Early Look

Wednesday, May 25, 2022

Futures	Up/Down	%	Last
Dow	-29.00	0.09%	31,851
S&P 500	0.00	0.00%	3,940
Nasdaq	18.00	0.15%	11,789

 

 

S&P futures are little changed at 3,940 after a volatile session on Tuesday saw it settle down -0.8% at 3,941 but finished well off morning lows of 3,872 – futures steady ahead of today’s FOMC May meeting minutes. In macro news, Russia has been pushed closer to a potential default after the US Treasury Department let a key sanctions waiver benefitting American investors expire. The Nasdaq fell on Tuesday as fears from Snap’s bleak warning spread to other tech names but finished well off its worst levels. In Asian markets, The Nikkei Index fell -70 points to 26,677, the Shanghai Index rose 1.19% or 36 points to 3,107, and the Hang Seng Index gained 59 points to 20,171. In Europe, the German DAX is higher by 0.3% to 13,965, while the FTSE 100 gains +0.6% to 7,530. Oil prices jump following weekly inventory data while the U.S. dollar rebounds off one-month lows and yields are steady (10-yr 2.75%).

Market Closing Prices Yesterday

·     The S&P 500 Index slumped -32.27 points, or 0.81%, to 3,941.48

·     The Dow Jones Industrial Average rose 48.38 points, or 0.15%, to 31,928.62

·     The Nasdaq Composite dropped -270.83 points, or 2.35%, to 11,264.45

·     The Russell 2000 Index declined -27.94 points, or 1.56% to 1,764.83

 

Economic Calendar for Today

·     7:00 AM ET         MBA Mortgage Applications Data

·     8:30 AM ET         Durable Goods Orders for April…est. +0.6%

·     8:30 AM ET         Durable Goods Orders Ex Transports for April…est. +0.6%

·     10:30 AM ET       Weekly DOE Inventory Data

·     2:00 PM ET         FOMC Minutes from May meeting

 

Earnings Calendar:

·     Earnings Before the Open: CMCO, DKS, DY, EXPR, PIII, PLAB, REX,

·     Earnings After the Close: BOX, CHNG, DXC, ELF, ENS, NTNX, NVDA, PLUS, SNOW, SPLK, UVV, VSAT, WSM, ZUO

 

Other Key Events:

·     Berenberg Annual Conference USA 2022, 5/23-5/25, in NY

·     Cowen Future of the Consumer: Sustainable Growth for a New Ecosystem, 5/24-5/25, in NY

·     JPMorgan Global Technology, Media & Communications Conference, 5/23-5/25, in Boston

·     Oppenheimer MedTech, Tools & Diagnostics Summit, 5/34-5/25 (virtual)

·     Truist 23^rd Annual Securities Financial Services Conference, 5/24-5/25 (virtual)

·     UBS Global Healthcare Conference, 5/23-5/25, in NY

·     UBS Global Energy Conference 5/24-5/25 (virtual)

·     Wolfe Global Transportation & Industrials Conference 2022, 5/24-5/26 (virtual)

 

 

Macro	Up/Down	Last
Nymex	1.44	111.21
Brent	1.30	114.86
Gold	-11.80	1,853.60
EUR/USD	-0.0069	1.0667
JPY/USD	0.32	127.15
10-Year Note	-0.009	2.751%

 

 

World News

·     The RBNZ raised 50bps as expected but caught the market off guard with a more hawkish outlook. The RBNZ also raised its projection for peak cash rates to 3.95% from 3.35% previously. The Monetary Policy Statement saw rates at ‘at least’ 3.25% by the end of 2022

·     UK PM Johnson set to announce help for households to pay their energy bills, Treasury is finalizing plans for a windfall tax on energy firms, those funds will be used for those struggling the most with the cost-of-living crunch – The Telegraph

·     Another Omicron subvariant, known as BA.2.12.1, has become the dominant form among new U.S. virus cases, making up about 58% of new cases – NY Times

 

Sector News Breakdown

Consumer

·     Nordstrom (JWN) 1Q adj EPS ($0.06) vs est. ($0.05) on revs $3.57B vs est. $3.1B; qtrly gr merch value +19.6%; merch margins in qtr improved amid favorable pricing impacts and lower markdown rates; qtrly ending inventory +23.7% vs +18.7% sales; guides FY adj EPS $3.20-3.50 ex impact of share repurchases vs est. $3.13, and revs +6-8% vs est. +5%; board authorized new $500Mm share repurchase program

·     Toll Brothers (TOL) 2Q EPS $1.85 vs est. $1.54 on revs $2.2B vs est. $2.06B; qtrly delivered homes 2,407 +6%, says over past month demand has moderated from unprecedented pace of last two years; sees 3Q deliveries 2,750 units and FY deliveries 11,000-11,500 units

·     Urban Outfitters (URBN) Q1 EPS $0.33 vs. est. $0.42; Q1 revs $1.05B below est. $1.07B; Q1 comp retail segment net sales increased 11%; by brand: comp retail segment net sales increased 18% at the Anthropologie Group, 15% at the Free People Group and 1% at Urban Outfitters

·     Caleres (CAL) Q1 EPS $1.32 vs. est. $0.83; Q1 sales rose 15.1% Y/Y to $735.1M vs. est. $677.28M; for FY22 co expects consolidated sales levels to be up between 2%-5% when compared to fiscal year 2021; for Q1, a 3.4% sales decline in the Famous Footwear segment, a 46.1% sales increase in the Brand Portfolio segment; Direct-to-consumer sales represented about 65% total net sales; raises FY22 EPS view to $4.20-$4.40 from $3.75-$4.00 (est. $3.92)

·     Wendy’s (WEN) shares rose after hours after its largest holder Trian proposed a potential acquisition of the fast-food chain; Nelson Peltz’s Trian Partners disclosed owning a total of 41.6M shares, or a 19.4% stake, in a 13D filing. Wendy’s said in a statement that it will “carefully” review any proposal submitted by Trian.

·     RCI Hospitality (RICK) increases amount of share repurchase program by $25.0M

·     Lyft Inc. (LYFT) said it would slow down hiring and assess budget cuts in some departments, joining rival Uber Technologies Inc (UBER) to rein in costs

 

Energy, Industrials & Materials

·     The American Petroleum Institute (API) reported crude inventories rose 600K barrels in the latest week, while inventories at Cushing fell -700K barrels, gasoline inventories fell -4.2M barrels and distillates fell -1.0M barrels

·     Dycom (DY) Q1 GAAP EPS $0.65 vs. est. $0.16; Q1 revs $876.3M vs. est. $779.5M; says expects contract revenues for quarter ending July 30, 2022, to increase mid-teens to 20%

·     Devon Energy (DVN) downgraded to Equal Weight from Overweight at Barclays

·     Diamondback Energy (FANG) upgraded to Overweight from Equal Weight at Barclays

·     Iran gained access to IAEA internal records in early 2000s, according to the WSJ citing documents; top military, nuclear officials discussed using IAEA records to prepare cover stories, falsify record of nuclear work

·     Telos Corporation (TLS) announces $50 million share repurchase authorization

·     Statkraft, Europe’s largest producer of renewable energy has signed a binding Heads of Terms with FREYR Battery (FREY), a developer of clean, next-generation battery cell production capacity

 

Financials

·     CME Group (CME) upgraded to Outperform from Perform at Oppenheimer with $223 tgt

·     Intuit (INTU) 3Q adj EPS $7.65 vs est. $7.58 on revs $5.6B vs est. $5.5B; sees FY adj EPS $11.68-11.74 vs est. $11.66 and revs $12.63-12.67B vs est. $12.32B

·     Raymond James (RJF) assets under administration $1.18 trillion; said investment banking pipelines are healthy, but M&A and underwriting activity has slowed significantly across the industry due to geopolitical and macroeconomic uncertainties

 

Healthcare

·     Agilent (A) Q2 EPS $1.13 vs. est. $1.06; Q2 revs $1.61B vs. est. $1.53B; guides Q3 EPS $1.20-$1.22 vs. est. $1.12 and sees Q3 revenue $1.625B-$1.65B vs. est. $1.56B; sees FY EPS $4.86-$4.92 above prior view $4.80-$4.90 vs. est. $4.60

·     Verrica Pharmaceuticals (VRCA) shares slide 50% after announced that the FDA has issued a Complete Response Letter (CRL) regarding its New Drug Application for VP-102 for the treatment of molluscum contagiosum

 

Technology, Media & Telecom

·     Apple’s (AAPL) iPhone development schedule hit by China lockdowns, citing the Nikkei Asia. Development of at least one of Apple’s new flagship iPhones for this year has fallen behind schedule due to disruptions from the COVID lockdowns in China, Nikkei Asia has learned.

·     LiveRamp Holdings (RAMP) 4Q adj EPS ($0.01) vs est. $0.02 on revs $142Mm vs est. $139.3Mm; sees 1Q revs about $139Mm vs est. $142.8Mm, sees FY23 revs $608-625Mm vs est. $631.7Mm

·     Interdigital (IDCC) announced it intends to offer, subject to market & other conditions, $350 mln of senior convertible notes due 2027 in private offering

·     Ooma Inc. (OOMA) 1Q adj EPS $0.12 vs est. $0.10 on revs $50.3Mm vs est. $49.8Mm; sees 2Q adj EPS $0.10-0.11 vs est. $0.09 and revs $51.4-51.9Mm vs est. $51.2Mm; guides FY adj EPS $0.37-0.43 vs est. $0.37 and revs $210.5-213.5Mm vs est. $210.2Mm

·     Photronics (PLAB) Q2 EPS $0.49 vs. est. $0.35; Q2 revs $204.5M vs. est. $192.37M; guides Q3 EPS $0.45-$0.55 vs. est. $0.37 and revs $205M-$215M vs. est. $196.4M

·     2U (TWOU) downgraded to Underweight from Neutral at Piper Sandler