Early Look

Wednesday, October 18, 2023

Futures	Up/Down	%	Last
Dow	-108.00	0.32%	34,036
S&P 500	-19.25	0.44%	4,382
Nasdaq	-83.50	0.55%	15,157

 

 

U.S. futures slip as oil and gold prices rise following escalated tensions in the Middle East, which prompted Arab leaders to cancel a summit with US President Biden, complicating efforts to avoid an escalation in the Israel-Hamas conflict. Global news headlines are almost entirely dominated by the shock blast at a hospital in Gaza. Both sides have blamed each other for the horrific event. US crude futures rise over 3% near $90 per barrel while gold prices rise over 1% to $1,958 an ounce. In earnings, airline operator UAL shares slid after results and warning on fuel costs and Middle East conflict. We get a bunch of financial related earnings this morning (ALLY, MS, STT, NTRS, USB) and after the close earnings from Tesla and Netflix headline a generally busy evening. In Asian markets, The Nikkei Index ended the session little changed at 32,042, the Shanghai Index dropped -24 points to 3,058, and the Hang Seng Index lost -40 points to 17,732. In Europe, the German DAX is down -90 points to 15,160, while the FTSE 100 is down about -40 points to 7,630.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dipped -0.43 points, or 0.01%, to 4,373.20.

·     The Dow Jones Industrial Average rose 13.11 points, or 0.04%, to 33,997.65.

·     The Nasdaq Composite slipped -34.24 points, or 0.25%, to 13,533.75.

·     The Russell 2000 Index advanced 18.98 points, or 1.09% to 1,766.05.

 

Economic Calendar for Today

·     7:00 AM ET                  MBA Mortgage Applications Data

·     8:30 AM ET                  Housing Starts M/M for September…est. 1.38M

·     8:30 AM ET                  Building Permits M/M for September…est. 1.45M

·     10:30 AM ET                Weekly DOE Inventory Data

·     12:30 PM ET                Fed’s Williams Participates in Moderated Discussion

·     1:00 PM ET                   US Treasury to sell $13B in 20-year notes.

·     2:00 PM ET                   Federal Reserve Releases Beige Book

·     3:15 PM ET                   Fed’s Harker Speaks on Workforce Challenges

·     4:00 PM ET                   Net Long-term TIC Flows for August

 

Earnings Calendar:

·     Earnings Before the Open: ABT ALLY CFG ELV FHN MS MTB NDAQ NTRS PG SCL STT TRV UCBI UNF USB WGO

·     Earnings After the Close: AA BANR CCI CNS COLB DFS EFX FNB FR GSBC KMI LBRT LRCX LVS MMLP NFLX NVEC PPG REXR SLG STLD TSLA ZION

 

 

Macro	Up/Down	Last
Nymex	2.74	89.40
Brent	2.43	92.33
Gold	20.40	1,956.20
EUR/USD	-0.0017	1.0557
JPY/USD	-0.06	149.75
10-Year Note	-0.017	4.83%

 

 

World News

·     The Chinese economy grew 4.9% y/y in Q3, slowing from the growth rate in the previous quarter of 6.3%, but topped the 4.5% consensus estimate. When compared with the second quarter of the year, China’s GDP rose 1.3% in, quickening from the 0.8% q/q growth recorded in Q2.

·     China Industrial production rose 4.5% y/y, matching the pace in August, and was slightly above the 4.4% increase expected by economists. China Retail sales rose 5.5%, accelerating from August’s 4.6% increase and topping the 4.8% growth expected by economists surveyed.

·     The American Petroleum Institute said weekly Crude oil inventories fell -4.383MM barrels, gasoline fell -1.578MM barrels, Distillates fell -0.612MM barrels and Cushing -1.005MM.

 

Sector News Breakdown

Consumer

·     Brinker (EAT) upgraded to Strong Buy from Outperform at Raymond James.

·     Floor & Decor (FND) to replace Vicor (VICR) in S&P 400 at open on 10/20 and VICR to replace CIRCOR International Inc. (CIR) in the S&P SmallCap 600.

 

Energy, Industrials and Materials

·     JB Hunt (JBHT) Q3 EPS $1.80 vs est. $1.83 on revs fell -18% y/y to $3.16B vs est. $3.184B; Intermodal revenue fell -15% y/y to $1.56B vs. est. $1.51B.

·     United Airlines (UAL) Q3 adj EPS $3.65 vs est. $3.35 on revs $14.48B vs est. $14.437B; capacity +15.7%, TRASM -2.8%, CASM -3.6%; sees Q4 total op revs about +9% vs est. +9.27%, sees avg aircraft fuel price/gal about $3.28 assuming TLV flight suspension thru year-end; guided Q4 EPS about $1.80 if flights to Tel Aviv are suspended through October (est. $2.09).

·     Terex (TEX) announced that John Garrison, Jr. is retiring as Chairman and CEO and a member of the Board of Directors, effective January 1, 2024.

·     Rio Tinto (RIO) said it will aim to boost iron ore output with a stronger outlook in China and as urbanization in India and across parts of Asia drives new steel demand growth.

 

Financials

·     Mastercard (MA) and Visa (V) – the WSJ reports the Federal Reserve is preparing a proposal that would lower the fees merchants pay to many banks when consumers shop with debit cards.

·     Fulton Financial (FULT) Q3 EPS $0.42 vs. est. $0.41; Q3 NIM 3.4% vs. est. 3.24% but below y/y 3.54%; Q3 net interest income (NII) $213.84M and Q3 credit loss provision $9.9M.

·     Hancock Whitney (HWC) Q3 EPS $1.12 vs est. $1.04 on NII 272.1Mm vs est. $273.17; CET1 capital ratio 12.04%, total deposits $30.3B +1% seq.

·     Interactive Brokers (IBKR) Q3 adj EPS $1.55 vs. est. $1.51; Q3 revs rose 34% y/y to $1.14B vs. est. $1.12B; customer accounts increased 21% to 2.43M; Q3 total net interest income rose 55% y/y to $733M vs. est. $725.5M; Customer trading volume was mixed across product types with options contracts volume up 18% while futures/stock volumes were down 1% and 22%, respectively.

·     M&T Bank (MTB) Q3 EPS $3.98 vs. est. $3.93; provision for credit losses of $150 million in each of the q3 & q2 of 2023 compared with $115 million in the third quarter of 2022; Q3 net charge-offs totaled $96 million in 2023’s third quarter.

·     Pinnacle Financial (PNFP) Q3 EPS $1.69 vs est. $1.71 on NII $317.242Mm vs est. $322.7Mm.

·     Preferred Bank (PFBC) Q3 EPS $2.71 vs est. $2.56 on NII $72.954Mm vs est. $71.25Mm.

 

Healthcare

·     Ardelyx Inc. (ARDX) said it the FDA approved tenapanor, marketed under the brand name Xphozah, for control of serum phosphorus in patients with chronic kidney disease on dialysis.

·     Bio-Rad Laboratories (BIO) CFO Ilan Daskal will resign effective Nov. 6 to pursue another opportunity.

·     Elevance Health (ELV) Q3 adj EPS $8.99 vs. est. $8.44; Q3 revs rose 7.2% y/y to $42.5B vs. est. $42.62B; Membership rose to 47.3 million, driven by growth in BlueCard, Affordable Care Act health plans and Medicare Advantage membership; benefit expense ratio, improved by 40 basis points to 86.8% due to by premium rate adjustments.

·     Takeda Pharma (TAK) said its trial of darvadstrocel in the treatment of complex Crohn’s Perianal Fistulas didn’t meet its primary endpoint based on topline data; said the Phase 3 trial assessing the treatment Alofisel, had a primary endpoint of combined remission at 24 weeks.

·     Viking Therapeutics (VKTX) shares rise overnight after saying its Phase 1 trial of VK2735, a dual agonist of glucagon-like peptide, also known as GLP-1, and glucose-dependent insulinotropic polypeptide, reduced liver fat content and plasma lipid levels in patients.

·     Y-mAbs Therapeutics (YMAB) said the FDA has cleared the company’s investigational new drug, or IND, application for CD38-SADA, the company’s second program within its Self-Assembly DisAssembly Pre-targeted Radioimmunotherapy Theranostic Platform.

 

Technology, Media & Telecom

·     ASML (ASML) warned of flat sales in 2024 as customers conserve cash; said it expects 2024 to be a “transition year” with a revenue similar to 2023; reported Q3 earnings of 1.9B euros, in line with analyst expectations, and repeated its forecast for full year sales growth of about 30%.

·     Omnicom (OMC) Q3 EPS $1.86 vs. est. $1.84; Q3 revs $3.58B vs. est. $3.55B; said is “pleased with our strong organic revenue growth of 3.3%, with notable performances in our Advertising & Media, Precision Marketing, and Healthcare disciplines”; Operating expenses increased $119.9 million, or 4.1%; Operating income increased $14.8 million, or 2.7%.