Early Look

Monday, August 7, 2023

U.S. stock futures are moving back above the 4,500 level to 4,505 (overnight high 4,522 and low 4,500.50), looking to bounce back from losses last week as earnings season begins to wind down and markets await key inflation data later n the week. Stocks closed lower Friday, finishing the week with losses after Fitch downgraded the U.S. debt and government bond yields embarked on a wild ride. For the week, the S&P 500 fell -2.27%, the Dow dropped -1.12%, and the Nasdaq lost -2.85% as the S&P 500 and the Nasdaq register biggest weekly declines since week ending March 10. This week also saw the first decline of more than 1% in the S&P in roughly 47 days, but it has been nearly 6-months since the S&P posted a daily decline of over 2% (Feb 21st). More than 80% of the S&P has reported this quarter, with the “beat” rate around 88%, but revenues scoring a much lower beat rate. Consumer price (CPI) inflation data later this week probably the biggest driver, but still lots of earnings today and tomorrow. In Asian markets, The Nikkei Index rose 61 points to 32,254, the Shanghai Index fell -19 points to 3,268, and the Hang Seng Index was little changed at 19,537. In Europe, the German DAX is lower by -110 points to 15,842, while the FTSE 100 is down -54 points to 7,510.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -23.86 points, or 0.53%, to 4,478.03.

·     The Dow Jones Industrial Average fell -150.27 points, or 0.43%, to 35,065.62.

·     The Nasdaq Composite slipped -50.48 points, or 0.36%, to 13,909.24.

·     The Russell 2000 Index declined -3.94 points, or 0.20% to 1,957.46.

Economic Calendar for Today

·     8:30 AM ET             Fed’s Bostic and Bowman Speak at Fed Listens Event

·     10:00 AM ET           Employment Trends for July

·     3:00 PM ET              Consumer Credit for June

Earnings Calendar:

·     Earnings Before the Open: AGM AXSM CCLP DK DKL ELAN FRPT GIGA GOGO HE HSIC KKR KOS LINC MITT OSG THS TSN VTRX XGN

·     Earnings After the Close: ACM ADTN AEL AIV ALTO AMBC ARCT AKRO ARWR ASUR AWR AXGN BKD BRBR BYND CAPL CARA CBT CE CHGG CLAR CXW DCGO DO DSP ENTA EVCM EVER FGEN FIVN FSK HEAR HIMS ICUI IFF JELD KD KMPR LAND LCID MED MNKD MRC MRVI MTW NSA OKE PARA PAY PLTR PRI RAIL RC RNG RNGR SBRA SIBN SWAV SWKS TCMD TDC TRHC VECO WHD WTRG

World News

·     Federal Reserve Governor Michelle Bowman said the US central bank may need to raise rates further in order to fully restore price stability. “Additional rate increases will likely be needed to get inflation on a path down to the FOMC’s 2% target,” Bowman said.

·     An elite group of North Korean hackers secretly breached computer networks at a major Russian missile developer for at least five months last year, according to technical evidence reviewed by Reuters and analysis by security researchers. – Reuters

Sector News Breakdown

Consumer

·     Copart, Inc. (CPRT) announces a two-for-one stock split.

·     Lucid (LCID) cut prices of its Air luxury sedans by as much as $12,400 as part of an offer amid rising competition in the U.S. EV industry and a price war sparked by Tesla (TSLA), Reuters’ reported; reduced the price of the Air Pure by $5,000 to $82,400 from $87,400, and cut prices of the Touring and Grand Touring versions by $12,400 to $95,000 and $125,600.

·     Manpower (MAN) authorizes repurchase of up to 5M shares of common stock.

·     Nike (NKE) mentioned positively in Barron’s noting the stock has fallen -8.2% in 2023, putting it in the bottom quintile of all S&P 500 stocks this year, but says the stock might be ready for a big push higher as most of its problems are fading and China begins to recover.

·     Toyota (TM) and partner Pony.ai are planning to mass produce robotaxis in China, setting up a venture this year which will build cars that employ the startup’s autonomous driving technology and ride-hailing services – Reuters.

Energy

·     Texas power prices for Sunday surged more than 800% as searing heat pushes demand toward record levels and strains supplies on the state grid. Electricity prices for the grid rose to more than $2,500 a megawatt-hour for Sunday evening, up from Saturday’s high of about $275, according to data from the Electric Reliability Council of Texas – Bloomberg

·     PG&E (PCG) upgraded to Buy from Neutral at UBS.

Financials

·     Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) posted gains in operating profit as strength in its insurance businesses helped counter inflationary pressures that have weighed on the sprawling conglomerate in the last year; posted net in­come of $35.9B, or $24,775 a Class A share equivalent vs. a loss of $43.8B, or $29,754 a Class A share y/y.

·     Macerich (MAC) files mixed-securities shelf.

Healthcare

·     BioNTech SE (BNTX) reported Q2 revenue that fell well short of expectations, while swinging to a net loss that beat forecasts; reported a net loss of EUR190.4 million ($208.8 million), or EUR0.79 a share, vs. per-share loss consensus was EUR0.83; total revenue declined to EUR167.7 million ($183.9 million) from EUR3.20 billion, to miss the FactSet consensus of EUR628.1 million.

·     The U.S. FDA on Friday approved Biogen (BIIB) and Sage Therapeutics’ (SAGE) oral pill to treat postpartum depression (PPD) in adults. The companies had sought the FDA’s approval for the drug, Zurzuvae, to treat major depressive disorder (MDD), or clinical depression, as well as postpartum depression.

·     Five major U.S. health systems said they would offer Eisai and Biogen’s (BIIB) promising new Alzheimer’s drug Leqembi after working out payment and administrative policies, and how to assess and monitor patients, most likely in the next month or two – Reuters.

·     Nektar (NKTR) announced that efficacy data previously generated by Eli Lilly (LLY) for rezpegaldesleukin, or REZPEG, that were presented at the September 2022 EADV Congress were incorrectly calculated by Lilly. The erroneous data is from two Phase 1b studies for REZPEG that were conducted by Lilly.

Industrials & Materials

·     Joby (JOBY) and Archer (ACHR) mentioned positively in Barron’s saying the companies are about to begin production of electric vertical takeoff and landing aircraft. For investors, the upside could be in the billions. https://tinyurl.com/4f3vrfsf

·     Astra Space (ASTR) announced a strategic reallocation of its workforce from its Launch Services organization to its Astra Spacecraft Engines business and has reduced its overall workforce by approximately 25% since the beginning of the quarter.

·     Airlines are preparing to temporarily reduce some flights and routes to inspect aircraft affected by the recall of hundreds of Pratt & Whitney jet engines, leaving the unit of the aerospace and defense company RTX (RTX) facing a potential multibillion-dollar bill – WSJ reported.

Technology, Media & Telecom

·     Sohu (SOHU) Q2 adj loss per share 52c vs. est. loss 56c; Q2 revs $152.1M, -22% y/y; adj operating expenses $137.8M, +5.7% y/y; adj gross margin 76% vs. 73% y/y; sees online game revenue $108M to $118M.