Early Look

Tuesday, July 18, 2023

Futures	Up/Down	%	Last
Dow	14.00	0.04%	34,777
S&P 500	-1.25	0.04%	4,552
Nasdaq	-19.50	0.12%	15,821

 

 

U.S. futures flat in overnight trading, with the S&P trading in a narrow 10-point range after topping new 52-week highs yesterday as momentum remains to the upside Wall Street closed the session higher on Monday, led by gains in financial and technology stocks, with investors looking toward the next round of quarterly results as earnings season gets underway. In Asian markets, The Nikkei Index rose 102 points to 32,493, the Shanghai Index slid -11 points to 3,197, and the Hang Seng Index dropped -398 points to 19,015. In Europe, the German DAX is down -12 points to 16,055, while the FTSE 100 is up a few points at 7,410. Busy morning of economic data today with June Retail Sales, Industrial Production, Business Inventories and Housing data, but attention on bank earnings early with BAC, BK, PNC among those reporting results (details below). The dollar and Treasury yields edge lower.

 

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 17.31 points, or 0.38%, to 4,522.73.

·     The Dow Jones Industrial Average rose 76.39 points, or 0.22%, to 34,585.42.

·     The Nasdaq Composite gained 131.24 points, or 0.93%, to 14,244.95.

·     The Russell 2000 Index advanced 20.18 points, or 1.05% to 1,951.27.

 

Economic Calendar for Today

·     7:45 AM ET            ICSC Weekly Retail Sales

·     8:30 AM ET            Retail Sales M/M for June…est. +0.5%

·     8:30 AM ET            Retail Sales Ex; Autos M/M for June…est. +0.3%

·     8:55 AM ET            Johnson/Redbook Weekly Sales

·     9:15 AM ET            Industrial Production M/M for June…est. 0.0%

·     9:15 AM ET            Capacity Utilization for June…est. 79.5%

·     10:00 AM ET          Business Inventories M/M for May…est. +0.2%

·     10:00 AM ET          NAHB Housing Market Index for July…est. 56

·     4:00 PM ET             Net Long-term TIC Flows for May

·     4:30 PM ET             API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: BAC BK CATC LMT MBWM MS PLD PNC SCHW SYF

·     Earnings After the Close: AIR EQBK FULT HWC IBKR JBHT OMC PNFP UCBI WAL

 

Other Key Events:

·     Oppenheimer Montauk Life Sciences Summit, 7/18-7/20, in NY

 

 

Macro	Up/Down	Last
Nymex	0.33	74.48
Brent	0.28	78.78
Gold	11.10	1,967.50
EUR/USD	0.0022	1.1256
JPY/USD	-0.50	138.22
10-Year Note	-0.035	3.762%

 

 

World News

·     Rejection rate for US credit applicants at 21.8% y/y to Jun vs 17.3% in Feb survey and prior to US banking crisis; highest level over the same period for the last 5 years.

·     RBA Minutes showed they considered holding rates or a 25bps hike; strong cases for both, decided the argument for a hold was stronger; the board agreed some further tightening may be required, will reconsider in August.

 

Sector News Breakdown

Consumer

·     Advance Auto Parts Inc. (AAP) said late Monday that Canada’s TRC Capital Investment Corp. has made an unsolicited “mini-tender,” or less than 5% of the company’s shares, offer to purchase up to 1 million shares of the auto parts retailer at $65.75 a share.

·     Norwegian Cruise Line (NCLH) downgraded to Hold from Buy at Truist.

·     MarineMax (HZO), Camping World (CWH), Polaris (PII), and OneWater Marine (ONEW) all downgraded to market Perform at Raymond James in leisure sector.

 

Energy, Industrials and Materials

·     Astronics (ATRO) sees prelim Q2 sales $170M-$175M vs. est. $167.5M; Q2 orders about $200M.

·     Lithium Americas (LAC) announced a decision by an appeals court to affirm a lower court’s ruling to approve its Thacker Pass lithium mine in Nevada amid opposition from environmental and other groups. The U.S. Appeals Court for the 9th Circuit affirmed a lower court’s decision from February, according to a court filing on Monday. https://tinyurl.com/5azuav35

·     Raytheon (RTX) and Northrop Grumman Corp. (NOC) were awarded a U.S. Defense Department contract to continue testing and building out ultra-high-speed hypersonic missile systems, executives at both companies said.

·     Transocean Ltd. (RIG) announces $518 Million Ultra-Deepwater Drillship Contract.

 

Financials

·     Bank America (BAC) Q2 trading revs ex DVA $4.39B vs. est. $3.98B; Q2 FICC revs ex DVA $2.76B vs. est. $2.44B; equities trading revs ex DVA $1.62B vs. est. $1.54B; Return on average equity 11.2%, and return on average assets 0.94%.

·     Bank of New York (BK) Q2 EPS $1.38 vs. est. $1.22; Q2 revs $4.45B vs. est. $4.38B; Net Interest revenue $1.10 billion, +33% y/y, total avg. deposits $277.21 billion, AUM $1.91 trillion, -1.5% y/y, net interest margin 1.2% vs. 0.89% y/y, and provision for credit losses $5 million.

·     CrossFirst Bancshares (CFB) Q2 EPS $0.35 vs. est. $0.34; Q2 revs $60.3M vs. est. $62.14M; Q2 book value per share $13.39. Reports Q2 net charge-offs .04%.

·     Equity Lifestyle (ELS) Q2 normalized FFO $0.63 vs. est. $0.66; Q2 revs $370M vs. est. $76.33M; guides FY23 FFO $2.80-$2.90 vs. est. $2.85; Core property operating expenses for the quarter ended June 30, 2023, increased 7.0% y/y.

·     FB Financial (FBK) 2Q adj EPS $0.77 vs est. $0.65 on NII $101.543Mm vs est. $103.17Mm.

·     PNC Financial (PNC) Q2 EPS $3.36 vs. est. $3.28; Q2 revs $5.29B vs. est. $5.45B; Q2 tangible book value per share $77.80; Q2 net charge-offs .24%; Q2 CET1 capital ratio 9.5%; raises quarterly dividend 5c to $1.55 per share.

·     Synchrony (SYF) Q2 EPS $1.32 vs. est. $1.24; Q2 CET1 capital ratio 12.3%; Q2 tangible common equity per share $24.67; sees FY23 net interest margin 15.00% – 15.15% and sees FY23 net charge-offs 4.75% – 4.90%.

 

Healthcare

·     4DMT (FDMT) completes enrollment of phase 2 prism clinical trial for intravitreal 4d-150 in patients with wet AMD and reports interim safety and tolerability data; expect to provide update regarding phase 3 pivotal trial plans in q1 2024 after discussion with FDA in q4 2023.

·     Argenx (ARGX) announces $750M ordinary shares offering.

·     CareDx (CDNA) said the United States District Court for the District of Delaware decision upheld and reaffirmed the March 2022 jury verdict finding that Natera (NTRA) violated the Lanham Act by falsely advertising the scientific performance of its Prospera transplant test.

·     Karyopharm Therapeutics (KPTI) announced that the FDA has granted Fast Track Designation to the development program of selinexor for the treatment of patients with myelofibrosis.

·     Masimo (MASI) guides Q2 prelim revs $453M-$457M vs. est. $553.23M saying large orders that were anticipated for Q2 were delayed to second half of year; said single-patient use sensor sales were down in Q2; company is taking actions to reduce costs in second half of year.

·     Novartis (NVS) Q2 sales rose to $13.62B from $12.78B y/y and above est. $13.45B; Q2 net profit rose to $2.32B from $1.70B in the same quarter the previous year, but came in shy of consensus expectations of $3.55B; raised its guidance, saying it expects group sales to grow in the high single digits, from a previous expectation of mid-single digits, and core operating income to grow in the low double digits, from a previous forecast of high single digits.

 

Technology, Media & Telecom

·     Pinterest (PINS) upgraded to Outperform from In Line at Evercore ISI with $41 tgt.

·     Shopify (SHOP) downgraded to In Line at Evercore ISI following outperformance.

·     Splunk (SPLK) and Microsoft (MSFT) are partnering to build Splunk’s enterprise security and observability offerings on Microsoft Azure.

·     Daily active users to Meta’s (META) “Threads” on Android devices slumped to 23.6 million from 49 million, according to market researcher Similarweb’s report on Monday. Usage in the U.S., which peaked at about 21 minutes on July 7, was just over 6 minutes on July 14.

·     Comcast (CMCSA) NBCUniversal is raising the price of its streaming service Peacock by as much as $2 a month, Joe Flint of The Wall Street Journal reports. This price increase comes as the platform continues to lose money. Peacock has about 22M subscribers, but had a $704M loss before interest, taxes, depreciation, and amortization in Q1. https://tinyurl.com/2s5fxxcv

·     Coherent (COHR, Lumentum (LITE), and Macom (MTSI) all downgraded at Bank America.

·     CommScope (COMM) downgraded to Hold from Buy at Deutsche Bank, which says lingering pressure on customer orders is likely to persist.

·     Marvell Technology Inc. (MRVL) added to the US 1 list at Bank America, and removed Global Foundries Inc. (GFS), which remains Buy-rated.