Early Look

Tuesday, July 2, 2024

After closing at the highs for the S&P 500 and Nasdaq yesterday in another market driven rally amid strength in technology stocks (XLK +18.4% YTD) and Communications (XLC +17.4% YTD), U.S. futures are looking at a pullback, being led lower by the same technology stocks heading into the midweek July 4^th holiday. Nasdaq futures are down over -0.5% giving back a good portion of yesterday gains. The market concentration strength remains a focus as @MikeZaccardi notes “in the S&P 500 the degree of stock concentration is extreme; the top 10 companies have the highest weight in the index since 1929.” Interest rate sensitive stocks saw weakness on Monday, led lower by likes of homebuilders and dividend paying sectors as Treasury yields jumped. The 10-year yield is taking a small breather this morning, slipping 2bps to 4.457% after its recent spike, as the Treasury curve has been steepening in recent days due to resurfacing concerns about the U.S. fiscal outlook. Meanwhile energy prices extend gains as oil climbs to multi month highs and gasoline at best levels since early April. Bitcoin prices slip 1% after jumping over 5% yesterday above $63K. Hurricane Beryl strengthened after becoming the earliest ever Category 5 storm in the Atlantic, with the system heading toward Jamaica with life-threatening winds and heavy rainfall. In Asian markets, The Nikkei Index jumped 433 points to settle above 40K at 40,074, the Shanghai Index edged higher 2 points to 2,997, while the Hang Seng Index gained 50 points to 17,769. In Europe, the German DAX is down -177 points or nearly 1% to 18,112, while the FTSE 100 falls -23 points to 8,143 and the France Cac-40 drops -61 points to 7,500. Few data points of importance this week with JOLTs job data today, ADP private payrolls tomorrow and nonfarm payrolls on Friday.

• The Dow Jones Industrial Average rose 50.66 points, or 0.13%, to 39,169.52.
• The Nasdaq Composite jumped 146.70 points, or 0.83%, to 17,79.30.
• The Russell 2000 Index declined -17.62 points, or 0.86% to 2,030.07.

• 8:55 AM ET                  Johnson/Redbook Weekly Sales
• 9:30 AM ET                  Powell, Lagarde, Campos Neto Speak in Sintra
• 10:00 AM ET JOLTS Job Openings for May
• 4:30 PM ET API Weekly Inventory Data

• Earnings After the Close: SLP

• Iran’s oil output has reached 3.57m b/d and the country has been selling crude to Europeans, oil minister Javad Owji said, according to the semi-official Tasnim news agency.

• Group 1 Automotive, Inc. (GPI) announced the expansion of its U.K. operations with the acquisition of four Mercedes-Benz dealerships located north of London in the county of Hertfordshire from L&L Automotive. This acquisition is expected to generate $105M in annual revenues.
• Homebuilders D.R. Horton (DHI) and Lennar (LEN) both downgraded to Neutral from Buy at Citigroup and reduced estimates on builders to reflect softening housing activity this summer.

• Airbus (EADSY) won an order from Philippines budget airline operator Cebu Air which will buy up to 152 Airbus jets valued at $24 billion, an order it said would be the largest in the country’s history.
• ArcelorMittal’s (MT) South African division has decided against shutting its steel plant in the KwaZulu-Natal province and is working on a plan to make it viable, it said on Tuesday, more than six months after announcing its closure.
• MSC Industrial (MSM) Q3 adjusted EPS $1.33 vs. est. $1.34; Q3 revs $979.35M vs. est. $982.22M.
• Shell Plc (SHEL) has temporarily paused construction of a biofuels plant in the Netherlands to seek ways to cut the cost of the project.
• Twin Disc (TWIN) announced that it has been added to the Russell 2000 and Russell 3000 indexes, effective July 1.

• Franklin Resources Inc. (BEN) files for offering of up to 31.6 mln shares by the selling stockholder.

• Incyte (INCY) downgraded to Underperform from Market Perform at BMO Capital.
• Y-mAbs Therapeutics (YMAB) announced the appointment of Peter Pfreundschuh as Chief Financial Officer, effective June 28.

• Fiverr (FVRR) downgraded to Neutral from Buy at UBS and cut tgt to $25 from $37.
• Pure Storage (PSTG) downgraded to Sell from Neutral at UBS and raised tgt to $47 from $44.
• Rapid7 (RPD) announced it has signed a definitive agreement to acquire Noetic Cyber, a cyber asset attack surface management, or CAASM company.
• Sea Ltd. (SE) shares lower after the e-commerce group’s subsidiary PT Shopee International Indonesia accepted the report of alleged antitrust violations from Indonesian regulatory agency KPPU.
• WideOpenWest (WOW) downgraded to underperform from market perform at Raymond James.