Early Look

Tuesday, October 5, 2021

Futures	Up/Down	%	Last
Dow	130.00	0.38%	34,000
S&P 500	12.00	0.27%	4,303
Nasdaq	43.50	0.30%	14,506

 

 

U.S, futures are trying to bounce after another brutal Monday on Wall Street that saw broad based weakness with the Nasdaq Composite hitting its lowest levels since late June, falling for the 6th time in the last 7-trading sessions and as the S&P 500 dropped over 1.2%, now more than 5% off its all-time highs, led by another decline in tech stocks. Bespoke noted that the NY FANG+ index closed below its 200-DMA today for the first time in 378 trading days and is now down more than 9% from its Sept. 7 record close. Many of the same concerns remain Tuesday, with a global energy crunch lifting oil prices to the highest in seven years, inflation momentum accelerating amid supply chain disruptions and soaring input costs, and the specter of a U.S. default as lawmakers continue to haggle over the extension of the country’s $28.4 trillion debt ceiling. The U.S. 10-Year Treasury yield ended a three-day losing streak on Monday as growth stocks plunged and concerns about a potential U.S. government debt default offered another reason for caution. The Dow, &P 500, and Nasdaq Composite ended the day down around 4%-7% from their recent closing highs. In Asian markets, The Nikkei Index fell -622 points to 27,822, the Shanghai Index remained closed for Golden Week holiday, and the Hang Seng Index gained 57 points to settle at 24,104. In Europe, the German DAX is up around60-points to 15,100, while the FTSE 100 gains around 50-points to 7,050. Crypto currencies adding to recent gains as Bitcoin tops the $50,000 level and Ethereum rises over 2% topping $3,450. Gold prices are near overnight lows as December gold futures fall -0.6% at $1,758 an ounce as the dollar edges higher and risk sentiment rising overnight.

Events Calendar for Today

·     7:45 AM ET         ICSC Weekly Retail Sales

·     8:30 AM ET         International Trade for Aug…est. (-$70.5B)

·     8:55 AM ET         Johnson/Redbook Weekly Sales

·     9:45 AM ET         Markit Composite PMI-F

·     9:45 AM ET         Markit Services PMI-F

·     10:00 AM ET      ISM Non-Manufacturing Index for Sept…est. 60.0

·     4:30 PM ET         API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: PEP

·     Earnings After the Close: SAR

 

Other Key Events:

·     Cowen 24th Annual Therapeutics Conference, 10/5-10/6, in Boston, MA

·     Deutsche Bank Annual Leveraged Finance Conference (virtual), 10/4-10/6

 

Market Closing Prices Yesterday

·     The S&P 500 Index tumbled -56.58 points, or 1.30%, to 4,300.46

·     The Dow Jones Industrial Average fell -323.54 points, or 0.94%, to 34,002.92

·     The Nasdaq Composite plunged -311.21 points, or 2.14%, to 14,255.48

·     The Russell 2000 Index declined -24.16 points, or 1.08% to 2,217.47

 

 

Macro	Up/Down	Last
Nymex	0.39	77.99
Brent	0.48	81.74
Gold	-11.40	1,758.00
EUR/USD	-0.0025	1.1597
JPY/USD	0.31	111.18
10-Year Note	+0.017	1.496%

 

 

World News

·     President Joe Biden said on Monday the federal government could breach its $28.4 trillion debt limit in a historic default unless Republicans join Democrats in voting to raise it in the two next weeks. Senate Republicans, led by Minority Leader Mitch McConnell, have twice in recent weeks blocked action to raise the debt ceiling, saying they do want action but will not help by voting for the move

·     The Australia Central Bank (RBA) Rate Decision kept rats unchanged at 0.1%, and QE unchanged at purchase rate of A$4b a week until at least mid Feb ’22, central scenario is conditions for rate rise won’t be met before 2024, RBA says it is committed to maintaining highly supportive monetary conditions

·     European PMI data: Spain Sep Services PMI: 56.9 vs 58.0 consensus; Italy Sep Services PMI: 55.5 vs 56.5 consensus; France Sep Services PMI: 56.2 vs 56.0 consensus; Germany Sep Services PMI: 56.2 vs 56.0 consensus; Eurozone Sep Services PMI: 56.4 vs 56.3 consensus

·     Japan Sept CPI higher as rises +0.3% y/y vs. decline of -0.4% consensus; Japan Sept CPI ex-fresh food lower rises +0.1% y/y vs 0.2% consensus; Japan Sep Services PMI higher at 47.8 vs 42.9 previous

 

Sector News Breakdown

Consumer

·     PepsiCo (PEP) Q3 core EPS $1.79 vs. est. $1.73; Q3 revs $20.19B vs. est. $19.39M; sees FY21 core EPS of at least $6.20 vs. est. $6.24; says now expects to deliver approximately 8% organic revenue growth for FY21 vs. prior view of 6% and at least 11% core constant currency EPS growth vs. prior view of 11% and at least 12% core; completed share buyback, doesn’t expect more buybacks this year

·     Lordstown Motors (RIDE) downgraded to Underweight from Equal Weight at Morgan Stanley and cut tgt to $2 from $8

·     Columbia Sportswear (COLM) downgraded to Neutral from Buy at Bank America and lower tgt to $108 from $137

·     Volvo (VLVLY) reports sales declined 30.2% Y/Y to 47,223 units in September; sales in Europe fell 41.5% and down 9% in the United States.

·     Lululemon Athletica (LULU) approved $500M boost in buyback program

·     Duckhorn Portfolio (NAPA) 4Q adj EPS $0.08 vs est. $0.01 on sales $70.9Mm vs est. $59.6Mm; guides FY22 adj EPS $0.54-0.57 vs est. $0.50, sees FY22 net sales $353-360Mm vs est. $350.2Mm

·     Everi Holdings (EVRI) tightens full year 2021 net income and adjusted Ebitda guidance to top of the previously provided range; now expects 2021 full year net income will be $90M-$95M & adj. Ebitda will be $337M-$342M

·     Group 1 Automotive (GPI) announces acquisition of two dealerships in Texas – the two stores are expected to generate approximately $150M in annualized revenues

·     Scientific Games (SGMS) said it landed major contracts from the Pennsylvania Lottery, announcing a ten-year base contract from the PA lottery will cover instant games and Scientific Games Enhanced Partnership for lottery instant game services

 

Energy, Industrials and Materials

·     Coal stocks jumped again on Monday as Arch Resources (ARCH), CONSOL Energy (CEIX) and BTU Energy (BTU) topped multi-year high as coal from the central Appalachia region rose $2.20 to $73.25/ton last week, according to U.S. government data, up 35% YTD

·     Renewable Energy (REGI) extended, increased line of credit to maximum of $250 mln

·     October prelim Class 8 from ACT truck orders was 27,400 units, compares to 36,900 in August and 25,480 in July (shares of CMI, PCAR and ALSN leveraged to monthly Class 8 data)

·     Patterson-UTI Energy (PTEN) reports an average of 83 drilling rigs operating for the month of September, 2021

·     Celanese (CE) will raise prices of all acetate tow product grades sold globally by $ 0.40/kg

 

Financials

·     Horace Mann (HMN) estimates third-quarter 2021 catastrophe losses in range of $35-$40 million, partially offsetting continued strong business performance

 

Healthcare

·     Johnson & Johnson (JNJ) announces submission of emergency use authorization amendment to the FDA to support booster of its single-shot covid-19 vaccine; submission includes data showing a booster increased protection to 94% against moderate to severe/critical covid-19 in the U.S.; substantial increase in immune response when booster was given at six months

·     AstraZeneca (AZN) said it has submitted a request to the us food and drug administration for emergency use approval of azd7442, which is intended as prophylaxis for symptomatic covid-19.

·     Elanco (ELAN) reaffirms expectation 2025 innovation rev. $600M-$700M

·     Syndax Pharmaceuticals (SNDX) said Daphne Karydas has notified the company of her intention to resign as Chief Financial Officer (CFO), treasurer, principal financial officer effective October 22, 2021, in order to pursue another opportunity.

·     Pfizer Inc (PFE)/BioNTech SE (BNTX) vaccine effectiveness in preventing infection by the coronavirus dropped to 47% from 88% six months after the second dose, according to data published on Monday that U.S. health agencies considered when deciding on the need for booster shots. The data, which was published in the Lancet medical journal, had been previously released in August ahead of peer review. The analysis showed that the vaccine’s effectiveness in preventing hospitalization and death remained high at 90% for at least six months.

·     Xenon Pharmaceuticals (XENE) files mixed securities shelf

 

Technology, Media & Telecom

·     Facebook (FB) and its Instagram, Messenger and WhatsApp reconnected late on Monday afternoon after a nearly six-hour outage that prevented the company’s 3.5 billion users from accessing its social media and messaging services. Facebook apologized but did not immediately explain what caused the failure.

·     Comtech Telecommunications Corp (CMTL) 4Q adj EPS $0.23 vs est. $0.24 on net sales $145.8Mm vs est. $149.7Mm; guides FY22 adj EBITDA $70-76Mm vs est. $80.5Mm, sees FY22 net sales $580-600Mm vs est. $600.2Mm; says on a consolidated basis, 1H22 financial performance expected to be significantly lower than 1H21