Early Look

Wednesday, July 28, 2021

Futures	Up/Down	%	Last
Dow	-48.00	0.14%	34,905
S&P 500	1.25	0.03%	4,396
Nasdaq	15.50	0.11%	14,963

 

 

U.S. futures are looking flat to up slightly with the Nasdaq outperforming early following better earnings results overnight from some of the biggest tech companies in the world topping consensus views, and ahead of the FOMC monthly policy meeting. Alphabet, AMD and Microsoft gained in premarket trading after their sales beat estimates while Apple shares slipped over worries of slower growth. The Federal Reserve policy meeting concludes today where officials will discuss how and when to taper stimulus. Facebook, Boeing, Ford and Pfizer are due to report their earnings among many others today. Crypto assets are back on the move higher, with Bitcoin recapturing the $40,000 level and Ethereum over $2,300 as investors await Federal Reserve policy comments later today. In Asian markets, Chinese stocks in choppy trading after state media allays concerns of systemic risks and highlights prospect of more fiscal support. The Nikkei Index pulled back 388 points (1.4%) to settle at 27,581, the Shanghai Index slipped about -20 points to 3,361 and the Hang Seng Index partially recovered following two days of massive losses, adding 1.5% to settle at 25,473. In Europe, the German DAX is…= up roughly 30 points to 15,550, while the FTSE 100 edges higher 0.2% to 7,010.

 

Stocks slipped from record highs on Tuesday, snapping their 5-day win streaks as the tech-heavy Nasdaq 100 saw its biggest one-day drop since mid-May, while all three major equity indexes fell. Fears of tighter China government regulations on individual companies led to a further rout in Asian markets, which spilled into the U.S. along with global market unease given the rise in the Covid-19 delta variant and central-bank talk of tightening policy. Treasuries gained on haven flows amid China’s ongoing regulatory suppression. At the same time, uncertainty looms ahead of the conclusion of Wednesday’s FOMC meeting. Earnings overnight in the tech sector saw strong quarterly results from Apple, Google, Microsoft and AMD, while mixed guidance cast a shadow on some of the reports. Oil edged lower, gold ends little changed and Bitcoin traded around $38,000 after briefly rising above $40,000 overnight.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -20.84 points, or 0.47%, to 4,401.46

·     The Dow Jones Industrial Average slid -85.79 points, or 0.24%, to 35,058.52

·     The Nasdaq Composite slumped -180.14 points, or 1.21%, to 14,660.58

·     The Russell 2000 Index declined -25.09 points, or 1.13% to 2,191.83

 

Events Calendar for Today

·     7:00 AM ET         MBA Mortgage Applications Data

·     8:30 AM ET         Advance Goods Trade Balance for June

·     8:30 AM ET         Wholesale Inventories for June

·     10:30 AM ET      Weekly DOE Inventory Data

·     2:00 PM ET         FOMC Meeting Results

 

Earnings Calendar:

·     Earnings Before the Open: ADP, AMG, APH, AVY, BA, BG, BMY, CHEF, CME, COWN, DT, EEFT, EPD, EVR, EXP, EXTR, GD, GNRC, HES, HESM, HP, HUM, IART, LFUS, MCD, MCO, MHO, MNRO, MPX, NSC, NYCB, OC, ODFL, PAG, PB, PFE, R, ROL, SHOO, SIX, SLAB, SLGN, TDY, TMO, VRTS, WING, WNC

·     Earnings After the Close: AFL, AHT, AKR, ALGN, ALGT, ALSN, AM, ASGN, ATUS, AVB, BCOV, BMRN, CASH, CCS, CDE, CHDN, CINF, CMO, CONE, CRUS, CTSH, CUBI, CURO, CYH, DRE, EQIX, EQT, ESI, ESRT, EXAS, F, FB, FBHS, FORM, GSKY, GTY, HIG, HOLX, INVH, IR, IRBT, ISBC, JAKK, KN, KRA, LC, LNDC, LRCX, MKSI, MOH, MTH, MXL, NLY, NOW, NOVA, OII, OIS, ORLY, PEB, PI, PKI, PPC, PTC, PYPL, QCOM, RBC, RJF, RRR, SSNC, TTEK, TYL, UDR, URI, VAC, VKTX, VNDA, WH, WHD, XLNX, XPO

 

 

Macro	Up/Down	Last
Nymex	0.33	71.98
Brent	0.20	74.68
Gold	0.90	1,800.00
EUR/USD	-0.0013	1.1804
JPY/USD	0.19	109.97
10-Year Note	+0.022	1.256%

 

 

World News

·     While no action is expected from the FOMC today, there may be a possible mention of tapering the central bank’s bond program. The Fed is currently purchasing $120B in securities a month, including $80B in Treasury bonds and $40B in mortgage-backed securities

·     Australia’s New South Wales state authorities on Wednesday extended a COVID-19 lockdown in state capital Sydney for another month after weeks-long curbs failed to contain an outbreak of the highly infectious Delta virus variant.

·     Germany Aug GfK Consumer Confidence -0.3 vs 1.0 consensus; Germany June Import Prices: m/m 1.6% vs 1.5% cons; y/y 12.9% vs 12.6% consensus; France July Consumer Conf: 101 vs 102 cons

 

Sector News Breakdown

Consumer

·     Starbucks (SBUX) 3Q adj EPS $1.01 vs est. $0.78 on revs $7.5B vs est. $7.3B, global comps +73%, US comps +83%, international comps +41%, China comps +19%; guides FY adj EPS $3.20-3.25 vs est. $3.00, sees FY revs $29.1-29.3B vs est. $28.8B, sees FY global comps +20-21%, sees Americas and US comps +21-22%, sees int’l comps +15-17%, sees China comps +18-20%; raises FY21 operating margin view to roughly 17% from 15%-16%

·     Mattel Inc. (MAT) Q2 adj EPS $0.03 vs. est. loss (-$0.06); Q2 revs $1.03B vs. est. $868.19M; qtrly gross billings in North America segment increased 30% as reported; qtrly net sales in international segment increased 57% as reported; qtrly worldwide gross billings for barbie of $291.3M, up 46% and for hot wheels of $227.4M, up 67%; raises FY21 revenue growth view to 12%-14% from 6%-8% and ups FY21 adjusted EBITDA view to $875M-$900M from $800M-$825M

·     Boyd Gaming (BYD) Q2 adj EPS $1.54 vs. est. $0.90; Q2 revs $893.6M vs. est. $790.35M; Q2 Adjusted EBITDA was $385.4M in Q2, up from $16.1 million in the second quarter of 2020; Companywide margins exceeding 43% and Las Vegas Locals margins approaching 57%

·     Cheesecake Factory (CAKE) Q2 adj EPS $0.80 vs. est. $0.72; Q2 revs $769M vs. est. $742.58M; comparable restaurant sales at The Cheesecake Factory restaurants increased 150.0% year-over-year and was up 7.8% relative to Q2 of 2019; Q3-to-date through July 26th comparable sales at The Cheesecake Factory restaurants increased 10% over 2019 levels.

·     Mondelez (MDLZ) Q2 EPS $0.66 vs. est. $0.64; Q2 revs $6.64B vs. est. $6.42B; net revenues increased +12.4% driven by organic net revenue growth of +6.2%, favorable currency and acquisitions; sees 2021 organic net revenue growth at over 4% and sees 2021 adjusted eps growth at high single-digits; estimates currency translation to increase 2021 net revenue growth by about 2% with a positive $0.09 impact to adjusted eps

·     Hersha Hospitality (HT) Q2 AFFO loss (4c) vs. est. loss (19c); Q2 revs $70.1M vs. est. $63.24M; said had 33 comparable hotels fully open and operational throughout the second-quarter, which generated 55.8% occupancy, an average daily rate of $208.81, and RevPAR of $116.48; nit providing year guidance

·     Six Flags (SIX) Q2 EPS $0.80 vs. est. loss (-$0.09); Q2 revs $330.82M; attendance was 8.5 million guests, a decrease of 2.0 million compared to second quarter 2019.

 

Energy

·     The America Petroleum Institute (API) reports that crude inventories fell 4.73M barrels last week, gasoline inventories fell 6.23M barrels, distillate inventories show a draw of 1.88M barrels and Cushing inventories show a draw of 126K barrels

·     Enphase (ENPH) 2Q adj EPS $0.53 vs est. $0.43; Q2 revs $316M vs. est. $311M; guides 3Q revs $335-355Mm vs est. $342.5Mm

·     Matador Resources (MTDR) 2Q adj EPS $1.02 vs est. $0.76 on revs $357.4Mm vs est. $353.8Mm, qtrly total oil equiv production volume of 8,482 MBOE; proposes qtrly dividend of $0.025/share

·     Ovintiv (OVV) posted a Q2 GAAP loss of $205M, which includes $799M in net losses on risk management; raised its full-year crude and condensate production guidance to 190K-195K bbl/day, due to outperformance across its assets, while keeping full-year capital guidance of $1.5B unchanged

 

Financials

·     Visa Inc. (V) Q3 adj EPS $1.49 vs est. $1.35 on revs $6.1B vs es.t $5.7B, says net revs growth would have been 39% if service revs were recognized on current qtr’s payment volume; qtrly processed transactions 42.6B +39%, payments volume +34% on constant-dollar basis, total cross-border volume on constant-dollar basis +47%; not providing guidance for FY at this time

·     Citizens Financial (CFG) agrees to acquire Investors Bancorp (ISBC) in $3.5B stock and cash deal

·     MeridianLink (MLNK) 13.2M share IPO priced at $26.00

·     Boston Properties (BXP) Q2 FFO $1.72 vs. est. $1.61; Q2 revs $713.8M vs. est. $696.74M; sees Q3 FFO $1.68-$1.70 vs. est. $1.65

·     Chubb Inc. (CB) Q2 core EPS $3.62 vs. et. $2.99; P&C net premiums written were up 15.5% globally for the quarter and 12.6% for the first six months, powered by commercial lines and the best organic P&C growth since 2004; P&C combined ratio was 85.5% compared with 112.3% prior year; Pre-tax net investment income was $884 million, up 7.0% from the prior year

·     Equity Residential (EQR) Q2 FFO 78c vs. est. 70c; Q2 revs $598.1M vs. est. $589.7M; Q2 occupancy 96.3% vs. 95.6% in Q1; raises FY21 FFO view to $2.85-$2.95 from $2.70-$2.80

·     Extra Space Storage (EXR) Q2 core FFO $1.64 vs. est. $1.56; Q2 revs $378.63M vs. est. $317.09M; Q2 same-store occupancy of 97.0%, compared to 94.2% as of June 30, 2020; sees FY FFO $6.45-$6.60 and same-store NOI growth 13.5%-15.5%

·     Principal Financial Group (PFG) Q2 EPS $1.70 vs. est. $1.51; Assets under management (AUM) of $990.4 billion; Individual Life premium and fees growth reflects strong non-qualified COLI sales, which increased 61% from the prior year quarter; total company net cash flow of $2.1 billion

·     Trustmark Corp. (TRMK) NII $122.4Mm vs est. $112.8Mm, revs $175.8Mm vs est. $172.1Mm

 

Healthcare

·     Amgen (AMGN) to acquire privately held Tenebrio for $900 million in cash with future contingent milestone payments acquisition complements Amgen’s antibody research capabilities across therapeutic areas acquisition includes a portfolio of early-stage oncology assets, including a phase 1 bispecific antibody for patients with advanced prostate cancer

·     Chemed Corp. (CHE) 2Q adj EPS $4.60 vs est. $4.29 on revs $532Mm vs est. $511.9Mm; guides FY adj EPS $18.20-18.50 vs est. $17.35

·     Masimo Corp. (MASI) Q2 adj EPS 94c vs. est. 90c; Q2 revs $305.12M vs. est. $295.6M; raises FY21 adjusted EPS view to $3.85 from $3.83 (est. $3.77) and raises FY21 revenue view to $1.216B from $1.205B (est. $1.21B)

·     Stryker (SYK) Q2 adj EPS $2.25 vs. est. $2.12; Q2 revs $4.3B vs. est. $4.13B; sees FY21 EPS $9.25-$9.40 vs. est. $9.19; expect 2021 organic net sales growth to be in range of 9% to 10% from 2019; expect continued unfavorable price reductions of approximately 1% in 2021

·     Teledoc (TDOC) 2Q EPS ($0.86) vs est. ($0.56) on revs $503Mm vs est. $500.6Mm; guides 3Q EPS loss $0.68-0.78 vs est. loss $0.50, sees 3Q revs $510-520Mm vs est. $514.2Mm; says in q2, 80% of member visits were related to non-infectious diseases vs approx 50% in pre-pandemic period

·     Thermo Fisher (TMO) Q2 adj EPS $5.60 vs. est. $5.49; Q2 revs $9.27B vs. est. $8.71B; Q2 adjusted operating margin was 29%, compared with 27% YoY; raises FY21 adjusted EPS view to $22.07 from $21.97 and ups FY21 revenue view to $35.9B from $35.6B vs. est. $35.66B; laboratory products and services segment revenue grew 29% to $3.58 billion in Q2

 

Industrials & Materials

·     CH Robinson Worldwide (CHRW) 2Q EPS $1.44 vs est. $1.33 on revs $5.5B vs est. $4.9B; Operating expenses increased 14.8% to $488.6 million, due to higher personnel expenses; Personnel expenses increased 20.8% to $362.9 million

·     IDEX Corp. (IEX) Q2 adj EPS $1.61 vs. est. $1.62; Q2 sales $685.9M vs. est. $689.5M; sees Q3 adj EPS $1.57-$1.61 vs. est. $1.55; sees year EPS $6.26-$6.36 vs. est. $6.21; raises FY revs view to +11% to +12%, saw +9% to +10%

·     Olin Corp. (OLN) 2Q EPS $2.17 vs est. $1.47 on revs $2.22B vs est. $2.12B; sees 3Q adj EBITDA sequentially better than 2Q, expects 2022 adj EBITDA to be better than 2021, with growth beyond 2022

·     Generac (GNRC) Q2 adj EPS $2.39 vs. est. $2.31; Q2 revs $920M vs. est. $863.41M; raises FY21 revenue growth view to 47%-50% from 40%-45% said adjusted EBITDA margin is now expected to be 24.5%-25.0% vs. previous guidance range of 24.5%-25.5%

 

Semiconductors

·     Advanced Micro Devices (AMD) 2Q adj EPS $0.63 vs est. $0.54 on revs $3.85B vs est. $3.6B, qtrly computing and graphics revs $2.25B, qtrly enterprise, embedded and semi-custom revs $1.6B, 2Q gr mgn 48%; 3Q guide revs aprpox $4.0-4.2B vs est. $3.8B and gr mgn about 48%; sees FY revs growth about 60% vs est. +51.2% and gr mgn approx 48%

·     Maxim Integrated (MXIM) Q4 adj EPS 91c vs. est. 84c; Q4 revs $720M vs. est. $681.79M; Q4 GAAP gross margin 67.2% (note MXIM agreed to be bought by ADI)

·     Monolithic Power Systems, Inc. (MPWR) Q2 EPS $1.81 vs. est. $1.69; Q2 revs $293.32M vs. est. $280.54M; sees Q3 revs $309M-$321M vs. est. $296.64M; sees Q3 gross margin 57.6%-58.2%

·     Teradyne Inc. (TER) Q2 adj EPS $1.91 vs. est. $1.75; Q2 revs $1.086B vs. est. $1.06B; sees Q3 adj EPS $1.29-$1.55 vs. est. $1.38; sees Q3 revenue $880M-$960M vs. est. $925.38M

 

Technology

·     Apple Inc. (AAPL) Q3 revs $81.4B vs. est. $73.82B; iPhone revs $39.57B vs. est. $34.56B; China sales grew 58% to $14.76 billion in the fiscal third quarter ended June 26; Q3 EPS $1.30 vs. est. $1.01; iPhone 12 Pro and 12 Pro Max were strong sellers helping push gross margins to 43.3%, above estimates of 41.9%; Q3 Services revenue reached a record high of $17.49B, above analyst expectations of $16.33B; Sales of iPads and Macs were $7.37B and $8.24B, compared with analyst expectations of $7.15B and $8.07B, according to Refinitiv data.

·     Alphabet (GOOGL) 2q rev. $61.88B, vs. est. $56.23B; 2q google cloud rev. $4.63B, vs. est. $4.34B; Q2 eps $27.26, vs. est. $19.35; qtrly operating margin 31% vs 17 % reported last year; 16-year old YouTube continues to accelerate revenue growth; 2-year growth stack up 89.5% vs 82.2% in Q1

·     Microsoft Corp. (MSFT) 4Q EPS $2.17 vs est. $1.92 on revs $46.15B vs est. $44.24B; server and cloud service revs +34% (azure +51%);

·     A10 Networks (ATEN) 2Q adj EPS $0.13 vs est. $0.11 on revs $59.2Mm vs est. $56.6Mm; guides 3Q revs $60.6-63.4Mm vs est. $61.5Mm

·     Agilysys, Inc. (AGYS) 1Q adj EPS $0.21 vs est. $0.17 on revs $38.7Mm vs est. $36.9Mm; guides FY revs $160-170Mm vs est. $163.6Mm

·     Juniper Networks (JNPR) 2Q adj EPS $0.43 vs est. $0.39 on revs $1.17B vs est. $1.14B; guides 3Q adj EPS $0.41-0.51 vs est. $0.46, sees 3Q revs about $1.2B +/- $50Mm vs est. $1.18B

·     Duolingo (DUOL) 3.7M share IPO priced at $102.00

·     Shopify (SHOP) files $10B mixed securities shelf

·     Snap One (SNPO) 13.85M share IPO priced at $18.00