Early Look

Tuesday, September 1, 2020

Futures	Up/Down	%	Last
DJ Industrials	11.00	0.04%	28,427
S&P 500	11.50	0.31%	3,510
Nasdaq	122.50	1.01%	12,236

 

 

Stocks futures are at it again, with Nasdaq futures looking at another 1% gain, just continuing to build and make new highs as momentum builds and builds with shares of large cap giants Apple (AAPL) and Tesla (TSLA) surging yesterday and again this morning following their recent stock splits as investors pile into some of biggest tech names. The face of the stay-at-home trade Zoom Media (ZM) reported another blow-out quarter last night, with shares jumping over 20%, bringing its YTD rally to over 375%. The dollar continues to plunge amid the easy monetary policy from the Fed, falling to over 2-year lows, while Treasury yields inch higher and commodity prices jump with both gold and oil rising overnight. In Asian markets, The Nikkei Index fell -1 point to 23,138, the Shanghai Index rose 14 points to 3,410 and the Hang Seng Index inched higher by 7 points to 25,184. In Europe, the German DAX is up over 80 points to move back above the 13,000 level, while the FTSE 100 fell about -80 points to 5,880. Another positive China PMI data point is also helping boost market sentiment. For the month of August, the Nasdaq Composite rose nearly 10%, with the S&P and Dow registering more than 7% gains.

 

Stocks closed out August with solid gains as the S&P 500 gained 7% this month, the best performance since a 9% gain in 1984, while the Nasdaq gained nearly 10% and the Dow posted gains of over 7.5%. The 30-year Treasury yield slipped on Monday, paring its monthly increase to 25.6 bps, its largest such jump since November 2016, while the benchmark 10-year trimmed its monthly increase to 15.9 bps, while the two-year note rate rose 2 bps this month. There were several tweet comments yesterday about the dislocation in tech vs. all other sectors as the same handful of tech giants continue to push the Nasdaq Composite to record highs. 1) @zerohedge – Nasdaq is up 1% with 510 more decliners than advancers; 2) @sentimentrader – We need just one more day with a 0.5% gain on the Nasdaq while most of its stocks are sliding, – that’d match December 1999 for the best envy-thy-neighbor market ever; 3) @BearTrapsReport – The Nasdaq 100 is over-extended above the upper Bollinger band on a monthly chart. The amount NDX is above the monthly Bollinger band is only on par with March 2000 and February 2020. – all in all, sentiment remains very, very strong, especially for tech.

Market Closing Prices Yesterday

·     The S&P 500 Index dipped -7.70 points, or 0.22%, to 3,500.31

·     The Dow Jones Industrial Average fell -223.82 points, or 0.78%, to 28,430.05

·     The Nasdaq Composite gained 79.82 points, or 0.68%, to 11,775.46

·     The Russell 2000 Index declined -16.47 points, or 1.04% to 1,561.88

 

Economic Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:45 AM EST      Markit US Manufacturing PMI, Aug-F

·     10:00 AM EST    ISM Manufacturing for Aug

·     10:00 AM EST    Construction Spending for July

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: BBW

·     Earnings After the Close: CAL, CDMO, HOME, HRB, NTNX, SCVL

 

Other Key Events:

·     Monthly auto sales data for August

·     European Society of Cariology virtual conference, 8/29-9/1

·     Jefferies Semi, IT Hardware virtual conference, 9/1-9/2

 

 

Macro	Up/Down	Last
WTI Crude	0.47	43.08
Brent	0.57	45.85
Gold	17.20	1,995.80
EUR/USD	0.0052	1.1988
JPY/USD	-0.10	105.81
10-Year Note	+0.019	0.724%

 

 

World News

·     EuroZone IHS Markit’s final Manufacturing Purchasing Managers Index (PMI) dipped to 51.7 from July’s 51.8, in line with an earlier flash reading and ahead of the 50-mark separating growth from contraction. An index measuring change in output rose to 55.6 from 55.3, just below the flash reading of 55.7 but its highest level since April 2018

·     Eurostat reported prices fell 0.2% year-over-year in the eurozone in August, mostly on a sharp drop in energy prices. That is the first negative reading since May 2016, and the reading was lower than the 0.2% rise forecast by economists

·     The Caixin China purchasing managers index, which is weighted toward small, private manufacturers, rose to 53.1 in August from 52.8 in July, Caixin Media Co. and research firm Markit said Tuesday. August’s reading was the highest level since January 2011

·     President Trump issued an executive order to defer the 6.2% tax employees pay toward Social Security from Sept. 1 until Dec. 31. This is only a deferral — not forgiveness of the tax owed.

 

Sector News Breakdown

Consumer

·     Walmart (WMT) unveils perks of its new membership program, Walmart Plus, which will grant subscribers unlimited free delivery, fuel discounts and no checkout lines. Touted as a rival to Amazon.com Inc’s (AMZN) Prime subscription, Walmart’s new loyalty program will cost $98 a year, or $12.95 a month, slightly cheaper than Prime membership and will become available to all U.S.-based customers on Sept. 15

·     Hawaiian Holdings Inc. (HA) subsidiary Hawaiian Airlines Inc. disclosed that it has notified 414 employees who are in its Air Line Pilots Association (ALPA) and Association of Flight Attendants (AFA) that they will be affected by the air carrier’s workforce reduction plan

·     Macau’s gaming bureau reported August gross revenue from games of fortune in the region decreased 94.5% year-over-year to 1.33B patacas (watch shares of WYNN, MLCO, MGM)

 

Energy, Industrials & Materials

·     Total (TOT) and Macquarie’s Green Investment Group have concluded a 50/50 partnership to develop a portfolio of 5 large floating offshore wind projects in South Korea with a potential cumulated capacity of more than 2 gigawatts.

 

Healthcare

·     AstraZeneca PLC (AZN) said its COVID-19 vaccine candidate Phase III trial is seeking up to 30,000 participants to test the vaccine, designated as AZD1222. Participants will either receive two doses of AZD1222 or a saline placebo four weeks apart.

·     AstraZeneca’s (AZN) Imfinzi (durvalumab) has been approved in the European Union for the first-line treatment of adults with extensive-stage small cell lung cancer (ES-SCLC) in combination with a choice of chemotherapies

·     Eastman Kodak (KODK) rises over 30% after D.E. Shaw reports 5.2% stake as of Aug. 21 in a 13G filing

·     Medtronic’s (MDT) MiniMed 770G System was approved by the FDA, which cited the device as the first automated insulin delivery and monitoring system for use in young pediatric patients

·     MediciNova (MNOV) announced development progress on its intranasal SARS-CoV-2 vaccine for COVID-19 utilizing BC-PIV, a viral vector platform technology developed by Mie University and BioComo

·     T2 Biosystems (TTOO) said the U.S. FDA granted emergency use authorization (EUA) for company’s COVID-19 molecular diagnostic test

 

Technology, Media & Telecom

·     Zoom Media (ZM) shares rose 22%; Q2 EPS 92c adj on revs $663.5M vs. est. 45c and $500.2M; boosted its year EPS view to $2.40-$2.47 from prior $1.21-$1.29 (est. $1.25); 2Q free cash flow $373.4M and Q2 cash and cash equivalents $748.9M vs. $213.9M YoY; boosted year revs to $2.37B-$2.39B from $1.78B-$1.8B; Q3 revs $685M-$690M vs. est. $493M on better EPS

·     Apple (AAPL) is readying 75 million 5G iPhones for later in the year, a number that is roughly the same as last year’s, Bloomberg News reported, citing sources. Apple plans to launch four new iPhone models in October featuring that 5G technology and several different screen choices

·     Cohu Inc. (COHU) said it now expects Q3 revenue at high-end of guidance at approximately $146M (est. $140.4M) as order forecast has improved through Q3

·     Gogo (GOGO) rises in reaction to announcement that it has entered into a definitive agreement to sell its Commercial Aviation (CA) business to Intelsat S.A. for $400M in cash

·     NeoPhotonics Corp. (NPTN) reaffirms Q3 2020 outlook following recent U.S. department of commerce tightening of restrictions on Huawei; targeting a return to profitability by end of 2021, excluding Huawei; says beyond Q3, is still assessing full impact of current bis restrictions

·     Proofpoint Inc. (PFPT) reaffirms its Q3 and full year 2020 financial guidance as originally provided on its Q2 earnings release

·     Rackspace (RXT) Q2 adj EPS loss (20c) on revenue up 9% to $657M; Q2 bookings were $288M, up 107% as compared to bookings of $139M YoY; sees FY consolidated revenue growth, year-over-year in constant currency 9.0%-10.0% and EPS 75c-81c

·     ScanSource (SCSC) Q4 adj EPS 19c vs. est. 21c and revs $636.5M fell -34% YoY and missed the $699M estimate; initiated $30M expense reduction plan

·     SiTime (SITM) raised Q3 rev guidance to $31M-$32M from prior $28M-$29M which includes initial revenue from a new design win at a large existing customer.