Early Look

Friday, July 22, 2022

Futures	Up/Down	%	Last
Dow	14.00	0.04%	32,021
S&P 500	-8.00	0.20%	3,993
Nasdaq	-55.50	0.44%	12,584

 

 

U.S. futures point to a slightly weaker open, down -0.28% at 3,990, trading in one of the narrowest ranges of the year overnight (3,980 low – 3,996 high) as a handful of weak earnings results overnight in various sectors is offset by generally positive upside momentum, with major averages on track for one of the best weeks of the year. Coming into today, the S&P 500 is up 3.5% WTD, the Dow +2.4%, the Russell 2000 +5.2% and the Nasdaq +5.3%, led by a whopping 8.2% gain in the semiconductor index. Overall, a gauge of global stock markets rose for a fifth straight session Thursday while the euro edges lower Friday after a handful of weaker PMI readings overnight. The euro had edge higher Thursday after the ECB raised interest rates for the first time in more than a decade as it seeks to rein in inflation. The FOMC meets next week and is expected to raise rates between 75-100 bps. Last night saw several warnings across various sectors with SNAP posting a big miss, slow growth, and no guidance in the social media space (raising fears of slowing ad revs for space), STX guided sharply lower in the chip related sector, SAM cut guidance in beverage space, ISRG a miss in the MedTech sector, SIVB a wide miss in the banking space and COF a miss in credit card space. Earnings thus far have generally been better, but outlooks not so much – but still, markets have climbed a “wall of worry” all week, ignoring any warning signs of a broader consumer spending slowdown. Stocks jumped yesterday led by tech after TSLA rose nearly 10% after results and upside trading momentum. As the U.S. corporate earnings season rolls along, 91 companies in the benchmark S&P 500 index have reported quarterly results, with 78% topping expectations, according to Refinitiv data. The Nasdaq had 61 new lows yesterday; that is the fewest since early November. In Asian markets, The Nikkei Index rose 111 points to end the week at 27,914, the Shanghai Index slipped -2 points to 3,269, and the Hang Seng Index gained 34 points to 20,609. In Europe, the German DAX is +0.3% to 13,285, while the FTSE 100 rises 0.25% to 7,287.

 

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 39.05 points, or 0.99%, to 3,998.95

·     The Dow Jones Industrial Average rose 162.06 points, or 0.51%, to 32,036.90

·     The Nasdaq Composite surged 161.96 points, or 1.36%, to 12,059.61

·     The Russell 2000 Index advanced 8.74 points, or 0.48% to 1,836.69

 

Economic Calendar for Today

·     9:45 AM ET          S&P Global Manufacturing PMI, July flash

·     9:45 AM ET          S&P Global Services PMI, July Flash

·     1:00 PM EST        Baker Hughes Weekly rig count data

 

Earnings Calendar:

·     Earnings Before the Open: AXP, CLF, GNTX, HCA, HTH, NEE, NEP, RF, ROP, SLB, SPFI, SXT, VZ

 

 

Macro	Up/Down	Last
Nymex	-1.72	94.63
Brent	-1.15	102.71
Gold	7.80	1,721.20
EUR/USD	-0.0069	1.0160
JPY/USD	0.06	137.43
10-Year Note	-0.083	2.825%

 

 

World News

·     Russian central bank cuts key interest rate to 8%

·     UK July Flash Manufacturing PMI 52.2 vs. Est 52; UK July Flash Services PMI 53.3 vs. Est 53

·     Eurozone July Flash Services PMI 50.6 vs. Est. 52; Eurozone July Flash Manufacturing PMI 49.6 vs. est. Est. 51 – ECB Survey Shows Inflation Further Above 2% Goal in Longer Term

·     Germany July Flash Services PMI 49.2 vs. est. 51.4; Germany July Flash Manufacturing PMI 49.2 vs. Est 50.7

·     France July Flash Services PMI 52.1 and France July Flash Manufacturing PMI 49.6 vs. Est 51

·     UK Retail Sales Fall 0.1% M/m in June vs. est. -0.2%

·     Japan June Core Consumer Prices Rise 2.2% Y/Y vs. est. +2.2%

 

Sector News Breakdown

Consumer

·     Boston Beer (SAM) shares fall -10%; Q2 EPS $4.31 vs. est. $4.43; Q2 revs $616.2M vs. est. $609.69M; cuts FY22 adjusted EPS view to $6.00-$11.00 from $11.00-$16.00 (est. $11.67); Gross margin of 43.1% was 2.6% points below the 2021 second quarter gross margin of 45.7%

·     BJ Restaurants (BJRI) 2Q adj EBITDA $23.4Mm vs est. $26.5Mm on revs $329.7Mm vs est. $327.7Mm, comps +11.7%

·     Mattel Inc. (MAT) Q2 adj EPS $0.18 vs. est. $0.06; Q2 sales rose 20% to $1.23B vs. est. $1.1B; reiterates 2022 guidance for net sales, adjusted eps and adjusted ebitda; qtrly worldwide gross billings for dolls were $401M, up 2% as reported, and 5% in constant currency; qtrly worldwide gross billings for action figures, building sets, games, and other were $372M, up 44% as reported

·     Six Flags (SIX) will replace Natus Medical (NTUS) in the S&P SmallCap 600 effective prior to the opening of trading on Tuesday, July 26

·     Scholastic Corp. (SCHL) 4Q adj EPS $1.72 on revs $514.4Mm; sees FY23 revs +8-10% and expects overall demand for independent reading resources at home and in school to remain strong

 

Energy

·     Germany agrees to bail out Uniper and will hold about 30% stake in the energy giant as part of a rescue package – Bloomberg

 

Financials

·     Capital One Financial (COF) shares fall -5%; Q2 EPS $4.96 vs. est. $5.09; Q2 revs $8.2B vs. est. $8.29B; Q2 net interest margin of 6.54%, an increase of 5 basis points; provision $1.1B vs est. $1.07B; NIM 6.54% +5bps vs 1Q; non-interest income fell short of analysts’ expectations as well $1.72B vs. $1.75B estimate

·     Regions Financial (RF) Q2 EPS $0.59 vs. est. $0.53; Q2 revs $1.7B vs. est. $1.69B; qtrly net interest income $1,108 mln vs $963 mln; qtrly average loans and leases increased 3% q/q

·     SVB Financial (SIVB) Q2 EPS $5.60 vs. est. $7.68; Q1 provision for credit losses $196M vs. $35M a year ago; Q2 net loan charge-offs of $20M, or 12 basis points of average total loans compared to $8 million, or 5-bps; lowered FY22 NIM view to 2.10%-2.20% from 2.15%-2.25%

·     W. R. Berkley (WRB) Q2 operating EPS $1.12 vs. est. $0.86; Q2 revenue $2.51B vs. est. $2.62B; et investment income $171.6M, net premiums written $2.59B and net premiums earned $2.36B

·     Associated Banc-Corp (ASB) Q2 EPS $0.56 vs. est. $0.44; Q2 net interest margin increased to 2.71%, reflecting a 34 bps from the same period last year

 

Healthcare

·     Tenet Healthcare (THC) 2Q adj EPS $1.50 vs est. $0.82 on net operating revs $4.6B vs est. $4.8B; says estimate cybersecurity incident during qtr had approx $100Mm unfavorable impact to adj EBITDA; guides 3Q adj EPS $1.14-1.36 vs est. $1.29 and FY adj EPS $5.80-7.00 vs est. $6.15

·     Intuitive Surgical (ISRG) shares fall -13%; 2Q adj EPS $1.14 vs est. $1.19 on revs $1.52B vs est. $1.56B; in Q2, company placed 279 Da Vinci surgical systems, a decrease of 15% compared with 328 y/y; grew da Vinci surgical system installed base to 7,135 systems, up 13% vs 6,335 y/y; raises FY22 procedure growth view to 14%-16.5% from 12%-16%

 

Industrials & Materials

·     PPG Industries (PPG) 2Q EPS $1.81 vs est. $1.73 on revs $4.7B vs est. $4.6B; guides 3Q adj EPS $1.75-2.00 vs est. $2.05 with aggregate sales volumes flat to down low-single-digit %

·     Novanta (NOVT) will replace Six Flags Entertainment (SIX) in the S&P MidCap 400 effective prior to the opening of trading on Tuesday, July 26

·     UFP Industries (UFPI) Q2 EPS $3.23 vs. est. $2.41; Q2 revs rose 7% to $2.9B vs. est. $2.35B

·     FedEx (FDX) is rolling back deliveries on Sunday in some parts of the US as e-commerce growth slows and cost pressures intensify – Bloomberg

 

Technology, Media & Telecom

·     Snap inc. (SNAP) shares fall -25%; Q2 EPS loss (-$0.02) vs. est. loss (-$0.01); Q2 revs $1.11B vs. est. $1.14B; authorized stock repurchase program of up to $500 mln of class a stock; not providing expectations for revenue or adjusted ebitda for Q3; Q2 Daily active users 347 million, +18% y/y, estimate 343.2M; N.A. daily active users 99 million, +4.2% y/y; says “we are not satisfied with the results we are delivering, regardless of the current headwinds

·     Seagate Technology (STX) Q4 adj EPS $1.59 below consensus $1.88; Q4 revs $2.63B vs. est. $2.78B; sees Q1 EPS $1.20-$1.60 below consensus $2.27 and revs $2.35B-$2.65B also well below consensus $3.03B; GAAP gross margin of 28.9%; non-GAAP gross margin of 29.3%

·     Micron Technology (MU) downgraded to underweight from equal weight at Morgan Stanley

·     AT&T (T) downgraded to equal weight from overweight at Barclays with its results seen likely to revive concerns about its management team’s credibility