Early Look

Wednesday, January 26, 2022

Futures	Up/Down	%	Last
Dow	371.00	1.09%	34,566
S&P 500	65.25	1.51%	4,414
Nasdaq	312.50	2.21%	14,452

 

 

A much brighter picture for U.S. futures this morning, with the S&P looking back above the 4,400 level, rising 1.4% as Dow component Microsoft (MSFT) shares rebound following upbeat earnings and guidance, helping boost the Dow, S&P and Nasdaq futures while investors await a Federal Reserve policy decision later today. The central bank is poised to signal plans for its first interest rate hike since 2018 and discuss shrinking its balance sheet when results of the 2-day FOMC policy meeting are released after 2:00 PM. Meanwhile, Russia-U.S. tension still hangs in the market with President Joe Biden indicating that Russian President Vladimir Putin is at risk of personal sanctions over Ukraine. Goldman, Citi Strategists say it’s now time to buy stocks rout, while Bank America, Wells Fargo strategists also see buying opportunity, according to Bloomberg. A much needed rebound for U.S. stocks early after posting double-digit percentage returns to start the New Year.

 

It was another volatile day on Wall Street Tuesday as the S&P 500 fell -1.22% ahead of the FOMC monetary policy meeting and the Nasdaq Comp tumbled 2.28% (now down 16% from November highs) as dip buyers that briefly lifted the S&P and Dow late afternoon failed to overcome late day selling pressure. Markets remain on edge over increased chatter of equity valuations amid the cloud of geopolitical risk coming from Ukraine. Markets also remain on edge ahead of today’s FOMC meeting, which is expected to indicate a rate hike in March is coming to try and tame inflation. Energy was the top S&P sector gainer Tuesday, as oil rebounded just a day after the biggest one-day tumble this year. Fear has popped its head into the market as the CBOE volatility index (VIX) closed at 31.16, its highest since Jan 29, 2021.

 

In Asian markets, The Nikkei Index dipped -120 points to 27,011, the Shanghai Index rose 22 points or 0.65% to 3,455, and the Hang Seng Index gained 0.2% to 24,289. In Europe, the German DAX is up over 300 points or 2.1% to 15,450, while the FTSE 100 is higher by 120 points or 1.65% to near 7,500. Bitcoin prices up over 4%, topping the $38,000 level and Ethereum up over 5% at $2,525 as crypto rallies with stocks. Oil extends gains as Brent rallies toward $89 with focus on stockpile draw, Ukraine.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -53.68 points, or 1.22%, to 4,356.45

·     The Dow Jones Industrial Average fell -67.76 points, or 0.20%, to 34,296.74

·     The Nasdaq Composite plunged -315.83 points, or 2.28%, to 13,539.30

·     The Russell 2000 Index declined -29.48 points, or 1.45% to 2,004.03

 

Events Calendar for Today

·     7:00 AM ET         MBA Mortgage Applications Data

·     8:30 AM ET         Advance Goods trade Balance for December…prior –($98.04B)

·     10:00 AM ET       New Home Sales MoM for December…est. 760K

·     10:30 AM ET       Weekly DOE Inventory Data

·     2:00 PM ET         FOMC Monetary Policy Meeting results

 

Earnings Calendar:

·     Earnings Before the Open: ABT, ADP, ANTM, APH, BA, BLFY, CPF, FCNCA, FCX, GD, GLW, HES, HESM, KMB, KNX, LBAI, MKTX, MNRO, MPX, NDAQ, NSC, NYCB, OSK, PB, PGR, RES, ROL, SMED, T, USAP

·     Earnings After the Close: AMP, ARAY, AVT, AZPN, BRKL, CACI, CALX, CASH, CCI, CNMD, CNS, CVLG, DRE, EQBK, EW, FLEX, HXL, INTC, ISBC, LC, LEVI, LRCX, LSTR, LVS, MKSI, MTH, NBTB, NOW, OBNK, PKG, PLXS, PROV, PTC, RJF, RLI, SEIC, SLG, SLM, STX, TER, TSLA, URI, VRTX, WASH, WHR, WOLF, XM

 

Other Key Events:

·     Goldman Sachs Global Macro Conference Asia Pacific 2022 (virtual), 1/25-1/26

 

 

Macro	Up/Down	Last
Nymex	0.51	86.11
Brent	0.72	88.92
Gold	-2.75	1,845.25
EUR/USD	-0.0019	1.1281
JPY/USD	0.28	114.14
10-Year Note	+0.00	1.785%

 

 

Sector News Breakdown

Consumer

·     Tesla (TSLA) earnings after the close tonight; seeing EV stocks rebounding (NKLA, RIVN)

·     FREYR Battery (FREY) has selected DNV, the assurance and risk management company, as its partner to supply third-party certification services.

·     Hawaiian Holdings (HA) Q4 adj EPS loss (-$1.37) vs. est. loss (-$1.50); Q4 revs fell 30% to $494.7M vs. est. $522.5M; reported total operating expenses of $566.1M and adjusted operating expenses of $443.4M; lowers FY22 CapEx view to $105M-$125M from $365M-$385M; lowers FY22 ASMs view to down 3%-up 1% from flat to up 4% from FY19 results.

·     Stride Inc. (LRN) 2Q EPS $1.00 vs est. $0.77 on revs $409.5Mm vs est. $395.2Mm; guides FY revs $1.62-1.64B vs est. $1.59B

 

Energy, Industrials and Materials

·     Canadian National (CNI) Q4 adj EPS C$1.71 vs. C$1.43 last year; Q4 revs C$3.75B vs. C$3.66B; Q4 operating ratio improved to 58.3%; says targeting free cash flow of approximately c$4.0 billion in 2022 compared to c$3.3 billion in 2021; expects to deliver about 20% adj eps growth in 2022

·     Marten Transport (MRTN) Q4 EPS $0.30 vs. est. $0.26; Q4 revs $266.9M vs. est. $262.42M; Operating expenses as a percentage of operating revenue improved to 88.5% for the fourth quarter of 2021 from 88.8% for the fourth quarter of 2020

·     The American Petroleum institute (API) crude inventories showed a drawdown of -900K barrels, inventories at Cushing drew 1.0M barrels, gasoline inventories rose 2.4M barrels and distillates fell -2.2M barrels in latest week

·     Silgan Holdings (SLGN) Q4 EPS $0.79 vs. est. $0.73; Q4 revs $1.44B vs. est. $1.36B; guides Q1 PS $70-$0.80 vs. est. $0.84 and year $3.83-$3.00 vs. est. $3.37

·     Sunrun (RUN) replaces $250 million recourse lending facility with new upsized $425 million facility to support continued growth at enhanced terms

 

Financials

·     Capital One Financial (COF) Q4 EPS $5.41 vs. est. $5.30; Q4 revenue $8.1B vs. est. $7.92B; Q4 net interest margin 6.60%, up 25 bps sequentially; Q4 provision for credit losses increased $723M to $381M; Q4 net charge-offs of $527M; $145M loan reserve release; Q4 net interest margin of 6.21 percent, an increase of 15 basis points vs q3 2021

·     Robinhood (HOOD) highlighted steps it has taken to avoid imposing trading restrictions and said it was in a “strong position” to support customers through unlikely market events – Reuters. Robinhood said in a blog post that its net capital position was $2.7 billion, more than 25 times what is currently required by the U.S. SEC

·     Cryptocurrency-exposed stocks are trading higher as Bitcoin regains ground, back above $37,000: Marathon Digital (MARA), Riot Blockchain (RIOT) and Coinbase (COIN) higher

·     Cadence Bancorp (CADE) Q4 EPS loss (-$0.22) vs. est. loss (-$0.32); Net interest revenue was $271.2N, compared to $176.9M Q4’20; raises dividend

·     Navient Corp. (NAVI) Q4 adj EPS $0.78 vs. est. $0.87; FFELP loans $52.64 billion, -9.7% y/y

·     QCR Holdings, Inc. (QCRH) Q4 EPS $1.71 vs. est. $1.73; Q4 net interest income totaled a record $46.5M, vs $46.2M in Q3’21

·     RenaissanceRe Holdings (RNR) Q4 EPS $4.65 vs. est. $4.51; Q4 revs $1.39B vs. est. $1.41B; Grew gross premiums written by $2.0 billion, or 34.9%, and net premiums written by $1.8 billion, or 45.0%, in 2021

·     Renasant Corporation (RNST) Q4 EPS $0.68 vs. est. $0.64; Q4 net interest margin was 2.81%, down 12 basis points; net interest income increased $1.7 million from Q3

·     Trustmark Corp. (TRMK) Q4 revs fell -16% to $149.1M vs. est. $152.9M; Q4 EPS $0.42 vs. est. $0.49; Recovery of credit losses $1.6 million; Q4 NII totaled $101.2M

·     Veritex Holdings, Inc. (VBTX) 4Q adj EPS $0.84 vs est. $0.72, NII $76.7Mm vs est. $73.1Mm

 

Healthcare

·     Anthem (ANTM) Q4 adj EPS $5.14 vs. est. $5.11; Q4 revs $36.58B vs. est. $36.51B; raises quarterly dividend to $1.28 from $1.13 per share; Q4 premiums grew 13.5% to $30.77 billion to miss expectations of $31.01 billion; total medical membership was 45.37 million as of Dec. 31, up 5.7% from a year ago; expects 2022 adj EPS “greater than” $28.25” vs. est. $28.59

·     Agilysys, Inc. (AGYS) 3Q adj EPS $0.19 vs est. $0.15 on revs $39.5Mm vs est. $42Mm; says expects overall revs for 4Q to be at record levels and FY revs to be at low end of guidance with adj EBITDA slightly better than 15% of revs as previously stated

·     Incyte (INCY) is withdrawing the New Drug Application (NDA) for parsaclisib for the treatment of patients with relapsed or refractory follicular lymphoma (FL), marginal zone lymphoma (MZL) and mantle cell lymphoma (MCL).

·     NextGen Healthcare, Inc. (NXGN) 3Q adj EPS $0.24 vs est. $0.21 on revs $149.7Mm vs est. $146.3Mm; guides FY revs $591-595Mm vs est. $588.2Mm, sees FY22 adj EPS $0.96-1.00 vs est. $0.95

 

Technology, Media & Telecom

·     Microsoft Corp. (MSFT) 2Q EPS $2.48 vs est. $2.31 on revs $51.7B vs est. $50.88B (intelligent cloud revs $18.3B +26%, productivity and business process revs $15.9B +19%, server products and cloud services revs +29%, windows OEM revs +25%) – shares rebounded on upbeat forecasts as sees Q3 Intelligent Cloud revenue of $18.75B-$19B vs. Refinitiv est. of $18.15B, driven by “strong growth” in its Azure platform; guides More Computing Q3 unit revs of $14.15B-$14.45Bvs. est. $13.88B and Productivity/Business Processes of $15.6B-$15.85B vs. est. $15.72B

·     AT&T (T) Q4 adj EPS $0.78 vs. est. $0.76; Q4 revs $40.96B vs. est. $40.43B; only added 884,000 net new phone subscribers in Q4 who pay a monthly bill, missing the FactSet estimates of 906,500 new subscribers; Revenue at Warner Media (includes HBO and HBO Max streaming), rose 15.4% to $9.9B in the quarter, helping offset some weakness at wireless services; HBO Max had steady growth as they added 4.4 million subscribers; sees FY revenue growth in the low-single digits range compared to 2021 consolidated revenues of $153.2 billion

·     Activision Blizzard’s (ATVI) next three Call of Duty titles will be available on Sony’s (SONY) PlayStation and Microsoft’s (MSFT) Xbox, Bloomberg reported

·     Texas Instruments (TXN) rises 6%; 4Q EPS $2.27 vs est. $1.94 on revs $4.83B vs est. $4.43B; guides 1Q revs $4.5-4.9B vs est. $4.37B, sees 1Q EPS $2.01-2.29 vs est. $1.90; qtrly revs driven by strong demand in industrial and automotive

·     TE Connectivity (TEL) Q1 adj EPS $1.76 vs. est. $1.60; Q1 revs $3.82B vs. est. $3.73B; sees Q2 adj EPS $1.70 vs. est. $1.69 and revs $3.8B vs. est. $3.86B

·     Libra, the controversial cryptocurrency project launched by Facebook (FB) CEO Mark Zuckerberg in 2019, is reportedly on the brink of collapse – Bloomberg reported

·     F5 Networks (FFIV) slides -11%; 1Q adj EPS $2.89 vs est. $2.78 on revs $687Mm vs est. $676.5Mm; guides 2Q revs $610-650Mm vs est. $692.7Mm, sees FY revs +4.5-8% vs est. +8.3%

·     8×8 (EGHT) files to sell 5.62M shares of common stock for holders

·     Radware (RDWR) announced that it signed a multimillion-dollar deal expansion with a Tier-1 U.S. carrier.