets early Wednesday was buoyed by dovish Bank of Japan policy maker comments saying they wouldn’t raise rates further in times of currency instability helping bounce the US dollar. Overnight the yen strengthened to 146.20/USD after gaining almost 1% after highs around 148 yesterday. Technical levels were closely watched as early gains in the S&P and Nasdaq stalled, proceeded by pullback in averages that dropped them below key levels. Investor jitters were then stoked by weak demand in a 10-year Treasury auction late day. Kicking off the day, Bitcoin rebounds about 4% to $57,400, the dollar edges lower, gold higher and Treasury yields are down.

 

Market Closing Prices Yesterday

  • The S&P 500 Index dropped -40.53 points, or 0.77%, to 5,199.50.
  • The Dow Jones Industrial Average fell -234.21 points, or 0.60%, to 38,763.45.
  • The Nasdaq Composite dropped -171.05 points, or 1.05%, to 16,195.81.
  • The Russell 2000 Index declined -29.19 points, or 1.41% to 2,035.11.

Economic Calendar for Today

  • 8:30 AM ET                  Weekly Jobless Claims…est. 240K
  • 8:30 AM ET                  Continuing Claims…est. 1.87M
  • 10:00 AM ET                Wholesale Inventory M/M for June…est. +0.2%
  • 10:30 AM ET                Weekly EIA Natural Gas Inventory Data
  • 1:00 PM ET US Treasury to sell $22B in 30-year notes
  • 3:00 PM ET                   Fed’s Barkin Speaks in Fireside Chat

Earnings Calendar:

  • Earnings Before the Open: AGEN AVT AXGN BATRA BETR CARS CCOI CEIX CHH CLSK COLD COMM CRN CRNC DCO DDOG DNUT EDR ELAN EPAM FOLD FOUR FUN FWONA GDRX GERN GOCO GSAT GTN HAE HBI HGV IHRT INSM LEYA LINC KLTR KOP LAMR LBRDA LIND LLY LNG LQDA LSXMA LTRPA MDU MLM MUR NRG NXST OB PAR PBH PENNPH PLL PLUG PRFT PZZA QRTEA ROIV RPRX SBH SEE SGA SN SPB SUP TGLS TKO UAA ULCC UP USFD VITL VST WD WHF WMS WRBY XMTR YETI
  • Earnings After the Close: ACHR AKAM ALRM AMN AMPL AMPS ARLO ARRY ARWR ATSG AVGR BE BKD BLZE BW CARG CDXS CENX CMBM COLL CPK CUTR CYTK DBX DEI DIOD DOCN DOCS DXC EB EQ ELF EVH EVLV EXFY EXPE FARO FIGS FIVN FNKO FOSL G GDEN GDOT GEVO GHLD GILD GRWG GSBD HCI HNST IIIV INO IOVA IRWD IVR LAND LAW LGF/A LPRO MAPS ME NGVC NNI NRDY NTRA NUS NWSA PANL PARA PAY PBI PBPB PCT PLBY PODD POWW PRA PTCT PUBM PX QNST WRHC RCAT REZI RICK RPAY RXT SENS SG SKIN SOI SOLV SOUN SYNA TASK TRUP TTD TTWO TXG U VCSA VIAV VRM WEST YELP

Other Key Events:

  • JP Morgan 2024 Auto Conference, 8/6-8/8, in New York
  • China PPI, CPI for July

 

 

Macro

Up/Down

Last

Nymex

-0.17

75.06

Brent

-0.31

78.02

Gold

6.00

2,438.40

EUR/USD

0.0001

1.0922

JPY/USD

-0.46

146.23

10-Year Note

-0.044

3.923%

 

World News

  • A powerful earthquake with a magnitude of 7.1 struck off the coast of Miyazaki on Japan’s main southwest island of Kyushu, prompting a tsunami warning, the Meteorological Agency says.
  • RBA Gov Bullock said they remain vigilant to inflation risks, won’t hesitate to hike if needed; judged current rates still meet their inflation mandate; don’t expect to return to the 2-3% inflation tgt range until the end of 2025; based on what the RBA board knows now we don’t see rates coming down quickly; we don’t react to 1 economic number; if the economy does turn down quicker than expect would cut rates.
  • In a call with clients this week, James Malcolm, a global strategist at UBS, estimated the cumulative dollar-yen carry trade size built since 2011 at about $500bn, with about half of that extended during the past two to three years. He said about $200bn of those positions had been ditched over the past few weeks, or about three-quarters of the trades he ultimately expected to be unwound. Financial Times reports https://tinyurl.com/3nxaw9cp
  • JPMorgan Chase & Co. (JPM) now sees a 35% chance that the US economy tips into a recession by the end of this year, up from 25% as of the start of last month. JPMorgan now sees just a 30% chance of the Federal Reserve and its peers keeping interest rates “high-for-long,” compared with a 50-50 assessment as recently as two months back.
  • China retail sales of passenger vehicles -2.8% y/y to 1.72 million units in July, or -2.6% m/m. NEV retail sales 0.878 mln, +36.9% y/y, +2.8% m/m. Tesla China sold 74,117 vehicles in July, with EV shares rose by 0.4 percentage points to 5.3%. TSLA China exported 27,890 vehicles (-15%y/y, +137% m/m), and BYD 26,995 (+65.2% y/y).
  • The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was 3 vs 19.7 last week. Bulls fall to 40.5% from 44.9%, Neutrals fall to 22% from 29.9%. Bears rise to 37.5% from 25.2%
  • Japan’s current account surplus hit its second highest on record in the first half as the trade deficit narrowed. In H1, Japan’s current account surplus reached 12.6817 trillion yen or a 59% increase from the same period last year. Trade deficit was a total of 2.6188 trillion yen, compared with 5.182 trillion during the same period last year.

Sector News Breakdown

Consumer

  • Azek Company (AZEK) Q3 adj EPS $0.42 vs est. $0.36, adj EBITDA $119.4Mm vs est. $108Mm on sales $434.369Mm vs est. $418.41Mm; sees Q4 sales $329-345Mm vs est. $374.22Mm and adj EBITDA $82-92Mm vs est. $99.08Mm; sees FY sales $1.422-1.438B vs est. $1.43B, adj EBITDA $370-380Mm vs prior $364-380Mm and est. $375.55Mm.
  • Boot Barn (BOOT) Q1 EPS $1.26 vs. consensus $1.08 on better revs of $423.4M vs. consensus $416.58M; Q1 comp store sales rose +1.4%; sees Q2 EPS $0.81-$0.87 vs. est. $0.94 and revs $405M-$412M vs. consensus $406.66M and same store sales decline of approximately (-0.5%) to growth of 1.4%.
  • Costco (COST) reported net sales of $19.3 billion for July, up 7.1% y/y. In June, sales rose at a 7.4% annual pace. Same-store sales rose by 5.2% y/y in July, slowing slightly from June’s 5.3% increase. Stripping away gasoline prices and foreign exchange rates, same-store sales rose by 7.2%, outstripping June’s 6.9% increase.
  • Dutch Bros (BROS) Q2 EPS $0.19 vs. est. $0.13; Q2 revs $324.9M vs. consensus $317.1M; Q2 adj Ebitda $65.2M vs. est. $56.8M; posted a 4.1% increase in system same-shop sales; raises FY24 revenue view to $1.215B-$1.23B from $1.2B-$1.215B (est. $1.23B) and said same shop sales growth is expected to remain in the low single digits.
  • Monster Beverage (MNST) Q2 EPS $0.41 vs. est. $0.45; Q2 revs rose 2.5% y/y to $1.98B vs. consensus $2.01B; Net sales for the Company’s Monster Energy Drinks segment rose 3.3% to $1.74B; Net sales for the Alcohol Brands segment decreased 31.9% to $41.6M.
  • Zillow Group (ZG) Q2 revenue $572M vs. consensus $538.25M; Jeremy Wacksman has been promoted to CEO of Zillow Group and appointed to the company’s Board of Directors; sees Q3 revenue $545M-$560M vs. est. $552.89M; continue to see double-digit revenue growth for 2024; Traffic to Zillow Group’s Mobile Apps and sites in Q2 was 231M avg monthly unique users, flat y/y.

Energy,

  • Cheniere Energy (LNG) reported an about 36% fall in Q2 profit on Thursday, hurt by lower NatGas prices and liquefied natural gas (LNG) margins; its LNG revenue was down at $3.04B in the quarter ended June 30, compared with $3.92B y/y; reported net income attributable to Cheniere of $880 million, down from $1.37 billion a year earlier.
  • Marathon Oil (MRO) adj net income $357M vs. est. $393.2M; Q2 revs $1.71B vs. est. $1.69B; reports sequential increase in Q2 production to 191,000 net boepd and 393,000 net boed and no change to full-year 2024 production and capital expenditure guidance ranges.
  • Occidental Petroleum (OXY) Q2 adj EPS $1.03 vs. est. $0.77; Q2 revs $6.88B vs. est. $6.8B; Q2 operating cash flow of $2.4B and operating cash flow before working capital of $3.0B; Q2 capital spending of $1.8B and contributions from noncontrolling interest of $42M; Q2 production of 1,258 MBoed exceeded mid-point of guidance by 6 MBoed.
  • SM Energy (SM) Q2 adj EPS $1.85 vs est. $1.53; sees Q3 production volumes 15.0-15.4 MMBOE with oil representing 45-46% of total volumes.
  • SolarEdge (SEDG) Q2 revs $265.4M vs. est. $262.3M; Q2 adj EPS loss (-$1.79) vs. est. (-$1.58); Q2 adj gross margin +0.2% and overall gross margin -4.1% compared to -12.8% in the prior quarter and compared to 32.0% y/y; guides Q3 revenue $260M to $290M, below est. $356.3M.

Financials

  • Jackson Financial (JXN) Q2 adj EPS $5.32 vs est. $4.36, adj op Inc $410Mm.
  • LegalZoom (LZ) Q2 EPS $0.10 vs. est. $0.09; Q2 revs $177.4M vs. est. $173.19M; Q2 subscription units increased 4% y/y and revs grew 6% y/y to $108.8M; Q2 cash flow provided by operating activities was $27.2M for the quarter compared to $45.2M for the same period in 2023; guides Q3 revs below ests; to cut global workforce by 15%.
  • Ripple Labs has been ordered by a Manhattan court judge to pay the U.S. SEC about $125 million in penalties over charges of improperly selling the cryptocurrency XRP, according to a court filing. That figure is well below the $2B the SEC had been seeking in fines and penalties.
  • Robinhood Markets (HOOD) Q2 EPS $0.21 vs. est. $0.15; Q2 revs $682M vs. est. $643.3M; Q2 transaction-based revenues increased 69% y/y to $327M; Q2 assets under custody increased 57% y/y to $139.7B; Q2 net deposits were $13.2B, an annualized growth rate of 41% relative to AUC at the end of Q1 2024; crypto trading volume surged 238% in May, while April recorded a 173% jump while equity trading volumes surged 82% in April and 76% in May y/y.

Healthcare

  • Elanco (ELAN) Q2 adj EPS $0.30 vs. est. $0.24; Q2 revs $1.18B vs. est. $1.15B; said they made significant progress on the three strategic outcomes of our IPP strategy in Q2, grow revenue, deliver innovation and improve cash; guides Q3 EPS $0.09-$0.14 on revs $1.02B-$1.05B vs. $0.18 and $1.07B.
  • Guardant Health (GH) Q2 adj EPS ($0.48) vs est. ($0.74), adj EBITDA ($61.9Mm) vs est. ($76.3Mm) on revs $177.2Mm vs est. $162.7Mm; guides FY revs $690-700Mm vs est. $681Mm, adj gr mgn 61-63% and adj op exp $720-730Mm.
  • ICU Medical (ICUI) Q2 adj EPS $1.56 vs est. $1.00, adj EBITDA $91.3Mm vs est. $82Mm on revs $596.455Mm vs est. $553.7Mm; guides FY adj EBITDA $345-365Mm vs est. $349.9Mm and adj EPS $4.95-5.35 vs est. $4.83.
  • McKesson (MCK) Q1 adj EPS $7.88 vs. consensus $7.21; Q1 revs $79.28B vs. consensus $82.53B; raised Fy25 EPS guidance to $31.75-$32.55 from prior $31.25-$32.50; approved a 15% increase to the dividend and authorized a $4.0 billion increase to the share repurchase program.
  • Outset Medical (OM) Q2 EPS ($0.66) vs est. ($0.47) on revs $27.4Mm vs est. $31.19Mm; guides FY revs $110Mm vs est. $146.41Mm, adj gr mgn low-mid-30’s %.
  • Sarepta (SRPT) Q2 EPS $0.07 vs est. $0.01 on revs $362.9Mm vs est. $391.4Mm.

Industrials and Materials

  • Blue Bird (BLBD) Q3 adj EPS $0.91 vs. est. $0.51, adj EBITDA $48.2Mm vs est. $33.62Mm on revs $333.4Mm vs est. $328.61Mm; sees FY revs $1.3-1.33B vs est. $1.318B, adj EBITDA $175Mm vs est. $158.35Mm.
  • CACI (CACI) Q4 adj EPS $6.61 vs. est. $5.93 and revs $2.038B vs. est. $1.93B; sees FY25 adj EPS $22.44-$23.33, vs. consensus $23.30 and sees FY25 revenue $7.9B-$8.1B vs. consensus $7.91B; said annual contract awards of $14.2 billion and book-to-bill of 1.9x.
  • CF Industries (CF) Q2 EPS $2.03 tops consensus $1.83; Q2 revs $1.57B vs. consensus $1.53B; Average selling prices for the first half of 2024 were lower than in 1H’23 as lower global energy costs reduced the global market clearing price required to meet global demand. Sales volumes in 1H’24 was like the first half of 2023.
  • Kratos Defense (KTOS) Q2 adj EPS $0.14 vs. est. $0.08; Q2 revs $300.1M vs. consensus $276.21M; sees Q3 revenue $265M-$280M vs. consensus $292.12M and affirms 2024 full year guidance.
  • Manitowoc (MTW) cuts FY24 revenue view to $2.175B-$2.225B from $2.275B-$2.375B (est. $2.28B) and lowered FY24 adjusted EBITDA view to $125M-$140M from $150M-$180M.
  • Nutrien (NTR) Q2 adj EPS $2.34 vs. consensus $2.19; Q2 revs $10.16B vs. consensus $10.81B; Retail adjusted EBITDA guidance was lowered to $1.5B-$1.7B from $1.65B-$1.85B due primarily to ongoing market instability in Brazil as well as the impact of delayed planting in North America in the second quarter.
  • Vedanta has put a plan to sell its steel business on hold after a $1 billion share sale gave the company more breathing room with its finances, sources say – Bloomberg reports.

Technology, Media & Telecom

  • Amdocs (DOX) Q3 adj EPS $1.62 vs est.$1.60 on revs $1.25B vs est. $1.255B; guides Q4 revs $1.24-1.28B vs est. $1.27B and adj EPS $1.67-1.73 vs est. $1.71; sees FY revs +1.9-2.7% vs est. +2.7% and adj EPS +8.5-9.5% vs est. +8.9%.
  • AppLovin Corp. (APP) Q2 EPS $0.89 vs. est. $0.75; Q2 revs $1.08B, in-line with consensus; sees Q3 revenue $1.115B-$1.135B vs. consensus $1.1B and sees Q3 adjusted EBITDA $630M-$650M.
  • Bumble (BMBL) Q2 EPS $0.22 vs. est. $0.13; Q2 revs $269M vs. consensus $273M; guides Q3 revenue $269M-$275M, consensus $296.13M and cuts Y24 revenue view to 1%-2% from 8%-11% and lowers FY24 adjusted EBITDA margin growth view to at least 200 basis points from 300 basis points (shares downgraded by two analysts as shares tumble).
  • Fastly (FSLY) Q2 adj EPS ($0.07) vs est. ($0.08) on revs $132.371Mm vs est. $131.57Mm, gr mgn 55.1%; sees Q3 revs $130-134Mm vs est. $152.52Mm, adj op income ($12.0)Mm-($8.0)Mm vs est. $7.308Mm and adj EPS ($0.08)-($0.03) vs est. ($0.02).
  • HubSpot (HUBS) Q2 adj EPS $1.94 vs est. $1.64, adj EBIT $109.3Mm vs est. $92.9Mm, adj EBIT mgn 17.2% on revs $637.23Mm vs est. $619.44Mm; sees Q3 revs $646-647Mm vs est. $646.69Mm and adj EPS $1.89-1.91 vs est. $1.89; sees FY revs $2.567-2.573B vs est. $2.559B and adj EPS $7.64-7.70 vs est. $7.36.
  • JFrog (FROG) Q2 adj EPS $0.15 vs. est. $0.14; Q2 revs $103M, in-line with consensus $103.58M; guides Q3 adjusted EPS $0.09-$0.11 vs. est. $0.14 and revs $105M-$106M below consensus $107.9M; Cuts FY24 revenue view $422M-$424M from $425.5M-$429.5M (vs. consensus $428.2M).
  • Klaviyo (KVYO) Q2 revs rose 35% y/y to $222.2M vs. est. $212.3M; Q2 adj operating profit $34.3M vs. est. $21.1M; sees FY revs $910M-$918M above prior view of $899M-$907M and vs. est. $903.5M; Q2 Total operating expenses rose to $186M from $120.1M.
  • Magnite Inc. (MGNI) Q2 adj EPS $0.14 vs est. $0.15, adj EBITDA $44.7Mm vs est. $41.8Mm on revs $162.9Mm vs est. $144Mm; sees FY adj EBITDA mgn +100-150bps, adj EBITDA growth mid-teens vs est. +15%.
  • MKS Instruments (MKSI) Q2 adj EPS $1.15 vs est. $1.71 on revs $887Mm vs est. $866.4Mm; sees Q3 revs $830-910Mm vs est. $893.21Mm, adj EBITDA $183-229Mm vs est. $219.03Mm and adj EPS $1.15-1.71 vs est. $1.34.
  • Sonos (SONO) Q3 adj EPS $0.23 vs est. $0.01, adj EBITDA $48.9Mm vs. est. $36.7Mm on revs $397.146Mm vs est. $391.24Mm; sees Q4 revenue $240M-$260M, below consensus $391.64M due to app launch issues.
  • Warner Brothers (WBD) Q2 EPS loss (-$4.07) vs. est. loss (-$0.22); Q2 revs $9.71B below consensus $10.07B; global DTC subscribers were 103.3M at end of Q2, increase of 3.6M subscribers vs. Q1; took a $9.1 billion goodwill charge in the second quarter related to the reassessment of the value of assets.

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Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.