Early Look

Tuesday, September 20, 2022

Futures	Up/Down	%	Last
Dow	-129.00	0.41%	30,988
S&P 500	-18.25	0.47%	3,898
Nasdaq	-66.50	0.55%	11,958

 

 

U.S. futures are giving back some of its gains from yesterday, with S&P futures dropping back below 3,900 as Treasury yields spike to highest levels in over a decade, with the 10-yr up 5-bps to 3.543% and the 2-yr up 3-bps to 3.979% ahead of the FOMC policy meeting. Stocks closed higher on Monday in a volatile trading session ahead of the Federal Reserve’s two-day policy meeting slated to kick off Tuesday. After wavering between gains and losses for most of the session, stocks bounced late day with most sectors finishing in the green (Healthcare and REITS were laggards). The next two-day meeting of the Fed’s policy-setting committee begins today and will culminate with a decision on the size of the next Fed interest-rate hike on Wednesday — as well as an updated batch of economic projections. Investors expect the Fed to raise its rate target by at least 75 basis points. In Asian markets, The Nikkei Index rose 120 points to 27,688, the Shanghai Index edged higher 6-points to 3,122, and the Hang Seng Index jumped 215 points to 18,781. In Europe, the German DAX is down over -80 points to 12,720, while the FTSE 100 is down slightly to 7,225. Hong Kong said it wants to relax Covid rules like mandatory hotel quarantine that have made travel difficult for nearly three years.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 26.56 points, or 0.69%, to 3,899.89

·     The Dow Jones Industrial Average rose 197.26 points, or 0.64%, to 31,019.68

·     The Nasdaq Composite gained 86.62 points, or 0.76%, to 11,535.02

·     The Russell 2000 Index advanced 14.65 points, or 0.81% to 1,812.84

 

Economic Calendar for Today

·     7:45 AM ET            ICSC Weekly Retail Sales

·     8:30 AM ET            Housing Starts M/M for August

·     8:30 AM ET            Building Permits M/M for Aug

·     8:55 AM ET            Johnson/Redbook Weekly Sales

·     1:00 PM ET            US Treasury to sell $15B in 20-year notes

·     4:30 PM ET            API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: APOG BELL

·     Earnings After the Close: SFIX

 

Other Key Events:

·     BTIG 2nd Annual Digital Assets Conference (virtual), 9/19-9/20

·     Credit Suisse Annual Houston Oil & Gas Conference, 9/20-9/21, in Houston, TX

·     Deutsche Bank Annual Leveraged Finance Conference, 9/19-9/21, in Arizona

·     Roth Capital Annual Solar & Storage Symposium, 9/20-9/21, in Anaheim, CA

·     Salesforce User Conference: Dreamforce 2022, 9/20-9/22, in San Francisco, CA

·     Wells Fargo 5th Annual Consumer Conference, 9/20-9/22, in CA

 

 

Macro	Up/Down	Last
Nymex	0.05	85.78
Brent	0.19	92.18
Gold	-2.80	1,675.40
EUR/USD	-0.0018	1.0004
JPY/USD	0.48	143.68
10-Year Note	+0.053	3.542%

 

 

World News

·     Sweden surprises markets with a record 100bps rate hike (ests for 75-bps); the Riksbank also raised its policy rate path, with the rate now seen peaking at about 2.53% in 2023 Q3

·     Japan Aug CPI: 3% y/y vs 2.6% consensus; Japan Aug CPI Core: 2.8% y/y vs 2.7% consensus

 

Sector News Breakdown

Consumer

·     Ford (F) previews effect of parts shortages on q3 performance, reaffirms full-year adjusted Ebit guidance of $11.5-$12.5b; expects to have about 40,000 to 45,000 vehicles in inventory at end of Q3 lacking certain parts presently in short supply; anticipates Q3 adj Ebit of between $1.4B-$1.7B

·     Oxford Industries (OXM) raises FY22 adjusted EPS view to $10.25-$10.60 from $9.60-$10.00 (est. $10.02) and raises FY22 revenue view to $1.38B-$1.41B from $1.29B-$1.33B (est. $1.31B)

·     Wynn Resorts (WYNN), Melco (MLCO) moving higher; watch casinos after China’s government issued draft rules aimed at making it easier for some foreigners to enter China for visits to tourism sites along the Chinese border. Separately, Macau GGR tracking 30% higher in September despite post-holiday slowdown (according to Inside Asian Gaming)

·     Nike (NKE) downgraded to Equal Weight from Overweight at Barclays

·     Fisker (FSR) and Wallbox (WBX) name Wallbox as Fisker’s global partner for home EV charging solutions

 

Energy, Industrials and Materials

·     Apogee Enterprises (APOG) Q2 adj EPS $1.06 vs. est. $0.83; Q2 revs rose 14% to $372M vs. est. $344.6M; raises year EPS view to $3.75-$4.05 vs. est. $3.66 and year revs to grow 8%-10%

·     Summit Midstream Partners LP (SMLP) said continue to expect to trend toward high end of our 2022 adjusted EBITDA guidance range of $205 mln to $220 mln

·     German utilities RWE and Uniper are close to striking long-term LNG deals with Qatar to help replace Russian gas (news late Monday)

·     Weyerhaeuser (WY) downgraded to Neutral from Buy and Louisiana-Pacific (LPX) downgraded to Underperform from Neutral at Bank America in Timber sector

 

Financials

·     PayPal (PYPL) downgraded to Neutral from Positive at Susquehanna

 

Healthcare

·     Change Healthcare (CHNG) rises after hours after a judge denied the U.S. Dept. of Justice’s request to block its sale to UnitedHealth (UNH). The DOJ sued to block UnitedHealth’s (UNH) $8 billion planned purchase of Change (CHNG) in late February https://on.wsj.com/3RZLHue

·     Humana (HUM) upgraded to Overweight from Equal Weight at Morgan Stanley

·     Merck (MRK) to initiate new phase 3 clinical program with lower dose of daily oral islatravir in combination with doravirine for treatment of people with hiv-1 infection

 

Technology, Media & Telecom

·     Cognex (CGNX) raises 3q revs $195M to $205M, from prior $160M to $180M

·     Zendesk Inc’s (ZEN) shareholders approved a $10.2 billion planned acquisition by a group of private equity firms led by Hellman & Friedman and Permira

·     Tencent Holdings Ltd. (TCEHY) is looking into shedding more of its huge investment portfolio as the Chinese social-media and videogame company tries to fund a series of share buybacks and refocus its growth strategy – WSJ https://on.wsj.com/3f5MriD

·     Ouster Inc. (OUST) said that it is initiating a comprehensive cost-reduction process across its business, streamlining its cost structure, including a 10% reduction in staff, and extending its expected cash runway.

·     Western Digital (WDC) downgraded to Hold from Buy at Deutsche Bank