Early Look

Thursday, August 31, 2023

Futures	Up/Down	%	Last
Dow	109.00	0.31%	35,065
S&P 500	3.25	0.07%	4,527
Nasdaq	-16.50	0.11%	15,484

 

 

S&P futures up slightly, trading in narrow 9-point range all night (4,531.75 high and 4,523 low) as the S&P 500 looks to make it a 5^th straight day of gains ahead of key inflation and payroll data tomorrow. Today we got a few Fed speakers, weekly jobless claims, and manufacturing data. Dow futures are looking higher following Salesforce.com (CRM) better earnings and guidance (shares +5% pre mkt). In Asian markets, The Nikkei Index jumped 285 points to 32,619, the Shanghai Index fell -17 points to 3,119, and the Hang Seng Index declined -100 points to 18,382. In Europe, the German DAX is up 87 points to 15,878, while the FTSE 100 is little changed at 7,472. European markets getting a boost from UBS’ earnings, helping lift the financial sector. Treasury yields are dipping (holding at 4.1%) while oil rises and the dollar rebounds.

 

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 17.24 points, or 0.38%, to 4,514.87.

·     The Dow Jones Industrial Average rose 37.57 points, or 0.11%, to 34,890.24.

·     The Nasdaq Composite gained 75.55 points, or 0.54%, to 14,019.31.

·     The Russell 2000 Index advanced 7.68 points, or 0.41% to 1,903.21.

 

Economic Calendar for Today

·     3:15 AM ET                  Fed’s Bostic Gives Speech in South Africa

·     8:30 AM ET                  Weekly Jobless Claims

·     8:30 AM ET                  Continuing Claims

·     9:00 AM ET                  Fed’s Collins Speaks on Community Colleges

·     9:45 AM ET                  Chicago PMI for August

·     10:30 AM ET                Weekly EIA Natural Gas Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ASO CAL CIEN CPB DG DLTH FLWS GCO GMS HRL JILL LE LFCR OLLI SIG TITN VSCO

·     Earnings After the Close: AMRK AVGO DELL ESTC HCP IOT MDB NTNX NX OXM PD S SOL TLYS VMW

 

Other Key Events:

·     China’s Caixin Manufacturing PMI, Aug-F

·     William Blair West Coast Med Tech & Life Sciences Field Trip, 8/28-8/31 in San Diego

 

 

Macro	Up/Down	Last
Nymex	0.49	82.12
Brent	0.48	86.34
Gold	-1.80	1,971.20
EUR/USD	-0.0051	1.0873
JPY/USD	-0.36	145.89
10-Year Note	-0.018	4.19%

 

 

World News

·     Federal Reserve Bank of Atlanta President Raphael Bostic said policymakers need to be cautious not to overtighten monetary policy and risk unnecessary harm to the US labor market. “Based on current dynamics in the macroeconomy, I feel policy is appropriately restrictive.”

·     China August Manufacturing PMI above expected; 49.7 vs 49.2 consensus; China August Services PMI below expected; 51.0 vs 51.2 consensus.

·     Japan July preliminary Industrial Production below expected; -2.0% m/m vs. -1.4% consensus; Japan July Retail Sales above expected; +6.8% y/y vs +5.4% consensus.

·     Euro-area inflation stopped slowing in August, presenting European Central Bank officials with a quandary as they weigh whether pressures are too persistent to risk a pause in interest-rate hiking. Consumer prices rose 5.3% from a year earlier, stuck more than 2 1/2 times above the goal sought by policymakers, because of energy.

·     The US for the first time approved the transfer of weapons to Taiwan under a program usually reserved for sovereign states, per Bloomberg.

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -1.4 vs -3.6 last week. Bulls rise to 33.1% from 32.3%, Neutrals rise to 32.4% from 31.8%, Bears fall to 34.5% from 35.9%.

 

Sector News Breakdown

Consumer

·     Amazon (AMZN) announced that its Buy with Prime app would begin integration with Shopify (SHOP) stores. The Buy with Prime app would work with Shopify’s Checkout resource and allow Prime members the option to use the app before completing the transaction in the Checkout.

·     Chewy inc. (CHWY) Q2 adj EPS $0.15 vs est. ($0.05) on net sales $2.78B vs est. $2.762B, adj EBITDA $86.9Mm vs est. $71.32Mm, adj EBITDA mgn 3.1%.

·     Costco (COST) reports August comps +3.4%; comps excluding gasoline +4.1%.

·     Five Below inc. (FIVE) Q2 EPS $0.84 vs. est. $0.83; Q2 revs $758.98M vs. est. $758.59M; Q2 comp store sales rose +2.7% vs. est. +2.6%; guides Q3 EPS and sales below views while cuts FY24 EPS to $5.27-$5.55 down from prior $5.31-$5.71 and reaffirms sales views of $3.5B-$3.57B.

·     Hormel Foods (HRL) Q3 adj EPS $0.40 vs. est. $0.41; Q3 revs fell -2.3% y/y to $2.96B vs. est. $3.05B; cuts FY adj EPS view to $1.61-$1.67 from prior $1.70-$1.82.

·     Victoria Secets (VSCO) Q2 adj EPS $0.24 vs. est. $0.26; Q2 revs $1.427B vs. est. $1.44B; Q2 comparable sales decreased (-11%); sees Q3 EPS loss ($1.00)-(70c) vs. est. loss (-$0.14) and sees Q3 revenue down low- to mid-single digit range, consensus $1.32B; expects improving sales trends in Q3 and Q4 with adjusted operating income rate of 5% to 6% for FY23.

·     Hyatt Hotels Corp (H) files mixed shelf.

 

Energy, Industrials and Materials

·     C.H. Robinson (CHRW) downgraded to Negative from Neutral at Susquehanna.

·     RXO Inc. (RXO) downgraded to Negative from Neutral at Susquehanna.

·     Greif Inc. (GEF) Q3 adj EPS $1.75 vs. est. $1.53; Q3 sales fell -18% y/y to $1.33B vs. est. $1.39B; Q3 adj EBITDA down -9.8% y/y to $226.5M vs. est. $211.8M; announced it has acquired 51% of the ownership interest in ColePak, LLC in an all-cash transaction.

·     Titan Machinery Inc. (TITN) entered into a definitive purchase agreement to acquire J.J. O’Connor & Sons Pty. Ltd. for $63 million in cash, subject to final working capital; sees diluted EPS $4.60 – $5.25 in fiscal 2024.

 

Financials

·     UBS will cut 3,000 jobs in Switzerland in the coming years as it integrates Credit Suisse, with further staff to go of their own accord, the bank’s CEO Sergio Ermotti told staff. UBS reported $28.875 billion in net profit attributable to shareholders for the second quarter, in its first earnings results since it took over Credit Suisse.

·     Canadian Imperial Bank of Commerce fell far short of analyst estimates as the lender set aside more than expected for souring loans. Provisions for credit losses totaled C$736 million ($543 million) in Q3, more than the C$456 million analysts had predicted.

·     Visa Inc (V) August U.S. payments volume on a year-over-year basis grew 7%; August cross-border volume excluding intra-Europe transactions was 151% of 2019, with card not present volume excluding travel at 172% of 2019; Aug global processed transactions grew 10% y/y.

·     Country Garden posted a net loss between January and June of 48.9 billion yuan ($6.72 billion); warns of default risks if its financial performance continues to deteriorate and said it “felt deeply remorseful” for its record loss in the first half.

 

Healthcare

·     Cooper Companies (COO) Q3 adj EPS $3.35 vs est. $3.34 on revs $930.2Mm vs est. $899.75Mm, adj op mgn 24%; sees 4Q revs $912-929Mm vs est. $916.37Mm and adj EPS $3.39-3.57 vs est. $3.49; guides FY revs $3.578-3.595B vs est. $3.555B and adj EPS $12.72-12.90 vs est. $12.82.

·     LivaNova (LIVN) gets FDA 510(K) clearance and CE Mark for Essenz in-line Blood Monitor.

·     Phibro Animal Health (PAHC) Q4 adj EPS $0.38 vs est. $0.38 on sales $255Mm vs est. $256.13Mm, adj EBITDA $32.3Mm vs est. $31.44Mm; guides FY24 net sales $1.0-1.05B vs est. $1.011B and adj EBITDA $115-121Mm vs est. $118.44Mm.

·     Sage Therapeutics (SAGE) implements strategic reorganization to support plans for ZURZUVAE™ commercial launch and pipeline advancement; potential growth catalysts include planned 4Q 2023 launch of ZURZUVAE and expected data read-outs for SAGE-718 and SAGE-324 in 2024.

·     U.S. FDA issued warning letters to three infant formula manufacturers following inspections at their facilities over the last few months. The regulator issued these letters to ByHeart Inc, Mead Johnson Nutrition (Reckitt) and Perrigo Wisconsin, LLC.

 

Technology, Media & Telecom

·     Crowdstrike (CRWD) Q2 adj EPS $0.74 vs est. $0.56 on revs $731.626Mm vs est. $724.13Mm; guides Q3 revs $775.4-778Mm vs est. $773.97Mm, adj op Inc $154.4-156.3Mm, adj EPS $0.74 vs est. $0.61; sees FY revs $3.0307-3.0429B vs est. $3.025B, adj op Inc $601.3-610.5Mm and adj EPS $2.80-2.84 vs est. $2.39.

·     Okta Inc. (OKTA) Q2 adj EPS $0.31 vs est. $0.22 on revs $556B vs est. $534.54B; guides Q3 revs $558-560Mm vs est. $552.38Mm, adj op Inc $53-55Mm and adj EPS $0.29-0.30 vs est. $0.20; sees FY revs $2.207-2.215B vs es.t $2.184, adj op Inc $215-220Mm; adj EPS $1.17-1.20 vs est. $0.91.

·     Pure Storage (PSTG) Q2 adj EPS $0.34 vs est. $0.28 on revs $688.7Mm vs est. $680.7Mm, adj gr mgn 72.8%, adj op mgn 16.2%; guides Q3 revs $760Mm vs est. $757.15Mm, adj op Inc $135Mm and adj op mgn 17.8%; sees FY revs +mid-high-single vs est. +7.17% and adj op mgn 15.5%.

·     Salesforce.com (CRM) Q2 adj EPS $2.12 vs. est. $1.90; Q2 revs $8.6B vs. est. $8.52B; boosts FY24 revenue view to $34.7B-$34.8B from $34.5B-$34.7B (est. $34.65B) and guides Q3 revs $8.7B-$8.72B vs. est. $8.66B; raises FY24 op margin view to about 30% from 28%.

·     Veeva Systems (VEEV) Q2 adj EPS $1.21 vs. est. $1.13; Q2 revs $590.2M vs. est. $587.11M; sees Q3 revenue $614M-$616M vs. est. $621.75M; raises FY24 adj EPS view to about $4.68 from $4.59 (est. $4.53) and slightly changes FY24 rev view to $2.365B-$2.37B from $2.36B-$2.37B.

·     Arista Networks (ANET) upgraded to Buy from Neutral at Citigroup and raised tgt to $220.

·     Palantir (PLTR) downgraded to Underweight from Equal Weight at Morgan Stanley while raising its price target to $9 from $8.