Early Look

Thursday, March 24, 2022

Futures	Up/Down	%	Last
Dow	121.00	0.35%	34,371
S&P 500	21.25	0.48%	4,469
Nasdaq	75.50	0.52%	14,522

 

 

U.S. futures are attempting to rebound after a late day slide pushed averages deeply into the red, closing at their lows as the S&P dropped back below its key technical 200-day moving average. With the bounce overnight, the S&P is now right back to its 200-day, a battleground level most of yesterday afternoon (4,467 on the futures). U.S. President Joe Biden and world leaders have opened the first in a trio of summits in Brussels focused on pressuring Russia to end its war in Ukraine with the focus to nudge allies to enact new sanctions. Meanwhile the Moscow Stock Exchange resumed trading on a limited number of stocks Thursday following a month-long closure following Russia’s invasion of Ukraine in late February, currently moving higher. Related to interest rates, another round of hawkish comments from Federal Reserve Presidents, including the San Francisco Fed’s Mary Daly, has consolidated bets on a 50-basis point rate hike at the central bank’s May policy meeting, with the CME Group’s FedWatch tool pricing in a 70.5% probability, up from just 32.9% two weeks ago. After a brief breather on Wednesday, U.S. Treasury yields resume their push higher as the 10-year moves back to 2.38%, its highest in 2-days, while oil prices ease (now flat) after a 20% jump the last 6-trading days. U.S. stocks ended lower on Wednesday as the jump in oil prices punished shares of consumer discretionary, travel, housing and MedTech on expectations higher prices will impact spending. Big cap tech gave up healthy gains early, led by a slide in shares of chip giant NVDA and software giant ADBE after a softer earnings outlook weighed on shares. The S&P 500 is down about 0.2% so far this week, and it is down more than 6% so far in 2022 but well-off recent lows of down -12% YTD. In Asian markets, The Nikkei Index gained 70 points to 28,110, the Shanghai Index fell -0.63% to 3,250, and the Hang Seng Index dropped over -200 points to 21,945. In Europe, the German DAX is down about -75 points to trade above 14,200, while the FTSE 100 is flat at 7,465.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -55.37 points, or 1.23%, to 4,456.24

·     The Dow Jones Industrial Average fell -448.96 points, or 1.29%, to 34,358.50

·     The Nasdaq Composite slumped -186.21 points, or 1.32%, to 13,922.60

·     The Russell 2000 Index declined -36.14 points, or 1.73% to 2,052.21

 

Economic Calendar for Today

·     8:30 AM ET         Weekly Jobless Claims…est. 212K

·     8:30 AM EST       Continuing Claims…est. 1.41M

·     8:30 AM ET         Durable Goods Orders for February…est. (-0.5%)

·     8:30 AM ET         Durable Goods Ex: Transportation, Feb…est. +0.6%

·     8:30 AM ET         Current Account for Q4…est. (-$218.0B)

·     9:45 AM ET         Markit Composite PMI, March-F

·     9:45 AM ET         Markit Services PMI, March-F…est. 56.0

·     10:30 AM ET       Weekly EIA Natural Gas Inventory Data

·     11:00 AM ET       Kansas City Fed Manufacturing for March

 

Earnings Calendar:

·     Earnings Before the Open: AUTO, EVLO, FDS, HOOK, MOV, SNX, TITN

·     Earnings After the Close: CODX, CURI, DRI, GLS, JOBY, MCW, MOVE, ONL, SMRT

 

 

Macro	Up/Down	Last
Nymex	0.03	114.98
Brent	0.11	121.71
Gold	7.80	1,945.10
EUR/USD	-0.0019	1.0987
JPY/USD	0.48	121.63
10-Year Note	+0.062	2.383%

 

 

World News

·     North Korea launched its first intercontinental ballistic missile in more than four years

·     Japan’s manufacturing PMI further lifted into expansionary territory, with the index up 0.5 index points to 53.2%.

·     Bank of Japan Minutes for Jan meeting: Members agreed inflation may overshoot expectations if firms pass on rising costs faster than expected, many members said they were closing watching wages as they affect service costs & affect household tolerance for rate hikes, members agreed the pass-thru of rising costs & increase in PX will probably broaden

·     U.S. commerce Sec Raimondo said yesterday: We are prepared to enforce export limits if Chinese chip companies deliver chips containing US tech to Russia; if enforcement tools are used, Chinese firms could essentially be shut down

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -2.6 vs -27.3 last week. Bulls rise to 32.8% from 22.5%, Neutrals rise to 31.7% from 27.8%, and Bears fall to 35.4% from 49.8%

 

Sector News Breakdown

Consumer

·     KB Homes (KBH) Q1 EPS $1.47 vs. est. $1.56; Q1 revs rose 23% to $1.4B vs. est. $1.5B; qtrly net order value up 15% to $2.15B, homes delivered were essentially even at 2,868; sees 2022 housing revenues in range of $7.20B-$7.6B and average selling price in range of $490,000 to $500,000; inventories grew 8% to $5.20B and backlog value grew 55% to $5.71B

·     Nikola Corp. (NKLA) confirmed it started production of its electric commercial truck, the Tre, last week at its Coolidge, Ariz., factory; previously said full production to start by end of Q2

·     Ollie’s Bargain Outlet (OLLI) Q4 adj EPS $0.69 vs. est. $0.66; Q4 revs $501.14M vs. est. $513.16M; Q4 comparable store sales decreased (-10.5%); sees Q1 total sales $417M-$422M, vs. est. $444.3M; and sees Q1 comp sales down 15.0% to down 14.0% (est. -10.8%)

·     Oxford Industries (OXM) 4Q adj EPS $1.68 vs est. $1.43 on revs $300Mm vs est. $294.6Mm; guides 1Q sales $315-335Mm vs est. $271.6Mm and adj EPS $2.65-2.85 vs est. $1.91; sees FY sales $1.245-1.285B vs est. $1.17B and EPS $8.75-9.15 vs est. $7.91; raises qtrly dividend by 31%

·     Trager Inc. (COOK) shares fell -13%; 4Q adj EPS $0.03 vs est. ($0.05) on revs $174.9Mm vs est. $156.8Mm; guides 1Q revs $208-212Mm vs est. $255.6Mm and FY revs $800-850Mm vs est. $955.9Mm

 

Energy, Industrials and Materials

·     ReneSola Inc. (SOL) 4Q adj EPS $0.04 vs est. $0.06 on revs $22.8Mm vs est. $24.9Mm; guides 1Q revs $3-4Mm vs est. $22Mm but sees revs growth accelerating to $100-120Mm for FY vs est. $128.4Mm

·     H.B. Fuller (FUL) Q1 adj EPS $0.80 vs. est. $0.73; Q1 revs $857M vs. est. $817.14M; said posted 21% growth in organic revenues and adjusted EPS and delivered adjusted EBITDA growth of 12% which exceeded our guidance for the quarter; boosts FY22 adj EPS view to $4.10-$4.35 from prior $4.00-$4.25 (est. $4.16) and raises FY22 revenue growth view to 15%-20% from 10%-15%

·     Karat Packaging (KRT) 4Q adj EPS $0.32 vs est. $0.29 on revs $91.3Mm vs est. $96Mm; sees 1Q revs $101-103Mm vs est. $98.5Mm; guides FY revs +17-19% vs est. +16.7%

·     Alcoa (AA), Vale (VALE), downgraded to Equal weight from Overweight and Southern Copper (SCCO) downgraded to Underweight at Morgan Stanley

·     Algoma Steel Group (ASTL) said it expects 4Q22 shipments to be in a range of 540,000 to 550,000 tons, slight sequential decrease is largely due to challenges across the logistics supply chain and COVID-related impact

 

Financials

·     Japan’s SMBC Nikko Securities said that executives had been arrested and indicted for alleged market manipulation, following charges from the country’s financial watchdog.

·     Fitch tracked February subprime auto ABS delinquencies at a rate of 4.8%, the highest since April 2020. “Certainly, spending power from what we are seeing on inflation could leave the subprime borrower more vulnerable – MarketWatch

·     The powerful earthquake that jolted Japan’s northeast coast last week is expected to cause insured property losses between $2 billion and $4 billion, modeling firm Verisk said. About $400M-$820M of the losses will stem from damage to commercial and industrial properties

 

Healthcare

·     Apellis (APLS) announces $300M common stock offering

·     Ascendis Pharma (ASND) announces $500M convertible senior notes offering

·     Convey Health Solutions (CNVY) 4Q EPS $0.01 vs est. $0.07 on revs $97.3Mm vs est. $97.05Mm; sees FY revs $390-410Mm vs est. $394.3Mm

·     Novartis (NVS) PluvictoTM approved by FDA as first targeted radioligand therapy for treatment of progressive, PSMA positive metastatic castration-resistant prostate cancer

·     Ligand (LGND) to spin-off its OmniAb business through merger w/ SPAC Avista Public Acquis Corp. II, resulting in OmniAb becoming an independent publicly traded co; LGND holders to receive 100% of Ligand’s shares in OmniAb thru a tax-free distribution prior to the merger

·     Equillium (EQ) 4Q EPS ($0.36) vs est. ($0.34); believe its cash and investments will be sufficient to fund currently planned operations for at least the next 12 months

·     Protagonist Therapeutics, Inc. (PTGX) CFO submitted his notice of resignation from his position to be effective on April 1, 2022.

·     Sientra (SIEN) Q4 EPS loss (-$0.27) vs. est. loss (-$0.19); Q4 revs rose 26.6% to $22.6M vs. est. 21.48M; sees FY22 revenue $93M-$97M or growth of 15%-20% vs. est. $96.01M

 

Technology, Media & Telecom

·     Veoneer (VNE) said today that the deal that will see it bought by Qualcomm Inc (QCOM) and SSW Partners would close on April 1. Qualcomm Inc and SSW Partners said in October they had reached an agreement to buy Veoneer for $4.5 billion.

·     Spotify Technology SA (SPOT) reached a deal with Google (GOOGL) to offer an alternative payment method within its app for users; the deal allows Spotify’s app within the Google Play Store to offer a choice between its alternative payment method and Google’s own, which takes as much as a 30% share of revenue

·     LG Energy, a supplier to Tesla (TSLA), General Motors (GM) and Hyundai announces plans to build the first ever cylindrical-type battery manufacturing plant in North America; to invest 1.7T Korean won (~$1.4B) to build the 11 GWh capacity factory in Arizona starting in this year’s Q2