Early Look

Wednesday, March 24, 2021

Futures	Up/Down	%	Last
Dow	97.00	0.30%	32,403
S&P 500	13.25	0.35%	3,913
Nasdaq	100.50	0.77%	13,106

 

 

U.S. futures are rebounding, helped by a bounce in semiconductor stocks after INTC issued upbeat EPS and revenue guidance as well as upbeat cap-ex spending (lifting equipment names), while in Europe, German leaders are set to ditch a plan agreed on Tuesday for two extra “rest-days” around the Easter holidays to try to break a third wave of the coronavirus pandemic. Oil prices rebound and Treasury yields slip further in another boost to sentiment early. Major averages declined on Tuesday, led by weakness in cyclical sectors such as materials, industrials, and financials as sectors that stood to gain the most from a pandemic recovery and subsequent boost to the economy fell the most on increased restrictions in Europe and more news on AZN’s Covid-19 vaccine. The Nasdaq fell 1.1%, the Dow lost 0.9%, and the S&P 500 ended the session down 0.8%. With COVID infections rising, the outlook for international travel dims, sending shares of airlines, cruise lines, and hotels lower and fled to relatively safer sectors of utilities, consumer staples, and real estate. In day one of testimony on Capitol Hill, Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell both said the economy has strengthened recently due to fiscal and monetary policy actions, but there’s still a long way to go (day two today to Senate Banking Panel). The 10-year Treasury yield continued its retreat, falling 5 bps to 1.64% after touching a 1-year high of 1.75% last week. The U.S. dollar jumped, pressuring commodity prices as WTI crude fell -6.5% to $57.56 per barrel. Oil prices rebounded overnight however, after a ship ran aground and blocked the Suez Canal in both directions. In an interesting stat from Bespoke, the last time the 10-year yield and the Russell 2,000 were both down two days in a row? 147 days ago on October 27th, 2020 (after each fell again on Tuesday). In Asian markets, The Nikkei Index dropped -590 points (or 2%) to 28,405, the Shanghai Index slipped -44 points to 3,367and the Hang Seng Index declined -579 points (2%) to 27,918. In Europe, the German DAX is down over -50 points to 14,600, while the FTSE 100 is down a few points at 6,690.

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -30.07 points, or 0.76%, to 3,910.52

·     The Dow Jones Industrial Average fell -308.05 points, or 0.94%, to 32,423.15

·     The Nasdaq Composite dropped -149.84 points, or 1.12%, to 13,227.70

·     The Russell 2000 Index plunged -81.16 points, or 3.58% to 2,185.69

 

Events Calendar for Today

·     7:00 AM ET         MBA Mortgage Applications Data

·     8:30 AM EST      Durable Goods Orders for February…est. 0.8%

·     8:30 AM EST      Durable Goods Ex: Transportation for Feb…est. 0.6%

·     9:45 AM EST      Markit Services PMI Flash for Feb…est. 60.0

·     9:45 AM EST      Markit Manufacturing PMI, flash for March…est. 59.3

·     10:30 AM ET      Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: APG, EPAC, GIS, HYMC, RAIL, VITL, WGO, WOR

·     Earnings After the Close: AMWL, CNXC, FUL, GRWG, KBH, MEG, MSGM, NAVB, QADB, RH, SCVL

 

Other Key Events:

·     Credit Suisse Consumer Retail Conference (virtual), 3/23-3/24

·     NAREIT REITwise 2021 Conference (virtual), 3/23-3/25

·     Scotia Weil Annual Energy Conference (virtual), 3/23-3/24

·     Sidoti Virtual Investor Conference, 3/24-3/25

·     Fed’s Williams takes part in Moderated Discussion

·     Fed’s Evans discusses the Economic Outlook

 

 

Macro	Up/Down	Last
Nymex	1.61	59.37
Brent	1.68	62.47
Gold	6.00	1,733.10
EUR/USD	-0.0021	1.1828
JPY/USD	0.15	108.74
10-Year Note	-0.01	1.628%

 

 

World News

·     German Chancellor Angela Merkel and leaders of federal states are set to ditch a plan agreed on Tuesday for two extra “rest-days” around the Easter holidays to try to break a third wave of the coronavirus pandemic, government sources said on Wednesday. At talks that ran into the early hours of Tuesday, Merkel and the leaders of Germany’s 16 states had agreed to call on citizens to stay at home for five days over the Easter holidays, declaring April 1 and April 3 as extra rest days. – Reuters

·     Germany’s 10-year bond yield fell to a five-week low (-0.375%) – still, IHS Markit’s flash composite PMI bounced above the 50-mark separating growth from contraction to 52.5 in March compared to February’s 48.8, its highest since late 2018

·     Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen will continue their testimony today on Capitol Hill. In their first joint appearance on Tuesday, the pair acknowledged that “asset prices are high,” but said that they are not worried about financial stability and the economic recovery “looks to be strengthening.” They also emphasized that the $1.9T stimulus package should not lead to a sizable increase in inflation

 

Sector News Breakdown

Consumer

·     Tesla (TSLA) CEO Elon Musk tweeted that Tesla cars can be bought using bitcoin and the option will be available outside U.S. later this year; adds that bitcoin paid to TSLA will not be converted into conventional currency and that co was using internal and open source software for the purpose

·     AutoZone (AZO) board authorized repurchase of an additional $1.5 bln of company’s common stock

·     At Home Group (HOME) Q4 EPS $1.08 vs. est. 69c; Q4 revenue $562.0M vs. est. $519.83M; nit providing annual guidance at this time; Achieves record Q4 net income of $72.7 million and EPS of $1.08; drives Q4 Adjusted EBITDA1 increase of 94.4% to $119.6 million

·     GameStop (GME) said since January 2021, it has been evaluating whether to increase the size of its at-the-market offering program and whether to potentially sell shares of its Class A Common Stock under the increased ATM Program during the course of fiscal 2021; Q4 adj EPS $1.34 vs. est. $1.35; Q4 revenue $2.122B vs. est. $2.21B; posted a 6.5% comparable store sales growth, a 175% increase in global E-Commerce sales and a $92.6 million reduction in SG&A

·     Golden Nugget Online (GNOG) Q4 revenue $23.0M vs. est. $22.3M (and $15.6M YoY); Q4 net loss $34.2M; Q4 adjusted EBITDA $6.2M

·     PLBY Group (PLBY) group 4q rev $46.3m; raises 2021 outlook to project revenue to exceed $200M

·     Steelcase (SCS) Q4 adj EPS 39c vs. est. 0c; Q4 revenue $677.1M vs. est. $650.4M; sees Q1 EPS loss (34c)-(27c) vs. est. loss (10c); sees Q1 revenue $540M-$570M below est. $580.25M

 

Energy, Industrials and Materials

·     Oil prices rebounded overnight after a ship ran aground and blocked the Suez Canal in both directions. The 224K-ton Ever Green was stranded after losing the ability to steer amid high winds and a dust storm, causing a gridlock of at least 100 vessels.

·     API Oil Inventories: Crude +2.93m vs -900k expected; Cushing -2.3m; Gasoline -3.7m; Distillates +246k

·     Alcoa (AA) upgraded to Overweight from Equal Weight at Morgan Stanley

·     MP Materials (MP) 6M share Secondary priced at $35.00

·     Piedmont Lithium (PLL) 1.75M share Secondary priced at $70.00

·     AAR Corp. (AIR) Q3 EPS 37c vs. est. 29c; Q3 revenue $410M (down 26% YoY) vs. est. $414.62M; said are committed to maintaining our low-cost structure and expect further margin expansion as our revenue recovers

 

Financials

·     Accolade (ACCD) files private offering of $250M convertible senior notes due 2026; sees Q4 adjusted EBITDA 60c-$2.10; sees Q4 revenue $56.9M -$57.9M vs. est. $52.59M

·     B. Riley Financial (RILY) sees Q1 adjusted EBITDA $105M-$115M compared to operating adjusted EBITDA of $70.9M for the Q1 of FY20; providing guidance for operating EBITDA that represents a year-over-year increase of close to 50% at the low end of the range.

·     Seacoast Banking Corporation (SBCF) announced that it has signed a definitive agreement to acquire Legacy Bank of Florida for roughly $102.2M deal; Seacoast expects the transaction to be 2% accretive to earnings per share in 2021, excluding one-time transaction costs

 

Healthcare

·     Bionano Genomics (BNGO) Q4 results topped consensus estimates; said from a ~33.7% YoY decline in Q3 2020, the quarterly revenue has risen to $4.0M at ~43% YoY growth recording the first year-over-year top-line expansion since Q3 2019

·     LabCorp (LH) said afterhours, while they continue to see strong momentum across operations, its board believes value is not being appropriately reflected in the Company’s current stock price and is undertaking a review of the Company’s structure and capital allocation strategy to ensure we are best positioned to unlock shareholder value

·     Aveo Pharmaceuticals (AVEO) 6M share Secondary priced at $8.00

 

Technology, Media & Telecom

·     Intel (INTC) said it would top its Q1 guidance issued earlier this year for sales and earnings saying sales are likely to reach $76.6B this year, down from a record $77.9B in 2020, but above the $72.7B estimate; sees Q1 EPS of $4 with $19B-$20B in cap-ex; INTC also provided a 7nm product update, and outlined Intel’s goal of becoming a significant player in global foundry capacity at its “Unleashed” event (shares of AMD slipped after-hours)

·     Semi equipment companies Lam Research (LRCX), ASML Inc. (ASML) KLA (KLAC), and Applied Materials (AMAT) rose following Intel’s announced $20B manufacturing expansion in Arizona in its push to become a global foundry player.

·     Adobe (ADBE) Q1 adj EPS $3.14 vs. est. $2.78; Q1 revenue $3.91B vs. est. $3.76B; raising our annual targets; sees Q2 adj EPS roughly $2.81 vs. est. $2.70; sees Q2 revenue roughly $3.72B vs. est. $3.7B; sees Q2 Digital Media annualized recurring revenue $450M of net new ARR; raises FY21 adjusted EPS view to about $11.85 from $11.20 (est. $11.26); raises FY21 revs to roughly $15.45B from $15.15B

·     21Vianet (VNET) Q4 revenue rose 28.6% in renminbi terms to 1.35B yuan, and adjusted gross profit rose 36.6% to 581.9M yuan (about $89.2M); adjusted EBITDA rose 47.7% to 389.8M yuan (about $59.7M), and EBITDA margin rose to 28.9% from 25.2%.

·     ACV Auctions (ACVA) 16.55M share IPO priced at $25.00

·     DigitalOcean (DOCN) 16.5M share IPO priced at $47.00