Early Look

Thursday, December 29, 2022

U.S. futures are pointing to a slightly higher open, looking to rebound after yesterday’s 1% declines across the board, as investors look to close a rough year with positive returns. Bespoke Investment noted that yesterday saw another 1%+ down day for SPY, the 65^th time posting a 1%+ down day in 2022. There has been very little news flow to move markets this week, with no Fed speakers, no major economic data, or earnings and volumes have dried up. Same situation today outside of weekly jobless claims data at 8:30 AM. In Asian markets, The Nikkei Index fell -246 points to 26,093, the Shanghai Index dropped -13 points to 3,073, and the Hang Seng Index declined -157 points to 19,741. In Europe, the German DAX is up 25 points to 13,951, while the FTSE 100 is down a few points to 7,488. In macro news, Russia fired missiles into Ukraine early on Thursday, targeting Kyiv, the northeastern city of Kharkiv, and other cities. Covid headlines out of China also weigh on investor minds after removing their zero covid policy this week, leading the US to require inbound airline passengers from China to show a negative test prior to entry.

Market Closing Prices Yesterday

·     The S&P 500 Index sunk -46.03 points, or 1.20%, to 3,783.22

·     The Dow Jones Industrial Average fell -365.85 points, or 1.10%, to 32,875.71

·     The Nasdaq Composite dropped -139.94 points, or 1.35%, to 10,213.29

·     The Russell 2000 Index declined -27.49 points, or 1.57% to 1,722.02

Economic Calendar for Today

·     8:30 AM ET            Weekly Jobless Claims

·     8:30 AM EST          Continuing Claims

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

·     11:00 AM ET          Weekly DOE Inventory Data

·     1:00 PM ET             US Treasury to sell $35B in 7-year notes

Sector News Breakdown

Consumer

·     Cal-Maine Foods (CALM) Q2 EPS $4.07 vs. est. $4.24; Q2 revs rose 110% y/y to $801.7M vs. est. $797.8M; Quarterly gross profit margin of 39.6%; conventional egg net average selling price per dozen increased to $2.883 compared with $1.151 a year ago and Net average selling price for specialty eggs rose 24.9% to $2.370 per dozen, compared with $1.898 per dozen

·     China said it will tighten oversight of private tutors that offer non-curricular services to primary and middle school students, including rules on fee charges and operating time, Bloomberg reported (watch shares of TAL, EDU, GOTU)

·     The United States will introduce incentives on Jan. 1 for delivery firms and other companies to switch to electric trucks. The first-of-its-kind incentives, established under President Joe Biden’s Inflation Reduction Act (IRA), will offer tax credits of $7,500 or $40,000 depending on the size of the electric vehicle (EV).

·     Tesla (TSLA) rising over 5% after gaining 3.3% Wednesday to snap its 7-day losing streak

Energy, Industrials and Materials

·     Lockheed Martin (LMT) has filed a protest with the Government Accountability Office, or GAO, to contest the U.S. Army’s selection of Bell Textron (TXT) for a helicopter project that could be worth $7B if all options are awarded – Bloomberg

·     Mosaic (MOS) reports October/November potash rev of $780M vs. $529M YoY

Financials

·     Goldman Sachs Group Inc. (GS) CEO said he expects to cut jobs in early January, according to a report late Wednesday. In his annual year-end letter to staff, David Solomon said “We are conducting a careful review and while discussions are still ongoing, we anticipate our headcount reduction will take place in the first half of January,” according to Bloomberg News.

·     Vornado Realty Trust (VNO) to replace RXO (RXO) in the S&P MidCap 400 at open on January 5

Healthcare

·     GE HealthCare (GEHC) to replace Vornado Realty Trust (VNO) in the S&P500 at open on January 4^th, 2023

·     RXO Inc. (RXO) will replace The Joint Corp. (JYNT) in the S&P SmallCap 600 effective Wednesday, January 4, 2023

·     Novartis AG (NVS) agreed to pay $245 million to settle a lawsuit alleging that it attempted to delay the launch of generic copies of its Exforge blood-pressure medicine

Technology, Media & Telecom

·     Taiwan Semi (TSM) is expected to ramp up substantially its 3nm chip output starting mid-2023 to fulfill orders from multiple customers, according to sources at fab toolmakers, Digitimes reported