Early Look

Friday, September 20, 2024

U.S. equity futures are mixed, with the S&P 500 pulling back after weaker earnings/guidance from package delivery giant Fed-Ex (FDX) tempered the euphoria around the trajectory for interest rates; FDX shares down over -13% overnight on results. Note the S&P posted its 39th record high of 2024 on Thursday, the Nasdaq and SmallCap Russell 2000 both finished higher by over 2% and the Dow Jones Industrial Averages closed above 42,000 for the first time ever, all in further reaction to the aggressive interest rate cuts (50-bps) by the FOMC midweek. In other central bank news today, the Bank of Japan kept rates unchanged as expected. The Nikkei Index jumped 568 points to 37,723, the Shanghai Index closed flat at 2,736, and the Hang Seng Index advanced 245 points to 18,258. In Europe, the German DAX is lower by -150 points to 18,852, while the FTSE 100 is down -35 points to 8,293. The dollar climbed 1% on the Japanese currency to 144.10 on the back of Bank of Japan Ueda’s remarks, having earlier fallen around 0.6% to 141.74 earlier after the BOJ kept interest rates steady in a widely expected move. Today is triple witching option expiration in which $5.1 trillion worth of options tied to stocks, indexes, and ETFs will expire. $2.6 trillion of these are tied to indexes while $620B are linked to options on futures. Most of the futures interest in this level is focused on the S&P 500 index around the $5,500 level. $635B is tied to ETF options while $600B will be tied to single stocks. U.S. markets are on track for weekly gains with the Russell 2000 +3.2% WTD, the Nasdaq +1.87%, the S&P +1.56% and the Dow +1.53% WTD.

• The Dow Jones Industrial Average rose 522.09 points, or 1.26%, to 42,025.19.
• The Nasdaq Composite surged 440.68 points, or 2.51%, to 18,013.98.
• The Russell 2000 Index jumped 46.37 points, or 2.10% to 2,252.71.

• China’s Banks maintain key lending rates as PBOC Stays put.

• Lennar Corp. (LEN) Q3 adj EPS $3.90 vs est. $3.63 on revs $9.4B vs est. $9.173B, gross margin on home sales 22.5%, repurchased $519Mm common stock; guides Q4 new orders 19,000-19,300 deliveries 22,500-23,00, avg sales price about $425,000, gr mgn on home sales flat to Q3, SG&A $ of home sales $6.7-6.8%, financial services op Inc $140Mm; forecasts Q4 gross margin on home sales flat with Q3.
• MillerKnoll (MLKN) Q1 adj EPS $0.36 vs. est. $0.40; Q1 revs $861.5M vs. consensus $889.3M; said demand is improving and our Contract business is seeing the return of larger projects in the Americas and Asia; Ending backlog of $758.0 million increased 9.2% from last year and 10.9% from the start of FY25; still sees FY25 adj EPS $2.20, vs. consensus $2.18; guides Q2 EPS $0.51-$0.57 vs. consensus $0.61.
• Chewy, Inc. (CHWY) announces $500M offering of Class A common stock; has agreed to purchase from selling stockholder $300M of Chewy’s Class A common stock.

• Diamondback Energy (FANG) boosts buyback to $6B from $4B; also announces 11.27M share common stock offering for holders.
• American Battery Technology Co. and lithium-producer Albemarle Corp. (ALB) are among 25 companies getting more than $3B in funding from the Biden administration to boost domestic production of advanced batteries and components.
• Geospace Technologies Corporation (GEOS) said starting in the beginning of FY25 it will operate under three new business segments: Smart Water, Energy Solutions and Intelligent Industrial. The business segment realignment and name changes take place to more accurately reflect the Company’s on-going diversification efforts.
• Iridium (IRDM) board approves additional $500M share buyback program
• Nippon Steel (NPSCY) plans to sell at least 30 billion yen ($211 million) in assets in this fiscal year to manage its debt, the Nikkei quoted its vice chairman as saying on Friday, as it waits to know the fate of its $14.9 billion bid for U.S. Steel (X).

• W. P. Carey (WPC) increases the quarterly dividend to $0.875 per share.

• Sinclair Inc (SBGI) boosts guidance; said Q3 political advertising revenue expected at $140M-$145M.
• Warner Music Group (WMG) said on Thursday it would lay off about 150 employees, in addition to its earlier job cuts this year, totaling to about 13% of its workforce