Early Look

Tuesday, May 17, 2022

Futures	Up/Down	%	Last
Dow	464.00	1.44%	32,623
S&P 500	66.25	1.66%	4,071
Nasdaq	247.50	2.02%	12,491

 

 

A much different picture to start the trading day, with U.S. equity futures pointing to a sharply higher open, rebounding after yesterday’s disappointing day to start the week as major averages look to snap 6-weeky losing streaks for the S&P and Nasdaq. Shares of Dow component Home Depot (HD) helping markets early after a quarterly beat for EPS, revs, comp sales and raised its year profit and sales guidance, giving a boost to retail and housing related names. Markets now await earnings results from the world largest retailer this morning, Wal-Mart (WMT). The dollar’s three-day retreat, while modest, provided a spark of investor optimism following news that Shanghai had recorded its third consecutive day with no new Covid infections, which could trigger a reopening of their lockdowns that has crippled their economy. Oil hit its highest in seven weeks on Tuesday, supported by the European Union’s ongoing push for a ban on Russian oil imports that would tighten supply.

 

Stocks were unable to hold onto gains late Monday as market choppiness continues with stocks fading into the close. Energy sector outperformed peers (now up roughly 50% YTD) while Consumer Discretionary lagged considerably (down by nearly 30% YTD) as growth-oriented indexes took the hardest hit today and continue to underperform YTD. U.S. data today include April Retail Sales (Consensus 1.0%, Previous 0.7%), and Industrial Production (Consensus 0.45%, previous 0.92%). In Asian markets, The Nikkei Index gained 112 points or 0.42% to 26,659, the Shanghai Index gained 0.65% to 3,093, and the Hang Seng Index jumped 3.27% or 652 points to 20,602. In Europe, the German DAX is up 230 points or 1.65% to 14,190, while the FTSE 100 rises around +0.9% to 7,535. Fed Bullard speaking today (8:00am) and Harker (9:15am), Fed Chair Powell (at 2:00pm), while Mester (2:30pm) and Evans (6:45pm) in a busy day of Fed speakers. Bitcoin bounces back above $30K as crypto assets rebound.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -15.88 points, or 0.39%, to 4,008.01

·     The Dow Jones Industrial Average rose 26.76 points, or 0.08%, to 32,223.42

·     The Nasdaq Composite slumped -142.21 points, or 1.20%, to 11,662.79

·     The Russell 2000 Index declined -9.24 points, or 0.52% to 1,783.43

 

Economic Calendar for Today

·     7:45 AM ET          ICSC Weekly Retail Sales

·     8:00 AM ET          Fed’s Bullard Discusses Economic Outlook

·     8:30 AM ET          Advance Retail Sales M/M for April…est. +0.9%

·     8:30 AM ET          Retail Sales M/M for April…est. +0.4%

·     8:55 AM ET          Johnson/Redbook Weekly Sales

·     9:15 AM ET          Industrial Production M/M for April…est. +0.5%

·     9:15 AM ET          Capacity Utilization for April…est. 78.6%

·     9:15 AM ET          Fed’s Harker Discusses Healthcare as Economic Driver

·     10:00 AM ET        Business inventories M/M for March…est. +1.9%

·     10:00 AM ET        NAHB Housing Market Index for May…est. 75

·     2:30 PM ET           Fed’s Mester Gives Opening Remarks to Panel on Inflation

·     4:30 PM ET           API Weekly Inventory Data

·     6:45 PM ET           Fed’s Evans Discusses the Economic Outlook

 

Earnings Calendar:

·     Earnings Before the Open: BPTH, HD, JBI, JD, ONON, PTN, SE, WMT

·     Earnings After the Close: AGYS, DOCS, KEYS, LVLU, NXGN, QUIK, TCS

 

Other Key Events:

·     Canaccord Global Metals & Mining Conference, 5/15-5/17 in CA

·     Goldman Sachs Global Staples Forum 2022, 5/17-5/18, in NY

·     Jefferies West Coast Aerospace and Defense Bus Tour, 5/16-5/18

·     JPMorgan Homebuilding & Building Products Conference (virtual), 5/16-5/17

·     Needham Annual Technology & Media Conference (virtual), 5/16-5/20

·     RBC Capital Auto, Industrials and Transportation Conference, 5/17-5/19, in Toronto

·     UBS Best of Europe Virtual 1:1 Conference (virtual), 5/17-5/19

 

 

Macro	Up/Down	Last
Nymex	0.47	114.67
Brent	0.90	115.14
Gold	13.50	1,827.50
EUR/USD	0.009	1.0521
JPY/USD	0.11	129.27
10-Year Note	+0.041	2.92%

 

 

World News

·     U.N. pursuing a deal with Russia, Turkey, and other nations to open Ukrainian food exports to world markets and stave off a potential global food shortage – WSJ reports

·     Putin signals Russia will tolerate Finland and Sweden joining NATO. Putin says the proposed NATO enlargement posed no direct threat for Russia; he had no problems with either country – FT

·     The RBA considered a larger hike in rates at its May meeting but opted for a “normal” quarter point, a heavy hint it will hike again in June, according to the Australia central bank minutes

 

Sector News Breakdown

Consumer

·     Home Depot (HD) shares rise 4%; Q1 EPS $4.09 vs. est. $3.67; Q1 revs $38.91B vs. est. $36.71B; Q1 comp sales increased 2.2% vs. est. loss of (-3.0%) and comparable sales in the U.S. increased 1.7%; raises FY22 EPS view to up mid-single digits from up low single digits and raises FY22 revenue view to up 3% from up slightly; guides FY22 comp sales up 3% and sees FY22 operating margin 15.4% (watch shares of LOW, TSCO in sympathy)

·     F45 training (FXLV) Q1 EPS $0.03 vs. est. $0.14; Q1 revs $50M vs. est. $50.4M; qtrly same-store sales increased 6% globally and 40% in United States; sees FY revenue $255M-$275M vs. est. $266.49M and sees FY adjusted EBITDA $90M-$100M

·     Gan Ltd (GAN) 1Q EPS ($0.11) vs est. ($0.10) on revs $37.5Mm vs est. $34.4Mm; affirms FY forecast revs $155-165Mm vs est. $158.2Mm and adj EBITDA $15-20Mm vs est. $16.7Mm

·     United Airlines (UAL) said it expects passenger revenue in Q2 to rise as much as 25% from 2019, anticipates total revenue per available seat mile rising 23% to 25% in Q2 from 2019 levels; said the demand environment has continued to improve, resulting in a higher unit revenue outlook

 

Energy, Industrials and Materials

·     First Solar (FSLR) signs definitive agreements to sell Japan project development and O&M platforms to PAG real assets

·     Rocket Lab USA (RKLB) Q1 EPS loss (-$0.06) vs. est. loss (-$0.04); Q1 revs $40.7M vs. est. $41.0M; sees Q2 revs $51M-$54M vs. est. $54.3M

·     Shoals Technologies Group (SHLS) 1Q adj EPS $0.05 vs est. $0.07 on revs $68Mm vs est. $70.4Mm; sees FY revs $300-325Mm vs est. $325.7Mm and adj net Inc $45-53Mm

 

Financials:

·     Ally Financial (ALLY) after regulatory filing showed Warren Buffett’s Berkshire Hathaway Inc acquired a stake in the company; shows Berkshire Hathaway owns 2.78%, or 8.97 million shares, in ALLY as of March 31

·     Citigroup (C) after quarterly 13-F filing showed Warren Buffett’s Berkshire Hathaway took a stake in the lender; Berkshire now holds 55.3 million shares, or about 2.9% of outstanding stock

 

Healthcare

·     Abbott (ABT) is confirming its previously issued full-year 2022 guidance for adjusted diluted earnings per share from continuing operations of at least $4.70. Abbott will incur one-time specified charges for expenses related to the consent decree which have not yet been quantified. However, Abbott does not expect that these expenses will have a material impact on Abbott’s consolidated financial statements

·     Gilead Sciences Inc. (GILD) said the FDA lifted a clinical hold placed on the company’s investigational new drug application for injectable lenacapavir; said the FDA had placed a hold on injectable lenacapavir in borosilicate vials due to a vial compatibility issue.

·     Ginkgo Bioworks Holdings, Inc. (DNA) 1Q adj EBITDA ($2Mm) vs est. ($28.4Mm) on revs $168Mm vs est. $105.7Mm; sees FY revs $375-390Mm vs est. $333Mm

·     Teva (TEVA) upgraded to Neutral from Underperform at Bank America

 

Technology, Media & Telecom

·     Twitter (TWTR) shares fall further, down -2% after Elon Musk said his $54.20 per share, or $44 billion purchase of Twitter Inc. can’t move forward until the company is clearer about how many of its accounts are fake

·     Taiwan Semiconductor (TSM) has told clients for the second time in under a year that it intends to raise prices, citing inflation worries, rising costs, and its own major expansion plans to help alleviate global supply issues, the Nikkei reported

·     Take-Two interactive (TTWO) 4Q adj EPS $1.09 vs est. $1.04 on revs $930Mm vs est. $882Mm, net bookings +8% to $845.8Mm; guides 1Q revs $810-860Mm vs est. $777.9Mm and FY revs $3.67-3.77B vs est. $3.96B; sees FY net bookings $3.75-3.85B on standalone basis

·     Tencent Music Entertainment (TME) Q1 revenue fell 15.1% to RMB 6.64 bln, in-line with ests; qtrly mobile MAU – online music 604 mln, qtrly paying users – online music 80.2 mln; qtrly revenues from online music services for Q1 fell by 4.8% to RMB2.62 bln

·     Paramount Global (PARA) Warren Buffett’s Berkshire Hathaway invested about $2.6 billion in during the first quarter of 2022 in the co, according to an SEC filing

·     JD.com (JD) Q1 adj EPS $0.40 vs. est. $0.24; Q1 revs $37.8B vs. est. $34.82B; Q1 annual active customer accounts up 16.2% to 580.5M

·     Nerdy Inc. (NRDY) Q1 revs $46.9M vs. est. $46.7M; gross profit of $32.8 mln in q1 increased 40% year-over-year; guides Q2 revs $37M-$40M vs. est. $45.9M; sees FY22 revs $160M-$175M vs. est. $197.9M

·     Stratasys (SSYS) 1Q adj EPS $0.02 vs est. ($0.04) on revs $163.4Mm vs est. $157.5Mm; sees 2Q revs +low-mid-teens vs est. +11.7%; guides FY revs $685-695Mm vs est. $686.5Mm