Early Look

Tuesday, June 30, 2020

Futures	Up/Down	%	Last
DJ Industrials	-60.00	0.24%	25,437
S&P 500	-4.50	0.13%	3,043
Nasdaq	-3.50	0.03%	9,970

 

 

Stock futures in the U.S. are looking at a mixed open, trying to add to the strong gains on Monday following a round of coronavirus updates that showed COVID-19 cases, while still rising, rose much less than the prior day levels in some of the bigger “hot-spots” around the country including FL, CA and AZ. Today also marks the final day of trading for the month and quarter, as stocks are on track to post their best QTD returns in about 20-years, with the Dow up around 17%, the S&P 18%, the Russell 2000 up 23% and the Nasdaq Composite up 28% QTD coming into today. In Europe, stock markets wobbled between small gains and losses, while equities across Asia rallied. The Nikkei Index jumped 293 points to 22,288, the Shanghai Index rose 23 points to 2,984 and the Hang Seng Index gained 125 points to 24,427. In Europe, the German DAX is up more than 30 points to 12,265, while the FTSE 100 is down about -20 points to the 6,200 level. Better economic data in China pointed to a strengthening recovery in China’s manufacturing sector. Federal Reserve Chairman Jerome Powell and Treasury Secretary Mnuchin will testify to Congress regarding the reopening of the U.S. economy. In earnings, chip stocks are higher on better guidance from XLNX and better earnings from MU while in the transport sector, FDCX is expected to report earnings tonight after the close.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 44.19 points, or 1.47%, to 3,053.24

·     The Dow Jones Industrial Average rose 580.25 points, or 2.32%, to 25,595.80

·     The Nasdaq Composite climbed 116.93 points, or 1.20%, to 9,874.15

·     The Russell 2000 Index advanced 42.43 points, or 3.08% to 1,421.21

 

Economic Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:00 AM EST      S&P CoreLogic CaseShiller for April…est. 0.5%

·     9:45 AM EST      Chicago PMI for June…est. 45.0

·     10:00 AM EST    Consumer Confidence for June…est. 91.4

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AYI, CAG, MEI

·     Earnings After the Close: CDMO, FDX, PEB, SCS

 

 

Macro	Up/Down	Last
WTI Crude	-0.61	39.09
Brent	-0.66	41.05
Gold	2.60	1,783.80
EUR/USD	-0.0037	1.1205
JPY/USD	0.16	107.74
10-Year Note	+0.008	0.631%

 

 

World News

·     Fed Chair Jerome Powell acknowledged that, “we have entered an important new phase” of economic recovery after the COVID-19 lockdowns, “and have done so sooner than expected,” according to his prepared statement for his testimony in Congress tomorrow discussing the CARES Act and the coronavirus. Still, he calls the economy’s path forward “extraordinarily uncertain and will depend in large part on our success in containing the virus.”

·     Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin will testify before the U.S. House of Representatives Financial Services Committee on the PPP, CARES Act and other lending facilities (they testified last month before the Senate)

·     China June official manufacturing PMI at 50.9 (vs. est. 50.4) and vs 50.6 in May; China June official services PMI rises to 54.4 vs. My 53.6 and China June official composite PMI at 54.2 vs 53.4 in May

 

Sector News Breakdown

Consumer

·     lululemon athletica Inc. (LULU) announced that it has entered into a definitive agreement to acquire MIRROR, a leading in-home fitness company that created an interactive workout platform that features live and on-demand classes, for a purchase price of $500 million (watch shares of PTON on news)

·     Herman Miller (MLHR) Q4 adj EPS 11c on sales $475.7M vs. est. 10c and $479.6M; said continues to withhold guidance; 4Q gross margin 34.9% vs. 37% YoY

·     Uber Technologies Inc. (UBER) has made a bid to take over rival food-delivery company Postmates, the New York Times reported Monday night. Talks were reported to be ongoing, but a deal could come within hours https://on.mktw.net/2NGKvfF

 

Energy

·     Royal Dutch Shell (RDS.A) said it is writing down between $15B-$22B of assets in the second quarter saying the pandemic has hurt several parts of its business including oil production, fuel sales and shipments of everything from LNG to petrochemicals; Oil Products sales volumes will be 3.5M-4.5M barrels a day in Q2, down from 6.6M a year earlier.

·     Energy Recovery (ERII) said Schlumberger (SLB) will exit its 15-year licensing deal for exclusive use of Energy Recovery’s VorTeq hydraulic pumping system.

 

Financials

·     Wells Fargo (WFC) said based on the Federal Reserve Board’s instructions regarding capital distributions through the end of 3Q 2020 it expects it will reduce its dividend from the current level of $0.51c per share; expects 2Q results will include increase in allowance for credit losses substantially higher than increase in 1Q

·     Simon Property (SPG) said it resumed its dividend at $1.30 per share and announcing that most of its U.S. retail properties have reopened; said it had ~$8.5B in liquidity, consisting of ~$3.5B of cash on hand, including its share of JV cash, and $5.0B of available capacity under its revolving credit facilities and term loan

·     State Street (STT) said to mull potential for buybacks in upcoming qtrs while suspending share repurchases for 3q; announced preliminary inaugural stress capital buffer requirement of 2.5% beginning in q4 of 2020

·     Jefferies (JEF) reports Q2 EPS 16c on revenue $1.03B; 2Q investment banking revenue $316 million, -47% QoQ and 2Q Total Equities & Fixed Income net revenue $730 million; 2Q pretax operating margin 16.7% vs. 20.1% QoQ

 

Healthcare

·     Crispr Therapeutics (CRSP) announces $325M common stock offering

·     Liquidia Technologies (LQDA) 9.375M share Spot Secondary priced at $8.00

·     Acceleron (XLRN) announces $400M common stock offering

·     Guardion Health Sciences (GHSI) has completed shipment of Astramern to Astramune Sdn Bhd, a subsidiary of Ho Wah Genting Berhad, a Malaysian company listed on the Malaysian Stock Exchange.

·     Luminex (LMNX) submits an Emergency Use Authorization (EUA) request to the FDA for its xMAP SARS-CoV-2 Multi-Antigen IgG blood test.

·     OncoCyte (OCX) announces completion of DetermaDx clinical validation study; prospective, blinded clinical validation study did not achieve pre-defined endpoint of improvement over routinely used clinical factors for managing patients with radiologically identified lung

·     Seattle Genetics (SGEN) and collaboration partner Genmab A/S (GMAB) announce positive topline results from a Phase 2 clinical trial, innovaTV 204, evaluating antibody-drug conjugate (ADC) tisotumab vedotin in patients with relapsed/refractory metastatic cervical cancer.

·     Verrica Pharma (VRCA) shares fell after announcement working with FDA to resolve issues related to VP-102 new drug application

·     Alterity Therapeutics (ATHE) rises after receiving FDA guidance in relation to the development pathway for ATH434 (previously PBT434), company’s lead compound for the treatment of Multiple System Atrophy (MSA), a Parkinsonian disorder

 

Industrials & Materials

·     Norwegian Air cancels orders for 97 Boeing (BA) aircraft, consisting of 92 737 MAX and five 787 Dreamliners. Norwegian also files legal claim seeking return of pre-delivery payments related to the aircraft and compensation for its losses related to the grounding of 737 MAX and 787 engine issues – Reuters

·     Landec (LNDC) guided Q4 revs about $156.1M and EPS between 1c-6c with Q4 net loss $14.6M-$17.6M; said to close curation foods’ manufacturing ops in Hanover and to sell building, assets related to its ops

 

Technology, Media & Telecom

·     Micron (MU) Q3 EPS 82c on revs $5.44B vs. est. 77c/$5.31B; qtrly overall GAAP gross margin as a % of rev was 32.4 % vs. 38.2% and non GAAP GM 33.2% vs. 39.3%; guides 4Q adj EPS $1.05 +/-$0.10 vs. est. $0.81, sees 4Q gross margin 34.5% +/-150bps vs. est $33.86%; said is ramping industry’s most advanced dram technology into production; says delivered more than 75% of NAND volume as high-value solutions in qtr

·     Xilinx (XLNX) raises mid-point of rev guidance as sees Q1 revs $720M-$734M (est. $690.2M) and margins 67%-68%, expenses $314M-$320M and expects Q2 to be in-line with Q1; says stronger-than-expected rev in wired & wireless, data center group offset weaker-than-expected rev in consumer-oriented end markets in qtr

·     Synacor (SYNC) and Qumu (QUMU) announced that the companies have mutually agreed to terminate their proposed all-stock merger agreement, previously announced on February 11, 2020