Early Look

Wednesday, April 3, 2024

U.S. futures are looking lower, and Treasuries are little changed overnight (10-yr yield holds at 4.36%) as investors await another batch of economic data and a flurry of Federal Reserve speakers later today. Stock markets look to prevent their third 3-day losing streak since the middle of March heading into a busy day of data. Following mixed economic data in the last few days (in-line JOLTs, in-line PCE inflation, stronger ISM) markets are now starting to talk about delayed interest rate cuts, though fed fund futures are still pointing to June as the first cut. Busy day of Fed speakers with the Fed’s Bostic set to speak on CNBC, Fed’s Bowman Speaks on Bank Liquidity, Fed’s Goolsbee, Powell, Barr and Kugler all on the calendar. In Asian markets, The Nikkei Index declined -387 points to 39,451, the Shanghai Index dipped -5 points to 3,069, and the Hang Seng Index dropped -206 points to 16,725. Meanwhile Taiwan was hit by its worst earthquake in 25 years, doing damage and disrupting chip factories. In Europe, the German DAX is up 37 points to 18,320, while the FTSE 100 is down -32 points to 7,903. Overnight in tech, Intel (INTC) provided weaker 2023 foundry losses sending shares lower.

Market Closing Prices Yesterday

·     The S&P 500 Index slumped -37.96 points, or 0.72%, to 5,205.81.

·     The Dow Jones Industrial Average fell -396.61 points, or 1.00%, to 39,170.24.

·     The Nasdaq Composite dropped -156.38 points, or 0.95%, to 16,240.45.

·     The Russell 2000 Index declined -37.80 points, or 1.80% to 2,065.04.

Economic Calendar for Today

·     7:00 AM ET                  MBA Mortgage Applications Data

·     8:15 AM ET                  ADP National Employment for March…est. 148K

·     9:45 AM ET                  S&P Global Composite PMI March-Pre

·     9:45 AM ET                  S&P Global Services PMI, March-Final

·     10:00 AM ET                ISM Non-Manufacturing PMI for March…est. 52.7

·     10:30 AM ET                Weekly DOE Inventory Data

·     12:00 PM ET                Fed’s Goolsbee Gives Opening Remarks

·     12:10 PM ET                Fed’s Powell Speaks at Stanford Event

Earnings Calendar:

·     Earnings Before the Open: AYI

·     Earnings After the Close: LEVI RGP SLP SPWH

Other Key Events:

·     Goldman Sachs 15th Annual Emerging Leaders Conference, 4/3-4/4, in Sydney

·     JP Morgan 10th Annual Retail Round-up, 4/2-4/4, in New York

Sector News Breakdown

Consumer

·     Cal-Maine Foods (CALM) Q3 EPS $3.01 vs. est. $2.46; Q3 revs $703.1M vs. est. $692.35M; overall sales volumes improved 3.2% y/y as we sold 300.8 million dozen compared with 291.4 million dozen y/y; conventional eggs sold reached 192.2 million dozen, up 2.6%, while specialty eggs sold were 108.6 million dozen.

·     Dave & Busters (PLAY) Q4 EPS $1.13 vs est. $1.10, adj EBITDA $151.8Mm vs est. $142.75Mm on revs $599.1Mm vs est. $602.61Mm.

·     Five Below (FIVE) and Costco (COST) downgraded to Accumulate from Buy at Gordon Haskett while Dollar Tree (DLTR) cut to Hold from Buy, and Lowe’s (LOW) to Hold from Accumulate saying there is also a “notable wall of worry,” including the recent uptick in gas prices, election risk, fewer holiday shopping days and uncertainty.

Energy, Industrials and Materials

·     Airbus (EADSY) delivered 142 aircraft in the first quarter, up 12% from the same period last year, industry sources said, according to Reuters; tally restored deliveries to the same level seen in the first quarter of 2022.

·     Cummins (CMI) Paccar (PCAR): In heavy duty machinery, monthly Class 8 trucking data came in at 17,300 monthly ACT N.A. class 8 new orders data out – below 20K for first time since May of last year (recall orders in Feb were 27,745, up 16% y/y for reference).

·     The American Petroleum Institute reported that crude inventories fell 2.286M barrels last week. Gasoline inventories fell 1.416M barrels.

·     In the Solar sector: Reuters reported the European Union has opened two investigations into the use of foreign subsidies in the solar power sector. According to an EU official, the investigations concern a public procurement tender in Romania for the design, construction and operation of a photovoltaic park and bids from Chinese-owned companies.

Financials

·     Ally Financial (ALLY) was downgraded to underweight from neutral at JP Morgan along with Guild Holdings (GHLD) and Essent Group (ESNT) cut to Neutral while upgraded Navient (NAVI) to Neutral.

·     Blue Owl Capital (OWL) said it would buy life insurer Kuvare Insurance Services for $750 million in a cash-and-stock deal; deal will be financed via $325Mm in cash and $425Mm of Blue Owl’s shares, the asset manager said.

Healthcare

·     Novo Nordisk (NVO) has warned that starter kits of its popular diabetes drug Ozempic will continue to not be available in Germany during the second quarter.

·     Sight Sciences (SGHT) announces the results of the three-year prospective GEMINI Trial and the Cross-Over Phase of the SAHARA RCT at the 2024 American Society of Cataract and Refractive Surgery (ASCRS) Annual Meeting.

·     Vanda Pharmaceuticals (VNDA) said it got FDA approval for Fanapt (iloperidone) tablets for treating manic or mixed episodes associated with bipolar I disorder in adults.

Technology, Media & Telecom

·     Intl Corp. (INTC) shares fall overnight after saying losses have deepened at its factory business and the unit may not reach a break-even point for several years; said its foundry business had $7 bln in operating losses for 2023 vs. $5.2 bln the year before.

·     Taiwan’s biggest earthquake in at least 25 years (7.2 magnitude quake) killed nine people on Wednesday, injuring more than 800; The quake hit at a depth of 15.5 km (9.6 miles), setting off a tsunami warning for southern Japan and the Philippines that was later lifted.

·     Wolfspeed (WOLF) downgraded to equal weight from overweight at Wells Fargo.