Early Look

Wednesday, December 7, 2022

Futures	Up/Down	%	Last
Dow	-87.00	0.26%	33,545
S&P 500	-16.25	0.4`%	3,928
Nasdaq	-73.50	0.64%	11,492

 

 

U.S. futures slip, with the S&P set to open lower as weaker Chinese trade data overnight weighed heavily on Asian market shares and renewed concerns about the global economy. Major U.S. stock averages come into the trading ay with a 4-day losing streak, and down 6 of the last 7 on rising interest rate concerns ahead of the FOMC meeting next week. The U.S. central bank last month raised rates by 75 basis points during its fourth consecutive meeting to 3.75%-4%, but it also signaled hopes to shift to smaller hikes as soon at its next meeting. Recent data has poured some “cold water” on those thoughts now, with deeper rates now being forecast to cool the economy. Stocks tumbled on Tuesday after some of biggest US banks at a financial services conference said they are bracing for a worsening economy next year as inflation threatens consumer demand, according to executives Tuesday. In Asian markets, The Nikkei Index dropped -199 points to 27,686, the Shanghai Index fell -12 points to 3,199, and the Hang Seng Index declined -626 points to 18,814. In Europe, the German DAX is down about -40 points to 14,300, while the FTSE 100 dips a few points to 7,515.

Market Closing Prices Yesterday

·     The S&P 500 Index slumped -57.58 points, or 1.44%, to 3,941.26

·     The Dow Jones Industrial Average fell -350.76 points, or 1.03%, to 33,596.34

·     The Nasdaq Composite dropped -225.05 points, or 2.00%, to 11,014.89

·     The Russell 2000 Index declined -27.65 points, or 1.50% to 1,812.58

 

Economic Calendar for Today

·     7:00 AM ET             MBA Mortgage Applications Data

·     8:30 AM ET             Nonfarm Productivity for Q3…est. +0.6%

·     8:30 AM ET             Unit Labor Costs for Q3…est. +3.1%

·     10:30 AM ET           Weekly DOE Inventory Data

·     3:00 PM ET              Consumer Credit for October…est. $28.3B

 

Earnings Calendar:

·     Earnings Before the Open: A LOT ASO BF/B CPB CULP DAKT LOVE OLLI THO UNFI VRA WLY

·     Earnings After the Close: AI DLM GEF GME HCP NAPA OXM RENT SPWH VRNT

 

Other Key Events:

·     Barclay’s Technology, Media & Telecommunications Conference, 12/7-12/8, in San Francisco

·     Cowen 5th Annual Cannabis Conference (virtual), 12/6-12/8

·     Goldman Sachs 14th Annual Industrials Week, 12/5-12/9, in London

·     Goldman Sachs 2022 Financial Services Conference, 12/6-12/7, in NY

·     Truist 4th Annual Securities Industrials & Services Summit (virtual), 12/6-12/7

·     UBS Global Tech, Media, & Telecom Conference, 12/5-12/7, in NY

·     China Exports, Imports, Trade Balance for November

 

 

Macro	Up/Down	Last
Nymex	0.10	74.35
Brent	0.09	79.44
Gold	3.60	1,786.00
EUR/USD	0.0029	1.05
JPY/USD	0.52	137.56
10-Year Note	+0.024	3.537%

 

 

World News

·     Democrat Raphael Warnock won re-election to the U.S. Senate in a hard-fought Georgia runoff on Tuesday, defeating Republican former football star Herschel Walker. Warnock’s projected victory was narrow. With 99% of the estimated vote counted, he led by 50.8% to 49.2%. Democrats now are on track for a 51-seat majority in the 100-seat Senate

·     China scraps most testing, quarantine requirements in covid-19 policy pivot – WSJ https://on.wsj.com/3VC4dL2

·     China November Trade Balance below expected; $69.84 Bln vs $78.05 Bln consensus; China November Exports below expected; -8.7% y/y in dollar terms vs. -3.9% consensus; China November Imports below expected; -10.6% y/y in dollar terms vs -7.1% estimate

 

Sector News Breakdown

Consumer

·     Lowe’s (LOW) issues guidance at analyst day; announced a new $15 billion share buyback and affirmed its FY outlook, including adjusted earnings per share of $13.65 to $13.80 vs. est. $13.79; sees comp sales -1% to 0%, vs. est. -0.45%

·     Casey General (CASY) Q2 EPS $3.67 vs. est. $3.16; Q2 revs $3.98B vs. est. 3.98B; Q2 comp same-store fuel gallons were up 0.3%; now expects same-store inside sales to be approximately 5%-7%; says total operating expense increase is expected to be near the low end of the annual range

·     Carvana (CVNA): Bloomberg reported that some of its largest creditors, including Apollo and Pimco, signed a cooperation agreement to prevent the creditor fights that have complicated other debt restructurings in recent years

·     Dave & Busters (PLAY) Q3 EPS $0.04, in-line with consensus as Q3 revs rose 51.5% y/y to $481.2M vs. est. $473.6M; combined comp store sales (including Main Event branded stores) rose +13.3% y/y and +17.5% compared with the same period in 2019

·     Smith & Wesson Brands (SWBI) Q2 EPS $0.26 vs. est. $0.40; Q2 revs $121M vs. est. $145.41M; Q2 gross margins 32.4%

·     Toll Brothers (TOL) Q4 EPS $5.63 vs. est. $3.96; Q4 revs +22% y/y to $3.71B vs. est. $3.22B; Q4 net signed contract value was $1.3B, down 56% y/y, contracted homes were 1,186, down -60% y/y, backlog value was $8.9 billion, down -7% y/y; gross margin was 26.9%, vs. 23.5% y/y; sees Q1 deliveries 1,750-1,850 units and FY23 deliveries 8,000-9,000 units

·     Thor Industries (THO) Q1 EPS $2.53 vs. est. $1.70; Q1 revs $3.11B vs. est. $2.91B; sees full-year fiscal 2023 net sales and diluted earnings guidance with a net sales estimate of between $11.5B-$12.5B vs. est. $11.68B and EPS $7.40-$8.70 vs. est. $8.15

·     Macau casino shares fall on profit taking (MLCO, WYNN, LVS), despite the local government said it will follow mainland’s policy to gradually relax Covid-induced curbs

 

Energy, Industrials and Materials

·     AeroVironment (AVAV) 2Q adj EBITDA $6.8Mm vs est. $16.2Mm on revs $111.6Mm vs est. $113.2Mm; sees FY revs $505-525Mm vs est. $510.2Mm, adj EBITDA $84-92Mm vs est. $78.3MM and adj EPS $1.26-1.58 vs est. $1.57

·     The American Petroleum Institute said weekly crude oil inventories fell -6.42M barrels, vs. -7.85M barrels the week prior

 

Financials

·     Mastercard (MA) board of directors announces quarterly dividend and $9 billion share repurchase program

·     Signature Bank (SBNY) plans to offload as much as $10BN in deposits tied to the Cryptocurrency industry, U-turn for a US lender that achieved rapid growth after aggressively courting digital assets, the Financial Times reported late yesterday

·     Marathon Digital Holdings (MARA) announces Bitcoin Production and Mining Operation Updates for November 2022; produced 472 BTC in November 2022 and 1,087 BTC quarter-to-date; increased unrestricted cash to $61.7 million and unrestricted Bitcoin Holdings to 4,200 BTC

·     StoneCo (STNE) downgraded to Equal Weight from Overweight at Morgan Stanley

·     PagSeguro Digital (PAGS) downgraded to Equal Weight from Overweight at Morgan Stanley

 

Healthcare

·     Avid Biosciences (CDMO) 2Q EPS ($0.02) vs est. ($0.01) on revs $34.8Mm vs est. $32.1Mm; sees FY revs $145-150Mm vs est. $143.8Mm

·     HealthEquity (HQY) 3Q adj EPS $0.38 vs est. $0.35 on revs $216.1Mm vs est. $206.8Mm; guides FY revs $850-860Mm vs est. $839.5Mm; guides FY EPS $1.26-1.35 vs est. $1.27

·     Neurocrine Biosciences, Inc. (NBIX), said investigational NBI-827104 did not meet its primary endpoint in the Phase 2 STEAMBOAT™ study evaluating the efficacy, safety, tolerability, and pharmacokinetics of NBI-827104 compared to placebo in pediatric patients with epileptic encephalopathy with continuous spike-and-wave during sleep

 

Technology, Media & Telecom

·     Pinterest (PINS) announces partnership with Elliott Investment, including the appointment of Marc Steinberg, Senior Portfolio Manager at Elliott, to the Board of Directors

·     Guidewire (GWRE) 1Q adj EPS ($0.12) vs est. ($0.39) on revs $195.3Mm vs est. $191.7Mm; sees 2Q revs $221-226Mm vs est. $221.4Mm and FY revs $886-896Mm vs est. $889.4Mm

·     MDB (MDB) shares rise +20% on results; 3Q adj EPS $0.23 vs est. ($0.17) on revs $333.6Mm vs est. $303.4Mm; guides 4Q revs $334-337Mm vs est. $314.7Mm and adj EPS $0.06-0.08 vs est. ($0.13); sees FY revs $1.257-1.26B vs est. $1.21B and adj EPS $0.29-0.31 vs est. ($0.31); Q3 results driven by 61% Atlas revenue growth

·     SentinelOne Corp. (S) Q3 revs rose 106% y/y to $115.3M vs. est. $110.9M; Q3 gross margin 64%; Q3 EPS loss (-$0.16) vs. est. loss (-$0.22); annualized recurring revenue (ARR) increased 106% to $487.4 mln as of October 31, 2022; guides year revs $420M-$421M vs. est. $416M

·     Skillsoft Corp. (SKIL) Q3 EPS loss ($3.21) and revs $139.4M vs. $140.2M last year (est. $142.8M); sees FY23 revs $520M-$550M from prior $545M-$580M vs. est. $566.9M

·     Sprinkler Inc. (CXM) 3Q adj EPS $0.02 vs est. ($0.01) on revs $157.3Mm vs est. $156.1Mm; sees 4Q revs $162.3-163.3Mm vs est. $166.1Mm and adj EPS $0.01-0.02 vs est. $0.01

·     StitchFix (SFIX) Q1 EPS loss (-$0.50) vs. est. loss (-$0.47); Q1 revs $455.59M vs. est. $459.44M; Q1 active clients of 3,709,000, a decrease of 471,000 or 11% y/y; cuts FY23 revenue view to $1.6B-$1.7B from $1.76B-$1.86B (est. $1.81B)

·     Zuora (ZUO) 3Q adj EPS ($0.02) vs est. ($0.06) on revs $101.1Mm vs est. $100.2Mm; sees FY revs $392.5-394.5Mm vs est. $394.8Mm and adj EPS ($0.16)-($0.15) vs est. ($0.16)

·     Madison Square Garden Entertainment (MSGE) exploring spin-off of live entertainment business from MSG Sphere, MSG Networks, Tao group hospitality businesses