Early Look

Wednesday, October 6, 2021

Futures	Up/Down	%	Last
Dow	-366.00	1.07%	33,817
S&P 500	-55.00	1.27%	4,278
Nasdaq	-218.50	1.49%	14,436

 

 

It looks like a “wash-out Wednesday” after “turnaround Tuesday” as stock markets are falling around the globe, with S&P futures fall over 1.2% to 4,280, while Nasdaq futures are down even further as rising global energy prices and Treasury yields adds to inflation concerns that could stall the economy’s post-pandemic recovery. U.S. markets look on track early to give back all of yesterday’s gains. The recent surge in natural gas prices (13-year highs) has oil prices rising to 7-year highs as it has accelerated energy switching in major economies around the world. The time to avert a debt default is narrowing quickly (October 18th), which is also weighing on market sentiment. In Asian markets, The Nikkei Index fell -293 points (1%) to settle at 27,582, the Shanghai Index remained closed for its Golden Week holiday, and the Hang Seng Index dropped -137 point to 23,996. In Europe, the German DAX is sharply lower, falling over -300 points (over 2%) to 14,860, while the FTSE 100 declines -125 points or 1.75% to 6,950. Airline stocks looking lower given rising energy prices and a research downgrade of AAL and JBLU at Goldman Sachs. Oil prices tested fresh seven-year highs in overnight trading, while U.S. natural gas prices printed multi-year peaks heading into the colder autumn season, as global power markets continue to soar. Stock indexes rose strongly on Tuesday, a day after a selloff among some of America’s biggest technology firms dragged down broader indexes, while crude oil settled at its highest level since October 2014. The S&P 500 and Nasdaq 100 rose led by a rebound in in mega-cap tech, and the 10-year yield spiked above 1.53% after the ISM’s reading on the U.S. services sector activity came in better than expected. Items to keep an eye on include Friday’s non-farm payroll data (ADP private payroll report due today), which could provide the Federal Reserve ammo to announce its tapering asset purchase at its November meeting. The dollar rose, rebounding from a three-day selloff, while Bitcoin extended its rally and surpassed the $50,000 mark. Oil gained with the price of Brent crude briefly exceeding $83 a barrel for the first time since October 2018 and natural gas prices hit 13-year highs.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 45.26 points, or 1.05%, to 4,345.72

·     The Dow Jones Industrial Average rose 311.75 points, or 0.92%, to 34,314.67

·     The Nasdaq Composite spiked 178.35 1.42 points, or 1.25%, to 14,433.83

·     The Russell 2000 Index advanced 10.89 points, or 0.49% to 2,228.36

 

Events Calendar for Today

·     7:00 AM ET         MBA Mortgage Applications Data

·     8:15 AM ET         ADP Employment Index for September…est. 428K

·     10:30 AM ET      Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AYI, IDT, RPM, STZ

·     Earnings After the Close: LEVI, RELL, RGP

 

Other Key Events:

·     Cowen 24th Annual Therapeutics Conference, 10/5-10/6, in Boston, MA

·     Credit Suisse European Telecom Infrastructure Conference (virtual) 10/6

·     Deutsche Bank Annual Leveraged Finance Conference (virtual), 10/4-10/6

 

 

Macro	Up/Down	Last
Nymex	-0.42	78.51
Brent	-0.35	82.21
Gold	-11.40	1,751.40
EUR/USD	-0.0062	1.1536
JPY/USD	-0.02	111.43
10-Year Note	+0.012	1.542%

 

 

World News

·     New Zealand’s Central Bank lifted its benchmark rate to 0.5% from 0.25% and signaled more increases over the next year as it seeks to tame inflation and rein in house prices

·     Bank of Japan Governor Kuroda said that the Japan’s economy has picked up led by exports and the manufacturing sector; recent low inflation is mainly due to unusual factors such as cuts to mobile fees; excluding such factors Japan’s CPI is not as weak as headline figures suggest

·     Saudi Arabia reduced oil prices for its main buyers, a day after OPEC+ sent crude futures surging by sticking to a plan for slow and steady supply increases. State firm Saudi Aramco’s cuts for customers in Asia, Europe and the U.S. may take some of the sting out of that jump for refiners at a time when a global gas shortage is pushing up demand for crude among power producers – Bloomberg

 

Sector News Breakdown

Consumer

·     AutoZone (AZO) to buy back up to additional $1.5B of stock

·     Retailers Wal-Mart (WMT), Costco (COST) and American Eagle (AEO) all mentioned favorably in Jim Cramer Investment club newsletter overnight; said AEO is a stock we think is undervalued, and we are sticking with this position for the charitable trust

·     American Airlines (AAL) downgraded to Sell from Neutral and cut tgt to $18 from $19 at Goldman Sachs and also downgraded JetBlue (JBLU) to Neutral from Buy at Goldman Sachs and lower tgt to $17 from $20 in airline sector

·     Norwegian Cruise Line (NCLH) CEO said on CNBC last night it will begin sailing its full fleet of 28 ships by April 1 of next year; 75% of the company’s cruise ships are expected to return to normal operations by the end of the year.

·     RealReal Inc. (REAL) Q3 GMV was approximately $367.9 mln, an increase of 50% YoY; September gross merchandise volume was approximately $127.3 mln, an increase of 44% YoY and says GMV reflects continued strength in women’s apparel and shoe categories, as well as increased strength in watch category

·     LGI Homes (LGIH) announced it closed 793 homes in September 2021, compared to 811 homes closed in September 2020

 

Energy, Industrials and Materials

·     Dominion Energy (D) announced today execution of a definitive agreement to sell Questar Pipelines to Southwest Gas Holdings Inc. (SWX), in a transaction valued at $1.975 billion, including the assumption of $430 million of existing indebtedness.

·     The American Petroleum Institute (API) showed a build of 951K barrels of oil for the week ending October 1; gasoline inventories showed a build of 3.68M barrels, distillate inventories show a build of 345K barrels and Cushing inventories show a build of 2M barrels

·     Acuity Brands (AYI) Q4 adj EPS $3.27 vs. est. $2.85; Q4 revs $992.7M vs. est. $963.96M; says they improved our operations and delivered solid performance in a challenging environment; are entering FY22 from a position of strength with a diverse and capable team, who are driven by our values to deliver results for our customers, our investors and our environment.

·     RPM International (RPM) Q1 EPS $1.08 adj vs. est. $1.03; Q1 sales $1.65B vs. est. $1.64B; expects 2q sales to increase in mid-single digits; looking ahead to our fiscal 2022 q2, we expect raw material, freight and wage inflation to persist

·     Dow Inc. (DOW) expects planned investments to add more than $3 billion of earnings before interest, taxes, depreciation and amortization to its results, including projects to produce its chemical products with lower emissions

·     Steel sector changes: Goldman Sachs downgraded U.S. Steel (X) to Neutral from Buy and Nucor (NUE) to neutral from Buy, while upgraded Cleveland-Cliffs (CLF) to Buy and Commercial Metals (CMC) to Neutral from Sell

·     Allison Transmission (ALSN) is accelerating the development of electrification technology for integration into the U.S. Army’s ground combat vehicle fleet including tracked Infantry Fighting Vehicles and the Main Battle Tank

·     Hess Midstream (HESM) 7.5M share Secondary priced at $26.00

·     Vale (VALE) said production of copper concentrate at its Salobo mine in Brazil has suspended due to a fire, and production is not expected to resume before the end of October.

·     Saudi Arabia reduced oil prices for its main buyers, a day after OPEC+ sent crude futures surging by sticking to a plan for slow and steady supply increases. State firm Saudi Aramco’s cuts for customers in Asia, Europe and the U.S. may take some of the sting out of that jump for refiners at a time when a global gas shortage is pushing up demand for crude among power producers – Bloomberg

 

Financials

·     Riot Blockchain (RIOT) said in September it produced 406 Bitcoin, an increase of approximately 346% over its September 2020 production of 91 Bitcoin. At end of Sept, it held approximately 3,534 Bitcoin, all of which were produced by its self-mining operations.

·     MarketAxess Holdings Inc (MKTX) monthly trading volume for Sept 2021 of $559.5B consisting of $215.0B in credit volume and $344.5B in rates volume

·     BlackRock Inc. (BLK) is putting annuities in American workers’ 401(k)s; BLK said five employers have signed up for a new retirement product that will allow workers to receive a stream of payments for the rest of their lives; a small number of 401(k) plans currently in corporate annuities

·     Nuvei (NVEI) 3M share IPO priced at $123.14

 

Healthcare

·     Calyxt (CLXT) announces new strategic direction to provide sustainable, plant-based synthetic biology solutions to expanded group of end markets and diversified base of customers

·     PerkinElmer (PKI) company, EUROIMMUN, announced that the FDA granted the Emergency Use Authorization (EUA) for its Anti-SARS-CoV-2 S1 Curve ELISA (IgG) assay.

·     Acer Therapeutics (ACER) rise over 20% after it and its Swiss partner Relief Therapeutics said the FDA has allowed it to file a new drug application for its experimental drug, ACER-001, to treat urea cycle disorders

·     Xenon Pharmaceuticals (XENE) 8.47M share Secondary priced at $29.50

·     Takeda Pharmaceutical (TAK) shares fall -5% after announcing that a safety signal has emerged in its Phase 2 studies of TAK-994, and as a precautionary measure, the company has suspended dosing of patients and has decided to stop both Phase 2 studies early.

·     Oncternal Therapeutics (ONCT) announces pre-clinical data from ONCT-534, an androgen receptor N-terminal-domain-binding small molecule degrader, was accepted for presentation at the AACR-NCI-EORTC Virtual International Conference on Molecular Targets and Cancer Therapeutics

 

Technology, Media & Telecom

·     Palantir Technologies Inc. (PLTR) selected to progress to next phase of army’s competitive $823m indefinite delivery, indefinite quantity (IDIQ) contract.

·     Manchester United (MANU) offers to sell 9.5M shares of common stock for holders