Early Look

Wednesday, July 20, 2022

Futures	Up/Down	%	Last
Dow	-74.00	0.23%	31,717
S&P 500	-7.25	0.19%	3,930
Nasdaq	-9.50	0.07%	12,266

 

 

U.S. futures are down after yesterday’s outperformance, hitting overnight highs of 3,964.25 before paring gains with earnings in focus again this morning. U.S. stocks closed with sharp gains on Tuesday as the S&P 500 gained 2.8%, the highest close since June 9 and topped its 50-day moving average resistance while the Nasdaq Composite added 3.1%, marking the biggest one-day percentage gain since June 24. The U.S. dollar marked its third straight day of declines as markets reduced the odds of a 100-bps Federal Reserve rate hike this month. Spiraling inflation initially led markets to price in a 100-basis-point hike in interest rates at the upcoming Fed meeting later this month, until some policymakers signaled a 75-basis-point increase. Overnight, shares of Netflix (NFLX) advanced despite losing 970,000 subscribers in Q2, which was less than half what Wall Street feared, while also guided Q3 revs and earnings below views. Gold is holding near an 11-month low as investors weigh the US dollar’s retreat against rising Treasury yields amid improving sentiment in markets. In Asian markets, The Nikkei Index spiked over 700 points or 2.67% to 27,680, the Shanghai Index climbed 25 points to 3,304, and the Hang Seng Index gained 229 points or 1.1% to 20,890. In Europe, the German DAX is higher by 45 points to 13,355, while the FTSE 100 gains about 15 points to 7,310. Bitcoin prices add to recent gains, topping $23,000 for the first time in over a month.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 105.84 points, or 2.76%, to 3,936.69

·     The Dow Jones Industrial Average rose 754.44 points, or 2.43%, to 31,827.05

·     The Nasdaq Composite surged 353.10 points, or 3.11%, to 11,713.15

·     The Russell 2000 Index advanced 60.91 points, or 3.50% to 1,799.32

 

Economic Calendar for Today

·     7:00 AM ET           MBA Mortgage Applications Data

·     10:00 AM ET         Existing Home Sales M/M for June

·     10:30 AM ET         Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ABT, BHLB, BIIB, BKR, BMI, CMA, ELV, LAD, MKTX, MTB, NDAQ, NTRS

·     Earnings After the Close: AA, AMTB, BANR, CCI, CCK, CNS, CSX, DFS, EFX, EGBN, FNB, FR, GSBC, INBK, KMI, KNX, LSTR, LVS, MMLP, NVEC, PACW, REXR, RLI, SEIC, SLG, STLD, TSLA, UAL, UMPQ, VMI, WTFC

 

Other Key Events:

·     Farnborough International Airshow, 7/18-7/22

·     Structured Finance Association Conference, 7/17-7/20, Las Vegas

 

 

Macro	Up/Down	Last
Nymex	-1.72	102.50
Brent	-1.60	105.75
Gold	-1.40	1,709.30
EUR/USD	-0.0028	1.0196
JPY/USD	0.00	138.18
10-Year Note	-0.046	2.973%

 

 

World News

·     Vladimir Putin said Russia would fulfill its commitments to supply natural gas to Europe but warned that flows via the Nord Stream pipeline could be curbed soon if sanctions prevent additional maintenance on its components – WSJ https://on.wsj.com/3aPHAAG

·     The European Union is set to propose a voluntary 15% cut in natural gas use by member states starting next month on concern Russia may halt supplies of the fuel – Bloomberg

·     Surging petrol and food prices last month pushed British inflation to its highest rate in 40 years, as the Office for National Statistics said annual consumer price inflation (CPI) rose in June to 9.4%, the highest since February 1982, up from May’s 9.1% and above the 9.3% consensus

·     India eliminated a levy on gasoline exports and cut windfall taxes on other fuels less than three weeks after they were imposed

 

Sector News Breakdown

Consumer

·     Las Vegas Sands (LVS), Wynn Resorts (WYNN), Melco Resorts (MLCO), MGM Resorts (MGM) shares rally as Macau will reopen its casinos on Saturday as authorities seek to unwind some stringent measures that locked down the gambling hub for 12 days to curb its worst outbreak of COVID-19. Macau shut all its casinos for the first time in more than two years on July 11

·     Cal-Maine Foods (CALM) 4Q EPS $2.25 vs est. $1.84 on revs $593Mm vs est. $576Mm

·     Aspen Group (ASPU) 4Q EPS ($0.08) vs est. ($0.07) on revs $19.4Mm vs est. $19.5Mm

 

Energy

·     The American Petroleum Institute said weekly crude oil inventories rose 1.86M barrels, Cushing rose 520K barrels, gasoline a reported 1.29M barrel build and distillates fell -2.15M barrels

·     WEC Energy (WEC) downgraded to Underperform from Neutral at Credit Suisse

 

Financials

·     Interactive Brokers (IBKR) Q2 EPS $0.84 vs. est. $0.91; Q2 revs $656M vs. est. $737.18M; Q2 customer accounts increased 36% to 1.92 million, customer equity decreased 19% to $294.8B; total DARTs decreased 6% to 2.17M and cleared DARTs decreased 7% to 1.93M

·     Hope Bancorp (HOPE) Q2 EPS $0.43 vs. est. $0.41; Q2, net interest margin expanded 15 basis points from preceding Q1; Q2 net interest margin 3.36% vs 3.11% and recorded a provision for credit losses of $3.2M

·     MarketAxess (MKTX) Q2 diluted EPS $1.78 vs. est. $1.74; Q2 revs $182.2M vs. est. $184.09M

·     M&T Bank (MTB) Q2 EPS $3.10 vs. est. $2.70; provision for credit losses was $302 million in the second quarter of 2022; Q2 net interest income expressed on a taxable-equivalent basis totaled $1.42 bln in qtr, vs $946 million in q2 2021

·     United Community Bank (UCBI) Q EPS $0.61 vs est. $0.68, NIM 3.19% +22bps vs 1Q, provision $5.6Mm vs est. $4.24Mm

 

Healthcare

·     Elevance Health (ELV) Q2 adj EPS $8.04 vs. est. $7.74; Q2 revs $38.5B vs. est. $38.13B; sees FY22 adjusted EPS ‘greater than’ $28.70 vs. est. $28.64; benefit expense ratio was 87.0 percent in q2 of 2022, an increase of 20 basis points over prior year quarter

·     The European Commission said it had sent a statement of objections to U.S. life sciences firms Illumina (ILMN) and GRAIL alleging they breached EU merger rules by implementing the merger while the Commission’s in-depth investigation into the proposed transaction was still ongoing.

·     Vascular Biogenics Ltd. (VBLT) -79%; after the company said its ovarian cancer treatment didn’t achieve the results it was looking for in a recent clinical trial.

 

Industrials & Materials

·     JB Hunt (JBHT) 2Q EPS $2.42 vs est. $2.35 on revs $3.84B vs est. $3.6B; Q2 segment Revenue $1.83 billion; up 42% and Q2 operating Income $202.5 million; up 50%

·     Forestar Group (FOR) 3Q EPS $0.80 vs est. $0.81 on revs $308.5Mm vs est. $408.5Mm; sees FY pre-tax margin about 14.25% vs prior guide 14.0-14.5% with revs approx $1.425B vs est. $1.7B

·     Matson Inc. (MATX) guides Q2 eps $9.31-$9.42 vs. est. $8.27; expects 2q22 operating income for logistics to be $22.5-$23.5M; says in recent weeks have seen a gradual decline in transpacific freight rate environment off highs experienced earlier this year

·     Cummins (CMI) downgraded to Market Perform from Outperform at Bernstein

·     Axalta Coating (AXTA) upgraded to Overweight from Sector Weight, FMC Corporation (FMC) upgraded to Overweight from Sector Weight and Albemarle (ALB) upgraded to Sector Weight from Underweight

 

Technology, Media & Telecom

·     Netflix (NFLX) 2Q EPS $3.20 vs est. $2.94 on revs $7.97B vs est. $8.04B; net adds -970K vs. est. loss of -2M losses; guides 3Q net adds 1Mm, revs $7.84B vs est. $8.08B, EPS $2.14 vs est. $2.75; announces new lower-priced ad-supported tier; Q2 Operating margin 19.8% vs. 25.2% y/y and sees Q3 operating margin 16% vs. estimate 20.1%

·     Omnicom (OMC) Q2 EPS $1.68 vs. est. $1.58; Q2 revs rose 11.3% y/y to $3.57B vs. est. $3.47B; qtrly increase in revenue from organic growth of 11.3%; Q2 worldwide revenue growth was led by an increase in revenue from organic growth of $403.8M, or 11.3%; qtrly operating profit margin decreased to 15.2% from 15.9%

·     ASML Inc. (ASML) Q2 net income of EUR1.4 billion ($1.4 billion) on sales of EUR5.4 billion, delivering earnings per share of EUR3.54 vs. expectations EPS of EUR3.48 on revenue of EUR5.3 billion; cut its 2022 sales growth forecast to 10% from 20%.