Early Look

Wednesday, July 1, 2020

Futures	Up/Down	%	Last
DJ Industrials	-166.00	0.65%	25,523
S&P 500	-14.50	0.46%	3,076
Nasdaq	-29.50	0.29%	10,118

 

 

After closing out Q2 with another strong performance, U.S. equity futures are pointing to a slightly lower open ahead of FOMC monetary meeting minutes later today and another round of coronavirus case counts that continues to have equity markets on edge (Texas record highs). U.S. major averages closed out Q2 with the best quarterly performance in over two-decades, as the S&P 500 index advanced roughly 20% for the quarter, while the Dow Jones Industrial Average was up 17% and the Nasdaq Composite outperformed, rising over 30% in the past three months. The massive rally over that stretch has been fueled by the Fed’s aggressive support for financial markets through various stimulus measures, government relief bill intervention and signs of an early recovery in economic activity after the coronavirus pandemic lockdown that started in March. After the close last night, Fed-Ex (FDX) reported quarterly earnings and revenue that far surpassed analyst expectations, sending shares higher by more than 10% in after hours, and likely to give the transport sector a boost today. In Asian markets, The Nikkei Index fell -166 points to 22,121, the Shanghai Index gained 41 points to 3,025 and the Hang Seng Index was closed. In Europe, the German DAX is down about -40 points to 12,265, while the FTSE 100 is lower by -30 points to 6,135. Crude oil prices are higher by over 2.5% after bullish inventory overnight, while gold prices hold above the $1,800 an ounce level for the first time in about 9-years.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 47.05 points, or 1.54%, to 3,100.29

·     The Dow Jones Industrial Average rose 217.08 points, or 0.85%, to 25,812.88

·     The Nasdaq Composite surged 184.61 points, or 1.87%, to 10,058.77

·     The Russell 2000 Index advanced 20.16 points, or 1.42% to 1,441.37

 

Economic Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     7:30 AM EST      Challenger Job Cuts YoY for June

·     8:15 AM EST      ADP Employment Change for June…est. 2.9M

·     9:45 AM EST      Markit US Manufacturing PMI, June-F…est. 49.6

·     10:00 AM EST    Construction Spending MoM for May…est. 1.0%

·     10:00 AM EST    ISM Manufacturing for June…est. 49.8

·     10:30 AM EST    Weekly DOE Inventory Data

·     2:00 PM EST       FOMC Meeting Minutes from June 10th

 

Earnings Calendar:

·     Earnings Before the Open: GIS, M, STZ. UNF

·     Earnings After the Close: CULP, SCHN

 

 

Macro	Up/Down	Last
WTI Crude	0.99	40.26
Brent	1.01	42.28
Gold	2.40	1,802.90
EUR/USD	-0.0003	1.1204
JPY/USD	-0.40	107.53
10-Year Note	+0.027	0.684%

 

 

World News

·     The Caixin China manufacturing purchasing managers index (PMI) climbed to a six-month high of 51.2 in June from 50.7 in May.

·     The final eurozone manufacturing PMI rising to 47.4 in June, from a previous estimate of 46.9 and a May level of 39.4.

·     German jobless claims rose by 69,000 in June after rising by 237,000 in May, vs. average forecast of an increase of 120,000. The adjusted unemployment rate increased to 6.4%, vs. the 6.6% est.

·     The state of Texas has reported 6,975 new COVID-19 cases on Monday, the state’s highest daily number of cases, bringing the total to no fewer than 159,986 cases

·     Japan’s large manufacturers deteriorated to the lowest level in 11 years, a as the main index measuring large manufacturers’ sentiment fell to minus 34 in June, compared with minus 8 in the previous March survey

 

Sector News Breakdown

Consumer

·     Beyond Meat Inc. (BYND) is making its retail-store debut in China through a partnership with Alibaba Group Holding Ltd. (BABA) as it plans to make its Beyond Burger available in 50 Freshippo stores in Shanghai starting this weekend

·     Capri Holdings (CPRI) Q4 adj EPS 11c on sales $1.19B (vs. $1.34B a year ago) and vs. est. 14c and $1.12B; seesQ1 revenue declining about 70% and a significant Q1 loss; not providing guidance for FY21; Q4 Michael Kors revenue fell -18.4% to $872M

·     Denny’s (DENN) announces offering of 8M shares of common stock

·     Steelcase (SCS) Q1 EPS loss (18c) on revs $482.8M vs. est. loss (14c)/$530.3M; said revenue and orders declined significantly as a result of government restrictions and economic uncertainty associated with the global pandemic; said total liquidity, comprised of cash, cash equivalents and the cash surrender value of company-owned life insurance, aggregated to $799.0M

·     Stein Mart (SMRT) Q1 EPS loss ($1.38) on sales down -57% YoY to $134.3M; said substantial doubt raised on going concern ability

·     Whirlpool (WHR) sees restructuring charges of $260M-$280M for FY20 — whirlpool workforce reduction plan to incur about $95M in costs

 

Energy

·     The American Petroleum Institute (API) showed a draw of 8.16M barrels of oil for the week ending June 26, with gasoline inventories reportedly show a draw of 2.46M barrels, distillate inventories show a build of 2.64M barrels, and Cushing inventories show a build of 164K barrels

·     Sempra Energy (SRE) raises FY adj EPS to $7.20-$7.50 from prior $6.70-$7.50 view (est. $7.35)

·     TravelCenters (TA) 6.1M share Secondary priced at $14.00

 

Financials

·     BCG Partners (BGCP) said it sees Q2 pre-tax adjusted earnings are now expected to be slightly above the low end of the previously stated range while Q2 revenues are expected to be slightly below the low-end of the previously stated outlook (had seen $525M-$575M) saying updated outlook comes against a backdrop of weaker industry volumes

·     Dun & Bradstreet (DNB) 78.3M share IPO priced at $22, above $19-$21 range

 

Healthcare

·     Avid Bioservices (CDMO) Q4 EPS loss (11c) on revs $12.6M vs. est. loss (16c) and $8.5M; sees FY21 revenue $76M-$81M vs. est. $88.6M; said revenue backlog was $65M, an increase of 12% at the end of Q3 and an increase of 41% YoY

·     BeiGene (BGNE) said it has begun commercializing XGEVA (denosumab) in China for the treatment of giant cell tumor of bone (GCTB)

·     CRISPR Therapeutics (CRSP) 6.428M share secondary priced at $70.00

·     T2 Biosystems (TTOO) Q2 prelim revs seen $2.40M-$2.6M vs. est. $2.44M; said during the 2Q of 2020, raised $8.4 million of net proceeds from the sale of 6.4 million shares through its ATM facility; announces U.S. launch of COVID-19 diagnostic test

·     Acceleron (XLRN) 4.86M share Secondary priced at $92.50

·     Gevo (GEVO) priced a public offering of 30M common shares together with accompanying warrants to purchase up to 30M shares at $0.60/share and accompanying warrant.

 

Industrials & Materials

·     FedEx (FDX) Q4 adj EPS $2.53 vs. est. $1.52 on revs $17.4B vs. est. $16.4B, says timing and pace of economic recovery are uncertain, will continue to make adjustments to network capacity to align with volumes and operating conditions, not providing FY21 forecast; sees 2021 capital expenditure $4.9 billion and said Q4 adjusted operating margin 5.2% vs. 9.60% YoY

·     Caterpillar (CAT) upgraded to Buy from Hold at Deutsche Bank with $166 tgt and Deere (DE) also upgraded to Buy with a $186 price target at the firm

·     United States Department of the Treasury intends to provide a $700M loan to YRC Worldwide (YRCW) maturing on September 30, 2024, under authorization provided by Subtitle A of Title IV of the CARES Act, for 29.6% fully diluted equity ownership in the company.

 

Technology, Media & Telecom

·     Motorola Solutions (MSI) reaffirms 2q revenue guidance