Early Look

Thursday, December 17, 2020

Tell me if you heard this one before? U.S. futures are tracking global markets higher, mostly rising on vaccine, stimulus hopes. Futures for the three major U.S. stock averages are on track to open higher by around 0.5% as Congress inches toward a virus relief deal (still not there but each day members say they are closer to a deal) and stocks in Europe advance as officials are reportedly pushing to speed up the approval of COVID-19 vaccines by the end of the month. In Asian markets, The Nikkei Index rose 49 points to 26,806, the Shanghai Index gained 37 points to 3,404, the Hang Seng Index jumped 218 points to 26,678. In Europe, the German DAX is higher by over 100 points to 13,675, while the FTSE 100 is little changed at 6,570. Bitcoin prices back in the headlines, rising another 7% to $22,730 just a day after topping the $20,000 for the first time as momentum melt-up continues in several asset classes. Markets remain hopeful ahead of today’s trading session that Moderna (MRNA) will receive emergency use approval from the FDA for its vaccine, while investors also watch headlines out of Washington as relief bill details are expected to include some type of stimulus checks, extend unemployment benefits, help pay for vaccine distribution and assist small businesses. House Democratic leader, Steny Hoyer, said that if the Friday midnight deadline is not met, he could envision another stopgap spending bill of three-or four-days’ duration to keep government agencies open while negotiations continue. Busy day of economic data with jobless claims, housing starts and Philly Fed survey.

U.S. stocks finished mixed on Wednesday in a day filled with stimulus headlines (and hopes a deal can come to fruition), a Fed decision and press conference and strength in technology shares as the Nasdaq Composite finished with another record high. The S&P 500 index and Nasdaq advanced after Fed Chairman Jerome Powell stressed that investors shouldn’t doubt the FOMC’s ability to help the economy and that there was still more it could do in ways of accommodation. That helped stocks overcome a knee-jerk decline after the FOMC kept bond purchases at current levels and didn’t shift duration. A weaker retail sales report for November failed to dent market sentiment. Crude oil futures settled at nine-month highs on the heels of a larger than expected U.S. crude inventory draw and optimism about a coronavirus relief package in the U.S.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 6.55 points, or 0.18%, to 3,701.17

·     The Dow Jones Industrial Average fell -44.77 points, or 0.15%, to 30,154.54

·     The Nasdaq Composite jumped 63.13 points, or 0.50%, to 12,658.19

·     The Russell 2000 Index declined -7.04 points, or 0.36% to 1,952.72

Economic Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims

·     8:30 AM EST      Continuing Claims

·     8:30 AM EST      Housing Starts MoM for November

·     8:30 AM EST      Building Permits MoM for November

·     8:30 AM EST      Philly Fed Business Index for December

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

·     11:00 AM EST    Kansas City Fed Manufacturing for December

Earnings Calendar:

·     Earnings Before the Open: ACN, CAMP, GIS, JBL, RAD, SAFM, WOR

·     Earnings After the Close: AIR, APDN, FDX, RFIL, SCS, SCHL

Sector News Breakdown

Consumer

·     Lennar Corp. (LEN) Q4 EPS $2.82 vs. est. $2.37; Q4 revenue $6.8B vs. est. $6.65B; sees Q1 new orders 14,500-14,800, deliveries 12,200-12,500; average sales price $390,000 and gross margin % on home sales of 23.5%-23.75%.

·     Herman Miller (MLHR) 2Q adjusted EPS 89c vs. est. 54c; 2Q net sales fell -8.1% YoY to $626.3M vs. est. $585.5M; 2Q gross margin 39% vs. 37.9% YoY; continues to suspend guidance

·     Smith & Wesson Brands (SWBI) announces $50M share buyback

·     European car registrations declined 12% in November to 897,692 units, followed by 7.8% decline in October

Energy, Industrials and Materials

·     Bloom Energy (BE) issues downside guidance for FY21, forecasts revenues of $950M-$1.0B vs. a consensus of $1.01B; expects adjusted gross margin of ~25% and adj operating margin of ~3%.

·     ABM Industries (ABM) Q4 EPS 69c vs. est. 70c and revs $1.48B vs. est. $1.44B; sees Q1 adj EPS 60c-65c vs. est. 47c; expects its on-going operational and corporate investments will extend into FY21

·     Blue Bird Corp. (BLBD) strong fourth quarter at or above guidance; focused on margin growth and industry recovery; guidance range provided for fiscal 2021; Q4 sales fell 18.1% to $281.4M

·     Olin (OLN) upgraded to overweight from sector weight at KeyBanc

Financials

·     S&P Global (SPGI) and IHS Markit (INFO) announced the future divisional structure of the combined company, effective upon completing their pending merger

Healthcare

·     Amgen (AMGN) raises quarterly dividend 10% to $1.76 per share

·     MacroGenics Inc (MGNX) rises 15%; said the FDA approved its drug Margenza in combination with chemotherapy for the treatment of an advanced type of breast cancer in patients who failed two or more prior therapies; is expecting to launch the drug, the first to be approved from its pipeline, in March.

·     Lexicon Pharmaceuticals, Inc. (LXRX), announced that it has entered a collaboration enabling the use by AC Bioscience LTD of preclinical and clinical data for LX2931 without granting any right or license under any of Lexicon’s patent rights for the compound

·     Phathom Pharmaceuticals (PHAT) 2.25M share Secondary priced at $42.00

·     Virios Therapeutics (VIRI) 3M share IPO priced at $10.00

·     Novartis (NVS) to acquire privately held Cadent Therapeutics for a total potential consideration of $770M gaining full rights to Cadent’s neuroscience portfolio (Cadent will receive a $210M upfront payment and will be eligible for up to $560M in milestone payments)

·     Two healthcare workers in Alaska has had a severe allergic reaction to Pfizer (PFE) and BioNTech’s (BNTX) COVID-19 vaccine, the New York Times reported, but experts say that the vaccine is still safe for the general public.

Technology, Media & Telecom

·     Roku (ROKU) shares rose 4%; said starting Dec 17, company’s users will be able to download HBO MAX (AT&T) from Roku channel store & subscribe directly on Roku device to access all of HBO Max

·     Accenture (ACN) Q1 adj EPS $2.17 vs. est. $2.05; Q1 revs $11.8B vs. est. $12.36B; sees FY revs up 4%-6%, higher than the prior 2%-5% view

·     AT&T (T) downgraded to equal-weight from overweight at Morgan Stanley

·     MercadoLibre (MELI) downgraded to neutral from buy at BTIG after nearly 200% advance