Early Look

Wednesday, November 25, 2020

Futures	Up/Down	%	Last
DJ Industrials	-51.00	0.17%	29,947
S&P 500	-1.50	0.03%	3,631
Nasdaq	31.50	0.26%	12,107

 

 

U.S. stock futures are mixed, a day after the Dow Jones Industrial Average topped the 30,000 for the first time (and closed above), while the Dow Transports and Russell 2000 also touched record highs, and the Nasdaq Comp moved back above the 12K level in what has been a massive recovery rally reignited by positive vaccine sentiment and the hope that the economy will soon get back to normal. Yesterday’s run higher came as the GSA cleared the way for a presidential transition process to Biden from Trump (removing some political uncertainty) and reports that former Fed Chairperson Janet Yellen could head up the Treasury. Today marks an extremely busy day of economic data including the 2^nd estimate for Q3 GDP, weekly jobless claims (a day early due to markets being closed for Thanksgiving Day tomorrow), goods trade balance, personal income and spending for October, inflation data (PCE), Durable Goods, Michigan sentiment data and new home sales for October. In earnings, DELL and HPQ each reported better earnings reports on surging sales of computers given the rising need with people staying at home during the pandemic. November so far has been astounding to say the least as the Dow rises over 13%, passes 30k, best month since 1987, the Russell 2000 is up over 20% for its best month ever, S&P energy sector is up 37% for its best month on record and S&P financials up 19% for its best month since 2009. This all comes in the face of surging coronavirus cases worldwide ahead of the holiday’s as economic recovery optimism amid upbeat Covid-19 vaccine news from Pfizer, AstraZeneca, and Moderna with indications from the White House that vaccine distribution could start after Dec. 10. In Asian markets, The Nikkei Index gained 131 points to 26,296, the Shanghai Index fell -40 points to 3,362 and the Hang Seng Index rose 81 points to 26,669. In Europe, the German DAX is lower by about -40 points to 13,250, while the FTSE 100 is down about -30 points to 6,400. The stock market will shut early on Black Friday, though low volumes and trading activity are typically seen until the close at 1 p.m. ET. Bond markets will close an hour later, while metals and U.S. crude oil will settle at 12:30 p.m. and 1:30 p.m., respectively.

Market Closing Prices Yesterday

·     The S&P 500 Index surged 57.82 points, or 1.62%, to 3,635.41

·     The Dow Jones Industrial Average rose 454.97 points, or 1.54%, to 30,046.24

·     The Nasdaq Composite spiked 156.15 points, or 1.31%, to 12,036.79

·     The Russell 2000 Index advanced 35.23 points, or 1.94% to 1,853.23

 

Economic Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Gross Domestic Product (GDP) for Q3 2nd estimate…est. 33.2%

·     8:30 AM EST      GDP Price Deflator for Q3 2nd estimate…est. 3.7%

·     8:30 AM EST      Advance Goods Trade Balance for Oct

·     8:30 AM EST      Weekly Jobless Claims…est. 730K

·     8:30 AM EST      Continuing Claims weekly data…est. 6.02M

·     8:30 AM EST      Personal Income MoM for October…est. 0%

·     8:30 AM EST      Personal Consumption for October

·     8:30 AM EST      PCE Price Index MoM for Oct

·     8:30 AM EST      Core PCE Price Index MoM for Oct…est. 0%

·     8:30 AM EST      Durable Goods Orders for Oct…est. 0.9%

·     8:30 AM EST      Durable Goods Ex: Transportation for Oct…est. 0.5%

·     10:00 AM EST    University of Michigan Confidence for November…est. 77.0

·     10:00 AM EST    New Home Sales MoM for October…est. 970K

·     10:30 AM EST    Weekly DOE Inventory Data

 

 

Macro	Up/Down	Last
WTI Crude	0.45	45.36
Brent	0.59	48.45
Gold	1.15	1,808.75
EUR/USD	-0.0008	1.1884
JPY/USD	0.05	104.49
10-Year Note	-0.014	0.868%

 

 

Sector News Breakdown

Consumer

·     American Eagle (AEO) Q3 EPS 35c vs. est. 34c and revs $1.03B (in-line with est.); does not anticipate declaring a dividend for rest of this year; Q3 digital reported revenue increased 29%; total qtr.-ending inventory at cost decreased $87 mln or 13% to $560M; Q3 Aerie digital revenue rose 83% and ae increased 11%

·     Gap Stores (GPS) Q3 total comp sales +5%, vs. est. -2.4%; Q3 eps 25c, vs. est. 31c and gross margin 40.6%, vs. est. 37.8%; sees Q4 net sales equal or slightly higher than last year vs. consensus $4.54B; Q3 Old Navy Global Net sales increased 15%, with comparable sales up 17%; Online sales rose 61%, but that was offset by a 20% decline in store sales, Gap said

·     Darden (DRI) downgraded to Neutral from Buy at BTIG

·     Ford (F) downgraded to Equal Weight from Overweight at Morgan Stanley

·     National Beverage (FIZZ) declares $3.00 special dividend

·     Nikola (NKLA) shares dip after yesterday’s sharp advance after the CEO failed to reassure investors that the company’s $2B deal with General Motors (GM) would go through in his interview on CNBC’s Mad Money with Jim Cramer (sides can walk away if no deal by 12/3)

·     Nordstrom (JWN) Q3 EPS 34c vs. est. loss (6c) on sales about $3B vs. est. $3.1B (and $3.57B a year ago); qtrly digital sales of $1.6 bln represented 54% of business; qtrly net sales included positive impact of about 10-pct points due to shift of Nordstrom anniversary sale from q2 to q3 this year; says encouraged by positive momentum, expect continued progress in q4 & into 2021

 

Energy, Industrials and Materials

·     The American Petroleum Institute (API) showed a bigger than expected build of 3.8M barrels of oil for the week ending Nov. 20; gasoline inventories showed a build of 1.3M barrels, distillate inventories show a draw of 1.8M barrels and Cushing inventories show a draw of 1.4M barrels.

·     Deere (DE) Q4 EPS $2.39 above consensus $1.49 and; Q4 worldwide revenue $9.73B, equipment operations revenue $8.66B

·     Mesa Air (MESA) shares rise 25%; on news it finalized a new contract replacing its previous agreement with American Airlines (AAL), to operate 40 CRJ-900s for a five-year term through year-end 2025 – under the previous contract, 30 of the aircraft were set to expire in 2021 with another 17 expiring in 2022.

·     Mosaic (MOS) confirmed the U.S. Department of Commerce announced that it preliminarily found that phosphate fertilizer imports from Morocco and Russia benefit from countervailable subsidies (news lifted shares yesterday after Bernstein and BMO noted the decision)

 

Financials

·     Raymond James Financial (RJF) client assets under administration of $922.6B rose 8% Y/Y and declined 1% from September; the MoM decrease is primarily from the decline in equity markets, with the S&P 500 Index down 3% vs. September.

 

Healthcare

·     Becton Dickinson (BDX) raises dividend 5.1% to 83c

·     Urovant Sciences (UROV) announces topline data from phase 2a study of vibegron for the treatment of irritable bowel syndrome (ibs) pain did not meet primary endpoint; key secondary endpoint of global improvement scale (gis) showed numerical differences in favor of vibegron versus placebo, however data was not statistically significant

·     MediciNova Inc.’s (MNOV) Ibudilast drug showed positive results for improving patients’ eye outcomes in a trial for people with progressive multiple sclerosis

·     Hepion Pharmaceuticals (HEPA) 20M share Spot Secondary priced at $1.50

 

Technology, Media & Telecom

·     Autodesk (ADSK) Q3 adj EPS $1.04 on revs $952M beating the 96c and $942.24M est.; sees Q4 adjusted EPS $1.04-$1.10 vs. est. $1.06 and revs $999M-$1.01B vs. est. $1B; qtrly total billings decreased 1 percent to $1.01B; Q3 subscription plan revenue was $884M, up 24%; guides year revs $3.75B-$3.765B vs. est. $3.75B and year EPS $3.91-$3.97 vs. est. $3.83

·     Dell Technologies (DELL) Q3 adj EPS $2.03 on revs $23.5B vs. est. $1.40 and $21.85B; ended qtr with cash and investments of $13 bln; paid down $4.6 bln in debt during qtr; total deferred rev of $28.7 bln at qtr-end, up 11% and qtrly recurring rev about $6 bln, up 13%; said saw continued demand for remote work, learning and gaming solutions in qtr

·     HP Inc. (HPQ) Q4 EPS 62c on revs $15.26B vs. est. 52c and $14.72B; said had record unit shipments in the quarter; announces dividend increase of 10%; Q4 personal systems rev $10.43 bln vs $10.43 bln and qtrly printing rev $4.83 bln vs $4.98 bln; guides q1 EPS 64c-70c vs. est. 53c

·     Pure Storage (PSTG) Q3 GAAP EPS loss (28c) on revs $410.6M vs. est. $406.48M; sees Q4 revenue $480M (down 2% YoY) vs. est. $466.24M; Q3 subscription service revs up 29% YoY to $136.1M

·     SiTime (SITM) raised revenue guidance for Q4 to increase 18-22% sequentially vs. 10-15% guidance provided during its Q3 earnings release

·     VMWare (VMW) Q3 adj EPS $1.66 on revs $2.86B vs. est. $1.43 and $2.81B; raises FY21 EPS view to $7.03 from $6.62 (est. $6.66) and raises FY21 revenue to $11.7B from $11.6B (est. $11.62B); said Q3 license revs $639 million, -34% YoY and services revenue $1.55 billion, +4.5% YoY

·     Yunji (YJ) rises after saying it has signed a cooperative framework agreement with ByteDance’s Chinese live streaming platform Douyin