Early Look

Thursday, January 20, 2022

Futures	Up/Down	%	Last
Dow	132.00	0.38%	35,042
S&P 500	23.25	0.51%	4,547
Nasdaq	131.50	0.87%	15,164

 

 

U.S. futures are looking higher looking at a bounce back after finishing at the lows late Wednesday, with S&P futures up +0.55% around 4,550, looking to recover key technical levels that were breached for the S&P, Russell 2000 and Nasdaq. On Wednesday, the Nasdaq declined over 1%, leaving it down nearly 11% from its November record high close, marking the fourth time in nearly two years that the tech-heavy index found itself in a correction (defined as 10% move off highs). Tech and other growth stocks have been tumbling since late 2021 due to growing expectation that the Federal Reserve will become more aggressive in raising interest rates to control inflation, with expectations for them to hike between 3-4 times this year, including at the March meeting. Bespoke noted that through 12 trading days the Nasdaq Composite is off to its 4th worst start to a year in its history: 2008: -11.5%, 2016: -10.7%, 2009: -8.6%, 2022: -8.3%, and 1996: -5.1%. In Asian markets, The Nikkei Index jumped over 300 points or 1% to settle at 27,772, the Shanghai Index dipped a few points to 3,555, and the Hang Seng Index surged 824 points or 3.42% to 24,952. In Europe, the German DAX is up roughly 30 points to 15,840, while the FTSE 100 is down slightly at 7,585. Investors get another heavy dose of earnings today, dominated this morning by regional banks.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -44.35 points, or 0.97%, to 4,532.76

·     The Dow Jones Industrial Average fell -339.82 points, or 0.96%, to 35,028.65

·     The Nasdaq Composite slumped -166.64 points, or 1.15%, to 14,340.26

·     The Russell 2000 Index declined -33.44 points, or 1.60% to 2,062.78

 

Events Calendar for Today

·     8:30 AM ET         Weekly Jobless Claims…est. 220K

·     8:30 AM EST       Continuing Claims…est. 1.58M

·     8:30 AM ET         Philly Fed Survey Index for January…est. 20.0

·     10:00 AM ET       Existing Home Sales MoM for December…est. 6.44M

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

 

Earnings Calendar:

·     Earnings Before the Open: AAL, AMTB, BHLB, BKR, BKU, FHN, FITB, HOMB, IIIN, KEY, MTB, NTRS, PPBI, RF, SASR, SNV, TRV, UNP, WBS

·     Earnings After the Close: ASB, BANR, CSX, IDW, INDB, ISRG, LLNW, MCB, NFLX, OZK, PPG, SIVB, TBK, TCBI

 

Other Key Events:

·     Sidoti SmallCap Conference (virtual), 1/19-1/22

·     American Society of Clinical Oncology (ASCO) Gastrointestinal Cancers Symposium, 1/20-/1/22

 

 

Macro	Up/Down	Last
Nymex	-0.28	86.68
Brent	-0.24	88.20
Gold	-2.40	1,838.15
EUR/USD	-0.0006	1.1336
JPY/USD	0.00	114.32
10-Year Note	+0.007	1.834%

 

 

World News

·     The People’s Bank of China (PBoC) lowered the one-year loan prime rate by 10 bps to 3.7% from 3.8%. It was the second cut in a month; also lowered its five-year loan prime rate to 4.6% from 4.65%, the first time it has reduced the rate since April 2020.

 

Sector News Breakdown

Consumer

·     United Airlines (UAL) Q4 revs fell -25% to $8.2B vs. est. $7.96B; Q4 adj EPS loss (-$1.60) vs. est. loss (-$2.11); expects 2022 adjusted capital expenditures to be around $4.2 bln; sees 1q capacity down 16% to 18% vs 1q 2019; will fly fewer available seat miles in 2022 than 2019 and CASM-ex will decline significantly over course of 2022; expects Q1 2022 total operating revenue to be down 20% to 25% versus Q1 2019; expects FY 2022 capacity lower than 2019

·     Ford (F) downgraded to Hold from Buy at Jefferies

·     Walmart (WMT) downgraded to Sector Weight from Overweight at KeyBanc

·     Amazon (AMZN) announced the opening of a bricks-and-mortar apparel store in Los Angeles, the first foray by the online retailer into the sale of fashion through physical stores.

 

Energy, Industrials and Materials

·     Alcoa Inc. (AA) Q4 adj EPS $2.50 vs. est. $1.90; Q4 revs $3.3B vs. est. $3.34B; anticipates adj Ebitda and adjusted net income levels for Q1 to be like Q4’21; for 2022, projects total bauxite shipments to range between 48.0 and 49.0 mln dry metric tons

·     Chesapeake Energy (CHK) is in talks to acquire privately owned Chief Oil & Gas for ~$2.4B including debt, according to a Reuters report. https://bit.ly/3tFxmK7

·     Enviva Partners (EVA) 4.3M share Secondary priced at $70.00

·     HB Fuller (FUL) 4Q adj EPS $1.09 vs est. $1.08 on revs $897Mm vs est. $897Mm; guides FY22 adj EPS $4.00-4.25 vs est. $4.18, sees FY22 double-digit organic revs growth of +10-15% including strong contribution from pricing vs est. +7.9%

·     Kinder Morgan (KMI) Q4 EPS $0.48 vs. est. $0.47; Q4 revs rose 42% YoY to $4.43B vs. est. $3.56B; adj Ebitda slips to $1.8B but above est. $1.77B; said expects to generate 2022 DCF of $4.7B and adj Ebitda of $7.2B

·     The American Petroleum Institute (API) showed crude inventories rose 1.404M barrels last week, while gasoline inventories rose 3.463M barrels, and distillate inventories fell -1.17M barrels; Cushing inventories fell -1.496M barrels

·     Vale (VALE) must carry out preventive work on 18 tailings dams at the company’s mines because of heavy rains in December and January, it is told by prosecutors in Brazil’s Minas Gerais state.

 

Financials

·     Discover Financial (DFS) Q4 EPS $3.64 vs. est. $3.68; says total loans ended the quarter at $93.7 bln, up 4% year-over-year; Q4 provision for credit losses of $263 million decreased $268 million from the prior year period; said Q4 credit card loans ended the quarter at $74.4 bln, up 4% year-over-year; and Q4 qtrly payment services volume was $83.4 billion, up 19% year-over-year

·     Eagle Bancorp (EGBN) 4Q EPS $1.30 vs est. $1.17; Book value per share $12.69 vs. $12.28 y/y; Tangible book value per share $12.65 vs. $12.21 y/y; Net interest income $233.4 million, -0.7% y/y and non-interest income $82.7 million, -33% y/y

·     Fifth Third (FITB) Q4 EPS $0.90 vs. et. $0.90; Net interest income FTE $1.20 billion, +1.3% y/y, and Net interest margin 2.55% vs. 2.58% y/y

·     F.N.B. (FNB) Q4 EPS $0.30, in-line w ests; Q4 tangible book value per share $8.59; Q4 CET1 capital ratio 9.9%. Reports Q4 net charge-offs .02%; Q4 net interest income decreased 4.7% to $223.3 mln compared to Q4 2020

·     Silvergate Capital (SI) upgraded to Buy from Neutral at Goldman Sachs saying with shares now trading at 2.2x tangible book value and 15.5x P/E on our 2023 estimates, shares now trade at the lowest levels of valuation since they initiated coverage

·     American Homes 4 Rents (AMH) 20M share Secondary priced at $39.15

·     Regions Financial (RF) Q4 EPS $0.43 vs. est. $0.48; Q4 revenue $1.63B vs. est. $1.63B; qtrly average loans and leases increased 4% compared to prior quarter; qtrly net interest income $1,019 mln vs $1,006 mln

·     Sterling Bancorp (STL) 4Q adj EPS $0.64 vs est. $0.52

·     Umpqua Holdings (UMPQ) Q4 EPS $0.41 vs. est. $0.43; Net interest income decreased by $1.7M on a quarter-to-quarter basis due to lower income related to PPP loan forgiveness; non-interest income increased by $9.0M due to higher net mortgage banking revenue of $9.0M

·     Wintrust Financial (WTFC) Q4 EPS $1.58 vs. est. $1.53; Q4 revs $429.74M vs. est. $415.22M; Net interest income increased by $8.5 million in the fourth quarter of 2021 primarily due to earning asset growth and a decline in deposit costs.

 

Healthcare

·     Novavax (NVAX) and Australia announced an advance purchase agreement for 51 mln doses of Novavax’s COVID-19 vaccine last January, with an option for an additional 10 mln doses

·     Vertex (VRTX) upgraded to Outperform from Market Perform at BMO Capital

·     Omeros Corporation (OMER) confirmed that earlier this month the company submitted to the U.S. FDA its response to the Agency’s Complete Response Letter (CRL) for narsoplimab in the treatment of hematopoietic stem cell transplant-associated thrombotic

·     Encompass Health (EHC) announced its intention to spin off its home health and hospice business to form an independent, publicly traded company and to rebrand the HH&H Business as Enhabit Home Health & Hospice

 

Technology, Media & Telecom

·     Alphabet (GOOGL), Amazon (AMZN), and Meta (FB) will be in focus today as the U.S. Senate Judiciary Committee is set to decide later this morning whether the full Senate should vote on two bills aimed at reining in tech giants. Lawmakers are expected to consider an amended version of a bill introduced by Senators D-Amy Klobuchar and R-Chuck Grassley that would bar tech platforms from giving preference to their own businesses on their websites.

·     Alibaba (BABA), Baidu (BIDU) rise over 5% and other US listed Chinese stocks are also higher after China’s cyberspace regulator denied issuing a document with new guidelines requiring the country’s major internet cos to seek approval for new investments and fundraising

·     NXP Semiconductors (NXPI) and AMD (AMD) downgraded to Neutral at Piper

·     Disney (DIS) names company executive Rebecca Campbell to lead its new hub for international content creation to expand regional content for its streaming services; said it plans to double the number of countries where its flagship Disney+ service is available to 160 by the end of FY23