Early Look

Monday, July 24, 2023

Stock futures in the US are edging slightly following mixed results last week, as investors brace for an FOMC policy meeting mid-week and roughly 1/3 of the S&P 500 reporting earnings this week. For the week, the S&P 500 gained 0.69%, the Nasdaq fell -0.57%, the Dow industrials added 2.09%. The Dow managed to eke out a small gain on Friday, extending its win streak to 10-straight days, the longest since August 2017 (the longest streak is 13 in 1987). In Asian markets, The Nikkei Index rose 396 points to 32,700, the Shanghai Index dipped -3 points to 3,164, and the Hang Seng Index fell -407 points to 18,668. In Europe, the German DAX is up 30 points to 16,206, while the FTSE 100 is flat at 7,663. Bitcoin prices drop to 1-month lows, down about -2% below $29,300.

Market Closing Prices Yesterday

·     The S&P 500 Index edged higher 1.45 points, or 0.03%, to 4,536.32.

·     The Dow Jones Industrial Average rose 3.30 points, or 0.01%, to 35,228.48.

·     The Nasdaq Composite slipped -30.50 points, or 0.22%, to 14,032.81.

·     The Russell 2000 Index declined -6.90 points, or 0.35% to 1,960.26.

Economic Calendar for Today

·     8:30 AM ET         National Activity Index for June

·     9:45 AM ET          S&P Global Manufacturing PMI-July-F

·     9:45 AM ET          S&P Global Services PMI, July-F

·     1:00 PM ET          US Treasury to sell $42B in 2-year notes.

Earnings Calendar:

·     Earnings Before the Open: APLD BMRC BOH DPZ DX HBT HOPE

·     Earnings After the Close: AGNC AGYS ARE BRO CADE CATY CCK CDNS CHX CLF FFIV HSTM HXL IBTX KREF MEDP NEW NXGN PKG RBB RGP RLI RRC SMBK SSD TBI WASH WHR WSFS ZWS

Sector News Breakdown

Consumer

·     AMC Entertainment (AMC) shares rose late Friday and AMC Entertainment Holdings (APE) shares tumbled after a judge in Delaware shot down a settlement that would have allowed the movie-theater chain to move ahead with a plan to dump more shares onto the market. AMC has wanted to turn its AMC Preferred Equity preferred units into common stock.

·     Aurora (AUR) files to sell 222.22M shares of Class A common stock for holders.

·     Constellation Brands (STZ) mentioned positively in Barron’s saying It has been a summer of milestones for the company noting its Modelo Especial became the top-selling beer in the U.S., and the company managed to attract the interest of activist investor Elliott Management.

·     Domino’s Pizza (DPZ) Q2 EPS $3.08 vs. est. $3.05; Q2 revs $1.02B vs. est. $1.07B; Q2 U.S. same store sales grew 0.1% in Q2 vs. est. +0.8%; International same store sales grew 3.6% vs. est. 2%.

·     Mattel Inc (MAT) shares edge higher after its “Barbie” movie hauled in $155 million in the United States and Canada over the weekend; set records as 2023’s biggest opening so far and the highest of any movie directed by a woman in history.

Energy, Industrials and Materials

·     American Airlines (AAL) said it raised the value of its contract offer to pilots by more than $1B to match a more generous deal at United Airlines (UAL) after American’s union warned that ratification was in jeopardy, according to Reuters.

·     Booz Allen Hamilton Holding Corp. (BAH) said it will pay $377.5Mm under a settlement agreement with the US Department of Justice to settle a civil investigation related to its cost accounting.

·     Chevron (CVX) reported Q2 adj EPS of $3.08 on Sunday, topping estimates of $2.97, said it produced 2.96 mln barrels of oil equivalent per day (boepd) in Q2 vs 2.9 mln boepd in the year-ago quarter; said that production in the Permian basin in U.S. was 11% higher compared to last year; added that it extended the retirement age for CEO Michael Wirth; the company also said its CFO Pierre Breber would step down in 2024 and would be replaced by insider Eimear Bonner.

·     UPS (UPS) said it plans on Tuesday to resume labor talks with the Teamsters union representing 340,000 employees, an effort to avert a strike that could roil supply chains and harm the economy.

·     Softbank and Symbotic (SYM) are investing a combined $100 million to establish the joint venture, which will be called GreenBox Systems LLC, and will buy $7.5 billion of Symbotic’s AI-powered systems for its warehouses – Bloomberg reports https://tinyurl.com/3jf5zaka

Financials

·     Arthur J. Gallagher & Co. (AJG) mentioned positively in Barron’s noting the insurance broker benefits from higher interest rates, as its revenue comes from fees paid as a percentage of premiums that have risen with inflation.

·     American Express (AXP) falls downgraded to Underweight from Neutral at Piper after its Q2 revenue missed estimates and expect further headwinds to revenue growth given the re-start of federal student debt repayments in its core customer base and a slowdown in network volume.

·     Equifax (EFX) downgraded to Underperform from Neutral at Bank America and lower its price tgt to $195 from $255 saying despite EFX cutting its 2023 guide by 3% at the mid-point (with 2Q EPS), BAML thinks there’s still downside.

Healthcare

·     Becton, Dickinson, and Company (BDX) announced that the updated BD Alaris™ Infusion System has received 510(k) clearance from the U.S. FDA.

·     Gilead Sciences, Inc. (GILD) announced that the Phase 3 ENHANCE study in higher-risk myelodysplastic syndromes has been discontinued due to futility based on a planned analysis.

·     Horizon Therapeutics (HZNP) announced phase II trial evaluating Daxdilimab for the treatment of systemic lupus erythematosus did not meet primary endpoint; continues to assess full dataset; Daxdilimab trials in alopecia areata, discoid lupus erythematosus and lupus nephritis ongoing.

·     Kenvue Inc. (KVUE) announced that it intends to file a Form S-4 Registration Statement today with the SEC in connection with Johnson & Johnson’s (JNJ) proposed offer to exchange up to 1,533,830,450 shares of Kenvue common stock that it owns.

·     Kodiak Sciences Inc. KOD (KOD) shares tumble after saying it decided to discontinue development of wet age-related macular degeneration (AMD) treatment Tarcocimab after the treatment failed to meet primary efficacy endpoints in two studies of patients on longer treatment intervals.

·     Verrica Pharmaceuticals (VRCA) announces FDA approval of YCANTH™ (cantharidin) topical solution as the first FDA approved treatment of pediatric and adult patients with molluscum contagiosum; VRCA said it plans to make YCANTH™ available by September 2023.

Technology, Media & Telecom

·     In a series of tweets Sunday, Elon Musk said he plans to soon replace Twitter’s decade-old logo of a small blue bird with a new, yet-to-be-decided logo featuring an “X.”

·     Casa Systems Inc. (CASA) files for shelf of up to 11.9 mln shares of common stock by selling stockholders.

·     Twilio (TWLO) downgraded to underperform from sector perform at RBC Capital Markets, with the broker saying the shares reflect “too much optimism” with an unfavorable risk-reward.