Early Look

Thursday, December 15, 2022

Futures	Up/Down	%	Last
Dow	-245.00	0.72%	33,994
S&P 500	-39.25	0.98%	3,991
Nasdaq	-152.50	1.28%	11,716

 

 

U.S. equity markets are pointing to a lower open, down roughly 1% as investors digest the Federal Reserve’s decision late yesterday to raise rates by 50-bps (as expected) but also issued a “dot plot” for 2023 that came in higher than forecast. Chair Jerome Powell also pushed back on the idea the central bank will cut rates next year. Markets appeared to take the news in stride late yesterday, finishing only modestly lower despite the more hawkish stance took on further rates, higher inflation, lower growth forecasts and view that rate cuts wouldn’t come until much later – but markets are starting to react to the more aggressive posture this morning, while also preparing for two more big central banks actions as the Bank of England (BOE) and European Central bank (ECB) are both expected to raise interest rates at their policy meetings this morning. In Asian markets, The Nikkei Index dropped -100 points to 28.051, the Shanghai Index dipped -7 points to 3,168, and the Hang Seng Index slides -300 points to 19,368. In Europe, the German DAX is down -156 points or over 1% to 14,300, while the FTSE 100 is down about -30 points to 7,465. The dollar rebounds, gold falls and Treasury yields remain flat.

 

Market Closing Prices Yesterday

·     The S&P 500 Index slumped -24.44 points, or 0.61%, to 3,995.21

·     The Dow Jones Industrial Average slid -142.95 points, or -0.42%, to 33,965.69

·     The Nasdaq Composite dropped -85.93 points, or 0.76%, to 11,170.89

·     The Russell 2000 Index declined -11.91 points, or -0.65% to 1,820.45

 

Economic Calendar for Today

·     8:30 AM ET           Weekly Jobless Claims…est. +230K

·     8:30 AM ET           Continuing Claims…est. 1.671M

·     8:30 AM ET           Empire Fed Manufacturing for December…est. (-1.0)

·     8:30 AM ET           Philly Fed Business Survey for December…est. (-10.0)

·     8:30 AM ET           Retail Sales M/M for November…est. (-0.1%)

·     8:30 AM ET           Retail Sales – Less Autos for November…est. (+0.2%)

·     9:15 AM ET           Industrial Production M/M for November…est. +0.1%

·     9:15 AM ET           Capacity utilization for November…est. 79.8%

·     10:00 AM ET         Business Inventories for October…est. +0.4%

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

·     4:00 PM ET            Net Long-Term TIC Flows for October

 

Earnings Calendar:

·     Earnings Before the Open: JBL

·     Earnings After the Close: ADBE

 

Other Key Events:

·     Oppenheimer Midwest Industrial Summit (virtual), 12/14-12/15

·     RBC Capital Healthcare Private Company Conference (virtual), 12/14-12/15

·     Truist Texas Bank Summit, 12/14-12/15, in Texas

 

 

Macro	Up/Down	Last
Nymex	0.03	77.31
Brent	0.01	82.71
Gold	-28.30	1,790.40
EUR/USD	-0.0064	1.0619
JPY/USD	1.24	136.71
10-Year Note	-0.019	3.485%

 

 

World News

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -20.3 vs -17.1 last week. Bulls fall to 24.3% from 24.7%, Neutrals fall to 31.1% from 33.5%, and Bears rise to 44.6% from 41.8%

 

Sector News Breakdown

Consumer

·     Lennar Corp. (LEN) Q4 adjusted EPS $5.02 vs. est. $4.89; Q4 revenue $10.2B vs. est. $10.1B; Q4 New orders decreased 15% to 13,200 homes; Q4 deliveries increased 13% to 20,064 homes; Q4 Backlog decreased 21% to 18,869 homes; sees Q1 new orders 12,000-13,500

·     Tesla (TSLA): Elon Musk, who lost his No. 1 spot on Bloomberg’s ranking of the world’s richest people, sold at least $3.58 billion of shares this week. Mr. Musk sold nearly 22M shares over a three-day period ending Dec. 14, according to a regulatory disclosure made public Wednesday

·     Central Garden & Pet (CENT) files mixed securities shelf

 

Energy, Industrials and Materials

·     Enphase Energy (ENPH) downgraded to Neutral from Positive at Susquehanna

·     PPL Corp. (PPL) upgraded to Overweight from Equal Weight at Morgan Stanley

·     TC Energy Corp (TRP) is resuming operations in a section of its Keystone pipeline a week after a leak of more than 14,000 barrels of oil in rural Kansas triggered the whole pipe’s shutdown. The 622,000 barrels per day (bpd) pipe has been shut since Dec. 7, when the leak was discovered.

·     Nordson (NDSN) 4Q ESP $2.44 vs est. $2.33 on revs $684Mm vs est. $649.5Mm; sees 1Q sales $605-630Mm vs est. $619Mm with adj EPS $1.85-2.00 vs est. $2.15; sees FY23 sales +1-7% vs est. +3.85% and adj EPS $8.75-10.10 vs est. $9.83

·     Planet Labs (PL) 3Q EPS ($0.15) vs est. ($0.18) on revs $49.7Mm, adj gr mgn 54%; guides 4Q revs $50-54Mm vs est. $51.2Mm; sees FY revs $188-192Mm vs est. $187Mm

·     Defense stocks changes at Morgan Stanley: upgraded L3Harris (LHX) to overweight, downgraded Lockheed Martin (LMT) to equal-weight and maintained overweight and top pick status on Northrop Grumman (NOC).

 

Financials

·     Capital One Financial (COF) November domestic credit card net charge-offs rate 3.14% vs 2.93% in October; 30+ day performing delinquencies rate for auto 5.50% at November end vs 5.29% at October end

·     Discover Financial (DFS) credit card delinquency rate 1.21% at November end vs 1.17% at October end; credit card charge-off rate 1.30% at November end vs 1.17% at October end

·     JPMorgan (JPM) reported charge-offs for November of 1.31% and delinquencies 0.73%

 

Healthcare

·     AstraZeneca (AZN) and Merck (MRK) announced that the U.S. FDA has extended by three months the Prescription Drug User Fee Act date for the pending supplemental new drug application for LYNPARZA in combination with abiraterone and prednisone or prednisolone for the treatment of adult patients with metastatic castration-resistant prostate cancer.

·     Novavax (NVAX) announces proposed $125 million public offering of common stock

·     Thermo Fisher Scientific (TMO) said the FDA has granted Emergency Use Authorization for its Applied Biosystems TaqPath Monkeypox/Orthopox Virus DNA Kit

·     Prothena (PRTA) 3.25M share Secondary priced at $56.50

·     Astria Therapeutics (ATXS) offering of 9.1M shares at $11.01

 

Technology, Media & Telecom

·     Warner Bros Discovery Inc (WBD) said now expects to incur total pre-tax restructuring charges of $4.1B-$5.3B which includes $2.8B-$3.5B of content impairment and development write-offs; said restructuring efforts are ongoing/could result in additional impairments above revised estimates

·     Western Digital (WDC) downgraded to Sell from Neutral at Goldman Sachs and cut tgt to $31 from $43

·     Verizon (VZ) upgraded to overweight at Morgan Stanley and downgrades AT&T (T) to equal weight saying that North American telecom services sector faces a balanced outlook heading into next year

·     Madison Square Garden Entertainment (MSGE) upgraded to equal-weight at Morgan Stanley based on recent underperformance and proposed spin of traditional live entertainment business