Early Look

Tuesday, July 16, 2024

After posting new intraday record highs for a 9^th straight day for the S&P (Spuz), before paring gains late day, futures are once again looking higher as earnings season picks up steam this week, with nearly 50 S&P companies expected to report. Markets are still digesting the assassination attempt on Republican Presidential candidate Donald Trump on Saturday, as the Republican National Convention takes center stage this week in Milwaukee where Trump and his newly appointed VP candidate, Ohio Senator JD Vance appeared. Stock markets have been in a massive upsurge all year long led by large cap technology stocks, but yesterday financials and healthcare sectors hit record highs and the Smallcap Russell 2000 hit its highest level since January 2022 and ended the day nearly 2% higher, rising a 4^th straight day. Treasury prices rise overnight as yields decline while Bitcoin holds its massive 10% spike yesterday, holding above $63,000 while gold is not far from its record highs! Markets now turn to monthly retail sales data at 8:30 AM which may provide insight to timing of Fed rate cuts (September expected).

Retailers a focus today as Amazon’s (AMZN) Prime Day will begin on July 16th & last 48 hours, with millions of deals and expanded same-day shipping offerings with competition responding, and includes Walmart Deals, Target’s Circle Week, and TikTok Shop’s Deals for You Days. Overnight cautious comments from Richemont (CFRUY) and Hugo Boss (BOSSY) cutting guidance, adding to the weak commentary from luxury retailer Burberry (BURBY) the day prior that sunk shares. In Asian markets, The Nikkei Index rose 84 points to 41,275, the Shanghai Index gained 2 points to 2,976, and the Hang Seng Index fell -287 points to 17,727. In Europe, the German DAX is down -75 points to 18,515, while the FTSE 100 is down -22 points to 8,160.

• The Dow Jones Industrial Average rose 210.82 points, or 0.53%, to 40,211.72.
• The Nasdaq Composite climbed 74.12 points, or 0.40%, to 18,472.57.
• The Russell 2000 Index advanced 38.76 points, or 1.80% to 2,187.02.

• 8:30 AM ET                  Retail Sales M/M for June…est. (-0.3%)
• 8:30 AM ET                  Retail Sales Less Autos M/M for June…est. 0.0%
• 8:30 AM ET                  Import/Export Prices M/M for June…est. (-0.1%) for both
• 8:55 AM ET                  Johnson/Redbook Weekly Sales
• 10:00 AM ET                Business Inventories M/M for May…est. +0.4%
• 10:00 AM ET NAHB Housing Market Index for July…est. 43
• 2:45 PM ET                   Fed’s Kugler Speaks at NABE Conference
• 4:30 PM ET API Weekly Inventory Data

• Earnings After the Close: AEHR EQBK FULT GSBC HWC IBKT JBHT OMC PNFP USEG

• Republican National Convention 7/15-7/18, in Milwaukee, WI

• Hugo Boss (BOSSY) cuts its sales and earnings forecasts for the year, citing weakening global consumer demand, especially in China and the UK, sending its shares down; now sees full-year sales to fall between 4.2B-4.35B euros vs. previous forecast of 4.3B-4.45B euros; sees operating profit (EBIT) to be around 350M-430M euros, down from a previous 43M-470M euros after reported operating profit of 410 million euros in 2023.
• Richemont (CFRUY) said quarterly sales rose 1% to 5.3 billion euros ($5.77 billion) – after surging 19% in the same period a year earlier; negative Chinese impact on Richemont’s results in Asia was partly offset by a big jump in business in Japan; In Europe, sales increased by 5%, while in the Americas, a 10% sales increase reflected sustained domestic demand.
• Shopify (SHOP) upgraded to Buy from Neutral at bank America and raised tgt to $82 from $78 as believes the company has turned a corner on balanced growth and margin under new CFO Jeff Hoffmeister.
• Starbucks (SBUX) downgraded to In Line from Outperform at Evercore ISI as sees lower earnings given the realization that recent and near-term same-store sales growth, both in the U.S. and China, will be lower than expected.
• Yum! Brands (YUM) downgraded to In Line from Outperform at Evercore ISI and tgt cut to $145 from $160 largely due to incremental disappointment about Taco Bell trends recently.

• Assurant (AIZ) announced that it expects its Global Housing segment to record approximately $46 million pre-tax, or $36 million after-tax, of reportable catastrophes for second quarter 2024, with no single event expected to exceed $15 million in pre-tax losses; said catastrophe losses driven by five storm events.
• PNC Financial (PNC) Q2 EPS $3.39 vs. est. $2.98 on in-line revs of $5.41B vs. est. $5.41B; Q2 tangible book value per share $89.12; Q2 CET1 capital ratio 10.2%; Q2 net charge-offs .33%; says outlook 2024 NII down about 4% vs estimate $13.35B.
• ServisFirst (SFBS) Q2 EPS $0.92 vs. est. $0.91; Q2 net Interest Income (NII) $105.9M vs. $101.3M last year; Q2 provision for loan loss $5.4M vs. $6.7M last year and Q2 net interest margin (NIM) 2.79% vs. 2.93% last year.
• Watch shares of rental property REITs (AVB, ESS, UDR, CPT, EQR) as President Joe Biden late yesterday proposed capping rent increases nationwide to 5% to reign in surging housing costs. Biden’s proposed policy would restrict how much landlords can increase tenants’ rents, the White House said on Tuesday.

• UnitedHealth (UNH) Q2 adj EPS $6.80 vs. est. $6.66; Q2 revs rose 6.4% y/y to $98.9B vs. est. $98.84B; backs FY24 adjusted EPS view $27.50-$28.00 vs. consensus $27.59; Company’s Q2 medical cost ratio of 85.1% vs analysts’ estimates of 84.4%; Q2 UnitedHealthcare revenue up 5.3% to $73.9B and Optum revenue rising 11.7% to $62.9B.

• Datadog (DDOG) upgraded to Outperform from Neutral at Mizuho and raised tgt to $155 from $135.
• Match Group (MTCH) shares rose 8% pre mkt after the WSJ reported the company has drawn the attention of another activist investor, Starboard Value. The hedge fund has built a big stake in the online-dating company and is pushing for a possible sale if a turnaround isn’t successful, according to people familiar with the matter.
• Palantir (PLTR) downgraded to Underperform from Neutral at Mizuho saying while the company has performed generally well in recent quarters, Mizuho remains concerned by the lack of visibility into Palantir’s business.
• Zscaler (ZS) downgraded to Neutral from Outperform at Mizuho.