Early Look

Thursday, September 24, 2020

Futures	Up/Down	%	Last
DJ Industrials	34.00	0.13%	26,719
S&P 500	3.50	0.09%	3,234
Nasdaq	-12.50	0.11%	10,816

 

 

U.S. equity futures are looking mixed, trying to recover from the selling deluge yesterday that saw major averages end near their market lows in another bout of increased volatility. Economic data on tap this morning with weekly jobless claims due at 8:30 AM, expected to decline to 840K last week – down 20K from the previous week’s tally – and the lowest reading since mid-March. The broad market gauge dropped 2.4% Wednesday to its lowest level in almost two months after hopes for an additional coronavirus-spending package from the government dimmed. Goldman Sachs slashed their Q4 U.S. growth forecast in half, to 3% from 6% saying “we think it is now clear that Congress will not attach additional fiscal stimulus to the continuing resolution.” Markets have grown jittery of late (major averages down 5 of the last 6 days) as coronavirus infections continue to rise in many parts of the world, including the western U.S., while the presidential election campaign is also fueling volatility. Several Fed officials spoke Wednesday, calling for additional fiscal relief to bolster the economy. Fed Chairman Powell is scheduled to offer congressional testimony in Capitol Hill for a third day this week. Gold extended its decline for the fourth straight day, retreating 0.6% to trade at $1,856.50, the lowest level since July, as the dollar extends its gains. The market never managed to gain any traction yesterday and finished sharply lower, with no sector able to offer leadership after small gains at the start. The S&P closed off 2.4%, down five of the last six days and right near its lows of the session. It’s now at levels last seen in late July. It’s a similar situation for the Nasdaq, down 3%. The Dow ended down 1.9% and the damage would’ve been worse were it not for Nike’s rally following earnings. In Asian markets, The Nikkei Index fell -258 points to 23,087, the Shanghai Index dropped -56 points to 3,223 and the Hang Seng Index declined -431 points to 23,311. In Europe, the German DAX is up around 20 points to 12,660, while the FTSE 100 is down roughly -20 points to 5,875.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -78.65 points, or 2.37%, to 3,236.92

·     The Dow Jones Industrial Average fell -525.05 points, or 1.92%, to 26,763.13

·     The Nasdaq Composite plunged -330.65 points, or 3.02%, to 10,632.99

·     The Russell 2000 Index declined -45.50 points, or 3.04% to 1,451.46

 

Economic Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims…est. 840K

·     8:30 AM EST      Continuing Claims…est. 12.3M

·     8:30 AM EST      Housing Starts MoM for Aug

·     8:30 AM EST      Building Permits MoM for Aug…est.

·     10:00 AM EST    New Home Sales MoM for Aug…est. (-0.1%) to 895K

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

·     11:00 AM EST    Kansas City Fed Manufacturing for September…prior 14

·     1:00 PM EST       U.S. Treasury to sell $50B 7-year notes

 

Earnings Calendar:

·     Earnings Before the Open: AYTU, DRI, DYNT, FDS, JBL, KMX, NTWK, RAD

·     Earnings After the Close: AEHR, AIR, CAMP, COST, MTN, SCHL

 

Other Key Events:

·     Bernstein Annual Strategic Decisions Virtual Conference, 9/23-9/24

·     Stephens Virtual Bank Forum, 9/22-9/24

 

 

Macro	Up/Down	Last
WTI Crude	-0.01	39.93
Brent	0.02	41.79
Gold	-9.10	1,854.15
EUR/USD	-0.0016	1.1644
JPY/USD	0.04	105.43
10-Year Note	-0.024	0.67%

 

 

Sector News Breakdown

Consumer

·     Dollar Tree (DLTR) authorized to resume share repurchase program

·     ChargePoint Inc, one of the world’s oldest and largest electric vehicle charging networks, said on Thursday it will go public by merging with Switchback Energy Acquisition Corp (SBE) in a deal that values the company at $2.4 billion (SBE shares up over 18% on news)

·     Nikola (NKLA) downgraded to Underperform from Neutral at Wedbush and cuts tgt to $15 from $45

·     Accel Entertainment (ACEL) 8M share Secondary priced at $10.50

·     Harley-Davidson (HOG) approved commitments to additional restructuring actions under The Rewire plan related to optimizing its global dealer network, exiting certain international markets, and discontinuing sales and manufacturing operations in India.

 

Energy

·     Refiners were pressured (along with entire energy complex) with Phillips 66 (PSX), Valero Energy Corp (VLO), Marathon Petroleum Corp (MPC) falling between 4% and 10% as California Governor Gavin Newsom said to ban sale of new gasoline-powered passenger cars and trucks starting in 2035. Newsom also wants the state legislature to stop issuing new permits by 2024 allowing use of hydraulic fracturing technology for oil and gas drilling

·     Sunworks Inc (SUNW), Polar Power Inc. (POLA) surging early in the renewable energy space following news yesterday that California state is planning to ban the sale of new gasoline-powered passenger cars and trucks starting 2035, in a bid to reduce climate-warming emissions by shifting to electric vehicles

 

Financials

·     Goldman Sachs (GS) upgraded to buy at UBS saying the election volatility could give it a boost

·     Jefferies (JEF) reported Q3 net revenue $1.38B, rising 61% YoY while Q3 Total Equities & Fixed Income net revenue jumped 92% YoY to $655.2M; increases share buyback authorization to $250M

·     Raymond James Financial (RJF) said Aug 2020 client assets under administration of $945.2 bln increased 15% over august 2019 and assets under management of $155.6 bln increased 9% over august 2019

·     Universal Insurance Holdings (UVE) said Q3-to-date estimated catastrophe losses resulting in full retention events for Hurricane Isaias ($15 million, pre-tax, Other States program) and Hurricane Sally ($43 million, pre-tax, All States program). These events resulted in a total net impact of approximately $58 million, pre-tax (approximately $44 million, after-tax).

 

Healthcare

·     ADC Therapeutics (ADCT) 6M share Secondary priced at $34.00

·     Axsome Therapeutics’ (AXSM) oral, multi-mechanistic investigational medicine for the acute treatment of migraine, AXS-07, relieved and substantially reduced relapse of migraine pain, as compared to the potent active comparator rizatriptan, in the MOMENTUM Phase 3 trial.

·     IDEAYA Biosciences (IDYA) has expanded its previous trial collaboration and supply agreement with Pfizer for the evaluation of the former’s sponsored combination study of IDE196

·     SeaSpine (SPNE) announces limited commercial launch of waveform c 3d-printed interbody implant system

 

Industrials & Materials

·     FedEx (FDX) upgraded to Buy from Hold with a price target of $281, up from $175 at Stifel

·     Freeport McMoRan (FCX) upgraded from Equal weight to Overweight w/ $19 tgt at Morgan Stanley saying mining equities are poised to benefit from a global synchronous recovery supported by unprecedented fiscal and monetary stimulus that is expected to drive inflation higher later in this cycle.

·     Covenant Logistics (CVLG) says Q3 adjusted operating and financial results expected to significantly exceed prior expectations

·     HB Fuller (FUL) Q3 adj EPS 76c on revs $691M vs. est. 70c and $674.2M; 3Q adjusted Ebitda down -8.75 YoY to $106M; estimated revenue in Q4 is anticipated to increase by 4% to 7% sequentially from Q3; says on track to achieve $200Mm debt repayments for 2020, also expects to deliver additional savings of $20-30Mm by end 2022

·     The Association of American Railroads (AAR) reports total weekly US rail traffic down 1.3% Y/Y to 521,956 carloads and intermodal units for the week ending Sept. 19, 2020. Total intermodal volume was 295,269, up 6.3%, offsetting the carloads volume decline of 9.6% to 226,687 (watch CSX, KSU, NSC, UNP)

 

Technology, Media & Telecom

·     E.W. Scripps (SSP) surges on reports it is nearing a deal to buy ION Media for $2.65B, reports WSJ; Berkshire plans to make a $600M preferred-equity investment in Scripps to help finance the purchase of closely held ION, the people said https://bit.ly/3iYu1h7 

·     Accenture (ACN) 4Q adj EPS $1.70 vs est $1.73 on revs $10.84B vs est $10.91B, new bookings $14B; guides FY21 revs +2-5% local currency, sees FY21 EPS $7.80-8.10 vs est $8.13, sees FY21 op cash flow $6.35-6.85B and free cash flow $5.7-6.2B

·     Kingsoft Cloud (KC) 16.422M share Secondary priced at $31.00

·     SurveyMonkey (SVMK) and Tableau announce an exclusive partnership with Axios to provide broad access to public opinion data driving one of the most-watched elections