Early Look

Thursday, June 1, 2023

Futures	Up/Down	%	Last
Dow	34.00	0.10%	33,013
S&P 500	10.25	0.26%	4,201
Nasdaq	20.50	0.15%	14,321

 

 

U.S. futures are edging higher to kick off the new trading month after the US House of Representatives approved the bill to suspend $31.4 trillion debt ceiling until 2025, sending the measure to the Senate tomorrow morning and then the President if passed. The Republican-controlled House voted 314-117 to send the legislation to the Senate. Stocks are coming off a mixed month as the S&P rose 0.26% in May, the Dow Jones Industrial Average lost 3.48%, the Russell 2000 lost -1.09% and the Nasdaq gained 5.82% (no sell in May, go away this year). Treasury yields jumped in May as the 10-year rose 18.5 bps to 3.636% for the month, snapping a two-month losing streak, while the two-year is up for two consecutive months, gaining 32.4 bps to settle the month at 4.388%. Note Smallcaps have underperformed as the “IWM” are down 4 straight months and -13% from the early Feb high. A handful of tech companies lower after results/guidance last night including CRM, CRWD, OKTA, and AI. In Asian markets, The Nikkei Index gained 260 points to 31,148, the Shanghai Index was unchanged at 3,204, and the Hang Seng Index dipped -17 points to 18,216. In Europe, the German DAX jumps 173 points to 15,837, while the FTSE 100 rises 30 points to 7,475. A busy day of economic data on tap (below).

 

Economic Calendar for Today

·     7:30 AM ET                  Challenger Layoffs for May

·     8:15 AM ET                  ADP National Employment Data for May…est. +170K (prior +296K)

·     8:30 AM ET                  Weekly Jobless Claims…est. 235K

·     8:30 AM ET                  Continuing Claims…est. 1.80M

·     8:30 AM ET                  U.S. Nonfarm Productivity for Q1…est. (-2.5%)

·     8:30 AM ET                  Unit Labor Costs for Q1…est. +6.0%

·     9:45 AM ET                  S&P Global Manufacturing PMI, May-F…prior 48.5

·     10:00 AM ET                Construction Spending for April…est. +0.2%

·     10:00 AM ET                ISM Manufacturing PMI for May…est. 47.0

·     10:30 AM ET                Weekly EIA Natural Gas Inventory Data

·     11:00 AM ET                Weekly DOE Inventory Data

·     1:00 PM ET                   Fed’s Harker Speaks on Economic Outlook

 

Earnings Calendar:

·     Earnings Before the Open: CAL DG DLTH HRL LE M REED SPTN

·     Earnings After the Close: ASAN AVGO BARK CHPT COO DELL ESTC FIVE GWRE IOT ITI MDB NX PD S TLYS VMW ZS ZUMZ

 

Other Key Events:

·     Bernstein Strategic Decisions Conference, 5/31-6/2, in New York

·     Deutsche Bank 13th Annual Global Financial Services Conference, 5/31-6/1, in New York

·     Jefferies Software Conference, 5/30-6/1, in CA

·     KeyBanc Industrials & Basic Materials Conference, 5/30-6/1, in Boston, MA

·     Mizuho 5^th Annual Auto Technology Conference, 5/30-6/1

·     TD Cowen Technology, Media & Telecom Conference, 5/31-6/1, in New York

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -25.69 points, or 0.61%, to 4,179.83.

·     The Dow Jones Industrial Average fell -134.51 points, or 0.41%, to 32,908.27.

·     The Nasdaq Composite slumped -82.14 points, or 0.63%, to 12,935.29.

·     The Russell 2000 Index declined -17.94 points, or 1.02% to 1,749.35.

 

 

Macro	Up/Down	Last
Nymex	-0.44	67.65
Brent	-0.20	72.40
Gold	+0.60	1,982.70
EUR/USD	0.0022	1.0710
JPY/USD	0.27	139.61
10-Year Note	+0.034	3.671%

 

 

World News

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -7.7 vs -12.3 last week. Bulls rise to 29.1% from 27.4%, Neutrals rise to 34.1% from 32.9%, Bears fall to 36.8% from 39.7%.

·     China May Caixin Manufacturing PMI Final: 50.9 vs 49.5 consensus.

·     Japan Q1 Biz Capex: +11% y/y vs +6% consensus; Q1 Co. Profits: +4.3% y/y vs +0.9% consensus; and Japan May Manufacturing PMI Final: 50.6 vs 50.8 previous.

 

Sector News Breakdown

Consumer

·     Chewy Inc. (CHWY) shares rise 17% after results; 1Q adj EPS $0.20 vs est. ($0.04) on revs $2.78B vs est. $2.73B, adj EBITDA $110.2Mm vs est. $56.57Mm; sees Q2 revenue $2.75B-$2.77B, vs. consensus $2.70B.

·     Hormel Foods (HRL) Q2 EPS $0.40, in-line with consensus while Q2 revs $2.98B miss consensus $3.05B; still sees FY EPS $1.70 to $1.82, vs. est. $1.74.

·     Nordstrom (JWN) Q1 EPS $0.07 vs. est. loss (-$0.08); Q1 revs fell -11.6% y/y to $3.18B vs. est. $3.12B; sees FY23 adjusted EPS $1.80-$2.20 vs. est. $1.88 and sees FY23 revenue down 4%-6%; Nordstrom rack sales trends improved late in qtr primarily driven by increased penetration of strategic brands in merchandise mix; Q1 digital sales decreased -17.4% y/y.

·     PVH Corp. (PVH) Q1 EPS $2.14 vs. est. $1.93; Q1 revs $2.05B vs. est. $2.12B; sees Q2 EPS $2.08 vs. est. $2.26 and sees Q2 revenue up low single-digits (est. $2.2B); backs year adj EPS view and revenue outlook; Q1 Direct-to-consumer revenue increased 8% y/y.

·     Victoria Secrets (VSCO) Q1 adj EPS $0.28 below est. $0.54; Q1 revs $1.41B vs. est. $1.42B; sees Q2 EPS $0.10-$0.40 below consensus $0.88 and sees Q2 revenue down mid-single digits well below consensus $1.54B; cuts FY23 revenue view to flat to down low single digits from prior view of up mid-single digit range.

·     Lucid (LCID) said it plans to raise about $3 bln through a stock offering, nearly two-thirds of which will come from Saudi Arabia’s Public Investment Fund (PIF).

·     Swiss watch exports to the US declined for the first time in more than two years as exports to the US fell by 4.9% in April, the Federation of the Swiss Watch Industry said Thursday.

 

Energy, Industrials and Materials

·     The American Petroleum Institute said crude stocks rose by about 5.2 million barrels in the week ended May 26, gasoline inventories rose by about 1.9 million, while distillate inventories gained by about 1.8 million.

·     Under pressure from Saudi Arabia, OPEC has banned journalists from Reuters, the Wall Street Journal, and Bloomberg from attending the group’s ministerial meeting in Vienna this weekend.

·     A California judge on Wednesday dismissed all charges against Pacific Gas & Electric (PCG) in connection to a 2020 fatal wildfire sparked by its equipment that destroyed hundreds of homes.

·     DHT Holdings (DHT) announced that it has entered into an agreement to acquire a VLCC built in 2018 at Hyundai Heavy Industries HHI for $94.5M.

·     ReneSola (SOL) 1Q EPS $0.00 vs est. $0.04 on revs $12.9Mm vs est. $35.15Mm.

·     Southwest airlines (LUV) said Q2 capacity and CASM-x are expected to be in line with previous guidance; sees Q2 rasm to down 8% – 10%; continues to expect solid profits in second quarter and full year 2023, both excluding special items.

 

Healthcare

·     Novan Pharmaceuticals (NOVN) targets PDUFA date of Jan. 5, 2024, for Berdazimer gel; says cutting 50% of employees.

·     Novabay Pharmaceuticals (NBY) files to offer up to 7.9M shares of common stock from time to time, by selling stockholders.

·     Phreesia (PHR) 1Q adj EBITDA $(13.8)Mm on revs $83.8Mm vs est. $81.2Mm; guides FY24 revs $353-356Mm vs est. $355.19Mm, adj EBITDA $(60)Mm-$(55)Mm vs est. $(63)Mm; says maintains FY25 $500Mm revs target, continues to expect to reach profitability in FY25, believe cash and equivalents along with cash generated in normal course of business can support FY25 targets.

 

Technology, Media & Telecom

·     Salesforce.com (CRM) Q1 EPS $1.69 vs. est. $1.61; Q1 revs $8.25B vs. est. $8.18B; Q1 current RPO $24.1B, up 12% y/y; said Q1 non-GAAP margin up 1,000 bps y/y and raising FY24 non-GAAP operating margin guidance to a 550-bps increase y/y; raises FY24 EPS view to $7.41-$7.43 from $7.12-$7.14 (est. $7.14) and backs FY24 revenue view of $34.5B-$34.7B vs. consensus $34.65B.

·     Crowdstrike (CRWD) 1Q adj EPS $0.57 vs est. $0.51 on revs $692.6Mm vs est. $676.4Mm; guides 2Q revs $717.2-727.4Mm vs est. $718.5Mm and adj EPS $0.54-0.57 vs est. $0.54; sees FY revs $3.00-3.04B vs est. $2.998B and adj EPS $2.32-2.43 vs est. $2.32.

·     C3.ai (AI) sees 1Q revs $70M-$72.5M vs. est. $72.1M, and sees 1Q adj operating loss $25M-$30M; sees 2024 revs $295M-$320M vs. est. $317M,

·     Credo Technology (CRDO) 4Q adj EPS ($0.04) vs est. ($0.04) on revs $32.1Mm vs est. $31.19Mm, adj gr mgn 58.2%; guides 1Q revs $33-35Mm vs est. $31.44Mm, adj gr mgn 58-60%, adj op exp $26-28Mm.

·     nCino Inc. (NCNO) Q1 EPS $0.07 vs. est. $0.05; Q1 revs rose 21% y/y to $113.7M vs. est. $112.5M; Q1 subscription revenues of $97.3m, up 23% y/y, cash from operating activities of $31.3m and GAAP loss from operations of $(8.6)m; achieves record free cash flow of $29.7m and record non-GAAP operating income of $10.9M; guides year EPS above views, revs below.

·     NetApp Inc. (NTAP) 4Q adj EPS $1.54 vs est. $1.34 on revs $1.58B vs est. $1.54B; guides 1Q revs $1.325-1.475B vs est. $1.47B and adj EPS $1.00-1.10 vs est. $1.19; sees FY revs +low-mid-single % vs est. -1.6% and adj EPS $5.65-5.85 vs est. $5.57.

·     Okta Inc. (OKTA) 1Q adj EPS $0.22 vs est. $0.13 on revs $518Mm vs est. $510.5Mm; guides 2Q revs $533-535Mm vs est. $527.87Mm and adj EPS $0.21-0.22 vs est. $0.17 with adj tax rate 26%; sees FY revs $2.175-2.185B vs est. $2.169B, adj EPS $0.88-0.93 vs est. $0.78 and adj tax rt 26%.

·     Pure Storage (PSTG) 1Q adj op profit $19.6Mm vs est. $10.29Mm on revs $589.3Mm vs est. $559.34Mm, adj gr mgn 72.2%, adj op mgn 3.3%; sees 2Q revs $680Mm vs est. $656.1Mm, adj op profit $90Mm vs est. $77.8Mm, adj op mgn 13%; sees FY revs +mid-high-single % vs est. +6.1% and adj op mgn 15%.

·     Veeva Systems (VEEV) Q1 adj EPS $0.91 vs. est. $0.79; Q1 revs $526.3M vs. est. $515.8M; Q1 subscription services revenues of $414.5M, up 3% y/y; sees Q2 adjusted EPS $1.12-$1.13 vs. est. $1.07 and sees Q2 revenue $580M-$582M vs. est. $580.31M; backs year rev view.

·     American Semiconductor (AMSC) 4Q adj EPS ($0.28) vs est. ($0.20) on revs $31.74Mm vs est. $28.25Mm; guides 1Q $26-30Mm vs est. $28.25Mm and adj loss/shr not to exceed ($0.17) vs est. ($0.14).