Early Look

Thursday, May 30, 2024

U.S. futures are looking lower for a second straight day to kick off trading, dragged down by Dow component Salesforce (CRM) falling over -15% overnight after posting a first quarter revenue miss and guided Q2 and the year revs below consensus, denting shares of software companies. Major U.S. stock indexes declined on Wednesday, with Treasury yields continuing their recent ascent to levels not seen since earlier this month on renewed uncertainty about the timing and size of any rate cuts from the Federal Reserve. The 2-year yield hit 5% for the first time since May 1, and the benchmark 10-year note yield climbed to 4.638%, its highest since May 2 ahead of GDP data at 8:30 this morning and key inflation data in the form of the personal consumption expenditures (PCE) price index on Friday that will help determine the path of interest rates by the central bank. The 10-year yield has risen in seven of the past nine sessions. Market expectations for a rate cut in September continue to drift lower, currently pricing in a 45.8% chance for a rate cut of at least 25 basis points, according to CME’s FedWatch Tool, down from 57.5% a week ago. All eleven S&P 500 sectors finished lower on Thursday and the Dow Industrials closed at its lowest level since April 24 and down more than 1,500 points after settling above the 40,000 level for the first time ever last week (weakness in CRM overnight on weaker results/guidance will not help the Dow today). The US economy expanded at a “slight or modest” pace across most regions since early April, according to the Fed in its Beige Book. In Asian markets, The Nikkei Index tumbled -502 points to 38,054, the Shanghai Index dropped -19 points to 3,091, and the Hang Seng Index fell -246 points to 18,230. In Europe, the German DAX is down a few points to 18,469, while the FTSE 100 advances about 20 points to 8,202.

• The Dow Jones Industrial Average fell -411.32 points, or 1.06%, to 38,441,54.
• The Nasdaq Composite slumped -99.30 points, or 0.58%, to 16,920.58.
• The Russell 2000 Index declined -30.66 points, or 1.48% to 2,036.19.

• 8:30 AM ET                  Continuing Claims…est. 1.797M
• 8:30 AM ET                  Gross Domestic Product (GDP) 2^nd estimate for Q1…est. +1.3% (prior +1.6%)
• 8:30 AM ET                  GDP Price Deflator 2^nd est. for Q1…est. +3.1%
• 8:30 AM ET                  GDP Consumer Spending for Q1
• 8:30 AM ET                  PCE Prices Prelim for Q1
• 8:30 AM ET                  Core PCE Prices Prelim for Q1…est. +3.7%
• 8:30 AM ET                  Advance Goods Trade Balance for April
• 10:00 AM ET                Pending Home Sales M/M for April…est. (-0.6%)
• 10:30 AM ET                Weekly EIA Natural Gas Inventory Data
• 11:00 AM ET                Weekly DOE Inventory Data
• 12:05 PM ET                Fed’s Williams Speaks at Economic Club of New York

• Earnings After the Close: AMBA ASAN COO COST DELL ESTC GPS HCP JWN MDB MRVL NTAP PD PHR S ULTA VEEV ZS

• Goldman Sachs Global Semiconductor Conference, 5/28-5/30, in New York
• Jefferies Software Conference, 5/29-5/30, in Newport, CA
• Keybanc Industrials and Basic Materials Conference 5/28-5/30, in Boston, MA
• TD Cowen 52nd Annual Technology, Media & Telecom Conference, 5/29-5/30, in New York
• China NBS Manufacturing and Services for May

• The Swiss franc is the strongest in G-10 FX, rising 0.7% against the greenback after SNB President Jordan warned a weaker currency is currently the most likely source of higher inflation and could be offset with FX sales.
• The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was 12.3 vs 20.7 last week. Bulls fall to 39% from 47%, Neutrals rise to 34.2% from 26.6%, Bears rise to 26.7% from 26.3%.

• Birkenstock (BIRK) Q2 revenue of 481.2M euros tops expectations of 466.1M; raises FY revenue forecast to $1.77B-1.78B euros vs. prior view 1.74B-1.76B euros on the back of benefits from full-price selling and strong demand for its sandals; sees annual adjusted EBITDA 535M-545M euros from prior 520M-530M euros.
• Capri Holdings (CPRI) Q4 adj EPS $0.42 vs. est. $0.65; Q4 revs fell -8.4% y/y to $1.223B vs. est. $1.29B; said 4Q continued to be impacted by softening demand globally for fashion luxury goods; said Q4 Versace revs fell -3.6%, Jimmy Choo revs fell -9.3% and Michael Kors revs fell -9.7%.
• Hormel Foods (HRL) Q2 EPS $0.34 vs. est. $0.36; Q2 revs fell -3% y/y to $2.89B vs. est. $2.97B as -7% declines in both retail and international sales offset 6% growth in foodservice sales; raised its guidance range for adjusted EPS to $1.55 to $1.65 from $1.51 to $1.65 but kept its sales outlook intact at $12.2 billion to $12.5 billion.
• Red Robin Gourmet (RRGB) Q1 adj EBITDA $12.2Mm vs est. $16.97Mm on revs $388.5Mm vs est. $392.73Mm, comps -6.5%; guides Q2 comps +0.3%; sees FY revs $1.25-1.275B vs est. $1.253B, comps -low-single, adj EBITDA $60-70Mm vs est. $58.48Mm.
• Cimpress (CMPR) authorizes share buyback up to $200M.

• Boeing (BA) outgoing CEO Dave Calhoun and other senior company officials will detail the plane maker’s quality, training, and other improvements during meetings with U.S. aviation regulators on Thursday, according to sources with knowledge of the matter, Reuters reported.
• Generac (GNRC) downgraded to Sell from Neutral at Guggenheim with a $120 price target.
• Hess Midstream LP (HESM) announced an underwritten public offering of an aggregate of 10 mln Class A shares.
• Top Republicans are warning the Biden administration against tapping into the nation’s strategic oil reserve to bring down gasoline prices with five months to go before the presidential election – Bloomberg.

• Royal Bank of Canada (RY) beat analysts’ estimates on strong performance from the company’s capital-markets business and lower-than-expected provisions for potential loan losses; to repurchase up to 30M of its common shares.
• UBS Group (UBS) said it would reshuffle its executive board, splitting leadership of its key wealth-management division in two and bidding farewell to Ulrich Koerner, the chief of Credit Suisse before the UBS takeover, as he will step down from the board at the end of June.

• Merus (MRUS) 7.55M share Spot Secondary priced at $53.00.

• C3.ai.Inc. (AI) Q4 EPS loss (-$0.11) vs. est. loss (-$0.30); Q4 revs rose 20% y/y to $86.6M vs. est. $84.4M; said full year revenue grew by 16% to $310.6M, also exceeding the top end of our guidance; sees Q1 revenue $84M-$89M vs. est. $85.9M and sees Q1 operating loss of ($30M) to ($22M); sees FY25 revenue $370M-$395M vs. est. $367.5M.
• Credo Technology (CRDO) Q4 EPS $0.07 vs. est. $0.05; Q4 revs rose 89.4% y/y to $60.78M vs. est. $60.72M; sees Q1 revenue $58M-$61M vs. est. $58.42M and guides Q1 non-GAAP gross margin to be between 63.0% and 65.0%.
• HP Inc. (HPQ) Q2 adj EPS $0.82 vs est. $0.81 on revs $12.8B vs est. $12.599B; sees Q3 adj EPS $0.78-0.92 vs est. $0.85 and FY adj EPS $3.30-3.60 vs est. $3.43; narrows FY24 EPS view to $3.30-$3.60 from $3.25-$3.65, consensus $3.43.
• nCino (NCNO) Q1 EPS $0.19 vs. est. $0.13; Q1 revs $128.09M vs. est. $126.65M; guides Q2 EPS and revs slightly below consensus while raises FY25 EPS view to $0.65-$0.68 from $0.60-$0.64 (est. $0.63) and backs FY25 revenue view $538.5M-$544.5M (est. $541.61M), while sees FY24 subscription revenue $463M-$469M.
• Nutanix (NTNX) Q3 adj EPS $0.28 vs. est. $0.17; Q3 revs rose 17% y/y to $524.6M vs. est. $516.5M; Q3 billings of $557.3M light of ests $565M and Annual contract value billings rose 20% y/y to $288.9M vs. est. $273.3M; sees Q4 revenue $530M-$540M, below consensus $546.1M and sees Q4 ACV Billings $295M-$305M.
• Okta Inc. (OKTA) Q1 adj EPS $0.65 vs est. $0.55 on revs $617Mm vs est. $604.34Mm, adj gr mgn 82%, adj op mgn 22%; guides Q2 revs $631-633Mm vs est. $615.82Mm, adj op mgn 19-20%, adj EPS $0.60-0.61 vs est. $0.54; sees FY revs $2.53-2.54B vs est. $2.508B, adj op mgn 19-20%, adj EPS $2.35-2.40 vs est. $2.32.
• Pure Storage (PSTG) Q1 EPS $0.32 vs. est. $0.21 and revs rose 18% y/y to $693.5M vs. est. $680.97M; sees Q2 revenue $755M vs. consensus $750.31M with Q2 non-GAAP operating income $125M and non-GAAP operating margin 16.6%; sees FY25 non-GAAP operating income $532M and non-GAAP operating margin 17%.
• UiPath (PATH) shares tumble on results; Q1 adj EPS $0.13 vs est. $0.12 on revs $335Mm vs est. $333.04Mm, adj gr mgn 86%, adj op Inc $50Mm vs est. $53.7Mm; guides Q2 revs $300-305Mm vs est. $342.33Mm, ARR $1.543-1.548B, adj op Inc approx breakeven vs est. $43.64Mm; guides FY revs $1.405-1.41B vs est. $1.557B, ARR $1.66-1.665B and adj op Inc approx $145Mm vs est. $290.48Mm.
• Alphabet’s (GOOGL) Google will invest $2 billion to establish its first data center in Malaysia to power new cloud services, the latest in a string of multibillion-dollar plans by Western tech giants to meet growing computing needs in Southeast Asia, the WSJ reported.