Early Look

Thursday, December 1, 2022

Futures	Up/Down	%	Last
Dow	-66.00	0.19%	34,533
S&P 500	-4.25	0.11%	4,076
Nasdaq	-29.50	0.24%	12,013

 

 

Global stock markets surged overnight following the upbeat reaction in US averages following comments from Fed Chairman Powell. Wednesday was a monster day for U.S. stock averages after Federal Reserve Chair Jerome Powell said the central bank might scale back the pace of its interest rate hikes as soon as December, helping extend the monthly advance. The S&P posted a 5.3% jump in November, its 2^nd straight monthly gain (first back-to-back gains in 2022) and closed above its 200-day moving average (4,050) for the first time since April, while the Dow rose 5.6% in November. The Nasdaq outperformed yesterday, with the Nasdaq 100 climbing 4.6% to close at highest since Sept. 1 and finish with a 4.3% gain for Nov. All S&P 500 sectors ended in positive territory led by a 5% jump in technology and 4.3% for Communications. Yesterday’s action was summed up in two parts: 1) markets fell early following a much weaker than expected Chicago PMI reading denting risk appetite (came in at 37.2 vs 47.0 expected with new orders falling at a faster pace), while GDP data was positive but showed rising inflation, but 2) commentary from Fed Chair Powell, who said it makes sense to moderate pace of interest rate hikes and that the time to moderate pace of rate hikes may come as soon as December meeting was enough to skyrocket stock prices. Today marks another big day of data, with personal spending, income and PCE inflation data due, to be followed by the monthly nonfarm payroll report Friday. Its also important to note that after this week, the Fed goes into its “blackout” period until the FOMC meeting 12/13-12/14. The U.S. dollar recorded a monthly loss of 7.4% against Japanese yen, worst month since 1998 and the Euro posted a monthly gain of 5.5% against US dollar, best month since Sept. 2010. Overnight movers on earnings to the upside include: PSTG, PVH, NTNX, SNPS while downside movers include BIG, CRM, ESTC, GIII, and SNOW. In Asian markets, The Nikkei Index jumped 257 points to 28,226, the Shanghai Index rose 14 points to 3,165, and the Hang Seng Index gained 139 points to 18,736. In Europe, the German DAX gains 100 points to 14,497, while the FTSE 100 is up few points to 7,582. Founder of bankrupt cryptocurrency exchange FTX Sam Bankman-Fried denied trying a perpetrate a fraud, while mystery still surrounds missing billions at the firm. Gold prices jump 1.9% to $1,793 an ounce as yields slide and the dollar dip.

Market Closing Prices Yesterday

·     The S&P 500 Index spiked 122.48 points, or 3.09%, to 4,080.11

·     The Dow Jones Industrial Average rose 737.24 points, or 2.18%, to 34,589.77

·     The Nasdaq Composite surged 484.22 points, or 4.41%, to 11,468.00

·     The Russell 2000 Index advanced 50.03 points, or 2.72% to 1,886.58

 

Economic Calendar for Today

·     7:30 AM ET            Challenger Layoffs for November

·     8:30 AM ET            Weekly Jobless Claims…est. 235K

·     8:30 AM ET            Continuing Claims…est. 1.573M

·     8:30 AM ET            Personal Income M/M for October…est. +0.4%

·     8:30 AM ET            Personal Spending M/M for Oct…est. +0.8%

·     8:30 AM ET            PCE Price Index M/M for October…est. +0.4%

·     8:30 AM ET            PCE Price Index Y/Y for October…est. +6.0%

·     8:30 AM ET            Core PCE Price Index M/M for October…est. +0.3%

·     8:30 AM ET            Core PCE Price Index Y/Y for October…est. +5.0%

·     9:25 AM ET            Fed’s Logan Speaks at Dallas Breakfast Event

·     9:45 AM ET            S&P Global Manufacturing PMI, Nov-F…prior 47.6

·     10:00 AM ET          ISM Manufacturing PMI for Nov…est. 49.8

·     10:00 AM ET          Construction Spending for Oct…est. (-0.3%)

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

 

Earnings Calendar:

·     Earnings Before the Open: BIG DBI DG DLTH KR LE MEI MDCO REX SCWX

·     Earnings After the Close: AMBA AOUT ASAN CHPT IOT MRVL PATH PD SMAR SOL TLYS ULTA VEEV ZS ZUMZ

 

Other Key Events:

·     Benchmark Discovery & Small Cap Conference, 12/1, in NY

·     Credit Suisse 26^th Annual Technology Conference, 11/28-12/1, in Arizona

·     Credit Suisse Industrials Conference, 11/30-12/2, in FL

·     Piper Annual Healthcare Conference, 11/29-12/1, in NY

 

 

Macro	Up/Down	Last
Nymex	0.83	81.28
Brent	0.75	87.72
Gold	33.60	1,793.50
EUR/USD	0.0026	1.0431
JPY/USD	-1.72	136.32
10-Year Note	-0.098	3.604%

 

 

World News

·     JPMorgan strategists see us stocks slumping in first half of 2023; S&P 500 to re-test 2022 lows as fundamentals weaken; expect stocks to rebound in second half following Fed pivot -Bloomberg

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -15.9 vs -11.3 last week. Bulls fall to 24.5% from 28.9%, Neutrals rise to 35.1% from 30.9%, and Bears rise to 40.4% from 40.2%

 

Sector News Breakdown

Consumer

·     Five Below (FIVE) 3Q EPS $0.29 vs est. $0.14 on sales $645Mm vs est. $613Mm; sees 4Q sales $1.085-1.110B vs est. $1.079B and EPS $2.93-3.09 vs est. $2.93; raises FY22 EPS view to $4.55$4.71 from $4.26-$4.56 and boosts FY22 rev view to $3.04B-$3.06B from $2.97B-$3.02B

·     Big Lots (BIG) Q3 adj EPS loss ($2.99) vs. est. loss ($2.94); Q3 revs fell -9.8% y/y to $1.2B vs. est. $1.21B; sees Q4 comparable store sales down in low double-digit range vs. est. down (-4.2%)

·     G-III Apparel (GIII) shares fall -20% after cutting its fiscal-year profit forecast to $2.90-$3.00, below consensus $3.58 with revs slightly above views

·     Costco (COST) reported net sales of $19.17B for the retail month of November, which included Black Friday, an increase of 5.7% from $18.13B last year

·     La-Z-Boy (LZB) 2Q adj EPS $1.05 vs est. $0.85 on revs $611Mm vs est. $598Mm, adj op mgn 10%; sees 3Q sales $525-535Mm vs est. $560.8Mm, adj op mgn 7.0-7.5% vs est. $6.6%

·     PVH Corp. (PVH) 3Q adj EPS $2.60 vs est. $2.15 on revs $2.281B vs est. $2.232B; guides FY revs high end previous range and adj EPS $8.25 vs est. $7.89; extends licenses with G-III apparel group

·     Victoria Secret (VSCO) Q3 EPS $0.29 vs. est. $0.23; Q3 sales fell -9% y/y to $1.318B vs. est. $1.32B; reaffirms FY guidance; forecasting Full year 2022 net sales to decrease 6% to 7% compared to last year $6.785B

·     Freyr Battery (FREY) announces public offering of 13.5M shares of common stock

 

Energy, Industrials and Materials

·     General Electric (GE) board of directors approves separation of GE Healthcare with distribution date of January 3, 2023, after market close; GE shareholders will receive one share of GE healthcare for every three shares owned

·     The U.S. Environmental Protection Agency (EPA) plans to propose this week to increase for 2023, 2024 and 2025 the number of renewable fuels that oil refiners must blend into their fuel mix, sources familiar with the matter said according to Reuters last night.

·     Shoals Technologies (SHLS) CEO Jason Whitaker to step down; announces 20M share offering of Class A common stock

·     Diamondback Energy (FANG) files to sell 5.9M shares of common stock for holders

 

Financials

·     Credit Suisse (CS) comes into the day with a 12-day losing streak; Dow Jones notes default swaps on Credit Suisse Climb to new high; Five-year credit default swaps in euros on Credit Suisse were quoted at 409 basis points, or 4.09 percentage point

·     Ally Financial (ALLY) downgraded to Underweight from Equal Weight at Morgan Stanley

·     Capital One (COF) downgraded to Underweight from Equal Weight at Morgan Stanley

·     Navient (NAVI) upgraded to Equal Weight from Underweight at Morgan Stanley

·     Synchrony (SYF) downgraded to Underweight from Equal Weight at Morgan Stanley

·     Lemonade (LMND) files to sell 7.85M shares of common stock for holders

 

Healthcare

·     Eli Lilly (LLY) announced that donanemab met all primary and secondary endpoints for the 6-month primary outcome analysis in the Phase 3 TRAILBLAZER-ALZ 4 study, providing the first active comparator data on amyloid plaque clearance in patients with early symptomatic Alzheimer’s disease treated with amyloid-targeting therapies.

·     Eli Lilly’s (LLY) Covid-19 antibody treatment is no longer authorized for use by the FDA because it isn’t likely to be effective against certain Omicron offshoots now dominant in the U.S.

·     Intellia Therapeutics (NTLA) 6.55M share Spot Secondary priced at $45.80

·     Aura Biosciences (AURA) 6.7M share Spot Secondary priced at $12.00

·     Iveric bio (ISEE) 13.35M share Spot Secondary priced at $22.50

·     Innoviva (INVA) announces FDA acceptance and priority review of new drug application for Sulbactam-Durlobactam (SUL-DUR); SUL-DUR is a targeted antibiotic that was specifically designed to treat serious infections

·     Roche’s (RHHBY) Alzheimer’s drug had an amyloid problem; Specifically, it didn’t remove enough of it. That was the major takeaway from last night’s post-mortem on gantenerumab, an Alzheimer’s disease treatment from Roche that failed to beat placebo in a pair of pivotal trials. In a detailed presentation, Roche explained that gantenerumab led to lower-than-expected reductions in amyloid, the toxic brain plaque thought to drive disease progression – STAT News

 

Technology, Media & Telecom

·     Salesforce.com (CRM) said Bret Taylor steps down as co-CEO of Salesforce, Marc Benioff stays on as CEO; Q3 EPS $1.40 vs. est. $1.21; Q3 revs $7.84B vs. est. $7.82B; Q3 Current Remaining Performance Obligation, CRPO, of $20.9B, up 11% Y/Y, 15% in constant currency; raises FY23 EPS view to $4.92-$4.94 from $4.71-$4.73 (est. $4.73) and backs FY23 rev view of $30.9B-$31.0B

·     Snowflake (SNOW) Q3 EPS loss (-$0.63); Q3 revs $557M vs. est. $539.1M; Q3 product revenue grew 67% y/y to $523M; Net revenue retention rate 165% vs. 173% y/y; Q3 customers 7,292, +7.1% q/q; sees Q4 product revenue $535M-$540M below consensus est. $553M; another 10pts of deceleration in RPO to 66% vs. 76% in Q2

·     At the urging of Apple (AAPL), AMD (AMD), and others, TSMC (TSM) plans to make advanced 4nm chips when its ~$12B Arizona plant opens in 2024, an upgrade to prior 5nm claims – Bloomberg

·     Box Inc. (BOX) 3Q adj EPS $0.31 vs est. $0.30 on revs $250Mm vs est. $251.1Mm, FCF $55Mm; sees 4Q revs $255-257Mm vs est. $259.3Mm and adj EPS $0.34-0.35 vs est. $0.33; sees FY revs $990-992Mm vs est. $994.4Mm

·     Credo Technology (CRDO) 2Q adj EPS $0.02 vs est. $0.03 on revs $51.4Mm vs est. $50.8Mm; sees 3Q revs $54-56Mm vs est. $54.1Mm; sees FY revs at least $200Mm vs est. $208Mm

·     Elastic NV (ESTC) Q2 adj EPS $0.00 vs. est. loss (-$0.10); Q2 revs $264.4M vs. est. $261.39M; boosts FY23 EPS view to (3c)-3c from (31c)-(25c) vs. est. loss (28c) but cuts FY23 revenue view to $1.067B-$1.073B from $1.08B-$1.086B (est. $1.08B); reducing company’s workforce by approximately 13% and implementing certain facilities-related cost optimization actions

·     nCino (NCNO) Q3 EPS loss (-$0.01) vs. est. loss (-$0.02); Q3 revs rose 50% y/y to $105.3M vs. est. $103.46M; raises FY23 EPS view to (17c)-(15c) from (19c)-(17c) and boosts FY23 revenue view to $403M-$404M from $401.5M-$403.5M (est. $402.5M)

·     HP Enterprise (HPE) has held talks with Nutanix (NTNX) in recent months about a potential takeover, Bloomberg reported https://bit.ly/3H5pk3M

·     Nutanix (NTNX) 1Q adj op Inc $10.6Mm on revs $433.6Mm vs est. $410.6Mm; adj gr mgn 83.4%, adj op mgn 2.4%; sees 2Q revs $460-470Mm vs est. $450.7Mm, adj gr mgn 82-83%, adj op mgn 5-10%; sees FY revs $1.77-1.78B vs est. $1.79B, adj gr mgn 82-83%, adj op mgn 2.-4%

·     Ooma inc. (OOMA) 3Q adj EPS $0.14 vs est. $0.11 on revs $56.7Mm vs est. $56.2Mm; guides 4Q revs $56.3-56.6Mm vs est. $57.5Mm and adj EPS $0.14-0.15 vs est. $0.11

·     Okta Inc. (OKTA) 3Q adj EPS $0.00 vs est. ($0.24) on revs $481Mm vs est. $465.3Mm; sees 4Q revs $488-490Mm vs est. $487.9Mm and adj EPS $0.09-0.10 vs est. ($0.11)

·     Pure Storage (PSTG) Q3 EPS $0.31 vs. est. $0.25; Q3 revs rose 20% y/y to $676.0M vs. est. $671.9M; qtrly subscription services revenue $244.8M, up 30% y/y and qtrly subscription annual recurring revenue (ARR) $1.0 bln, up 30% y/y; sees FY23 revenue $2.75B, in-line with ests and sees FY23 non-GAAP operating income $430M and operating margin 15.6%

·     Semtech (SMTC) Q3 adj EPS $0.65 vs. est. $0.63; Q3 revs fell -8.9% y/y to $177.6M vs. est. $175.44M; sees Q4 adjusted EPS $0.44-$0.52 vs. est. $0.44 and revs $145M-$155M vs. est. $165.86M

·     Splunk (SPLK) 3Q adj EPS $0.83 vs est. $0.25 on revs $930Mm vs est. $846.9Mm; sees 4Q revs $1.055-1.085B vs est. $1.063B, adj EBIT mgn 23-26% vs est. 22%

·     Synopsis (SNPS) Q4 adj EPS $1.91 vs. est. $1.84; Q4 revs $1.284B vs. est. $1.28B; sees Q1 adj EPS $2.48-$2.53 vs. est. $2.29 and revs $1.34B-$1.37B vs. est. $1.34B; sees FY23 adj EPS $10.28-$10.35 vs. est. $10.08; sees FY23 revenue $5.775B-$5.825B vs. est. $5.68B

·     Yext Inc. (YEXT) 3Q adj EPS $0.02 vs est. $($0.01) on revs $99.3Mm vs est. $99.6Mm; sees 4Q revs $100-101Mm vs est. $101.4Mm and adj EPS $0.02-0.03 vs est. $0.01