Early Look

Tuesday, June 28, 2022

Futures	Up/Down	%	Last
Dow	169.00	0.54%	31,590
S&P 500	19.50	0.50%	3,923
Nasdaq	50.75	0.42%	12,091

 

 

After a lackluster trading day that saw most major averages finish near their lows, U.S. futures are looking at a higher open, rising +0.45% to 3,920, helped by news overseas after China reduced quarantine times for inbound travelers by half, the biggest shift yet in a Covid-19 policy. In Asian markets, The Nikkei Index rose 0.66% to 27,049, the Shanghai Index rose 0.89% to 3,409 and the Hang Seng Index gained 0.85% to 22,418. In Europe, the German DAX gains 100 points or 0.75% to 13,288, while the FTSE 100 rises 1.2% to 7,345. The news out of China lifts oil prices in hopes of finding a spark that could ignite global growth prospects into the second half of the year. Financials and banks are looking higher after several of them announced buybacks, dividend increases, or intentions of future moves last night after all 33 U.S.-based banks, with more than $100 billion in collective assets, passed the Fed’s annual ‘stress test’ last week. Volumes were light yesterday, and expect to remain so ahead of the upcoming three-day 4^th of July holiday weekend coming up.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -11.63 points, or 0.30%, to 3,900.11

·     The Dow Jones Industrial Average fell -62.42 points, or 0.20%, to 31,438.26

·     The Nasdaq Composite dropped -83.07 points, or 0.72%, to 11,524.55

·     The Russell 2000 Index advanced 6.01 points, or 0.34% to 1,771.74

 

Economic Calendar for Today

·     7:45 AM ET          ICSC Weekly Retail Sales

·     8:30 AM ET          Advance Goods Trade Balance for May…est.

·     8:55 AM ET          Johnson/Redbook Weekly Sales

·     9:00 AM ET          Monthly Home Prices M/M for April

·     9:00 AM ET          CaseShiller 20-city Index for April

·     10:00 AM ET        Richmond Fed Index for June

·     10:00 AM ET        Consumer Confidence for June…est. 100.4

·     1:00 PM ET           U.S. Treasury will sell $40B in 7-year notes

·     4:30 PM ET           API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: EPAC. ROIV, SNX

·     Earnings After the Close: AEMD, AVAV, PRGS

 

Other Key Events:

·     Truist Securities symposia-cel

·     Truist Las Vegas Gaming Bus Tour (in person) 6/28-6/29

·     Wells Fargo “Bricks to Clicks” Digital Conference (virtual), 6/28-6/29

 

 

Macro	Up/Down	Last
Nymex	1.88	111.45
Brent	2.51	117.60
Gold	-0.40	1,824.50
EUR/USD	-0.0001	1.0581
JPY/USD	0.64	136.09
10-Year Note	+0.04	3.234%

 

 

World News

·     China reduced quarantine times for inbound travelers by half, the biggest shift yet in a Covid-19 policy that has left the world’s second-largest economy isolated as it continues to try and eliminate the virus – Bloomberg

·     The wife and daughter of President Biden were sanctioned by Russia on Tuesday in response to previous sanctions against Russian officials and their families, Russian state news agency RIA reported. Jill and Ashley Biden were put on a Russian sanctions list that targeted 25 U.S. citizens, including politicians, officials, and academics, according to RIA

 

Sector News Breakdown

Consumer

·     Nike Inc. (NKE) Q4 EPS $0.90 vs. est. $0.81; Q4 revs fell -1% to $12.2B vs. est. $12.13B; authorized a new four-year, $18 bln program to repurchase shares of class b common stock; qtrly Q4 Nike direct rev growth was partially offset by a decline in greater China; said Q4 included non-recurring charges of about $150M, associated with Russian operations; Q4 gross margins fell 80 bps, primarily due to higher inventory obsolescence reserves in greater China, elevated costs; qtrly North America total revenue was $5,115B vs $5,384B reported last year

·     Wynn Resorts (WYNN), Melco (MLCO), MGM Grand (MGM) shares rise after China reduced quarantine times for inbound travelers by half, raising hopes of increased traffic to macau

·     JetBlue Airways Corp (JBLU) sweetened its offer for Spirit Airlines Inc (SAVE) with a ‘ticking fee’ and higher reverse termination fee, trying to sway Spirit’s shareholders from taking Frontier Group’s (ULCC) offer; with the move, they bump their offer to $34.15 from $33.50 per share

·     Ford (F) has announced a recall for certain 2022 Ford F-150 Lightning electric pickup trucks with all-season tires related to the tire pressure monitoring system, or TPMS, reported InsideEVs

·     Playtika Holding (PLTK) rises after Axios reported Monday that Joffre, a tech-focused buyout group, is looking to pay $21 a share to buy a majority stake in Israel-based Playtika from a group of Chinese investors.

·     Boston Beer (SAM) downgraded to Sell from Neutral at Goldman Sachs and cut tgt to $318 from $380 as is incrementally more negative and more positive on Molson Coors (TAP) which they upgraded and Constellation Brands (STZ)

·     Stanley Black & Decker (SWK) announced it has signed a definitive agreement for the sale of its Stanley oil & Gas business to Pipeline Technique Limited

 

Energy, Industrials and Materials

·     Berkshire Hathaway continue to add to its stake in Occidental Petroleum (OXY), buying 794,000 shares this past Thursday, lifting its stake to 16.4% of the big U.S. energy company, according to a filing late Monday. Berkshire had purchased a total of 9.5 million shares on June 17 and June 22.

·     Griffon (GFF) declares $2.00 special dividend

 

Financials

·     Cushman & Wakefield (CWK) and Newmark Group (NMRK) are said not to be involved in discussions about a possible deal after renewed speculation about a potential tie up was reported on Sunday. https://bit.ly/3OJwcnX

·     Bank of America (BAC) plans to boost qtrly div to $0.22/shr

·     Goldman Sachs (GS) said it plans to increase its common stock dividend to $2.50 per share from its current level of $2.00 per share

·     State Street (STT) to increase quarterly dividend 10% to $0.63 per share

·     Citizens Financial (CFG) raises share repurchase authorization to $1B – will consider dividend increase for Q3

·     Jefferies Financial Group (JEF) Q2 EPS $0.45 vs. est. $0.51; Q2 revs $1.13B vs. est. $1.26B

·     Morgan Stanley (MS) announces 11% dividend increase and authorization of a $20 billion multi-year common equity share repurchase program

·     Wells Fargo (WFC) expects to boost its Q3 common stock dividend to $0.30 per share from $0.25 after its SCB was indicated to be 3.2%, up from 3.1%

·     Truist (TFC) said planned boost in div to 52 cents from 48 cents

·     Concentrix (CNXC) reports Q2 EPS $2.93 vs. $2.37 last year; Q2 revs rose 14.5% to $1.57B vs. $1.37B last year; sees Q3 revenue $1.575B-$1.605B and FY22 revs $6.37B-$6.42B

 

Healthcare

·     Eliem Therapeutics (ELYM) announced that it has completed dosing of the last patient in its Phase 2a trial of ETX-810 in patients with chronic lumbosacral radicular pain

·     Gilead (GILD) resubmits new drug application to U.S. FDA for lenacapavir, an investigational, long-acting hiv-1 capsid inhibitor

·     Kezar Life Sciences Inc. (KZR) shares doubled in after the company reported positive results in its lupus nephritis drug trial; said zetomipzomib, “continues to demonstrate a favorable safety and tolerability profile for administration over the 6-month treatment period”

·     Roivant Sciences Ltd. (ROIV) and Pfizer Inc. (PFE) unveiled Priovant Therapeutics, a biotechnology company focused on developing novel therapies for autoimmune diseases with the greatest morbidity and mortality.

·     Spero Therapeutics (SPRO) receives complete response letter from U.S. FDA for Tebipenem HBR new drug application

 

Technology, Media & Telecom

·     eBay (EBAY) downgraded to Neutral from Buy at UBS and cut tgt to $48 from $60 warning that eBay’s 2022 GMV is set to decline about 17% y/y, which is below the guided decline of 14%-16% and the Street at 15%

·     Fortinet (FTNT) upgraded to Outperform from Market Perform at BMO Capital

·     Microchip (MCHP) upgraded to Buy from Hold at Stifel and up tgt to $75 noting the stock is down 31% from its peak on January 4, which creates a favorable risk/return level

·     Snowflake (SNOW) upgraded to Buy from Hold at Jefferies and raise tgt to $200 from $125

·     TSMC (TSM) plans to raise prices for most of its manufacturing processes by about 6% starting in January 2023, despite concerns raised recently about a potentially disappointing second half of 2022 for several end market – Digitimes