Early Look

Monday, August 14, 2023

US equities are pointing to a slightly higher open after indexes declined for a second straight week last Friday. Stocks finished mixed on Friday as strength in the energy and healthcare sector helped offset weakness in the Technology, Communications and Consumer Discretionary sectors following slightly, ”hotter” than expected PPI inflation data pushed Treasury yields higher. The producer price index for final demand, as well as the core index which excludes food and energy, both rose by 0.3% in July, according to data. Tempering the negative mood was the report from the University of Michigan. US year-ahead inflation expectations unexpectedly declined in early August. No major US economic data today to move markets and earnings season has come to a crawl this week. In Asian markets, The Nikkei Index fell -413 points to 32,059, and the Shanghai Index dipped -10 points to 3,178. In Europe, the German DAX is up around 100 points to 15,932, while the FTSE 100 drops -15 points to 7,508.

Market Closing Prices Yesterday

• The S&P 500 Index slipped-4.78 points, or 0.11%, to 4,464.05.
• The Dow Jones Industrial Average rose 105.25 points, or 0.30%, to 35,281.40.
• The Nasdaq Composite dropped -93.14 points, or 0.68%, to 13,644.85.
• The Russell 2000 Index advanced 2.49 points, or 0.13% to 1,925.11.

Economic Calendar for Today

• No Major US Economic Data!

Earnings Calendar:

• Earnings Before the Open: AMPS BTAI BWEN CORR CVSI LWAY ONDS ROIV RVLP SNDA XXII
• Earnings After the Close: ACHV AREN AWH AYRO BEEM CLSD CSSE GETY GOEV HRTX ICAD INVO LUNR MARK MEDS MOVE NVTS OPRX PSTV QRHC RUM SKYH SLGC TCON VERO ZEV

Other Key Events:

• China Industrial Output, Retail Sales for July
• Needham Annual MedTech & Diagnostics Conference (virtual) 8/14-8/15
• Stifel Biotech Executive Summer Summit, 8/14-8/16, in Newport, RI

World News

• Goldman Sachs Group Inc. economists anticipate the Federal Reserve will start lowering interest rates by the end of next June, with a gradual, quarterly pace of reductions from that point. Goldman Pencils In First Fed Rate Cut for Second Quarter of 2024. – Bloomberg.

Sector News Breakdown

Consumer

• AMC Entertainment Holdings Inc. (AMC) shares fall after a Delaware court approved a revised plan to proceed with the planned conversion of AMC Preferred Equity (APE) units into common shares.
• Ford’s (F) Brazilian unit has reached a transfer agreement with the Bahia state government for the ownership of its idle factory complex in the Camacari industrial park, Reuters.
• Nikola (NKLA) said it is recalling 209 Class 8 Tre battery-electric vehicles following the results of battery investigations.
• Tesla (TSLA) announced to cut prices for its Model Y long-range version and performance version by Rmb14k each, lowering the MSRP for Model Y long-range version to Rmb299.9k (-4.5%) and performance version to Rmb349.9k (-3.8%).
• Wynn Resorts (WYNN) announced its decision last week to close the WynnBET online sports betting and iGaming platform in certain jurisdictions.

Energy, Industrials and Materials

• U.S. Steel (X) said it started a formal review process after rejecting a $7.25 billion cash and stock takeover offer from Cleveland-Cliffs (CLF). Cleveland-Cliffs (CLF) said it made an offer to U.S. Steel’s board on July 28 consisting of $17.50 in cash and 1.023 shares of Cliffs stock, valuing U.S. Steel at $32.53 per share, a 43% premium. https://tinyurl.com/52w9cjca
• JinkoSolar (JKS) Q2 EPS $4.23B, +50% y/y, vs. est. $3.98B; Q2 gross margin 15.6% vs. 14.7% y/y, and solar module shipments 17,763 mw, +74% y/y; raises year solar module shipments view to 70-75 GW from, prior 60-70 GW.
• NextEra Energy Inc. (NEE) mentioned positively in Barron’s saying although shares have outperformed the S&P 500 index for the past decade, it’s been lagging more recently. Still, NextEra Energy offers a “relatively low-risk green play, with a 2.7% dividend yield that’s rising.
• SunPower Corp. (SPWR) said it is currently in discussions with Maxeon Solar (MAXN) regarding a dispute over alleged breaches of master supply agreements. During this process, SunPower said it plans to work jointly with Maxeon to resolve these matters.
• TPI Composites Inc. (TPIC) cut its profitability forecast for the full year and said it expects credit losses and impairment charges after customer Proterra Inc. (PTRA) filed for Chapter 11 bankruptcy protection.

Healthcare

• Rockwell Medical press release (RMTI) Q2 GAAP EPS (-$0.18) vs. est. loss (-$0.12); Q2 revs -3.1% y/y to $18.1M vs. est. $17.9M; raised its 2023 net sales guidance from between $78M-$82M to $82M-$86M and raises profit guidance.
• Valneva (VALN) ADRs shares slip after saying the U.S. FDA extended the review period for its chikungunya virus vaccine, VLA1553, citing the need to finalize a Phase 4 program.
• Large cap Pharma could be under pressure as the Lowering Drug Costs for American Families Act (H.R. 4895), introduced by a trio of Democrats in late July aims to expand drug cost relief measures for Medicare seen in the Inflation Reduction Act to those insured privately. – SA

Technology, Media & Telecom

• Apple (AAPL) iPhone maker Hon Hai cuts outlook after mobile demand sags saying consumer demand for Smartphones has been muted for over a year. – Bloomberg
• Comcast Corp. (CMCSA)’s broadband network is the backbone for tech trends and its stock is cheap compared to buzzy names like Nvidia Corp. (NVDA), Netflix Inc. (NFLX) and Meta Inc. (META) said Barron’s. Rather than thinking of Comcast as just a cable TV provider, buy Comcast for its broadband business and because the stock is “dramatically undervalued.”
• Okta (OKTA) upgraded to Buy from Sell at Goldman Sachs, saying subscription revenue is likely to bottom.
• SoftBank (SFTBY) is in discussions to purchase the 25% stake in Arm Holdings it doesn’t currently own from Vision Fund 1, the $100 billion investment fund it started in 2017 – Reuters.