Early Look

Friday, June 26, 2020

Stock futures in the U.S. are mixed but markets overseas manage solid gains heading into the final trading day of the week and as we near the end of the quarter with major averages on pace for strong gains. In Asian markets, The Nikkei Index rose 252 points to 22,512, the Shanghai Index remained closed and the Hang Seng Index fell -231 points to 24,549. In Europe, the German DAX is up 125 points to move above 12,300, while the FTSE 100 is higher by about 90 points to 6,240. U.S. coronavirus cases neared an all-time high on Thursday, and states such as Texas and Florida were forced to dial back reopenings, amid the surge in cases in those states. Banks could weigh on the S&P after the Federal Reserve’s latest stress tests found that most will remain well-capitalized even under the harshest Covid-19 scenarios. But buyback have been suspended through the third quarter and dividend payments will be capped to preserve capital. Busy day of economic data upcoming with Personal Spending and Income as well as inflation related data at 8:30 AM and Sentiment data later at 10:00. Stocks surged on Thursday in the final hour of trading, breaking out of a fairly tight trading range. Shares of Nike (NKE) dips overnight after top and bottom line results missed estimates on weaker gross margins.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 33.43 points, or 1.10%, to 3,083.76

·     The Dow Jones Industrial Average rose 299.66 points, or 1.18%, to 25,745.60

·     The Nasdaq Composite surged 107.84 points, or 1.09%, to 10,017.00

·     The Russell 2000 Index advanced 23.57 points, or 1.70% to 1,413.31

Economic Calendar for Today

·     8:30 AM EST      Personal Income for May…est. (-6.0%)

·     8:30 AM EST      Personal Spending for May…est. 9.0%

·     8:30 AM EST      PCE Deflator MoM for May…est. 0.0%

·     8:30 AM EST      PCE Deflator YoY for May…est. 0.5%

·     8:30 AM EST      PCE Core Deflator MoM for May…est. 0.0%

·     8:30 AM EST      PCE Core Deflator YoY for May…est. 0.9%

·     10:00 AM EST    University of Michigan Sentiment, Jun-F…est. 79.2

·     1:00 PM EST       Baker Hughes Weekly Rig Count

Sector News Breakdown

Consumer

·     Albertsons (ACI) 50M share IPO priced at $16.00

·     Nike (NKE) Q4 EPS loss (51c) on revs $6.31B vs. est. 10c and $7.38B; Q4 gross margins 37.3% vs. est. 43.5%; greater China revs down 3% to $1.65B; qtrly North America total revenue was $2.23B vs. $4.17B reported last year; qtrly EMEA total revenue was $1.33B vs. $2.46B reported last year; FY20 effective tax rate was 12.1%, compared to 16.1% for same period last year

·     Group 1 Automotive (GPI) said it sees US operating profit improving much faster than anticipated, says UK ops to show a profit for June, seen significantly improving market conditions and operating trends in May and June-to-date vs March/April

·     DraftKings (DKNG) CFO Jason Park discloses the sale of 76.1K shares. Park still holds 14.5K shares after the transaction; several other directors sold shares as well according to SEC filings

·     Office Depot (ODP) announces a 1 for 10 reverse stock split

·     Tesco PLC (TSCDY) said Q1 comp sales growth was 7.9% and said group sales were 13.38 billion pounds ($16.62 billion) in the quarter ended May 30.

Financials

·     Bank stress tests: The Federal Reserve told the biggest U.S. banks they can’t increase dividends or resume buybacks through at least the third quarter as uncertainty over the course of a global pandemic weighs on lenders. The Fed found that the country’s largest lenders have struggled to model the unprecedented downturn and ensuing rescue programs. The Fed did not say how each bank fared under the pandemic analysis, but found the 34 tested firms could suffer as much as $700 billion in loan losses under the most severe “W-shaped” pandemic recovery.

·     CoreLogic (CLGX) raises Q2 revenue view to $455M-$465M from $420M-$445M (est. $440.1M) and boosts Q2 adj EBITDA view to $145M-$150M from $120M-$135M driven principally by continued market share gains and operating leverage attributable to higher U.S. mortgage market volumes

·     SITE Centers (SITC) is joining the S&P SmallCap 600 index, replacing Mobile Mini (MINI), which is set to be acquired by WillScot

Healthcare

·     Akouos (AKUS) 12.5M share IPO priced at $17.00

·     Fusion Pharma (FSUN) 12.5M share IPO priced at $17.00

·     Tela Bio (TELA) 3M share Secondary priced at $16.00

·     Xeris Pharma (XERS) 7.4M share secondary priced at $2.72

·     AbbVie (ABBV) unit Allergan has received a Complete Response Letter (CRL) from the FDA regarding its marketing application seeking approval of DARPin drug abicipar pegol for the treatment of neovascular age-related macular degeneration (wet AMD).

·     Vaxart (VXRT) said it signed an MoU with Attwill Medical Solutions Sterilflow to use AMS’ resources for lyophilization development and large-scale manufacturing including tableting and enteric coating for Vaxart’s oral COVID-19 vaccine

Industrials & Materials

·     CEOs of American Airlines (AAL), Delta (DAL), United (UAL), Southwest (LUV) and JetBlue (JBLU) are heading to the White House today to discuss a range of coronavirus-related travel issues with VP Mike Pence and other senior U.S. officials.

·     Apogee Enterprises (APOG) Q1 adj EPS 15c on sales $289.1M vs. est. $301.3M

·     DHT Holdings (DHT) files to sell 25.7M shares of common stock for holders

·     Virgin Galactic (SPCE) announced the successful completion of the second SpaceShipTwo test flight from Spaceport America. “This flight follows the completion of the first test flight from the Company’s commercial headquarters in New Mexico on May 1, 2020

Technology, Media & Telecom

·     Amazon (AMZN) is going to announce the purchase of self-driving car developer Zoox, according to reports in The Information and the Financial Times. The FT report put the price tag at $1.2 billion. The deal will pit Amazon against Waymo, which is backed by Alphabet (GOOGL) https://on.mktw.net/2Vma0ah

·     CalAmp (CAMP) Q1 adj EPS 2c on revs $80.2M vs. est. loss (6c) and $76M; said not providing Q2 guidance

·     SYNNEX (SNX) Q2 adj EPS $1.83 on revs $5.53B vs. est. loss (77c)/$5.13B; sees Q3 EPS $2.00-$2.50 on sales $5.5b_$5.9B vs. est. $1.14 and $5.44B; announces $400M stock buyback

·     Okta, Inc. (OKTA), CrowdStrike, Inc. (CRWD), Netskope, and Proofpoint, Inc. (PFPT) announced the companies are coordinating to help organizations implement an integrated, zero trust security strategy required to protect today’s dynamic and remote working environments.

·     Progress Software (PRGS) Q2 EPS 63c/$100.38M vs. est. 62c/$98.33M; raises FY20 EPS view to $2.82-$2.86 from $2.73-$2.80 (est. $2.78) and raises FY20 revenue view to $433M-$443M from $428M-$438M (est. $430.62M)