Early Look

Thursday, December 2, 2021

Futures	Up/Down	%	Last
Dow	266.00	0.78%	34,368
S&P 500	25.25	0.55%	4,533
Nasdaq	37.00	0.23%	15,906

 

 

Much like yesterday morning, U.S. futures are looking much higher than the day prior close, but the questions is…will it be able to hold its gains this time after major averages tumbled all afternoon, closing at its lows amid rising interest rate/inflation fears and concerns over the latest virus variant. The sharp pivot to “hawkish” from “dovish” by Fed Chairman Powell in his testimony to the Senate and Congress the last two days appears to have caught stock markets and investors by surprise, as the Fed appears open to the idea of quicker tapering, as momentum in the economy is clear and inflation remains high. The recent outbreak in South Africa of the omicron variant, and new cases popping up around the globe is also troubling, though to this point, symptoms appear to be mild. The Nasdaq Comp comes into today down more than 4% off record highs, while the Russell 2000 Smallcap index falls roughly 12% off its record highs (in correction mkt territory). Travel names were among those hammered on Wednesday as the U.S. Global Jets ETF (JETS), which includes airline operators and manufacturers, hit a 52-week intraday low of $19.35 per share. The CBOE volatility index (VIX), generally seen as a measure of investor anxiety jumped above the 31-level last night, its highest level since March 2021. In Asian markets, The Nikkei Index declined -0.65% to 27,753, the Shanghai Index dipped -3 points to 3,573, and the Hang Seng Index rose 130 points or 0.55% to settle at 23,788. In Europe, the German DAX is lower by -1.25% or 190 points to 15,280, while the FTSE 100 is down -0.7% ay 7,117. Will markets begin to rebound after the S&P 500 dipped below its 50-day moving average support last night, or is it the start of a bigger correction that some have been calling for? Tech lagging after a Bloomberg report last night indicated that Apple (AAPL) told suppliers iPhone demand has weakened.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -53.96 points, or 1.18%, to 4,513.04

·     The Dow Jones Industrial Average fell -461.68 points, or 1.34%, to 34,022.04

·     The Nasdaq Composite plunged -283.64 points, or 1.83%, to 15,254.05

·     The Russell 2000 Index declined -51.49 points, or 2.34% to 2,147.42

 

Events Calendar for Today

·     7:30 AM ET          Challenger Layoffs for November

·     8:30 AM ET          Weekly Jobless Claims…est. 240K

·     8:30 AM EST       Continuing Claims…est. 2.0M

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

 

Earnings Calendar:

·     Earnings Before the Open: DG, DLTH, EXPR, GMS, KIRK, KR, LE, MEI, SCWX, SIG, VERU

·     Earnings After the Close: ASAN, COO, DOCU, DOMO, GWRE, JOAN, MRVL, OLLI, OOMA, SMAR, SWBI, TLYS, ULTA, VRNT, ZUMZ

 

Other Key Events:

·     Cowen 2021 Energy Summit (virtual), 12/1-12/3

·     Credit Suisse 25th Annual Technology, Media & Telecom Conference, 11/29-12/2, in Arizona

·     Credit Suisse 9th Annual Industrials Conference, 12/1-12/3, in Florida

·     DA Davidson FinTech & Payments Virtual Conference, 12/2

·     Evercore/ISI 4th Annual HealthCONx Conference, 11/30-12/2, in Boston

·     Morgan Stanley Nasdaq Investor Conference (virtual), 11/30-12/3

·     Morgan Stanley Global Consumer & Retail Conference (virtual), 11/30-12/2

·     Piper 33rd Annual Healthcare Conference (virtual), 11/29-12/2

·     RBC Capital Forest Products Conference (virtual), 12/2

·     Stephens Annual Investment Conference, in Nashville, TN, 12/1-12/3

·     China Caixin Services PMI for November

 

 

Macro	Up/Down	Last
Nymex	1.10	66.67
Brent	1.15	70.02
Gold	-4.55	1,777.17
EUR/USD	0.0017	1.1336
JPY/USD	0.20	112.95
10-Year Note	+0.003	1.438%

 

 

World News

·     The Biden administration is set to extend existing requirements to wear masks on public transit into mid-March, as it looks to tackle the threat posed by the new Omicron coronavirus variant, according to reports.

·      

 

Sector News Breakdown

Consumer

·     Costco Wholesale Corp (COST) said net sales of $18.13B for retail month of November, four weeks ended November 28, 2021, up 15.7% from last year; November total comp sales +14.1%, vs. est. +15%

·     Five Below (FIVE) 3Q EPS $0.43 vs est. $0.29 on revs $608Mm vs est. $565.3Mm, comps +14.8%; guides 4Q sales $985Mm-$1.005B vs est. $1.004B, sees 4Q EPS $2.36-2.48 vs est. $2.50

·     PVH Corp. (PVH) 3Q adj EPS $2.67 vs est. $2.08 on revs $2.33B vs est. $2.4B; guides 4Q adj EPS about $1.94 vs est. $1.97; guides FY adj EPS about $9.25 vs est. $8.71 on revs +27-28% vs est. +28.4%

·     RLX Technology (RLX) rises as China’s tobacco regulator issues draft rules, further lifting the private e-cigarette industry away from a grey area and into the purview of the state

·     Cars.com Inc. (CARS) will replace DSP Group Inc. (DSPG) in the S&P SmallCap 600. S&P MidCap 400 constituent Synaptics Inc. (SYNA) is acquiring DSP Group in a deal expected to be completed on December 2.

 

Energy, Industrials and Materials

·     Boeing (BA) rises 4% after China’s aviation authority issued an airworthiness directive on the Boeing Co 737 MAX that will help pave the way for the model’s return to service in China. The directive instructs airline operators on the revisions required before the MAX returns to service, although it does not specify when China will lift a ban on the MAX in its airspace.

·     Chevron (CVX) raises share buyback guidance range to $3B-$5B from $2B-$3B per year; announced a 2022 organic capital and exploratory spending program of $15B, at the low end of its $15B-$17B guidance range and up more than 20% from 2021 expected levels

·     Culp Inc. (CULP) Q2 EPS $0.07 vs. est. $0.08; Q2 revs $74.6M vs. est. $73.8M; raises quarterly dividend by 5%; withdrawing its previously issued annual guidance for fiscal 2022; said net sales and consolidated operating income for Q3 expected to be sequentially comparable to Q2

·     Expeditors International (EXPD) downgraded to Underweight from Equal-weight at Morgan Stanley with a $95 tgt

·     Murphy USA (MUSA) announces $1B repurchase program

·     NV5 Global Inc. (NVEE) will replace Raven Industries Inc. (RAVN) in the S&P SmallCap 600. CNH Industrial N.V. (CNHI) is acquiring Raven Industries in a transaction expected to be completed on November 30.

 

Financials

·     Square Inc. (SQ), which was co-founded and led by former Twitter Inc. chief Jack Dorsey, is changing its corporate name to Block Inc. The change will be effective later this month, the company said Wednesday. Its ticker symbol will remain SQ.

·     Geo Group’s (GEO) Board has unanimously approved a plan to terminate its Real Estate Investment Trust election and become a taxable C corporation; lowers FY21 adjusted FFO view to $2.30-$2.32 from $2.57-$2.59; during Q4 of 2021, GEO expects to incur a one-time, non-cash deferred tax charge of approximately $75M; also decided to stop paying a quarterly dividend

·     WeWork (WE) said in a securities filing that it would restate several quarters of its results, including its latest one, and that management has concluded there was a material weakness in its internal control.

·     Katapult (KPLT) slides after the financial technology firm said its gross originations over a two-month period were lower than 2020 levels.

·     Toronto-Dominion (TD) to buy back up to 50M common shares; Q4 adjusted EPS C$2.09 vs. C$1.60 last year; reports Q4 adjusted revenue C$10.94B vs. C$10.42B a year ago.

 

Healthcare

·     Bruker BioSciences Corp. (BRKR) will replace KAR Auction Services Inc. (KAR) in the S&P MidCap 400, and KAR Auction Services will replace Meredith Corp. (MDP) in the S&P SmallCap 600. Meredith is being acquired in a two-step transaction that is expected to be completed on or about December

·     MEI Pharma (MEIP) 17.5M share Secondary priced at $2.60

·     ImmunoGen (IMGN) 11.64M share Secondary priced at $6.60

·     Vir (VIR) said its Covid-19 antibody treatment, co-developed with Glaxo (GSK), looked to be effective against the new omicron variant in early testing

 

Technology, Media & Telecom

·     Apple (AAPL) has expressed to its component suppliers that demand for the iPhone 13 line-up is slowing, according to a Bloomberg report which states that when the company reduced its iPhone 13 production target by up to 10M units, it had hoped to make it up next year when supply improved, but Apple is now informing its partners that those orders may not be realized.

·     C3.ai. Inc. (AI) Q2 EPS loss (-$0.23) vs. est. loss (-$0.28); Q2 revs rose 41% to $58.3M vs. est. $56.9M; Q2 Subscription revenue was $47.4M, up 32% YoY from $35.9M; FY22 Revenue Guidance raised to 35%-37% growth, up from 17% growth in FY21

·     CrowdStrike (CRWD) Q3 adjusted EPS $0.17 vs. est. $0.10; Q3 revs $380.1M vs. est. $363.53M; said Q3 net new ARR growth accelerating and ending ARR growing 67% year-over-year to surpass the $1.5 billion milestone; raises FY EPS to $0.57-$0.59 from prior $0.43-$0.49 (est. $0.46); sees Q4 adjusted EPS $0.19-$0.21 vs. est. $0.16 and revs $406.5M-$412.3M vs. est. $399.95M

·     Elastic NV (ESTC) 2Q adj EPS ($0.09) vs est. ($0.16) on revs $206Mm vs est. $194.5Mm; guides 3Q adj EPS loss $0.20-0.24 vs est. loss $0.22, sees 3Q revs $207-209Mm vs est. $202.6Mm

·     NCino Inc. (NCNO) 3Q adj EPS ($0.04) vs est. ($0.06) on revs $70Mm vs est. $66.6Mm; guides 4Q revs $68.5-69.5Mm vs est. $68.2Mm

·     Okta (OKTA) Q3 adjusted EPS loss (-$0.07) vs. est. loss (-$0.24); Q3 revenue $351M vs. est. $327M; sees Q4 revenue $358M-$360M vs. est. $354.79M; Remaining performance obligations (RPO) grew 49% year-over-year to $2.35B; increases revenue and operating profit outlook for fiscal 2022 as raises FY22 revenue view to $1.275B-$1.277B from $1.243B-$1.25B (est. $1.25B)

·     Semtech (SMTC) 3Q adj EPS $0.74 vs est. $0.72 on revs $194.9Mm vs est. $193.2Mm; sees 4Q sales $184-194Mm vs est. $187Mm, adj gr margin 63.5-64.5%, adj EPS $0.65-0.73 vs est. $0.66

·     Snowflake (SNOW) Q3 EPS loss (-$0.51) vs. est. loss (-$0.60); Q3 revs rose 110% to $334.4M vs. est. $305.6M; said saw momentum accelerate in Q3, with product revenue growing 110% year-on-year to $312.5M; said product revs in the EMEA and APJ regions up 174% and 219% year-on-year, respectively; sees Q4 product revs $345M-$350M; had 5,416 customers as of Oct. 31, compared with 4,990 as of July 31, including 148 customers that accounted for more than $1 million in product revenue over the past 12 months.

·     Splunk (SPLK) 3Q EPS ($2.14) vs est. ($0.50) on revs $665Mm vs est. $651Mm, qtrly cloud ARR +75% to $1.11B, net new cloud ARR +107%; guides 4Q revs $740-790Mm vs est. $834Mm, sees FY23 cloud ARR at least $2B and total ARR about $3.9B

·     Synopsis (SNPS) 4Q adj EPS $1.82 vs est. $1.78 on revs $1.152B vs est. $1.154B; guides 1Q revs $1.25-1.28B vs est. $1.1B and adj EPS $2.35-2.40 vs est. $1.76; sees FY revs $4.725-4.775B vs est. $4.626B and adj EPS $7.73-7.80 vs est. $7.65

·     Veeva Systems (VEEV) 3Q adj EPS $0.97 vs est. $0.88 on revs $476.1Mm vs est. $465.9Mm; guides 4Q revs $478-480Mm vs est. $479.5Mm and adj EPS about $0.88 vs est. $0.86; sees FY23 revs $2.15-2.17B vs est. $2.18B

·     Zuora (ZUO) 3Q adj EPS ($0.02) vs est. ($0.03) on revs $89.2Mm vs est. $86.5Mm; sees 4Q revs $90-91Mm vs est. $88Mm; guides FY revs $345-346Mm vs est. $341.4Mm, sees FY adj EPS loos $0.11-0.11 vs est. EPS loss $0.11