Early Look

Friday, April 21, 2023

Futures	Up/Down	%	Last
Dow	-32.00	0.09%	33,877
S&P 500	-7.25	0.17%	4,145
Nasdaq	-41.50	0.32%	13,033

 

 

After big swings yesterday, U.S. stock index futures looking down slightly on Friday as investors digested a mixed bag of earnings reports, while awaiting more data for clues on the outlook for interest rates and the economy. U.S. stocks indexes have been rangebound this week as investors look for clues on how far the Federal Reserve could hike interest rates, while earnings signaled resilience in big banks, but most regional lenders reported deposit outflows. Major averages declined on Thursday, led by the Nasdaq -0.8% after TSLA shares tumbled nearly -10% after weaker quarterly margins. Banks underperformed the broader market, falling 1.2% with the biggest losses in the regionals in quarterly reports. Oil prices slid by about $2 a barrel to their lowest level since late March, dragging energy stocks lower. Today is the final day for Fed speakers ahead of their “quiet” period next week into the May FOMC meeting. Meanwhile, a slate of Fed speakers this week have supported the view of another 25-basis point rate hike by the U.S. central bank when it meets. In Asian markets, The Nikkei Index fell -93 points to 28,564, the Shanghai Index tumbled -65 points, or nearly 2% to 3,301, and the Hang Seng Index dropped -321 points to 20,075. In Europe, the German DAX is down -52 points to 15,743, while the FTSE 100 is up a few points to 7,910. Chinese stocks slumped after reports President Biden reportedly intends to limit investment in key parts of China’s economy by US companies. After debating the measures for almost two years, the Biden administration plans to act around the time of a summit of the G7 that’s due to start on May 19 in Japan, Bloomberg reported.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -24.73 points, or 0.60%, to 4,129.79.

·     The Dow Jones Industrial Average fell -110.39 points, or 0.33%, to 33,786.62.

·     The Nasdaq Composite slumped -97.67 points, or 0.80%, to 12,059.56.

·     The Russell 2000 Index declined -9.74 points, or 0.54% to 1,789.70.

 

Economic Calendar for Today

·     9:45 AM ET            S&P Global Manufacturing PMI, Apr-Flash

·     9:45 AM ET            S&P Global Services PMI, Apr-Flash

·     9:45 AM ET            S&P Global Composite, Apr-Flash

·     1:00 PM ET            Baker Hughes Weekly rig count data

 

Earnings Calendar:

·     Earnings Before the Open: HCA FCX PG RF SLB

 

 

Macro	Up/Down	Last
Nymex	-0.18	80.92
Brent	-0.14	77.23
Gold	-18.60	2,000.50
EUR/USD	-0.0001	1.0966
JPY/USD	-0.52	133.71
10-Year Note	-0.025	3.52%

 

 

World News

·     Chinese stocks slumped after reports President Biden reportedly intends to limit investment in key parts of China’s economy by US companies. After debating the measures for almost two years, the Biden administration plans to act around the time of a summit of the G7 that’s due to start on May 19 in Japan, Bloomberg reported.

·     CNBC’s Kayla Tausche reported that the US is also considering the possibility of raising tariffs on certain Chinese exports, though no final decision has been made, she added.

·     Preliminary Eurozone PMIs showed that the pace of expansion in services accelerated to 56.6 in Apr from 55.0 in March while the manufacturing sector lost even more momentum falling to 45.5 from 47.3.

·     Japan CPI Ex Fresh Food, Energy YoY came in at 3.8% vs the expected 3.6% and prior 3.5%. Headlines were in line with consensus but fell slightly from February’s 3.3% to 3.2% last month.

 

Sector News Breakdown

Consumer

·     Amazon’s (AMZN) Whole Foods Market is planning to cut several hundred corporate jobs, the company said, as the grocer reorganizes its structure to simplify operations, WSJ reported.

·     Autoliv (ALV) Q1 EPS $0.90 vs. est. $0.92; Q1 revs $2.49B vs. est. $2.31B; Net income fell to $74 million, from $83 million a year ago; Operating cash flow swung to negative $46M from $70M, due mainly to negative working capital effects from strong sales growth in March, with free cash flow at negative $189M as expenditures increased due to capacity expansion.

·     Big Lots (BIG) downgraded to underweight from neutral at Piper, citing weakening demand for home furnishings and mattresses.

·     Overstock.com (OSTK) downgraded to neutral from overweight at Piper Sandler, citing demand for home furnishings weakening further.

·     Tesla Inc (TSLA) raised the U.S. prices for its Model S and X premium electric vehicles, according to its website just a day after taking prices down for the 6^th time this year, although they are still 20% lower than the start of the year. The price of the Model X is now roughly 2.6% higher at $97,490, while that of the Model S increased around 2.9% to $87,490. However, the prices of all four models are still both between 16% and 23% cheaper than at the start of the year.

 

Energy, Industrials and Materials

·     CSX Corp (CSX) 1Q EPS $0.48 vs est. $0.43 on revs rose 9% y/y to $3.71B vs est. $3.58B, driven by solid volume growth in merchandise and coal, higher fuel surcharge, pricing gains.

·     Diamondback (FANG) prelim hedged average oil price per barrel $72.05, prelim hedged average natural gas price per mcf $1.96, estimate $2.08; Prelim hedged average NGLs price per barrel $23.16, estimate $25.53.

·     Knight-Swift (KNX) Q1 adj EPS $0.73 vs. est. $0.81; Q1 revs $1.64B vs. est. $1.61B; guides 2023 adj EPS $3.35-$3.55 (down from $4.00-$4.05 prior) and below est. $3.85.

·     PPG Industries (PPG) 1Q adj EPS $1.82 vs est. $1.54 on revs $4.38B vs est. $4.396B; guides 2Q aggregate sales volume flat and adj EPS $2.05-2.15 vs est. $1.96, sees FY adj EPS $6.95-7.25 vs est. $6.90; expects refinish sales volumes to be close to 2019 pre-pandemic levels in Q2.

·     Valmont industries (VMI) announces $400M share buyback; 1Q adj EPS $3.61 vs est. $3.33 on adj net sales $1.06B vs est. $1.04B; guides FY net sales +4-7% vs prior +4-7% and est. +5.3%, adj EPS $15.45-16.00 vs prior $15.35-15.90 and est. $15.57.

·     SQM (SQM) shares down -6% after Chile’s president said he would nationalize the country’s lithium industry, transferring control of its vast operations from industry giants to a separate state-owned company.

·     In Pipelines: Raymond James upgraded Plains All America (PAA) to Strong Buy and NuStar (NS) to Outperform and downgraded Magellan Midstream (MMP) to MP and Williams (WMB) to OP.

·     XPO Logistics (XPO) upgraded to Buy from Neutral at Citi.

 

Financials

·     Associated Bancorp (ASB) Q1 EPS $0.66 vs. $0.64; Q1 provision for credit losses $18M; NIM 3.07%, NII $274M, non-interest income $62M; common equity Tier 1 ratio 9.45%; said now expect to drive total average core customer deposit growth of 1% to 3% in 2023.

·     Bank OZK (OZK) 1Q EPS $1.41 vs est. $1.38 on NII $344.85Mm vs est. $337.53Mm; Deposits were $22.28B, a 9.6% increase from $20.33 billion end March; total assets were $28.97 billion, a 9.1% increase from $26.56B and book value per common share was $38.43 at March 31, 2023.

·     Cathay General Bancorp (CATY) Q1 EPS $1.32 vs. est. $1.25; Q1 net interest margin 3.74% vs. 3.77%; qtrly provision for credit losses of $8.1M compared with $1.4M in Q4.

·     First Financial Bancorp (FFBC) 1Q EPS $0.74 vs est. $0.71 on NII $159.318Mm vs est. $158.27Mm; ROAA $1.69%, ROATE 29.02%.

·     Horace Mann (HMN) guides Q1 core EPS $0.21-$0.23 vs. est. $0.38; and back year core EPS $2.00-$2.30 vs. est. $2.10; catastrophe losses for Q1 expected in range of $22M-$23M.

·     Regions Financial (RF) Q1 EPS $0.62 vs. est. $0.66; Q1 revs $2.0B vs. est. $1.97B; set aside $135M as provision for credit losses, compared to a benefit of $36M in the previous year; Total deposits fell 3% from the end of last year to $129.04B.

·     SEI Investment (SEIC) 1Q EPS $0.79 vs est. $0.82 on revs $469.12Mm vs est. $467.83Mm, adj FCF $114.4Mm.

·     WR Berkely (WRB) Q1 EPS $1.06 vs. est. $1.31; Q1 revs $2.9B vs. est. $2.86B; Q1 ROSE 17.4% and operating income $275.9M; Q1 combined ratio was 90.6%, gross premiums written $3.05B and net premiums written $2.57B.

 

Healthcare

·     AbbVie (ABBV) announced positive data from its Phase 3 ELEVATE study, evaluating atogepant for the preventive treatment of episodic migraine in people who had previously failed two to four classes of oral preventive medications. The results of the study demonstrated adult patients in the atogepant 60 mg once daily arm experienced a decrease of 4.20 days in their mean monthly migraine days (MMDs) across the 12-week treatment period, which was statistically significantly greater than the 1.85-day reduction observed in the placebo arm.

 

Technology & Telecom

·     Alphabet (GOOGL) Sees FY reduction of depreciation expense of approximately $3.4b; severance charges $1.9B-$2.3B to be taken in Q1; Cites assessment of useful lives of servers, equipment.

·     Qualtrics (XM) 1Q adj EPS $0.02 vs est. $0.02 on revs $409.8Mm vs est. $392.9Mm; not providing a financial outlook due to pending transaction.

·     SAP AG (SAP) Q1 EPS EUR 0.35, Q1 EBIT EUR 803 million, Q1 adjusted EPS EUR 1.08, Q1 revenue EUR 7,441 million vs. estimate EUR 7,341 million; updates outlook 2023 to reflect the anticipated divestiture of Qualtrics and expects EUR 14.0 – 14.4 billion cloud revenue at constant currencies (2022: EUR 11.43 billion), up 23% to 26% at constant currencies; Outlook 2023 EUR 26.9 – 27.4 billion cloud and software revenue at constant currencies (2022: EUR25.39 billion), up 6% to 8%.