Morning Preview: August 22, 2024

Early Look

Thursday, August 22, 2024

Futures

Up/Down

%

Last

Dow

38.00

0.09%

41,044

S&P 500

7.00

0.13%

5,648

Nasdaq

37.75

0.19%

19,947

 

 

U.S. futures are edging slightly higher, after rising for the 9th time in 10-trading days on Wednesday for the S&P 500 and Nasdaq, as markets await a busy day of data with U.S. PMI Services Aug, Initial Jobless Claims, Existing Home Sales July, and Kansas City Fed releases Jackson Hole 2024 agenda. Markets took the biggest negative revision to payrolls (-818K jobs) since the global financial crisis in stride yesterday, as all wait on the Fed speakers today and tomorrow and size of expected rate cuts. Overnight this morning a few movers on earnings and guidance in tech and retail, with AAP, URBN, BJ, SNOW, CSIQ, TD looking lower on results/guidance and SNPS, WOLF, ZM, ZUO looking higher after results. In Asian markets, The Nikkei Index gained 259 points to 38,211, the Shanghai Index fell -7 points to 2,848, and the Hang Seng Index jumped 250 points to 17,641. In Europe, the German DAX is up 65 points to 18,514, while the FTSE 100 is up 20 points to 8,303. The yen hovers around 145.35/USD ahead of Ueda’s Friday appearance in Japan’s parliament. Treasury 10-year yield remains steady near 3.80%. Note 475 of the S&P 500 companies have now reported Q2 earnings. So far there has been a smaller earnings surprise of 5.15% compared to Q1 of 8.25%. The sales surprise has also been smaller, rising +0.75%, compared to last quarter’s 1.045%.

 

Market Closing Prices Yesterday

  • The S&P 500 Index gained 23.73 points, or 0.42%, to 5,620.85.
  • The Dow Jones Industrial Average rose 55.52 points, or 0.14%, to 40,890.49.
  • The Nasdaq Composite jumped 102.05 points, or 0.57%, to 17,918.99.
  • The Russell 2000 Index advanced 28.37 points, or 1.32% to 2,170.56.

Economic Calendar for Today

  • 8:30 AM ET                  Weekly Jobless Claims…est. 230K
  • 8:30 AM ET                  Continuing Claims…est. 1.867M
  • 9:45 AM ET S&P Global Manufacturing PMI, Aug-flash…est. 49.6
  • 9:45 AM ET S&P Global Services PMI, Aug-flash…est. 54.0
  • 9:45 AM ET S&P Global Composite, Aug-flash…est. 53.5
  • 10:00 AM ET                Existing Home Sales M/M for July…est. 3.93M
  • 10:30 AM ET                Weekly EIA Natural Gas Inventory Data
  • 11:00 AM ET                Kansas City Fed Manufacturing for August…prior (-12)
  • 1:00 PM ET U.S. sells $9B for 30-year TIPs auction

Earnings Calendar:

  • Earnings Before the Open: AAP BJ CSIQ HOV LANC PTON
  • Earnings After the Close: AMWSA BILL CAVA INTU NDRA ROST RRGB WDAY

Other Key Events:

  • Democratic National Convention, 8/19-8/22, in Chicago, IL
  • Kansas City Fed sets Jackson Hole conference dates 8/22-8/24, in Wyoming
  • Wells Fargo FinTech, Information & Business Services Forum, 8/21-8/22 in Newport

 

 

Macro

Up/Down

Last

Nymex

0.26

72.19

Brent

0.32

76.37

Gold

-3.90

2,543.60

EUR/USD

-0.0007

1.1143

JPY/USD

0.58

145.84

10-Year Note

+0.049

3.826%

 

World News

  • The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was 27.9 vs 13.6 last week. Bulls rise to 51.6% from 42.5%, Neutrals fall to 24.7% from 28.6%, Bears fall to 23.7% from 28.9%.
  • The Bank of Korea leaves the key interest rate unchanged at 3.50% for the 13th consecutive meeting; updated economic forecasts have 2024 CPI at 2.5% versus the 2.6% estimate in May, and 2025 CPI at 2.1%, unchanged from previous estimate.
  • Japan’s services PMI rose to 54.0 in August from 53.7, driven by growth in new business, including exports. Despite rising input costs, service providers raised prices at the slowest pace in nine months. Japan’s manufacturing PMI increased slightly to 49.5 in August from 49.1.
  • Australia’s manufacturing PMI rose to 48.7 in August from 47.5, indicating a slight improvement though still in contraction. The services PMI increased to 52.2 from 50.4, signaling growth in the services sector.

Sector News Breakdown

Consumer

  • Advance Auto Parts (AAP) announced that it has entered into a definitive agreement to sell WorldPac, an automotive parts wholesale distribution business, to funds managed by global investment firm Carlyle (CG) for $1.5B in cash.
  • Advance Auto Parts (AAP) Q2 EPS $0.75 vs. est. $0.94; Q2 rev $2.7B vs. est. $2.67B; Q2 comparable store sales increased 0.4%; cuts FY24 EPS view to $2.00-$2.50 from $3.75-$4.25 (EST. $3.55), lowers FY24 revenue view to $11.15B-$11.25B from $11.3B-$11.4B (est. $11.29B) and cuts FY24 comp store sales view to (1%)-0% from 0%-1%.
  • BJ’s Wholesale (BJ) reports Q2 adjusted EPS $1.09 vs. consensus $1.00; Q2 revs $5.2B vs. est. $5.15B; Q2 comp club sales increased by 3.1% y/y; Q2 comparable club sales excl. Gasoline +2.4%, vs. est. +1.35%; Q2 Membership fees $113.1M, +9.1% y/y; sees FY24 adjusted EPS $3.75-$4.00 vs. est. $3.93.
  • Estee Lauder (EL) upgraded to Overweight from Neutral at Piper Sandler and raised tgt to $114 from $95.
  • Urban Outfitters (URBN) Q2 EPS $1.24 vs est. $1.00 on sales $1.352B vs est. $1.339B; retail comps +7.1%; Q2 Comparable Retail segment net sales increased 7.1% at Free People and 6.7% at Anthropologie and decreased 9.3% at Urban Outfitters.

Energy, Industrials and Materials

  • Canadian Solar (CSIQ) cuts FY24 revenue view to $6.5B-$7.5B from $7.3B-$8.3B after guiding Q3 revs lower at $16B-$1.8B (est. $2.18B) and missed Q2 results; said full year total module shipments to be in the range of 32 GW to 36 GW and CSI Solar’s total battery energy storage shipments in the range of 6.5 GWh to 7.0 GWh.
  • Nordson Inc. (NDSN) Q3 adj EPS $2.41 vs est. $2.33 on sales $661.604Mm vs est. $656.23Mm; guides FY revs $2.665-2.705B vs est. $2.652B and adj EPS $9.45-9.65 vs est. $9.51.
  • Unifi (UFI) Q4 adj EPS ($0.22) vs est. ($0.23) on sales $157.5Mm vs est. $156.69Mm; sees Q1 sales $147-153Mm vs est. $158.15Mm and FY sales growth more than 10% vs est. +17.6%.

Financials

  • TD Bank (TD) swung to a quarterly loss after setting aside C$3.57B ($2.63B) for fines related to U.S. regulatory probes into its anti-money laundering (AML) program. The net loss was C$181M, or 14 Canadian cents per share, in the three months ended July 31, compared with a profit of C$2.88B, or C$1.53 per share, a year earlier.
  • TD Bank (TD) said it had set aside $2.6 billion for fines for weaknesses in its anti-money-laundering practices. It plans the sale of 40.5 million shares of common stock in Charles Schwab (SCHW), reducing its ownership interest in the wealth-management company to about 10% from more than 12%.

Healthcare

  • Agilent Technologies (A) Q3 adj EPS $1.32 vs est. $1.26 on revs $1.58B vs est. $1.558B; sees Q4 adj EPS $1.38-1.42 vs est. $1.44 and revs $1.641-1.691B vs est. $1.669B; sees adj EPS $5.21-5.25 vs est. $5.20 and revs $6.45-6.5B vs est. $6.462B.

Technology, Media & Telecom

  • Alibaba (BABA) and Tencent (TCEHY), are betting billions on developing the country’s OpenAI challengers, the Wall Street Journal reported saying both companies have reduced their overall investments in the past two years, but their interest in AI has intensified. https://tinyurl.com/46ep5eu2
  • Snowflake (SNOW) Q2 adj EPS $0.18 vs. est. $0.16; Q2 revs $868.8M vs. consensus $851.3M; raises FY25 product revenue view to $3.356B from $3.3B and vs. est. $3.31B; Q2 Product revenue was up 30% y/y at $829M, while remaining performance obligations were $5.2B, up 48% y/y; sees q3 product revs $850M-$855M.
  • Synopsys (SNPS) Q3 adj EPS $3.43 vs. consensus $3.28; Q3 revs $1.53B vs. consensus $1.52B; sees Q4 adj EPS $3.27-$3.32, vs. consensus $3.23 and sees Q4 revenue $1.614B-$1.644B vs. consensus $1.61B; for the full yr, we expect to achieve rev growth of approximately 15%.
  • Wolfspeed (WOLF) Q4 adj EPS ($0.89) vs est. ($0.85) on revs $200.7Mm vs est. $201.19Mm; guides Q1 adj EPS ($1.09) – ($0.90) vs est. ($0.84); cuts FY25 net CAPEX by $200Mm.
  • Zoom Video (ZM) Q2 EPS $1.39 topped consensus $1.21; Q2 revs $1.16B vs. est. $1.15B; for Q2, grew operating cash flow and free cash flow by 33.7% and 26.2% year over year, respectively; sees Q3 EPS $1.29-$1.31 above consensus $1.24 and raises FY25 EPS view to $5.29-$5.32 from $4.99-$5.02 and ups FY25 revenue view to $4.63B-$4.64B from $4.61B-$4.62B; Q2 3,933 customers contributing more than $100,000 in trailing 12 month revs, up about 7.1% y/y.
  • Zuora Inc. (ZUO) raising both our revenue outlook and our non-GAAP operating income ranges, as well as increasing our target for adjusted free cash flow, while absorbing the operating expense impact of our recent Togai and Sub(x) acquisitions; Q2 adj EPS $0.19 vs est. $0.10, adj op Inc $25.6Mm vs est. $18.82Mm on revs $115.4Mm vs est. $112.6Mm; guides Q3 revs $115-117Mm vs est. $115.11Mm, adj op Inc $20.5-21.5Mm vs est. $20.34.
  • Edgar Bronfman sweetened his offer for Shari Redstone’s media empire, submitting a revised bid of $6 billion for National Amusements and a minority stake in Paramount (PARA) – the WSJ https://tinyurl.com/yt9awsew

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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.