Morning Preview: June 06, 2022

Early Look

Monday, June 6, 2022









S&P 500










S&P futures are rebounding after major averages dropped last week, looking higher by 1% to 4,149 – just off highs of 4,156.50 and well-off lows of 4,104.50 – helped by a WSJ report that Chinese regulators may ease pressure on the Chinese Internet sector. Weekend comments from Commerce Secretary Gina Raimondo, who suggested President Joe Biden could remove some Trump-era tariffs on China-made imports, added a tailwind to sentiment. Stocks declined last week as investors continued to bet that the Federal Reserve will tighten monetary policy aggressively to combat surging inflation. For last week, the S&P fell 1.20%, the Dow lost 0.95%, the Nasdaq shed 0.98%. Recent statements from the rate-setting Fed members indicate that 50 bps rate increases are likely at the June and July meetings, with mixed expectations for the following meetings. Ten-year Treasury yields end the week at 2.955%, gaining over 20 bps last week and now up roughly 145 bps this year. Yields rose Friday following a better-than-expected jobs report that showed slowing but still strong growth in employment. Focus this week will be inflation data as the consumer price index reading for May is slated for Friday morning release. In Asian markets, The Nikkei Index gains 154 points to 27,915, the Shanghai Index rises 40 points to 3,236, and the Hang Seng Index jumps 571 points to 2.71% to 21,653. In Europe, the German DAX is up 150 points or 1% to 14,610, while the FTSE 100 rises nearly 100 points or 1.3% to 7,630. Bitcoin prices rebounding as well, up nearly 6% to $31,400 while Ethereum jumps 8% to $1,900. There is no US economic data today and there are no Fed speakers today, as we have entered the blackout period ahead of next policy meeting 14-15 June.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -68.28 points, or 1.63%, to 4,108.54

·     The Dow Jones Industrial Average fell -348.58 points, or 1.05%, to 32,899.70

·     The Nasdaq Composite tumbled -304.16 points, or 2.47%, to 12,012.73

·     The Russell 2000 Index declined -14.62 points, or 0.77% to 1,883.05


Earnings Calendar:

·     Earnings Before the Open: SAIC

·     Earnings After the Close: COUP, GTLB. HQY, NGL, SRAX


Other Key Events:

·     American Society of Clinical Oncology (ASCO) 2022 meeting, 6/3-6/7, in Chicago

·     Baird Global Consumer, Technology & Services Conference, 6/6-6/8, in NY

·     Goldman Sachs Travel & Leisure Conference, 6/6-6/7, in NY

·     Oppenheimer FinTech Virtual Bus Tour (virtual), 6/6-6/9

·     RSA Conference 2022, 6/6-6/9, in San Francisco

·     William Blair 42nd Annual Growth Stock Conference, 6/6-6/9, in Chicago

American Society of Clinical Oncology, or ASCO

·     AstraZeneca (AZN) and Daiichi Sankyo’s Enhertu met primary endpoint of progression-free survival, reducing risk of disease progression or death by 49% versus chemotherapy; also improved median overall survival by more than 6 months versus. Chemotherapy in all patients evaluated in destiny-breast04

·     Gilead Sciences (GILD) said Tecartus Car T-cell therapy demonstrates strong overall survival rates and continued durable responses in long-term follow-up of two pivotal studies including longest ever follow-up of a car t-cell therapy in mantle cell lymphoma. In three-year follow-up in relapsed/refractory mantle cell lymphoma, Tecartus induced high rates of durable response (ORR 91%, 68% CR) and a median overall survival of 46.6 months

·     HOOKIPA (HOOK) announces positive Phase 1 data and Phase 2 plans for HB-200 program for the treatment of advanced head and neck cancers; HB-200 was generally well tolerated, rapidly induced a high magnitude of tumor-specific T cells, and showed early anti-tumor activity in these difficult-to-treat patients

·     Legend Biotech Corp (LEGN) said data from the longer-term data from CARTITUDE program continue to show deep and durable responses with ciltacabtagene autoleucel across lines of therapy in patients with multiple myeloma; overall response rate remains at 98 percent after more than two years, with median progression-free and overall survival not yet being reached

·     Merck (MRK): adjuvant treatment with Merck’s Keytruda (pembrolizumab) demonstrates statistically significant & clinically meaningful improvement in distant metastasis-free survival in patients with resected stage IIb or IIC melanoma in phase 3 KEYNOTE-716 Trial. KEYNOTE-716 is the first Phase 3 trial with an anti-PD-1/L1 to significantly improve distant metastasis-free survival (DMFS) and recurrence-free survival (RFS) for these patients

·     Merus (MRUS) presents clinical data on Zenocutuzumab (Zeno) in NRG1-fusion (NRG1+) cancer; 34% overall response rate in 79 evaluable patients with measurable disease; 9.1 months median duration of response; tumor reduction in 70% of patients; observed to be very well-tolerated; potential new standard of care for patients with NRG1+ cancer





















10-Year Note





World News

·     China May Caixin Services PMI missed: 41.4 vs 47.3 consensus

·     Demand for the Federal Reserve’s facility for overnight reverse repurchase agreements rose above $2 trillion for the second time ever on Frida, as investors rush to find places to park their cash. 101 participants parked $2.031 trillion at the Fed’s facility, up from $1.985 trillion the day before, a $46 billion increase. Reached all-time high on May 23 at $2.045- Bloomberg

·     The ECB is set this week to support a proposal to create a new bond-buying program it it’s needed to counter market stress & spiraling borrowing costs for member states – FT reports

·     Ukrainian forces managed to retake parts of the city of Severodonetsk in a counterattack, as they try to hold off the Russian offensive in eastern Ukraine while Kyiv waits for new long-range rocket systems from the U.S. – DJ

·     IPOs have plunged ~90% in the US and Europe over the course of the first 5 months of this year, with just 157 companies raising $17.9B (vs. 628/$192B during the same period in 2021) – FT

·     Janet Yellen, worried by the specter of inflation, initially urged Biden administration officials to scale back the $1.9 trillion American Rescue Plan by a third, according to an advance copy of a biography on the Treasury secretary. “Privately, Yellen agreed with Summers that too much government money was flowing into the economy too quickly – Bloomberg


Sector News Breakdown


·     Carl Icahn is dropping a proxy fight focused on the treatment of pregnant pigs at grocery-chain Kroger Co. (KR) after concluding he is likely to lose as he did a similar fight at McDonald’s Corp. (MCD) last month, the WSJ reported

·     Didi Global (DIDI) rises over 50% after the WSJ reported Chinese regulators are concluding probes into ride hailing giant Didi Global and two other firms and are preparing to allow their apps back on domestic app stores as early as this week. The report is the latest signal to investors that official promises to ease pressure on China’s internet sector may be gaining traction.

·     Keurig Dr Pepper Inc. (KDP) will replace Under Armour Inc. (UAA) in the S&P 500. Under Armour (UAA) will replace Trinity Industries Inc. (TRN) in the S&P MidCap 400 effective prior to the open of trading on Tuesday, June 21 to coincide with the quarterly rebalance

·     Nordstrom Inc. (JWN) mentioned positively in Barron’s saying it could be a good bet at eight times forward earnings since it specializes in formal clothes, which will be needed as social events ramp up this summer

·     Park Hotels & Resorts Inc (PK) raises Q2 forecast on improving demand across all its portfolios; expects Q2 RevPAR of $169 mln-$173 mln vs. prior forecast of $160 mln-$164 mln

·     Tesla (TSLA) rises 3% pre-mkt after CEO Elon Musk said on Saturday that the electric vehicle maker’s total headcount will increase over the next 12 months, but the number of salaried staff should be little changed, backtracking from an email just two days ago saying that job cuts of 10% were needed.

·     Target Corp. (TGT) mentioned positively in Barron’s saying at less than 14 times forward earnings, it is worth a look since it attracts consumers with higher incomes

·     Joann Inc (JOAN) files for mixed shelf of up to $100M

·     Urban Outfitters (URBN) will replace Tactile Systems Technology Inc. (TCMD) in the S&P SmallCap 600 effective prior to the open of trading on Tuesday, June 21, to coincide with the quarterly rebalance


Energy, Industrials and Materials

·     Solar stocks looking higher early: First Solar (FSLR), SunPower (SPWR), Enphase (ENPH), SunRun (RUN) after Bloomberg President Joe Biden will take executive action to boost the US solar sector, seeking to revive clean energy projects stalled by a trade dispute and bolster domestic manufacturing so the nation’s climate efforts are less reliant on foreign suppliers. Biden plans to invoke the Defense Production Act to provide support for US-made solar panels reported

·     Southwest gas (SWX) Icahn Files 13D on Southwest Gas, reports 7.6% stake late Friday

·     Eaton Corp. (ETN) will benefit amid elevated energy prices according to Barron’s saying the stock is down 19% this year and is ripe to rebound, citing Morgan Stanley’s analyst Joshua Pokrzywinski, whose price target is 30% higher than the current trading value

·     Trinity Industries (TRN) will replace Endo International plc (ENDP) in the S&P SmallCap 600, effective prior to the open of trading on Tuesday, June 21 to coincide with the quarterly rebalance

·     Water scarcity poses a risk for investors in food production, mining, and apparel production according to Barron’s this weekend noting that scarcity also produces a trading opportunity saying water-focused thematic ETFs like Invesco Water Resources ETF (PHO), could see a boon, says Barron’s as its three biggest holdings are: American Water Works Co. (AWK), Roper Technologies Inc. (ROP) and Xylem Inc. (XYL).



·     The developer of American Dream, the $6 billion mega-shopping mall in East Rutherford, N.J., has failed to make its semiannual interest payment for an $800 million municipal bond, according to a notice to bondholders Friday. Bondholder trustee U.S. Bank NA said that developer Triple Five Group didn’t deposit funds for an interest payment due Wednesday and bondholders were paid from an $11.35 million debt service reserve account – WSJ

·     EastGroup Properties (EGP) files prospectus relates to potential resale from time to time by selling securityholders of some or all of 1.9 mln common shares

·     Essex Property Trust (ESS) raises Q2 core FFO view to $3.55-$3.61 from $3.43-$3.55 (Q2 est. is $3.50), raises FY22 core FFO view to $14.00-$14.32 from $13.77-$14.13 and raises FY22 same property revenue growth view to 9.1%-10.1% from 8.1%-9.1%

·     VICI Properties Inc. (VICI) will replace Cerner Corp. (CERN) in the S&P 500 prior to the open of trading on Wednesday, June 8. S&P 500 constituent Oracle Corp. (ORCL) is acquiring Cerner in a deal expected to be completed soon

·     Bank America now expects 150 bps of ECB rate hikes this year, with 50 bps moves in July and September (ahead of the ECB policy decision on Thursday)



·     Abbott (ABT) resumed production at its Michigan infant formula facility on Saturday after making improvements to the plant in accordance with the FDA. The facility has had operations halted since February

·     Ironwood Pharmaceuticals Inc. (IRWD) will replace Greenhill & Co Inc. (GHL) in the S&P SmallCap 600 effective prior to the open of trading on Tuesday, June 21, to coincide with the quarterly rebalance

·     Sotera Health Co. (SHC) and Shockwave Medical Inc. (SWAV) will replace Urban Outfitters Inc. (URBN) and LiveRamp Holdings Inc. (RAMP) respectively in the S&P MidCap 400 effective prior to the open of trading on Tuesday, June 21, to coincide with the quarterly rebalance

·     Vera Therapeutics (VERA) files $400M mixed-securities shelf

·     Yumanity (YMTX) to sell clinical-stage product candidate YTX-7739 as well as its unpartnered Discovery-stage neuroscience product candidates and targets to Janssen in $26M cash transaction; said plans to distribute any remaining available cash proceeds from the sale to Yumanity stockholders via a one-time dividend.


Technology, Media & Telecom

·     Amazon (AMZN) shares are set to split 20-to-1 on Monday, reducing the share price to $122

·     ON Semiconductor Corp. (ON) will replace IPG Photonics Corp. (IPGP) in the S&P 500, while IPG Photonics will replace Yelp Inc. (YELP) in the S&P MidCap 400 and Yelp will replace Red Robin Gourmet Burgers Inc. (RRGB) in the S&P SmallCap 600 effective prior to the open of trading on Tuesday, June 21 to coincide with the quarterly rebalance

·     LiveRamp Holdings (RAMP) will replace Vera Bradley Inc. (VRA) in the S&P SmallCap 600 effective prior to the open of trading on Tuesday, June 21, to coincide with the quarterly rebalance

·     Crowdstrike (CRWD) upgraded to overweight from equal- weight at Morgan Stanley saying that the cyber security firm offers durable growth and free cash flow at a discount


Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.