Early Look

Friday, May 24, 2024

After posting its worst day in May on Thursday, U.S. futures are bouncing, pointing to a higher open but remain on track for their first weekly losses in five. The S&P 500 traded below the support of 5,300 after US business activity accelerated in early May at the fastest pace in two years, largely reflecting stronger growth at service providers and accompanied by a pickup in inflation. Meanwhile, stocks saw profit taking following NVDA earnings, which topped lofty expectations as shares surged, but marked a near-term top for stocks as investors used the rally in other sectors as a “sell on the news.” Only a few data points today for traders with Durable Goods and Michigan Confidence data (which includes 1 and 5-yr inflation expectations, which showed an increase two weeks ago). The Dow Jones Industrial Average registered its biggest one-day percentage decline since the end of April on Thursday, falling -1.53% or over 500 points to 39,065 (down 1,000 points from Monday highs of 40,077), led by a -7.55% drop in component Boeing (BA) after saying it burned through nearly $4 billion in the year’s first quarter. The S&P 500 shed about 39 points, or 0.7%, closing near 5,267 (after hitting intraday record high of 5,341.88) and the Nasdaq Composite lost about 65 points, or 0.4%, closing near 16,736 (after hitting intraday record high of 16,996.39). In Asian markets, The Nikkei Index dropped -457 points to 38,646, the Shanghai Index slips -27 points to 3,088, and the Hang Seng Index declines -259 points to 18,608. In Europe, the German DAX is down -63 points to 18,627, while the FTSE 100 is down -34 points to 8,304. After yesterday’s data, swaps are now pricing in the Federal Reserve to deliver its first rate cut in December by 25-bps, instead of November. Gold prices are bouncing but on track for the first weekly decline in three. Meanwhile, the dollar (DXY) is looking lower but is headed to its best week since early April.

• The Dow Jones Industrial Average fell -605.78 points, or 1.53%, to 39,065.26.
• The Nasdaq Composite slid -65.51 points, or 0.39%, to 16,736.03.
• The Russell 2000 Index declined -33.30 points, or 1.60% to 2,048.41.

• 8:30 AM ET                  Durable Goods Orders M/M Ex: Transportation for April…est. +0.1%
• 9:35 AM ET                  Fed’s Waller Gives Keynote Address
• 10:00 AM ET                University of Michigan Sentiment, May-Final…est. 67.5
• 10:00 AM ET                University of Michigan 1-yr and 5-yr inflation expectations…prior 3.5% and 3.1%
• 1:00 PM ET                   Baker Hughes Weekly rig count data

• The German economy grew by 0.2% in the first three months of 2024, the statistics office reported on Friday, confirming preliminary data. Despite declining inflation, household consumption did not recover in the first quarter, falling 0.4% on the previous quarter.

• The board and chief executive of Gildan Activewear (GIL) have resigned following a hedge fund’s successful proxy campaign that sought to reinstall the company’s ousted former CEO.
• Rost Stores (ROST) Q1 EPS $1.46 vs. est. $1.34; Q1 revs $4.9B vs. est. $4.83B; Q1 comp sales rose 3% and operating margins of 12.2% rose 205 basis points compared to 10.1% y/y; raises FY24 EPS view to $5.79-$5.98 from $5.64-$5.89 (est. $5.92) and backs FY24 comp store sales growth view 2%-3%.
• Tesla (TSLA) has cut output of its best-selling Model Y electric car by a double-digit percentage number at its Shanghai plant since March, according to industry data and a source says Reuters. The move is aimed at addressing weakening demand for the U.S. automaker’s aged model in China.
• Cavco Industries (CVCO) Q4 EPS $4.03 vs est. $4.51 on revs $420.1Mm vs est. $476.4Mm vs est. $470.11Mm, gross margins 23.6%.

• LyondellBasell (LYB) increases the quarterly dividend 7% to $1.34 per share.
• Saia (SAIA) upgraded to Buy from Hold at Stifel while lower tgt to $475 from $526 and upgraded XPO Inc. (XPO) to Buy from Hold and raised tgt to $120 from $115 in the trucking sector.

• Candel Therapeutics (CADL) said its therapy CAN-2409 in combination with valacyclovir showed median overall survival of 20.6 months in patients with non-small cell lung cancer (NSCLC).

• Domo Inc. (DOMO) Q1 adj EPS loss (-$0.33) vs. est. loss (-$0.23); Q1 revs $80.1M vs. est. $79.49M; Q1 subscription revenue rose 1% y/y to $72.1M, billings rose 7% y/y to $65.5M, net cash provided by operating activities was $1.9M and said GAAP operating margin decreased by 2 percentage points y/y.
• Lions Gate (LGF/B) Q4 adj EPS $0.27 vs. est. loss (-$0.11) and $0.21 last year; Q4 revs $1.12B vs. est. $1.07B; Q4 adj OIBDA was $140.3M; Q4 TV segment Profit rose 83% driven and Film & Television Library achieved record $339M in Q4 with trailing 12-Month revenue of $886M.
• Workday (WDAY) Q1 adj EPS $1.74 vs est. $1.58, adj op Inc $515Mm vs est. $483.48Mm on revs $1.99B vs est. $1.973B, subscription revs $1.815B; sees Q2 subscription revs $1.895B and adj op mgn 24.5%; cuts FY25 subscription revenue to $7.7B-$7.725B from $7.725B-$7.775B.