Early Look

Tuesday, January 31, 2023

Futures	Up/Down	%	Last
Dow	-137.00	0.40%	33,648
S&P 500	-16.25	0.40%	4,016
Nasdaq	-66.50	0.56%	11,901

 

 

After a tremendous start to January thru last week, as the S&P was up over 5% and the Nasdaq over 11% for its best start to a year in a decade, U.S. stocks are looking lower for a second day, paring some of those gains as investors await the cluster of key market moving catalysts this week, specifically the FOMC rate meeting tomorrow afternoon. U.S. stock indexes fell on Monday, dragged lower by declines in technology and other mega-cap shares, as investors looked toward a major week of events including central bank meetings and a slew of earnings reports. The Nasdaq dropped about 2%, while ending back below its 200-day moving average, but still on track for its biggest monthly gain since July of last year. The Dow Jones Industrial Average snapped a six-session win streak. Nearly all S&P 500 sectors ended red with energy and tech weakest. The catalyst list this week are long and impactful with 1) FOMC on Wednesday; 2) BOE/ECB central bank meetings on Thursday (rate hikes expected); 3) big tech earnings (META Wed, AAPL/AMZN/GOOG Thurs); 4) Eurozone CPI, US Employment Cost Index, US Jobs Report, all late week. Several earnings results today will also move the needle with XOM, PFE, UPS, GM, MCD this morning and then AMD, AMGN, EA tonight. In Asian markets, The Nikkei Index falls -106 points to 27,327, the Shanghai Index dipped -13 points to 3,255, and the Hang Seng Index tumbles -227 points to 21,842. In Europe, the German DAX is down about -100 points to 15,028, while the FTSE 100 slips -65 points to 7,718. Oil, gold, and Treasury yields all lower to start.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -52.79 points, or 1.30%, to 4,017.77.

·     The Dow Jones Industrial Average slid -260.99 points, or 0.77%, to 33,717.09.

·     The Nasdaq Composite slumped -227.90 points, or 1.96%, to 11,393.81.

·     The Russell 2000 Index declined -25.74 points, or 1.35% to 1,885.82.

 

Economic Calendar for Today

·     7:45 AM ET           ICSC Weekly Retail Sales

·     8:30 AM ET           Employment Costs for Q4…est. +1.1%

·     8:55 AM ET           Johnson/Redbook Weekly Sales

·     9:00 AM ET           Monthly Home Prices M/M for November

·     9:00 AM ET           CaseShiller 20 City Index for November…est. (-0.6%)

·     9:45 AM ET           Chicago PMI for January…est. 45.1

·     10:00 AM ET         Consumer Confidence for January…est. 109.0

·     4:30 PM ET            API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ALGM AOS AQUA CAT DOV GLW GM HUBB IP KEX LII MAN MCD MCO MDC MPC MPLX MSCI NVR NYCB OSK PFE PHM PII ST SYY UPS XOM

·     Earnings After the Close: AMD AMGN APAM ASH BXP CACC CENT DOX EA EW HA HLI IEX JNPR KTXX MDLZ MRCY MTCH NATI NEU OI POWL SMCI SNAP SYK UNM VREX WDC

 

 

Macro	Up/Down	Last
Nymex	-0.85	77.05
Brent	-0.82	84.08
Gold	-21.20	1,918.00
EUR/USD	-0.0011	1.0832
JPY/USD	-0.03	130.42
10-Year Note	-0.013	3.538%

 

 

World News

·     China Manufacturing PMI Jan: 50.1 (est. 50.1; prev 47.0); Non-Manufacturing PMI Jan: 54.4 (est. 52.0; prev 41.6); Composite PMI Jan: 52.9 (prev 42.6)

 

Sector News Breakdown

Consumer

·     General Motors (GM) Q4 adj EPS $2.12 vs. est. $1.67; Q4 revs $43.11B vs. est. $40.5B; guides 2023 adj EPS $5.00-$7.00 vs. est. $5.70; says on track to produce 400,000 EVs in North America from 2022 through the first half of next year.

·     Tesla (TSLA) said it will boost its CAPEX by about $1 billion in the next two years to between $7 billion and $9 billion, up from its forecast $6 billion to $8 billion spend this year.

·     Whirlpool (WHR) Q4 adj EPS $3.89 vs. est. $3.25; Q4 revs fell -15% y/y to $4.92B vs. est. $5.09B; Q4 revenue ex currency $5.06B; sees $800 million to $900 million benefit in 2023 from strong cost takeout actions and easing raw material inflation; guides FY revs about $19.4B vs. est. $19.14B and EPS range $16 to $18 vs. est. $16.33.

·     Polaris (PII) 4Q adj EPS $3.46 vs est. $3.26 on sales $2.4B vs est. $2.4B; guides FY23 sales +0-5% vs est. -2% and adj EPS -3% – +3% vs est. -2%

·     J&J Snack Foods (JJSF) 1Q adj EPS $0.42 vs est. $0.47 on revs $351.3Mm vs est. $360.7Mm; says inflation trends gradually improving for some raw materials since 2022 4Q, expected to benefit margins in future months.

 

Energy

·     Exxon Mobil (XOM) Q4 adj EPS $3.40 vs. est. $3.29; Q4 revs $95.43B vs. est. $94.67B; posted $59 billion in adjusted profit for 2022; results far exceeded the then-record $45.2 billion net profit it reported in 2008; cash flow from operations soared to $76.8B last year, up from $48.1B in 2021

·     Helmerich & Payne (HP) Q1 EPS $0.90 vs. est. $0.80; Q1 North America Solutions operating income increased $53M sequentially, while direct margins increased $57M.

 

Financials

·     UBS (UBS) reports posted Q4 net profit of $1.65B, up 23% y/y topping the $1.3B estimate thanks to low tax rate and revs, guided 2023 buyback of at least $5 billion.

·     Principal Financial (PFG) Q4 adj operating EPS $1.70 vs. est. $1.53; Assets under management (AUM) of $635 billion, which is included in assets under administration of $1.5 trillion.

·     AGNC Investment (AGNC) Q4 EPS $1.17 vs. est. $0.65; $9.84 tangible net book value per common share as of Dec 31, 2022; 12.3% economic return on tangible common equity for the quarter

·     Alexandria Real Estate (ARE) 4Q FFO/shr $2.14 vs est. $2.13, 94.8% occupancy of operating properties in N. America: adj EBITDA mgn 69%

·     Equity Lifestyle (ELS) 4Q adj FFO/shr $0.66 vs est. $0.61on revs $340.6Mm vs est. $336.8Mm; sees 1Q EPS $0.42-0.48 vs est. $0.45 and FY EPS $1.65-1.75 vs est. $1.57.

 

Healthcare

·     Pfizer (PFE) Q4 adjusted EPS $1.14 vs. est. $1.05; Q4 revs $24.3B vs. est. $24.32B; expect strong topline growth of 7% to 9% in 2023 excluding our covid-19 products and anticipated foreign exchange impacts; revenues from covid-19 products expected to grow in 2024 after reaching low point in 2023 due to significant govt supply on hand to start year; sees FY23 adjusted EPS $3.25-$3.45, vs. consensus $4.44 and sees FY23 revenue $67B-$71B, vs. est. $74.13B.

·     Amgen (AMGN) announced AMJEVITA(TM) (adalimumab-atto), a biosimilar to Humira(R)* (adalimumab), is now available in the United States. AMJEVITA was the first biosimilar to Humira approved by the U.S. FDA.

·     Structure Therapeutics, a company with operations in the U.S. and China, filed to raise $125 million in an IPO that would set its valuation at more than $500 million.

 

Industrials & Materials

·     Caterpillar (CAT) Q4 adj EPS $3.86 vs. est. $4.02; Q4 revs $16.6B vs. est. $16.04B; A4 adj operating income $2.18B vs. est. $2.54B; dealers increased their inventories $2.4 bln in 2022, while remaining about flat in 2021; FY sales and rev increase in 2022 reflected favorable price realization, higher sales volume; said increase in sales volume in qtr was driven by impact from changes in dealer inventories and higher sales of equipment to end users

·     UPS Inc. (UPS) Q4 adj EPS $3.62 vs. est. $3.59; Q4 revs $27B vs. est. $28.09B; announces new $5B share repurchase program; raises quarterly dividend 6.6% to $1.62 per share; sees FY23 revenue $97B-$99.4B vs. consensus $100.03B; sees FY23 CapEx about $5.3B.

·     Graco Inc. (GGG) 4Q adj EPS $0.73 vs est. $0.69 on sales $555Mm vs est. $553.7Mm; guides FY revs +low-single-digit organic, constant currency vs est. +2.2% reported.

·     Potlatch (PCH) Q4 adj EPS $0.12 vs. est. $0.16; Q4 revs $253.1M vs. est. $252.22M; higher interest rates and their expected impact on housing starts are expected to create headwinds for our operating results in 2023; encouraged by the recent increase in lumber prices.

·     Woodward (WWD) Q1 EPS $0.49 vs. est. $0.63; Q1 revs $618.62M vs. est. $599.43M; sees year EPS $3.15-$3.60 vs. est. $3.39; sees FY revs $2.6B-$2.75B vs. est. $2.64B

·     Global crude steel output falls 4.2% to 1.88 bln tonnes in the full year 2022 – WorldSteel.

 

Technology, Media & Telecom

·     Samsung (SSNLF) operating profits sink 69% in Q4 on weaker demand including PCs and smartphones; net profit for Q4 rose 119.9% to 23.84 trillion won, or roughly $19.4 billion reflecting a one-time tax gain from a recent change in South Korean tax laws; Revenue for the three-month period fell by roughly 8% from a year ago to 70.5 trillion won.

·     Confluent Inc. (CFLT) 4Q adj EPS ($0.09) vs est. ($0.14) on revs $169Mm vs est. $164.5Mm; sees 1Q revs $166-168Mm vs est. $168.1Mm and adj EPS ($0.15)-($0.13) vs est. ($0.15); sees FY adj EPS ($0.28)-($0.22) vs est. ($0.43)

·     Harmonic (HLIT) 4Q adj EPS $0.17 vs est. $0.14 on revs $164.3Mm vs est. $159.3Mm, adj gr mgn 52.7%; guides 1Q revs $152-162Mm vs est. $161.1Mm and FY revs $695-735Mm vs est. $734Mm.

·     NXP Semiconductors (NXPI) Q4 EPS $2.76 vs. $2.76 Bloomberg est.; Q4 revs $3.31B vs. est. $3.3B; guides Q1 revs $2.9B-$3.1B vs. est. $3.16B; Q4 adj EBIT margin 36.5% and ad gross margin 58%; sees Q1 EPS $2.82-$3.22 vs. est. $3.09 (shares fell -4% overnight).

·     Sanmina (SANM) 1Q adj EPS $1.64 vs est. $1.45 on revs $2.36B vs est. $2.15B; guides 2Q revs $2.2-2.3B vs est. $2.16B and adj EPS $1.50-1.60 vs est. $1.47; sees FY23 rev growth driven by existing, new programs.

·     Spotify (SPOT) Q4 EPS (EUR 1.40) vs. (EUR 0.20) last year and revs EUR 3.17B vs. EUR 2.69B last year; said ended 2022 with strong Q4 performance as nearly all our KPIs surpassed guidance; MAU net additions reached a quarterly record-high of 33 million in Q4, 10 million above guidance. Subscriber growth exceeded guidance by 3 million net additions.

·     The White House is weighing cutting off China’s Huawei from all its U.S. suppliers, including Intel (INTC) and Qualcomm (QCOM), as the Biden administration intensifies a crackdown on the Chinese technology industry, Bloomberg reported late day.