Early Look

Thursday, June 23, 2022

Futures	Up/Down	%	Last
Dow	125.00	0.41%	30,597
S&P 500	24.25	0.64%	3,787
Nasdaq	110.50	0.96%	11,676

 

 

S&P futures are up +0.65% to 3,787 at overnight highs and off overnight lows (3,735) ahead of day 2 of testimony by Fed Chairman Powell to Senate today and busy day of economic data. Stocks fell slightly on Wednesday as markets struggled to sustain a rebound from earlier in the day while traders also weighed comments from Federal Reserve Chair Jerome Powell. Oil prices extend yesterday losses, down 1% around $105, falling to the lowest levels since early May as concerns mounted that the global economy is weakening (though prices well off yesterday lows around $101.50). Bitcoin prices showing strength early, rising over 4% to $20,750 after dipping below $20K late yesterday. In Asian markets, The Nikkei Index rose 20 points to 26,171, the Shanghai Index gains 52 points or 1.62% to 3,320, and the Hang Seng Index jumps 265 points or 1.26% to 21,273. In Europe, the German DAX is down about -100 points to 13,045, while the FTSE 100 is little changed at 7,095. Bond yields tumbled as comments by Federal Reserve Chair Jerome Powell and growth data in Europe stoked fear about a global downturn.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -68.28 points, or 1.63%, to 3,108.54

·     The Dow Jones Industrial Average fell -348.58 points, or 1.05%, to 3

·     The Nasdaq Composite tumbled -304.16 points, or 2.47%, to 10,

·     The Russell 2000 Index declined -14.62 points, or 0.77% to 1,7

 

Economic Calendar for Today

·     8:30 AM ET           Weekly Jobless Claims…est. 227K

·     8:30 AM EST         Continuing Claims…est. 1.315M

·     8:30 AM ET           Current Account for Q1…est. (-$273.5B)

·     9:45 AM ET           S&P Global Manufacturing PMI Flash…est. 56.0

·     9:45 AM ET           S&P Global Services PMI Flash…est. 53.5

·     10:00 AM ET         Fed Chair Powell Testifies Before House Financial Services Panel

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

·     11:00 AM ET         Weekly DOE Inventory Data

·     11:00 AM ET         Kansas City Fed Manufacturing for June

 

Earnings Calendar:

·     Earnings Before the Open: APOG, DRI, FDS, GMS, JRSH, MEI, RAD

·     Earnings After the Close: CAMP, FDX, KMX, SWBI

 

Other Key Events:

·     Citigroup Asia Pacific Property Conference (virtual), 6/22-6/24

·     Cowen 7th Annual Future Health Conference (virtual), 6/22-6/23

·     JPMorgan Energy, Power, & Renewables Conference 2022, 6/22-6/23, in NY

 

 

Macro	Up/Down	Last
Nymex	-0.91	105.28
05.28Brent	-0.90	110.84
Gold	-7.60	1,830.80
EUR/USD	-0.0051	1.0514
JPY/USD	-0.93	135.32
10-Year Note	-0.034	3.122%

 

 

World News

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -41.1 vs -38.9 last week. Bulls fall to 18.2% from 19.4%, Neutrals rise to 22.5% from 22.2% and Bears rise to 59.3% from 58.3%

·     The U.K. composite PMI, which measures manufacturing and services activity, was unchanged at 53.1 in June, Economists polled by had expected a reading of 52.9

·     The French composite PMI, which measures manufacturing and services activity, fell to a five-month low of 52.8 in June from 57.0 in May although remained above the 50 level

·     The German composite PMI fell to a six-month low of 51.3 in June from 53.7 in May

·     NY Fed says intends to conduct a small value Treasury sale operation, which will occur on June 28, beginning around 1:30 PM, and sale to not exceed face value of $25M and sale will be limited to treasury nominal coupon securities maturing between 22.5-30 years from date of operation

 

Sector News Breakdown

Consumer

·     KB Homes (KBH) Q2 EPS $2.32 vs. est. $2.02; Q2 revs rose 19% to $1.72B vs. est. $1.65B; narrows FY housing revs $7.3B-$7.5B vs. prior view $7.2B-$7.6B; qtrly homes delivered were essentially even at 3,469; says will remain strategic in our capital allocation decisions to maximize returns in this environment; qtrly ending backlog value up 43% to $6.12B

·     Li Auto Inc. (LI) announced the launch of its new, second-ever vehicle model called L9, a bigger sport utility vehicle than the company’s signature Li ONE model. Bloomberg reported, citing Chinese state television, that the gov’t may extend tax exemptions on electric-car purchases.

·     Steelcase (SCS) 1Q adj EPS ($0.05) vs est. ($0.18) on revs $740.7Mm vs est. $691Mm; sees 2Q revs $875-900Mm vs est. $873Mm and adj EPS $0.11-0.15 vs est. $0.23

·     Red Robin Gourmet Burgers (RRGB) announced that Paul Murphy, President, and CEO said he intends to retire at the end of 2022 when his employment agreement expires

·     GMS Inc. (GMS) Q4 adjusted EPS $2.09 vs. est. $1.88; Q4 revs $1.29B vs. est. $1.26B; board approved an expanded share repurchase program of $200m

·     Leslie’s (LESL) downgraded to Hold from Buy at Loop Capital

 

Energy

·     Occidental Petroleum (OXY) edges higher after Warren Buffett’s Berkshire Hathaway disclosed buying 9.6 mln more shares in the oil company; purchases were made over the past week and cost about $529 mln, Berkshire says, which raises its stake to over 16%

·     U.S. oil refiners will try to convince the Biden administration not to ban exports of domestic fuel to combat record-high gasoline prices during tomorrow’s scheduled meeting with Secretary of Energy Jennifer Grandholm, Reuters reported

·     API Oil Inventories: Crude +5.6m vs -0.6m expected: Gasoline +1.22m: Distillate -1.66m: Cushing -390k

 

Financials

·     Lincoln National (LNC) downgraded to Peer Perform from Outperform at Wolfe Research

·     MetLife (MET) upgraded to Outperform from Peer Perform at Wolfe Research

·     Travelers (TRV) downgraded to Peer Perform from Outperform at Wolfe Research

 

Healthcare

·     Rockwell Medical (RMTI) files to sell 11.17M shares of common stock for holders

·     Xenon Pharmaceuticals (XENE) 7.89M share Spot Secondary priced at $30.50

 

Industrials & Materials

·     HB Fuller (FUL) 2Q adj EPS $1.11 vs est. $1.07 on revs $993Mm vs est. $996.4Mm; sees FY raw material and delivery costs expected to continue to rise, sees more than 20% increase for full year vs 4Q21 exit rate; sees FY adj EBITDA $530-550Mm vs est. $540Mm (sees double-digit growth in all four qtrs.); sees adj EPS $4.10-4.35 vs est. $4.20

·     Apogee Enterprises (APOG) Q1 EPS $1.00 vs. est. 56c; Q1 revs $357M vs. est. $328.59M; boosts share repurchases by 1M shares; sees year EPS $3.50-$3.90 vs. est. $3.08

·     Mosaic (MOS) May Potash revenue $539M vs. $246M Y/Y; reports Phosphates revenue $502M vs. $327M Y/Y and Mosaic Fertilizantes revenue $786M vs. $336M Y/Y

·     Rio Tinto (RIO) downgraded to Equal Weight at Morgan Stanley

·     Teck Resources (TECK) downgraded to Equal Weight from Overweight at Morgan Stanley

·     Westinghouse Air Brake (WAB) and AGCO (AGCO) downgrade to equal-weight at Morgan Stanley and resumes coverage of Cummins (CMI) at equal-weight while trimming its PTs across most of its machinery and construction coverage.

·     Worthington Industries (WOR) Q4 adjusted EPS $1.58 vs. est. $0.84 and vs. $2.33 a year ago; Q4 revenue $1.52B vs. est. $1.24B and vs. $978.3M a year ago; operating income fell -41% Y/Y

 

Technology, Media & Telecom

·     Omnicom (OMC), Interpublic (IPG), WPP (WPP) and Publicis (PUB) all downgraded in advertising sector at Macquarie saying economic pressures are building, and ad spending follows GDP

·     Lattice Semiconductor (LSCC) set to join Russell 1000® index

·     Accenture (ACN) Q3 EPS $2.79 vs est. $2.72; Q3 revs $16.2B vs. est. $15.23B; narrows FY22 EPS view to $10.61-$10.70 from $10.61-$10.81 (est. $10.28) and boosts FY22 revenue growth to 25.5%-26.5% in local currency, up from 24%-26%

·     Advanced Micro (AMD) announced that Mathew Hein is joining the company as chief strategy officer and senior vice president of corporate development, effective June 27.

·     Booking.com (BKNG) and Expedia (EXPE): Morgan Stanley lowers ’23 OTA bookings by 3-6% as latest AlphaWise data show 4 signs of weakening travel demand. Said 4 Signs of Incremental Travel Weakness Emerge as 1) over the past two weeks, travel spend intentions over the next six months down-ticked across nearly every income bracket, the % of high-income consumers planning to cut back on travel due to inflation also increased 8% points, 3) tourism/vacation, the most discretionary form of travel saw the biggest m/m decline and 4) net travel spending intentions for domestic and international leisure together turned negative for the first time.