Early Look

Wednesday, July 6, 2022

U.S. futures are flat to down slightly following Tuesday’s dip buying by investors, as stocks staged a strong rally after overnight weakness as concerns about a possible recession in the U.S. weighed on investor sentiment, but lower interest rates appeared to boost the tech sector. In Asian markets, The Nikkei Index slides -315 points or 1.2% to settle at 26,107, the Shanghai Index falls -1.43% to 3,355, and the Hang Seng Index drops -1.22% or 21,586. In Europe, the German DAX is up 1.65% or 200-points to 12,600, while the FTSE 100 jumps 1.75% to 7,148. Later today, the Fed Minutes from its prior FOMC meeting to be released at 2:00 PM. Also, reminder no ADP private payroll data today after announcing last week they were taking the month off to revise new methodology. The market news flow is very quiet on this holiday shortened trading week, a big vacation week ahead of the start of earnings season late next week where expectations remain very low. In oil news, Mohammad Barkindo, the secretary general of OPEC, has died at the age of 63 just hours after delivering a speech in Abuja. The U.S. dollar stays at 2-year highs against the euro, which slides to the 1.02 level while Treasury yields are flat (though the benchmark 10-year yield is 70 bps off last month decade highs of 3.5%). U.S. data today includes the minutes of the FOMC’s June 15 meeting, where the FOMC lifted interest rates 75bpts. The minutes will provide us with some details on the discussions FOMC members had. The JOLTS Job Opening data, and June services PMI data is also due.

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 6.06 points, or 0.16%, to 3,831.39

·     The Dow Jones Industrial Average fell -129.44 points, or 0.42%, to 30,967.82

·     The Nasdaq Composite surged 194.39 points, or 1.75%, to 11,322.24

·     The Russell 2000 Index advanced 13.57 points, or 0.79% to 1,741.33

Economic Calendar for Today

·     7:00 AM ET           MBA Mortgage Applications Data

·     8:55 AM ET           Johnson/Redbook Weekly Sales

·     9:45 AM ET           S&P Global Comp PMI, June-F

·     9:45 AM ET           S&P Global Services PMI, June-F

·     10:00 AM ET         ISM Non-Manufacturing PMI for June

·     10:00 AM ET         JOLTs Job Openings for May

·     4:30 PM ET          Weekly API Inventory Data

Sector News Breakdown

Consumer

·     Uber Eats parent Uber Technologies Inc (UBER) and DoorDash Inc (DASH) shares looking lower after Amazon.com Inc (AMZN) agreed to take a 2% stake in Just Eat Takeaway.com’s U.S. food delivery business GrubHub and will offer its Prime members access to the service for one year

·     Altria (MO): the U.S. FDA has temporarily stayed an order that banned e-cigarette maker Juul from selling its products while the order is appealed. The agency has determined that there are scientific issues unique to the JUUL application that warrant additional review.

·     Sabre (SABR) upgraded to Buy from Underperform with an unchanged price target of $10 at Bank America

Energy, Industrials and Materials

·     Norfolk Southern Corp (NSC) tgt to $235 from $260, Union Pacific Corp (UNP) tgt to $220 from $235, and CSX Corp (CSX) tgt to $31 from $35 at Citigroup saying freight volume in the second quarter was below expectations. Expects freight volume to be under incremental pressure which could continue into 2023 caused by a decelerating macro environment and service constraints

·     TechnipFMC (FTI) has been awarded an integrated front end engineering and design study by a Brazilian unit of Equinor (EQNR) for an offshore project called BM-C-33; TechnipFMC ranks a “major” contract as valued over $1B

·     Kornit Digital (KRNT) guides Q3 revs $56.4M-$59.4M vs. Refinitiv est. $91.4M; says entered period where some customers are working through excess capacity built through 2-yr pandemic, expect to continue for near-term; non-GAAP op margin of -34% and -28% and Adjusted EBITDA Margin between -30% to -24%, both net of non-cash warrant impact of approximately 10%.

·     RADA Electronic Industries (RADA) shares -10%, after saying that it’s withdrawing its full-year 2022 revenue guidance in light of its pending merger with Leonardo DRS; guides Q2 revenue to about $22.5M below the $36M estimate

·     Rocket Lab USA (RKLB) said its next 2 launches will be responsive space missions for the U.S. National Reconnaissance Office

Financials

·     Cryptocurrency broker Voyager Digital Ltd. said it has filed for Chapter 11 bankruptcy protection, days after it suspended withdrawals and trading on its platform amid growing turmoil in digital-currency markets.

·     MarketAxess Holdings (MKTX) announced trading volume for June 2022 and trading volume and preliminary variable transaction fees per million for the quarter ended June 30, 2022. Select June 2022 highlights: U.S. high-grade average daily volume of $5.8 billion, up 9%; estimated market share of 22.7%, up from 21.9%. Record U.S. high-yield ADV of $2.0 billion, up 44%; record estimated market share of 19.0%, up from 13.7%

·     Hut 8 Mining (HUT) production and operations update for June 2022; increased its bitcoin holdings by 328 in period ending June 30; with 7,406 unencumbered bitcoins in reserve, hut 8 remains committed to its HODL strategy

Healthcare

·     Kazia Therapeutics Ltd.’s (KZIA) shares edge higher after the company said regulators designated its treatment for childhood brain cancer as an orphan drug.

·     HEXO Corp (HEXO) announced on Tuesday that the company’s shareholders voted in favor of its previously disclosed transaction of convertible notes with its domestic rival Tilray (TLRY)

·     Eisai (ESALY) and Biogen (BIIB) announced that the U.S. FDA has accepted the Biologics License Application, or BLA, under the accelerated approval pathway for lecanemab

·     Vertex Pharmaceuticals (VRTX) on July 1, Co entered into 2022 credit agreement which provides for $500 mln senior unsecured revolving facility

Technology, Media & Telecom

·     Shopify (SHOP) delays compensation overhaul, lays off 50, as fallen stock price complicates plans- The Globe and Mail reports

·     Palo Alto Networks (PANW), CrowdStrike Holdings (CRWD) and Okta (OKTA) shares may be active as Morgan Stanley analysts said they expect durable security spending environment in the second half of 2022 against an uncertain macro backdrop

·     SAP (SAP) downgraded to Equal Weight from Overweight at Barclays