Early Look

Friday, December 18, 2020

Futures	Up/Down	%	Last
DJ Industrials	11.00	0.04%	30,213
S&P 500	3.50	0.10%	3,716
Nasdaq	-1.00	0.01%	12,750

 

 

U.S. stock futures are pointing to a flattish open but still remain on track for weekly advances after all four major averages closed at record highs on Thursday on vaccine rollout news and ongoing hopes that a stimulus relief bill will be reached between Republicans and Democrats. Leaders on Capitol Hill said they are close to an agreement that would provide $900B in coronavirus aid, including direct payments to individuals, enhanced unemployment benefits and help for small businesses. In vaccine news, outside advisers to the U.S. FDA endorsed emergency use of Moderna’s (MRNA) vaccine last night, setting the stage for expected authorization late Friday which would mark the second vaccine available. Also, JNJ said it has fully enrolled participants for the first late-stage trial of its COVID-19 single-dose vaccine candidate. Transport giant Fed-Ex (FDX) shares slipped overnight despite a big beat on the top and bottom line as investors fretted over the lack of 2021 guidance. In financials, the Federal Reserve comes out with its latest round of bank stress tests today, which look out how well U.S. lenders can handle fallout from the coronavirus crisis. Index funds tracking the S&P 500 have a small window today to buy nearly $80B worth of Tesla (TSLA) stock ahead of its addition into the index. In addition, volume on the day should be higher than normal ahead of quadruple witching, which refers to the day that options and futures on both indexes and stocks expire simultaneously. In Asian markets, The Nikkei Index closed lower by -43 points to 26,763, the Shanghai Index, fell about -10 points to 3,394 and the Hang Seng Index dropped -179 points to 26,498. In Europe, the German DAX is up around 25 points to the 13,700 level, while the FTSE 100 is higher by about 15 points to 6,565. In Europe, Brexit talks between Britain and the EU are nearing the final hours to navigate a trade deal.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 21.31 points, or 0.58%, to 3,722.48

·     The Dow Jones Industrial Average rose 148.83 points, or 0.49%, to 30,303.37

·     The Nasdaq Composite spiked 106.56 points, or 0.84%, to 12,764.75

·     The Russell 2000 Index advanced 25.32 points, or 1.30% to 1,978.05

 

Economic Calendar for Today

·     8:30 AM EST      Current Account for Q3

·     10:00 AM EST    Leading Index MoM for November

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

Earnings Calendar:

·     Earnings Before the Open: APOG, DRI, WGO

 

 

Macro	Up/Down	Last
WTI Crude	-0.09	48.27
Brent	-0.19	51.31
Gold	-6.70	1,878.75
EUR/USD	-0.0017	1.2251
JPY/USD	0.26	103.37
10-Year Note	+0.007	0.94%

 

 

World News

·     Brexit talks between Britain and the EU are nearing the final hours to navigate a trade deal that would prevent the most turbulent finale to the Brexit crisis in less than two weeks’ time, EU chief negotiator Michel Barnier said on Friday. An accord would ensure that the goods trade which makes up half of annual EU-UK commerce, worth nearly a trillion dollars in all, would remain free of tariffs and quotas beyond Dec. 31.

·     German Nov PPI rose 0.2% m/m vs 0.1% consensus and fell -0.5% y/y vs -0.6% consensus

·     German Dec IFO Biz Climate was reported at 92.1 vs 90.0 cons, IFO Current Conditions: 91.3 vs 89.0 cons and IFO Expectations: 92.8 vs 92.5 consensus

·     UK Nov Retail Sales fell -3.8% m/m vs -4.2% cons but rose 2.4% y/y vs 2.8% cons; Nov Retail Sales ex-autos: -2.6% m/m vs -3.3% cons; 5.6% y/y vs 4.1% consensus

·     The Energy Department and National Nuclear Security Administration, which maintains the U.S. nuclear weapons stockpile, have evidence that hackers accessed their networks as part of an extensive espionage operation that has affected at least half a dozen federal agencies, Politico reported

 

Sector News Breakdown

Consumer

·     Apogee Enterprises (APOG) Q3 adj EPS 90c vs. est. 69c and revenue $314M below consensus $327.41M; not providing detailed financial guidance due to continued uncertainty driven by the impact of COVID and end-market conditions

·     Steelcase (SCS) Q3 EPS 8c on revs $617.5M vs. est. 3c and $628.8M; says at end 3q, backlog of customer orders was $545M, or 15% lower than prior year and includes approximately $60M of delayed shipments from 3q; guides Q4 EPS about break-even vs. est. $0.09 (recall office furniture rival MLHR shares fell 13% the day prior on weaker outlook)

·     QuantumScape (QS) files to sell 305.1M shares of Class A common stock

·     Shoe Carnival (SCVL) announces $50M share buyback

·     Scholastic (SCHL) 2Q adj EPS $1.15 vs. est. $1.38 on revs $406.2Mm vs. est. $528Mm, not providing guidance

 

Energy, Industrials and Materials

·     Fed-Ex (FDX) 2Q adj EPS $4.83 on revs $20.6B vs. est. $19.5B; says while environment remains uncertain, expecting earnings growth in 2H21 driven by anticipated heightened demand for services; not providing guidance for FY21; Q2 adj. operating margin 7.4%, vs. est. 7.19%; see e-commerce package volumes at 111Mm per day by 2026

·     U.S. Steel (X) said it sees Q4 EPS loss (85c) vs. est. loss (57c) and Q4 Ebitda about $55M vs. est. $95.3M; says flat-rolled customer demand in U.S. and Europe has improved throughout Q4; December’s performance has been particularly strong driven by flow-through of higher steel prices; in tubular, customer activity remains ‘range bound’ with higher rig counts not yet resulting in higher shipments

·     Honeywell International (HON) has been awarded a ~$1.11B modification to the contract for the Automotive Gas Turbine 1500 engine program.

·     AAR Corp. (AIR) Q2 adj EPS 31c vs. est. 18c; Q2 sales down -28% YoY to $403.6M vs. est. $408.5M; Q2 adj Ebitda down -40% YoY to $27M

·     Babcock & Wilcox’s (BW) rises after B&W Thermal segment has booked new service projects valued at more than $10M for utility and industrial facilities.

·     Williams (WMB) announced bankruptcy court approval of the global resolution it reached last month with Chesapeake as part of Chesapeake’s Chapter 11 bankruptcy restructuring process. Subsequent to the bankruptcy court’s approval, Williams received a payment of $112 million from Chesapeake related to all pre-petition and past due receivables associated with midstream expenses per the existing contracts

 

Financials

·     The Federal Reserve comes out with its latest round of bank stress tests today, which look out how well U.S. lenders can handle fallout from the coronavirus crisis

·     The Hartford (HIG) announces $1.5 billion share repurchase authorization

·     Seven Oaks Acquisition (SVOKU) priced its upsized IPO of 22.5M units (from 20M) at $10/unit

 

Healthcare

·     An FDA advisory panel recommended that Moderna Inc.’s (MRNA) Covid-19 vaccine be cleared for broad use, setting the stage for the FDA to grant an expected emergency-use authorization by late Friday. The advisory panel’s vote was 20-0, with one abstention, to recommend use of the Moderna vaccine for people 18 years of age and older

·     Johnson & Johnson (JNJ) says it has fully enrolled participants for the first late-stage trial of its COVID-19 single-dose vaccine candidate. The Ensemble trial has enrolled ~45K participants and is being conducted by its Janssen unit,

·     Mesoblast Ltd (MESO) shares fell -30%; after saying the Data Safety Monitoring Board noted the company’s trial of remestemcel-L in ventilator-dependent patients with moderate to severe acute respiratory distress syndrome due to COVID-19 infection is not likely to meet its endpoint

·     Greenwich LifeSciences (GLSI) 660K share Spot Secondary priced at $40.00

·     908 Devices (MASS) 6.5M share IPO priced at $20.00

·     Centene (CNC) reaffirms FY2020 total revenues guidance of $109.8B-$111.4B vs. consensus of $111.26B and adjusted EPS of ~$4.90-$5.06 vs. consensus of $4.99.

·     Mereo BioPharma (MREO) announced a license and collaboration agreement with Ultragenyx Pharmaceutical (RARE) for setrusumab

·     Repare Therapeutics (RPTX) added to the Nasdaq Biotechnology index

·     Spruce Biosciences, Inc. (SPRB) announced that it will be added to the Russell 2000, 3000 and microcap indexes effective December 21, 2020, following Russell’s quarterly additions of select initial public offerings.

 

Technology, Media & Telecom

·     BlackBerry (BB) Q3 adj EPS 2c vs. est. loss (1c) and revs $224M vs. est. $219.72M; said surging coronavirus cases in the Unites States have slowed the pace of auto sales in BlackBerry’s biggest market, squeezing demand for the firm’s QNX software; reaffirms full year revenue outlook of $950M vs. a consensus of $946.17M

·     Microsoft Corp (MSFT) said it found malicious software in its systems related to a massive hacking campaign disclosed by U.S. officials this week, adding a top technology target to a growing list of attacked government agencies.

·     Sony Corp (SNE) is pulling CD Projekt’s (OTGLY) video game Cyberpunk 2077 from its PlayStation Store and offering full refunds after gamers complained it was rife with bugs

·     ViacomCBS (VIAC) and Discovery (DISCA) both downgraded to Underperform from Neutral at Bank America in the media space

·     Chinese chip giant SMIC (SMICY) is seeking talks with Dutch semiconductor equipment company ASML (ASML) for EUV lithography equipment, according to DigiTimes sources

·     Glu Mobile Inc. (GLUU) filed a lawsuit in federal court alleging that Reworks Oy infringes a Glu patent relating to systems and methods for providing competitive scene completion in a mobile gaming application