Early Look

Monday, May 15, 2023

Futures	Up/Down	%	Last
Dow	121.00	0.36%	33,476
S&P 500	15.25	0.38%	4,153
Nasdaq	38.50	0.29%	13,434

 

 

U.S. futures are pointing to a higher open to start this option expiration week, rising as hopes build for debt-ceiling resolution with meetings between both the White House and GOP expected to resume tomorrow. Investors will also be looking to a slew of updates on the health of the U.S. consumer in coming days with earnings results from retailers Home Depot (HD) and Wal-Mart (WMT) expected the next few days. Economic data this morning includes the NY Empire Manufacturing report at 8:30 AM ET. There are also a few Fed speakers on the docket today. Stocks posted modest losses last week as the S&P 500 fell 0.3%, the Dow fell 1.1% and the Nasdaq rose 0.4%. In Asian markets, The Nikkei Index rise 238 points to 29,626, the Shanghai Index gains 38 points to 3,310, and the Hang Seng Index advances 343 points to 19,971. In Europe, the German DAX is up 45 points at 15,959, while the FTSE 100 rises 38 points to 7,792. Oil prices edging higher after four consecutive weeks of losses as the market balances concerns over the US economy and China’s muted recovery against expectations of a rise in future demand.

 

Market Closing Prices Yesterday

·     The S&P 500 Index slid -6.50 points, or 0.16%, to 4,124.12.

·     The Dow Jones Industrial Average dipped -8.89 points, or 0.03%, to 33,300.62.

·     The Nasdaq Composite slipped -43.76 points, or 0.35%, to 12,284.74.

·     The Russell 2000 Index declined -3.86 points, or 0.22% to 1,740.85.

 

Economic Calendar for Today

·     8:30 AM ET              Empire Fed Manufacturing for May…est. -2.50

·     8:45 AM ET              Fed’s Bostic Has Opening Remarks at Financial Markets

·     9:15 AM ET              Fed’s Kashkari Takes Part in a Moderated Discussion

·     4:00 PM ET              Net Long-term TIC Flow for March

 

Earnings Calendar:

·     Earnings Before the Open: CTLT FULC LWAY MOVE NERV NOVN RMTI SUNW TPG UAVS WKHS ZEV

·     Earnings After the Close: ADMP AEY ARKR BEEM BKYI CARA CBAY CSSE FLNT GOEV HOFV ICAD LUCD MEDS NGS NVTS ONTX OPGN PX QRHC RUM SLND SSKN TTOO VOXX XGN

 

Other Key Events:

·     Davidson 25th Annual Financial Institutions Conference, 5/15-5/17, in CO

·     JMP Securities Life Sciences Conference, 5/15-5/16, in New York

·     China April industrial Output, Retail Sales Y/Y

 

 

Macro	Up/Down	Last
Nymex	0.23	70.27
Brent	0.18	74.35
Gold	0.60	2,020.40
EUR/USD	0.0024	1.0872
JPY/USD	0.50	136.20
10-Year Note	+0.02	3.483%

 

 

World News

·     The People’s Bank of China said it kept the one-year medium-term lending facility rate unchanged at 2.75% while injecting 125.00 billion yuan ($17.96 billion) of liquidity.

 

Sector News Breakdown

Consumer

·     Aristocrat Leisure Limited agreed to acquire NeoGames SA (NGMS) for $29.50 a share in all-cash deal for the lottery game technology company in a deal valued at $1.2B https://bit.ly/3W278gO

·     Activist investor Engaged Capital has built a 6.6% stake in Shake Shack (SHAK), including swaps, and is planning to run a proxy fight for three board seats, the WSJ reported. Engaged has been in talks with Shake Shack’s management for over six months but the two sides have thus far failed to reach an agreement https://on.wsj.com/3pE9WVv

·     Freyr Battery (FREY) Q1 EPS loss (9c) vs. est. loss (29c); as of March 31, Freyr had cash, cash equivalents, and restricted cash of $474.8M.

·     Tapestry (TPR) upgraded to Outperform from Market Perform at Bernstein.

 

Energy

·     Oneok (OKE) agreed to acquire Magellan Midstream Partners (MMP) in a cash and stock deal valued at ~$18.8B including assumed debt, resulting in a combined company with a $60B total enterprise value. The deal will consist of $25 per share in cash and 0.667 common share of Oneok (OKE) for each outstanding Magellan with an implied value of $67.50 https://bit.ly/3puysYX

 

Financials

·     U.S. bank deposits fell to $17.15T from $17.164T w/w and US bank loans, leases fell by $15.7b in week ended May 3. Deposits at small U.S. Banks edge up to $5.24 trln in week ending May 3 vs $5.22 trln in prior week, Fed data, not seasonally adjusted.

·     Discover Financial Services (DFS) credit card delinquency rate 1.38% at April end vs 1.40% at March end; card charge-off rate 1.78% at April end vs 1.61% at March end.

·     H&R Block (HRB) and Intuit (INTU) which does TurboTax, looking lower after the WSJ reported the Biden administration is considering creating a government-run alternative to TurboTax and H&R Block, drawing resistance from Republicans and companies fearing a loss of business. https://on.wsj.com/3pDYzwS

 

Healthcare

·     An FDA advisory panel narrowly recommended approval for Sarepta’s (SRPT) gene therapy for Duchenne Muscular Dystrophy (DMD) by a vote of 8-6 late Friday, ruling that the potential benefit to patients outweighs a long list of concerns from agency reviewers.

·     Illumina Inc. (ILMN) won a partial victory against Carl Icahn after ISS recommended that investors support all but one of its board nominees including CEO Francis DeSouza.

·     Enzo Biochem Inc (ENZ) files for mixed shelf of up to $150 mln.

·     Surmodics (SRDX) files $200M mixed securities shelf.

·     Veru (VERU) files to sell 5M shares of common stock for holders.

 

Industrials & Materials

·     Newcrest Mining (NCMGY) has agreed to a $17.5 billion takeover by Newmont (NEM) in the gold mining sector; Newcrest said it recommends shareholders vote in favor of Newmont’s offer, which comprises 0.400 of its own shares for each Newcrest share. In addition, Newcrest is permitted to pay a special dividend of up to $1.10 a share around the time any deal is completed. https://on.mktw.net/3o6BH8z

·     DuPont (DD) upgraded to Buy from Hold at Deutsche Bank and raised tgt to $80.

·     Venator (VNTR) reaches agreement to enter prepackaged Chapter 11 to significantly reduce debt.

 

Technology, Media & Telecom

·     Apple (AAPL) devices to occupy 90% of TSMC 3nm capacity in 2023 https://bit.ly/3o1WlXv

·     Micron (MU), Western Digital (WDC): According to TrendForce, DRAM and NAND Flash prices are expected to fall further in the second quarter of 2023 due to weak server shipments and high inventory levels – Digitimes reports. https://bit.ly/42CakCy

·     Nintendo (NTDOY) mentioned positively in Barron’s saying The Super Mario Bros. Movie has given Nintendo its first massive hit outside the gaming space, but its release of “The Legend of Zelda: Tears of the Kingdom” on Friday should be Nintendo’s biggest software release in years.

·     Meta Platforms (META) upgraded to Buy from Hold at Loop Capital and raise tgt to $320 from $220.

·     Alphabet (GOOGL) downgraded to Hold from Buy at Loop Capital and keep tgt unchanged at $129.