Early Look

Wednesday, August 24, 2022

U.S. futures are looking slightly lower as the dollar held steady as did Treasury yields as markets await comments from Federal Reserve officials ahead of its annual retreat in Jackson Hole on Friday. Bets on another 75-bps rate hike from the Fed, following two similar increases in June and July, are essentially sitting at 50%, according to Fed fund futures as investors see easing inflation pressures and weakening growth slowing the central bank’s policy path. Minnesota Fed President Neel Kashkari said late Tuesday that his biggest concern was that “if we are wrong and markets are wrong and inflation is much more embedded, at a much higher level, than we appreciate, then we are going to have to be more aggressive” in bringing it back down. The hawkish outlook is keeping the U.S. dollar elevated. In Asian markets, The Nikkei Index fell -139 points to 28,313, the Shanghai Index dropped -61 points to 3,215, and the Hang Seng Index fell -234 points to 19,268. In Europe, the German DAX is down a few points to 13,185, while the FTSE 100 is down -30 points to 7,456. A handful of retailers are lower after earnings results this morning last night (AAP, CTRN, JWN)

Market Closing Prices Yesterday

·     The S&P 500 Index dipped -9.26 points, or 0.22%, to 4,128.73

·     The Dow Jones Industrial Average fell -154.02 points, or 0.47%, to 32,909.59

·     The Nasdaq Composite was little changed, or 0.00%, to 12,381.30

·     The Russell 2000 Index advanced 3.40 points, or 0.18% to 1,919.14

Economic Calendar for Today

·     7:00 AM ET           MBA Mortgage Applications Data

·     8:30 AM ET           Durable Goods Orders for July…est. +0.6%

·     8:30 AM ET           Durable Goods Ex: Transports for July…est. +0.2%

·     10:00 AM ET         Pending Home Sales M/M for July…est. (-4.0%)

·     10:30 AM ET         Weekly DOE Inventory Data

·     1:00 PM ET            US Treasury to sell $46B in 5-year notes

Earnings Calendar:

·     Earnings Before the Open: CTRN DY EAT IIVI IMBI WOOF

·     Earnings After the Close: ADSK AMSWA BOC CRM GES JBSS NTAP NVDA PHAC SNOW SPLK WSM ZUO

Other Key Events:

·     Needham Semiconductor and Semi-Cap 1×1 Conference (virtual), 8/24-8/25

·     Piper Annual MedTech & Diagnostics California Bus Tour, 8/23-8/25, in CA

·     Seaport Global Annual Summer Investor Conference (virtual), 8/23-8/24

Sector News Breakdown

Consumer

·     Advance Auto Parts (AAP) Q2 adj EPS $3.74 vs. est. 43.77; Q2 sales rose +0.6% y/y to $2.67B vs. est. $2.75B; Q2 comp sales fell (-0.6%) vs. est. Z+2.4%; said DIY omnichannel sales were particularly challenged in the quarter; lowers FT adj EPS $12.75-$13.25 from $13.30-$13.85 and sees FY FCF at least $700M, vs. prior view at least $775M

·     Bed Bath & Beyond (BBBY) told prospective lenders that it has selected a lender to provide a loan following a marketing process conducted by JPM, people familiar with the matter said – WSJ

·     Caleres (CAL) 2Q EPS $1.38 vs est. $1.32 on sales rose 9.3% y/y to $738.3Mm vs est. $735.6Mm; reiterates FY EPS outlook; FY22 revenue growth view to up 4%-6% from up 2%-5%

·     La-Z-Boy (LZB) Q1 adj EPS $0.91 vs. est. $0.67; Q1 sales rose 15% to $604M vs. est. $566.1M; Q1 retail segment sales increased 30% to $236M, an all-time qtrly record; expect delivered Q2 sales up 2%-5% y/y or range of about $590M-$605M

·     Nordstrom (JWN) 2Q adj EPS $0.81 vs est. $0.80 on revs +12% vs est. +8.5%, says anniversary sale shifted one week from 3Q to 2Q with +200bps benefit on net sales; sees FY adj EPS $2.30-2.60 vs est. $3.04 and revs incl retail sales and credit revs +5-7% vs est. +6.7%; says customer traffic and demand decelerated significantly in late June predominantly at Rack; says adjusting plans and taking action to navigate dynamic in short-term, including aligning inventory and expense to recent trends; cuts FY22 EBIT margin to 4.5%-4.9% from 5.8%-6.2%

·     Toll Brothers (TOL) 3Q EPS $2.35 vs est. $2.30 on home sales revs $2.3B vs est. $2.5B, says backlog was $11.2B at qtr-end +19%, says as 3Q progressed saw significant decline in demand; in more recent weeks have seen signs of increased demand as sentiment is improving and buyers are returning to market; continues to expect continued gross margin expansion in 4Q to 29.2% and reaffirms FY adj gross margin guide 27.5%

·     Urban Outfitters (URBN) Q2 sales rose 2.2% y/y to a record $1.18B vs. est. $1.18B; Q2 EPS $0.64 vs. est. $0.68; Urban outfitters Q2 comp retail segment sales +1%, vs. est. +1.18%; total inventory increased by $214.3 mln, or 44.4%, on a y/y basis; Q2 comp Retail segment net sales increased 8% at the Free People Group and 7% at the Anthropologie Group and fell -9% at Urban Outfitters

·     Tesla (TSLA), NIO (NIO) suspend EV charging services as facilities in Chengdu, Chongqing have been taken offline; drought, heatwave gripping China has disrupted power supplies – Bloomberg

Energy

·     American Petroleum Institute showed weekly crude stockpiles fell -5.632MM barrels in the latest week while Cushing with a build of +679K barrels; gasoline inventories rose +268K barrels and distillates rose +1.05MM barrels

·     Dycom (DY) Q2 EPS $1.46 vs. est. $0.99; Q2 revs $972.27M vs. est. $932.74M; sees Q3 contract revenue up low- to mid-teens vs. consensus $973.42M

·     Matson (MATX) adds 3M shares to repurchase program

·     Golar LNG (GLNG) enters swap arrangements for 50% of 2024 Dutch title transfer facility exposure; share of expected 2024 annual debt service for Hilli’s contractual debt is approximately $47M; arrangements to hedge about 50% of exposure to Dutch title transfer facility linked production for 2024 at a ttf price of $51.20/MMBtu

Financials

·     Intuit (INTU) 4Q adj EPS $1.10 vs est. $0.98 on revs $2.4B vs est. $2.34B; guides FY adj EPS $13.59-13.89 vs est. $13.81 and revs $14.485-14.7B vs est. $14.467B

·     Wex (WEX) approves $150M share repurchase program

Healthcare

·     Roche (RHHBY) said it received CE label expansion for its VENTANA PD-L1 (SP263) Assay in non-small cell lung cancer (NSCLC) as a companion diagnostic for its cancer drug Tecentriq

Technology, Media & Telecom

·     Paycor (PYCR) 4Q adj op Inc $9.2Mm vs est. $4.02Mm on revs $111Mm vs est. $103.5Mm; sees 1Q revs $112-114Mm vs est. $108.6Mm and FY revs $510-516Mm vs est. $490Mm

·     ScanSource (SCSC) Q4 EPS $0.91 vs. est. $0.97; Q4 revs rose 12.9% y/y to $962.3M vs. est. $903.9M; sees FY23 annual outlook net sales growth, y/y to be at least 5.5%; sees FY23 adjusted ebitda (non-Gaap) at least $174M

·     Aviat Networks (AVNW) 4Q adj EPS $0.67 vs est. $0.68 on revs $77.4Mm vs est. $76Mm