Early Look

Thursday, July 11, 2024

U.S. futures are edging lower after major averages surged late Wednesday, with the S&P 500 and Nasdaq Composite closing at the highs ahead of today’s CPI inflation report as all major averages posted gains of over 1%. The S&P 500 index closed above 5,600 for the first time ever, rising for a 7^th straight day to start the month along with the Nasdaq (also at record highs), while the Dow logs its best day since May and Smallcaps jumped. Following two days of Fed Chairman Powell testimony, continued market strength rising every day in July thus far, it all comes down to June CPI data at 8:30 AM to see if the party continues. Estimates are calling for June CPI headline to rise +0.1% (vs. May unchanged) and headline Y/Y to rise +3.1% (vs. May +3.3%). The core CPI, or excluding food & energy is expected to rise +0.2% M/M (same as in May) while Y/Y to rise +3.4% (also in-line with May reading). In Asian markets, The Nikkei Index jumped 392 points to 42,224, the Shanghai Index gained 31 points to 2,970, and the Hang Seng Index advanced 360 points to 17,832. In Europe, the German DAX is up 50 points to 18,457, while the FTSE 100 rises 30 points to 8,224. The British pound rises to its highest level since March after the UK economy expanded at twice the pace expected in May, as Gross domestic product (GDP) rose 0.4% month-on-month after the flat reading in April. Early weakness in airlines after Delta (DAL) reported earnings miss and disappointing guidance, while beverage giant Pepsi (PEP) with mixed results.

• The Dow Jones Industrial Average rose 429.39 points, or 1.09%, to 39,721.36.
• The Nasdaq Composite surged 218.16 points, or 1.18%, to 18,647.45.
• The Russell 2000 Index advanced 22.28 points, or 1.10% to 2,051.75.

• 8:30 AM ET                  Consumer Price Index (CPI) headline Y/Y for June…est. +3.1%
• 8:30 AM ET CPI Core (ex: food & energy) M/M for June…est. +0.2%
• 8:30 AM ET CPI Core (ex: food & energy) Y/Y for June…est. +3.4%
• 8:30 AM ET                  Weekly Jobless Claims…est. 236K
• 8:30 AM ET                  Continuing Claims…est. 1.86M
• 10:30 AM ET                Weekly EIA Natural Gas Inventory Data
• 11:00 AM ET                Cleveland Fed CPI for June
• 11:30 AM ET                Fed’s Bostic Speaks in Moderated Q&A
• 1:00 PM ET                   Fed’s Musalem Speaks in Q&A on Economy
• 1:00 PM ET US Treasury to sell $22B in 30-year notes
• 2:00 PM ET                   Federal budget for June…est. (-$83.0B)

• Earnings After the Close: PEV

• The International Energy Agency (IEA) said global oil demand growth will slow to just under a million barrels per day (bpd) this year and next as Chinese consumption contracted in the second quarter due to economic problems. Global demand in the second quarter rose by 710,000 bpd year on year in its lowest quarterly increase in over a year.

• Delta Airlines (DAL) shares tumble on guidance; Q2 EPS $2.01 misses’ consensus $2.37 on better revs of $16.66B vs. est. $15.45B while forecasts Q3 adj. revs $14.8B-$15.1B, below consensus est. $15.32B; also guides Q3 adj EPS $1.70-$2.00 vs. est. $2.06 and sees Q3 revenue up 2%-4%.
• PepsiCo (PEP) reports Q2 core EPS $2.28 vs. est. $2.16; Q2 revs $22.5B vs. est. $22.6B; revs missed citing weakness in North America convenient foods and the impacts of product recalls at Quaker Foods; Q2 organic volume declined 3% while effective net pricing of increased 5%. In North America, Frito Lays sales slipped 0.5%, beverages sales edged up 0.8%; revised its guidance for organic revenue growth to “approximately” 4% from “at least” 4% and reiterated its guidance for core constant-currency EPS growth of at least 8%.
• PriceSmart (PSMT) Q3 EPS $1.08 vs est. $1.01; Q3 revs $1.23B vs. est. $1.21B; said Q3 net merchandise sales – constant currency increased 9.1% over the comparable prior year period; comparable net merchandise sales for the 50 warehouse clubs that have been open for greater than 13 1/2 calendar months increased 7.8% for the 13-week period ended June 2, 2024 compared to the comparable 13-week period of the prior year.
• Vista Outdoor Inc. (VSTO) late Thursday urged shareholders to vote in favor of its proposal to sell its Kinetic Group ammunition business to the Czechoslovak Group, a Czech conglomerate, at an upcoming special meeting.

• AZZ Inc. (AZZ) Q1 adjusted EPS $1.46 vs. est. $1.30; Q1 revs $413.2 vs. est. $402.05M; said both segments performed well, delivering organic sales expansion of 4.7% for Metal Coatings and 6.5% for Precoat Metals. Consolidated EBITDA margin grew to 22.8%; raises Fy25 adjusted EPS to $4.50 to $5.00, from prior $4.25 to $4.75.
• Olin Corporation (OLN) announced a temporary disruption of operations at its Freeport, Texas, facility because of Hurricane Beryl.
• Republic Services (RSG) upgraded to Buy from Hold at Truist and raised tgt to $220 from $192.
• WD-40 (WDFC) Q3 EPS $1.46 vs est. $1.39 on sales $155Mm vs est. $145.8Mm, gr mgn 53.1%; reiterates FY guidance.
• Zurn Elkay Water (ZWS) said sees preliminary Q2 results in-line to slightly ahead of the outlook range they provided earlier in the quarter.

• Artisan Partners Asset Management Inc. (APAM) reported that its preliminary assets under management as of June 30, 2024, totaled $158.9 billion. Artisan Funds and Artisan Global Funds accounted for $77.0 billion of total firm AUM, while separate accounts and other AUM accounted for $81.9 billion.
• Citigroup (C) shares dipped after the Federal Reserve and Office of the Comptroller of the Currency said they had fined Citi $136 mln for making “insufficient progress” toward fixing data management issues identified in 2020.
• Franklin Resources, Inc. (BEN) reported preliminary month-end assets under management (AUM) of $1.65 trillion at June 30, 2024, compared to $1.64 trillion at May 31, 2024. This month’s increase in AUM reflected the impact of positive markets and flat long-term net inflows.
• Invesco Ltd. (IVZ) preliminary month-end assets under management (AUM) of $1,715.8 billion, an increase of 1.7% versus previous month-end. The firm delivered net long-term inflows of $6.5 billion in the month. Non-management fee earning net inflows were $0.2 billion and money market net outflows were $1.9 billion.
• Lazard (LAZ) preliminary assets under management, as of June 30, totaled approximately $244.7B. The month’s AUM included market appreciation of $2.5B, net outflows of $1.4B and foreign exchange depreciation of $1.4B.
• Victory Capital Holdings (VCTR) reported Total Assets Under Management of $168.7 billion, Other Assets of $5.1 billion, and Total Client Assets of $173.8 billion, as of June 30, 2024.

• Pfizer (PFE) announced that based on results from the ongoing pharmacokinetic study, the company has selected its preferred once-daily modified release formulation for danuglipron, an oral glucagon-like peptide-1 receptor agonist.

• E2open Parent (ETWO) Q1 adj EPS $0.04 vs est. $0.04, adj EBITDA $50.7Mm vs est. $52.94Mm on revs $151.2Mm vs est. $155.04Mm; guides FY revs $630-645Mm vs est. $637.1Mm, adj gr mgn 68-70% and adj EBITDA $215-225Mm vs est. $220.83Mm (mgn 34-35%).
• ITT Inc. (ITT) announced a strategic commercial agreement from its Svanehøj business, furthering the company’s leadership position in the green energy transition.