Early Look

Thursday, August 27, 2020

Futures	Up/Down	%	Last
DJ Industrials	-81.00	0.29%	28,231
S&P 500	-7.50	0.22%	3,472
Nasdaq	-23.50	0.19%	11,968

 

 

Stock futures are pointing to a slightly lower open, the first time this week its lower as the Nasdaq Composite comes into the day riding a 5-day win streak after surging again yesterday. Both the S&P 500 and the Nasdaq Composite each pushed further into record territory again on Wednesday, led by the usual suspects with AMZN, NFLX, GOOGL, FB, TSLA all setting new record highs and AAPL not far behind after touching a record best earlier this week as momentum continues in the largest cap tech names. Software was a huge winner as well with CRM shares touching record highs after a beat and raise quarter, lifting cloud related software stocks (CRM will be added to the Dow Jones Industrial Average next week). But while indexes surge on a daily basis, the strength remains in this narrow group with Bespoke noting that while the S&P 500 is up 6% this month, only 8 out of 18 days so far have seen positive breadth (with only 30 S&P 52-week highs yesterday as the S&P up 1% with negative breadth as there were 54 more decliners than advancers). Energy and Healthcare were the biggest laggards yet again along with defensive sectors. In Asian markets, The Nikkei Index dropped -82 points to 23,208, the Shanghai Index gained 20 points to 3,350, and the Hang Seng Index fell -210 points to 25,281. In Europe, the German DAX is lower by -50 points to 13,140, while the FTSE 100 is down about -10 points to 6,030. The two potential market catalysts today remain the Fed’s annual economic policy symposium, known as Jackson Hole, which will be done virtually this year as Fed Chairman Jerome Powell’s keynote is at 9:10 AM, which will reveal conclusions of the central bank’s review of its monetary policy framework. Also today, weekly jobless claims are due out at 8:30 with over 1 million expected to file first time unemployment and the Q2 GDP reading expected to show a sharp plunge. Hurricane Laura has been downgraded to a category 3 hurricane as it moves across southwestern Louisiana this morning, and then continues northward

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 35.11 points, or 1.02%, to 3,478.73

·     The Dow Jones Industrial Average rose 83.48 points, or 0.30%, to 28,331.92

·     The Nasdaq Composite powered higher 198.59 points, or 1.73%, to 11,665.06

·     The Russell 2000 Index declined -11.02 points, or 0.70% to 1,560.19

 

Economic Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims…est. 1.0M

·     8:30 AM EST      Continuing Claims…est. 14.4M

·     8:30 AM EST      Gross Domestic Product (GDP) Annualized Q2-S…est. (-32.5%)

·     8:30 AM EST      GDP Price Index, Q2-S…est. (-1.8%)

·     8:30 AM EST      Personal Consumption, Q2-S…est. (-34.2%)

·     8:30 AM EST      Core PCE QoQ, for Q2-S…est. (-1.1%)

·     10:00 AM EST    Pending Home Sales MoM for July…est. 2.0%

·     10:30 AM EST    Weekly EIA Natural Gas Inventory Data

·     11:00 AM EST    Kansas City Fed Manufacturing for August…est. 5

 

Earnings Calendar:

·     Earnings Before the Open: BURL, DG, DLTR, DXLG, FLXS, LANC, MOV, PLAB, TITN

·     Earnings After the Close: ANF, AVNW, DELL, GPS, HPQ, MBUU, MRVL, OKTA, OLLI, ULTA, VEEV, VMW, WDAY

 

Other Key Events:

·     Fed’s Powell to speak at Jackson Hole on policy

·     Davidson Virtual West Coast Bank tour, 8/25-8/27

·     Investigational Liver Congress 2020,8/27-8/29

·     Piper Annual Medtech and Diagnostics Bus Tour, 8/25-8/27

 

 

Macro	Up/Down	Last
WTI Crude	-0.15	43.24
Brent	-0.02	45.62
Gold	-13.10	1,941.30
EUR/USD	-0.0008	1.1822
JPY/USD	0.02	106.01
10-Year Note	-0.013	0.68%

 

 

Sector News Breakdown

Consumer

·     BorgWarner (BWA) was charged by the SEC for materially misstating its financial statements by failing to account for certain asbestos liabilities; from 2012 to 2016, BorgWarner failed to report over $700M in liabilities associated with future asbestos claims.

·     Coty (COTY) reports Q4 adjusted EPS (46c) and reports Q4 revenue $560.4M; q4 and fy20 severely impacted by covid-19 pandemic; says significant improvement expected in q1, with positive adjusted operating income; says Wella divestiture on track to close by end of cy20

·     Six Flags Entertainment Corporation (SIX) said all of the company’s incremental revolving credit lenders agreed to extend the incremental $131M revolving commitments by one year.

·     Williams-Sonoma (WSM) Q2 adjusted EPS $1.80 on revenue $1.491B vs. est. $1.00/$1.47B; Q2 Demand comparable brand revenue growth of almost 19%, which includes orders placed but not yet filled in the quarter; Q2 net comparable brand revenue growth of 10.5%, with sequential and YoY acceleration in nearly all brands, including Williams Sonoma at a record 29.4%, Pottery Barn at 8.1% and West Elm at 7.0%.

 

Energy

·     Hurricane Laura has been downgraded to a category 3 hurricane as it moves across southwestern Louisiana this morning, and then continues northward

 

Healthcare

·     Abbott Laboratories (ABT) said that the FDA granted emergency use authorization for the company’s 15-minute COVID-19 test that will be priced at just $5; says BinaxNOW works without relying on lab equipment

·     Clovis Oncology (CLVS) announced that the FDA approved the FoundationOne Liquid CDx, Foundation Medicine’s comprehensive liquid biopsy test for all solid tumors with multiple companion diagnostic indications, including for Rubraca tablets

·     Lannett (LCI) 4Q adj EPS $0.31 vs. est. $0.29 on sales $137.9Mm vs. est. $134.3Mm, says implemented $15Mm cost reduction initiatives in July 2020; guides 2021 net sales $520-545Mm vs. est. $566.4Mm

·     Phibro Animal (PAHC) Q4 adj EPS 17c on sales $186M vs. est. 22c and $191M; sees Q1 sales about $190M

 

Industrials & Materials

·     Copper prices closed +1% to $6,594/ton, pushing near two-year highs reached earlier this month, as London Metal Exchange inventories fell to the lowest in 14 years and China enjoys its strongest copper demand in three and a half years – Seeking Alpha

·     Greif (GEF) Q3 adj EPS 85c on sales $1.08B (-14% YoY) vs. est. 85c and $1.13B; 3Q adjusted Ebitda fell -22% YoY to $159.4M

·     Greenbrier (GBX) downgraded at KeyBanc to Sector Weight from Overweight

·     Raven Industries (RAVN) said it’s indefinitely suspending its quarterly dividend, deciding to reallocate the cash to supplement and accelerate investments in Raven Autonomy and Raven Composites

·     Rolls-Royce shares fell after reporting a £5.4 billion loss before tax. It is reviewing “a range of options” to strengthen its balance sheet, alongside potential disposals to raise at least £2 billion, including ITP Aero and other assets; CFO to leave the company

 

Technology, Media & Telecom

·     Box (BOX) Q2 adjusted EPS 18c on revs $192.3M vs. est. 12c/$189.56M; raises FY21 adj. EPS view to 56c-60c from 47c-52c (est. 50c) and raises FY21 revenue view to $767M-$770M from $760M-$768M (est. $765.11M)

·     Elastic (ESTC) Q1 adj EPS 6c on revs $128.9M vs. est. loss (18c) and $120.9M; Q1 adjusted gross margin 76.6% vs. 73.3% YoY; guides Q2 revs 4129M-$131M vs. est. $128.9M and EPS loss (22c-20c) vs. est. loss (24c); raises year revs to $544M-$550M from prior $530M-$540M

·     NetApp (NTAP) Q1 adjusted EPS 73c/$1.3B vs. est. 41c/$1.15B; sees Q2 adjusted EPS 66c-74c on revs $1.225B-$1.375B vs. est. 77c/$1.24B; expects to reduce worldwide headcount by about 5%

·     Semtech (SMTC) Q2 EPS 43c on sales $143.7M vs. est. 41c and $141.8M; guides Q3 sales $145M-$155M vs. est. $147M and margins 61%-62%

·     Splunk (SPLK) Q2 EPS loss (33c) on sales $491.7M vs. est. loss (34c) and $520.5M; guides Q3 revs $600M-4630M vs. est. $639M; 2Q total ARR $1.93B, up 50% YoY and Cloud ARR $568M, up 89% YoY; said cloud accounted for more than half of software bookings in the quarter

·     AMC Theatres (AMC) said it is set to reopen an additional 170 U.S. locations starting tomorrow after reporting a successful first weekend

·     NXP Semiconductors (NXPI) announces availability of the first multi-device vehicle wireless charging solution driven by a single MWCT controller in production vehicles