Early Look

Tuesday, July 21, 2020

Futures	Up/Down	%	Last
DJ Industrials	177.00	0.66%	26,810
S&P 500	23.50	0.73%	3,269
Nasdaq	97.50	0.89%	11,048

 

 

Stock futures are on the rise (again) following another global stock market rally overnight as Asian markets jump and European markets are also firmly higher as European Union leaders finally agreed a EU750 billion ($860 billion) coronavirus rescue fund after long negotiations. The agreed deal will see EU390 billion offered in grants to individual countries, with the rest coming in the form of loans, lower than the proposed EU500 billion in grants. The news was welcomed by foreign markets as the German DAX surges over 240 points to 13,275, while the FTSE 100 is up about 30 points to near the 6,300 level. In Asian markets overnight, The Nikkei Index rose 166 points to 22,884, the Shanghai Index gained 6-points to 3,320 and the Hang Seng Index jumped 577 points to 25,635. That news, along with vaccine hopes on the COVID-19 virus and positioning ahead of key earnings this week has futures higher. Momentum for stocks continued to the upside on Monday, especially for technology stocks as the Nasdaq Composite surged 263.90 points, or 2.5%, to end at a closing record of 10,767.09, booking its largest daily percent gain since April 29 after falling over 1% last week on profit taking. The all-time closing peak for the Nasdaq represented its 28th of 2020. The rally came ahead of a busy week of corporate earnings this week with results from MSFT, INTC, TSLA on tap later in the week, following better results from IBM overnight (earnings rose but sales decline YoY again). The market rallied sharply through the afternoon as work-from-home and large-cap stocks jumped, leading the broader market to a strong close. The benchmark S&P 500 index finished near 3,252, above its June 8 high of 3,230, paced by gains in Amazon up over 8%. Stocks benefitted early after positive COVID-19 vaccine news from the likes of BNTX, PFE and AZN. Money worked their way into the “work-from-home stocks” such as ZM, AMZN, PTON, DOCU and out of the more defensive plays that rose last week such as utilities and REITs. Fear also remains non-existent as the CBOE volatility index (VIX) ended down 1.22 points at 24.46 on Monday, its lowest closing level since February 21. Gold prices are higher, back near 9-year highs, with oil higher and Treasuries higher.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 27.11 points, or 0.84%, to 3,251.84

·     The Dow Jones Industrial Average rose 8.92 points, or 0.03%, to 26,680.87

·     The Nasdaq Composite surged 263.90 points, or 2.51%, to 10,767.09

·     The Russell 2000 Index declined -5.36 points, or 0.36% to 1,467.95

 

Economic Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:30 AM EST      Chicago Fed Nat Activity Index for June

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: CBSH, CIT, CMA, CTG, FULT, GATX, GPK, KO, LMT, MUSA, PCAR, PEBO, PLD, PM, SBNY, SFNS, SNV, SYF

·     Earnings After the Close: AGR, AIR, AMTD, CALX, COF, CSL, FFIC, HOPE, IBKR, IRBT, ISRG, NAVI, PNFP, SNAP, SUM, TER, TXN, UAL, USNA, WRB, WTFC

 

 

Macro	Up/Down	Last
WTI Crude	1.03	41.84
Brent	1.11	44.39
Gold	9.60	1,827.00
EUR/USD	0.0007	1.1455
JPY/USD	-0.03	107.24
10-Year Note	+0.006	0.616%

 

 

World News

·     European Union leaders agreed on a $2.06 trillion spending package aimed at containing an unprecedented economic downturn by resorting to new measures that could ultimately deepen the bloc’s economic integration

 

Sector News Breakdown

Consumer

·     Hibbett (HIBB) shares jumped 20%; said Q2 comp store sales are forecasted to increase in excess of 70%; 1H comp store sales are expected to increase approximately 20%; brick and mortar comparable store sales are expected to increase about 60% in Q2; digital comp sales are forecasted to increase approximately 200% in Q2

·     New Age Beverages (NBEV) shares jumped after reaching a deal to acquire Ariix, together with four additional companies in the e-commerce and direct selling channels; said the new combination will create a global firm with estimated pro forma revenues in excess of $500M across more than 75 countries worldwide.

 

Energy, Industrials & Materials

·     Graphic Packaging (GPK) Q2 adj EPS 26c on sales $1.61B vs. est. 19c and $1.58B

·     Steel Dynamics (STLD) Q2 adjusted EPS 47c on revenue $2.1B vs. est. 35c/$2.06B

 

Financials

·     Bank South Bank (BXS) Q2 EPS 59c vs. est. 33c; Q2 NIM 3.35%; Total non-performing assets were $155.4M, or 1.01% of net loans and leases, at June 30, 2020; Noninterest expense for the second quarter of 2020 was $162.5 million, compared with $157.7 million YoY

·     Commerce Bancshares (CBSH) Q2 EPS 34c on revs $320.57M vs. est. 52c/$324.58M

·     Synovus (SNV) Q2 adjusted EPS 23c vs. est. 5c; Q2 net interest margin 3.13% vs. 3.69% a year ago

·     Synchrony (SYF) Q2 EPS 6c vs. est. 15c; Q2 CET1 capital ratio 15.3%, Q2 net charge-offs 5.35%, Q2 loan receivables down 4% to 78.3B, or 3% on a Core basis and reports Q2 purchase volume down 19% to 31.2B, or 13% on a Core basis

·     Equity Lifestyle (ELS) normalized Q2 FFO 47c vs. est. 43c

·     First Hawaiian (FHB) will replace Emergent BioSolutions (EBS) in the S&P SmallCap 600 Index, as EBS is moving up to the MidCap 400, replacing Caesars Entertainment (CZR) which completed its acquisition with Eldorado Resorts.

·     Genworth Financial (GNW) reached an agreement with AXA to settle their dispute related to liability involving losses incurred from mis-selling complaints for payment protection insurance underwritten by two companies AXA acquired from Genworth in 2015

·     Triumph Bancorp (TBK) reports Q2 EPS 25c vs. est. 7c; said earned non-interest income for Q2of $20.0 million compared to $7.5 million for the quarter ended March 31, 2020

·     Zions Bancorp (ZION) reports Q2 EPS 34c below consensus 38c; reports provision $168Mm vs. $21Mm

 

Healthcare

·     Acadia Pharmaceuticals Inc. (ACAD) said the FDA accepted for filing its supplemental New Drug Application for NUPLAZID for the treatment of hallucinations and delusions associated with dementia-related psychosis

·     Novartis (NVS) reports Q2 core EPS $1.36 on sales $11.35B vs. est. $1.35/$12B

·     NuVasive (NUVA) sees Q2 revenue $202M-$205M above ests $151.58M saying reflects the impact of the widespread shutdown in elective surgical procedures in April as a result of the COVID-19 pandemic and government stay-at-home orders, with surgical volumes increasing in May and even further in June; sees $20M-$25M in charges related to inventory and accounts receivables, resulting in prelim 2Q Adj Op Loss of $17M to $23M

·     Pieris Pharmaceuticals’ (PIRS) shares fell as the FDA instituted a partial clinical hold on Phase 1 clinical trials of its lead candidate PRS-343 until the company conducts an additional in-use and compatibility study with various infusion materials under specific conditions aimed at confirming the suitability of the PRS-343 for administration in clinical settings.

 

Technology, Media & Telecom

·     IBM Corp. (IBM) Q2 adjusted EPS $2.18 on revs $18.1B (down -5.4% YoY) above the $2.07/$17.62B estimate; 2Q total cloud revenue $6.3 billion, up 30%; 2Q adjusted gross margin 49% vs. 47.4% YoY, 2Q cloud and cognitive software revenue $5.75 billion, 2Q global technology services revenue $6.32 billion, -7.6% YoY; ended 2Q with $14.3 billion of cash on hand which includes marketable securities, up $5.2 billion from year-end 2019

·     Amazon (AMZN) Prime Day 2020 will be postponed by three months, according to an email to third-party sellers that suggests this year’s big deals will launch in October.

·     Cadence Designs (CDNS) Q2 adj EPS 66c on revs $638M above est. 52c and $591.5M; guides Q3 adj EPS 59c-61c on revs $630M-$650M vs. est. 63c and $651.4M

·     DXC (DXC) said it is selling its healthcare software provider business to Dedalus Group for $525M in cash; transaction is expected to close by March 2021.

·     eBay (EBAY) is selling its classified ad business to Norway’s Adevinta (ADEVF) for $9.2B in cash and stock, making the latter the largest online classifieds company globally.

·     Limelight Networks (LLNW) backs FY20 adjusted EPS view breakeven to 10c vs. est. 5c and boosts FY20 revenue view to $230M-$240M from $225M-$235M (est. $232.6M); narrows FY adjusted EBITDA view to $28M-$35M from $25M-$35M; 2Q EPS $0.03 vs. est. $0.01, revs $58.5Mm vs. est. $56.7Mm

·     Logitech (LOGI) raises FY21 revenue growth view to 10%-13% from mid-single-digit growth

·     Synaptics Incorporated (SYNA) announced the signing of a definitive agreement to acquire DisplayLink Corp. for $305M in an all-cash transaction