Early Look

Thursday, January 5, 2023

Futures	Up/Down	%	Last
Dow	12.00	0.04%	33,428
S&P 500	4.25	0.12%	3,879
Nasdaq	23.25	0.21%	11,022

 

 

U.S. futures are looking flat, with the S&P up only a few points to 3,878, remains stuck in a roughly 100-point range over the last few weeks, bottoming at 3,800 on a few occasions and hitting a wall around 3,900 so far. Stocks closed higher Wednesday as investors looked past Fed meeting minutes that showed the central bank will remain aggressive in its policy to tame high inflation, but market expectations still believe the Fed will stop short of those higher rate target goals, keeping a slight bif to the market. A busy day of economic data with Dec ADP private payroll data at 8:30 AM (est. 150K after 127K prior), Weekly Jobless Claims (est. 225K) and cont claims (est. 1.708M). Also more Fed speakers this week with St Louis Fed President Bullard speaking today and Fed Chairs Barkin, Bostic, Cook George speaking Friday. The very important monthly nonfarm payroll report is expected tomorrow morning. In Asian markets, The Nikkei Index gained 103 points to 25,820, the Shanghai Index gained 31 points to 3,155, and the Hang Seng Index rose 250 points to 21,052. In Europe, the German DAX is down -10 points to 14,480, while the FTSE 100 rises about 30 points to 7,614. China and Hong Kong to reopen border as Beijing drops zero-Covid curbs

Market Closing Prices Yesterday

·     The S&P 500 Index gained 28.81 points, or 0.75%, to 3,852.95

·     The Dow Jones Industrial Average rose 133.40 points, or 0.40%, to 33,269.77

·     The Nasdaq Composite climbed 71.78 points, or 0.69%, to 10,458.76

·     The Russell 2000 Index advanced 21.81 points, or 1.25% to 1,772.54

 

Economic Calendar for Today

·     7:30 AM ET            Challenger Layoffs for December

·     8:15 AM ET            ADP Employment Data for December…est. 150K

·     8:30 AM ET            Weekly Jobless Claims…est. 225K

·     8:30 AM EST          Continuing Claims…est. 1.708M

·     8:30 AM ET            International Trade for November…est. (-$73.0B)

·     9:45 AM ET            S&P Global Services PMI, Dec-F…prior 44.6

·     9:45 AM ET            S&P Global Composite, Dec-F…prior 44.4

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

·     11:00 AM ET          Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ANGO CAG HELE LNN LW MSM NEOG RPM SCHN SMPL STZ WBA

·     Earnings After the Close: AEHR DCT FC KRUS

 

Other Key Events:

·     Consumer Electronics Show (CES) in Las Vegas, 1/4-1/7

 

 

Macro	Up/Down	Last
Nymex	0.67	74.51
Brent	1.70	79.54
Gold	-7.40	1,851.60
EUR/USD	0.001	1.0609
JPY/USD	-0.06	132.56
10-Year Note	-0.008	3.701%

 

 

World News

·     Republicans in the U.S. House of Representatives will try for a third day on Thursday to select a House speaker leader after six failed votes have highlighted internal divisions

·     Euro zone producer prices fell month-on-month as expected in November, down -0.9% month-on-month for a 27.1% year-on-year rise.

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -21.5 vs -21.1 last week. Bulls fall to 20.5% from 26.5%, Neutrals rise to 37.5% from 25.9% and Bears fall to 42% from 47.6%

 

Sector News Breakdown

Consumer

·     Tesla (TSLA) delivered fewer cars made in China last month than in November. Data from the China Air Passenger Car Association Tesla delivered 55,796 in December, down from more than 100,000 in November and 21% lower than a year earlier

·     Volvo (VLVLY) its car sales grew in December but fell for the full year due to lockdowns in China; sales grew 13% year-on-year in December to 72,663 cars, a slight acceleration from November, but that 2022 sales fell 12% to 615,121 cars.

·     Amazon’s (AMZN) confirms more than 18,000 layoffs, far more than originally expected

·     Inter parfums (IPAR) said it sees FY net sales $1.08B vs. prior view $1.03B (est. $1.03B) and guides FY EPS $3.60 above prior $3.40 and same consensus; also raises 2023 outlook

·     Resources Connection (RGP) Q2 EPS $0.51 vs. est. $0.47; Q2 revs $200.4M vs. est. $199.2M

·     Nordstrom (JWN) downgraded to Neutral from Overweight at Piper

·     Wolverine Worldwide (WWW) downgraded to Neutral from Overweight at Piper

 

Energy, Industrials and Materials

·     MSC Industrial (MSM) Q1 adj EPS $1.48 vs. est. $1.46; Q1 revs $957.75M vs. est. $947.68M; sees FY23 adjusted operating margin 12.7%-13.3% and sees FY23 average daily sales growth 5%-9%

·     RPM (RPM) Q2 adjusted EPS $1.10 vs. est. $1.10 and revs $1.79B vs. est. $1.81B

·     Delek US Holdings, Inc. (DK) announced the 2023 capital spending budget of approximately $350 million on a consolidated basis

·     Magnolia Oil & Gas (MGY) announced preliminary Q4 estimated oil and gas production volumes in the range of 73 to 74 Mboe per day, compared to the midpoint of the Company’s earlier guidance of 78 Mboe per day

·     Transocean Ltd. (RIG) announces contract awards and extensions totaling $488 million; contract contributes an estimated $34 mln in backlog and is expected to commence in Q1

·     The American Petroleum Institute said that crude inventories rose 3.3M barrels last week. Gasoline inventories rose 1.2M barrels

 

Financials:

·     Silvergate (SI): The collapse of crypto exchange FTX sparked a run on Silvergate Capital Corp., forcing the bank to sell assets at a steep loss to cover some $8.1 billion in withdrawals, the WSJ reported. Crypto-related deposits plunged 68% in the fourth quarter. To satisfy the withdrawals, Silvergate liquidated debt it was holding on its balance sheet. https://on.wsj.com/3WRbyHg

·     American Express (AXP) downgraded to Underweight from Equal Weight at Stephens

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

·     MarketAxess (MKTX) announced monthly trading volume for December. Strong December with 27% increase in total credit average daily volume (“ADV”) to $10.6 billion. Record 22.8% (+140 bps) composite corporate bond estimated market share,2 up from 21.4%. 26% increase in U.S. high-grade ADV to $5.1 billion with estimated market share of 23.4%. Estimated U.S. high-grade TRACE market ADV increased 27%. 25% increase in U.S. high-yield ADV to $1.6 billion with record estimated market share of 21.4% (+310 bps), up from 18.3%

 

Healthcare

·     Geron Corporation (GERN) announced that it intends to offer and sell $175 million of shares of its common stock in an underwritten public offering

·     Homology Medicines (FIXX) announced enrollment and site status updates from the pheEDIT Phase 1 gene editing trial with HMI-103 for phenylketonuria, or PKU, and the juMPStart Phase 1 gene therapy trial with HMI-203 for Hunter syndrome, or MPS II

·     Personalis (PSNL) raises FY22 revenue view to about $65M, above prior view $663M-$64M and vs. est. $63.6M after guiding Q4 results above views

·     MIMEDX (MDXG) announces Commercial Launch of EPIFIX® in Japan with exclusive distribution agreement with GUNZE MEDICAL LIMITED

 

Technology, Media & Telecom

·     Western Digital (WDC) has restarted merger talks with Japan’s Kioxia, Bloomberg reported https://bit.ly/3InmtnB

·     T-Mobile (TMUS) released preliminary results for 2022 that included strong growth in new postpaid customers; said that it added 6.4M total postpaid customers in 2022, which exceeded expectations, and added 2M new high speed Internet customers during the year.

·     Dell Inc. (DELL) plans to stop using China-made chips by 2024 and has told suppliers to reduce the amount of other made-in-China components in its products amid concerns over U.S.-Beijing tensions, Nikkei reported

·     Charter Communications (CHTR) and Comcast (CMCSA) upgraded to Buy from Hold at Truist. These two were the worst performing large-cap stocks in our coverage universe in 2022 as investors recognized broadband flow share trends fundamentally changed, but we believe efforts to stem the erosion are proving successful and should once again cause the stocks to trade at traditional premiums to telecom stocks