Early Look

Monday, July 22, 2024

After tumbling last week, both S&P and Nasdaq futures are looking at strong openings, while the U.S. dollar edged lower, and Treasuries rose after Joe Biden ended his reelection campaign and endorsed Vice President Kamala Harris. Last week, the Dow Jones Industrial Average rose 0.7%, the S&P 500 was down 2% and the Nasdaq tumbled -3.7% following a sharp retreat in semiconductors (SOX) after hitting record highs the week prior. The move came in a bout of profit taking in tech, while investors took a breather heading into a busy week of earnings. In political news, President Joe Biden said Sunday he will drop out of the 2024 presidential race against former President Donald Trump after weeks of pressure for him to abandon his White House re-election bid by Democrats. Biden said he will remain in office the remainder of the year and endorses Vice-President Kamala Harris as the Democratic candidate in November. With the slowdown in the U.S. economic data calendar (except for PCE inflation data on Friday) and the Fed blackout period on speaking ahead of the next FOMC meeting, there may be little to distract markets from ongoing back and forth of U.S. politics and earnings in the days ahead. In Asian markets, The Nikkei Index fell -464 points to 39,599, the Shanghai Index fell -18 points to 2,964, and the Hang Seng Index gained 218 points to 17,635. In Europe, the German DAX is up 239 points to 18,411, while the FTSE 100 gains 63 points to 8,219. In a surprise move in China, the PBOC cut the 7-day OMO reverse repo rate by 10bps from 1.8% to 1.7% this morning (July 22nd), followed by a 10bp cut for both 1-year and 5-year LPR. The move is a dovish surprise. Offshore yuan turns softer as Chinese banks lower lending rates for the first time since August following an unexpected PBOC rate cut.

• The Dow Jones Industrial Average fell -144.28 points, or 0.93%, to 40,287.53.
• The Nasdaq Composite sunk -144.28 points, or 0.81%, to 17,726.94.
• The Russell 2000 Index declined -13.94 points, or 0.63% to 2,184.35.

• Earnings After the Close: AGNC AGYS ARE BOKF BRO CADE CALX CATY CCK CDNS CLF ELS HSTM KREF MEDP NBTB NUE RBB RLI SMBK SSD TRST WACH WRB ZION

• Estee Lauder (EL) downgraded to Market Perform from Strong Buy at Raymond James.
• Goodyear Tire & Rubber Co (GT) said it signed a definitive agreement to sell its off-the-road tire business to Yokohama Rubber Company for $905 million in cash; Goodyear will retain its business providing off-road tires for U.S. military and defense applications, it said; the transaction is expected to close by early 2025.
• RH (RH) mentioned positively in Barron’s noting shares have fallen 28% over the past year, while working through the excesses of the Covid era. However, Stifel analyst W. Andrew Carter said the bad news seems reflected in the stock, and sales could increase by 8.6% annually from fiscal 2023 through fiscal 2026.

• Boeing (BA) said it expects delayed suppliers to catch up on parts that have slowed production of its 787 jets to below a rate of five a month, as the U.S. planemaker works to restore output of two key commercial programs by the year’s end – Reuters.
• C.H. Robinson (CHRW) upgraded to Buy from Underperform at Bank America and raised tgt to $99 from $76 and downgraded Schneider National (SNDR) to Underperform from Neutral with $23 tgt.
• Clearwater Paper (CLW) signed a deal to sell its tissue business to Italian multinational tissue-paper maker Sofidel for $1.06 billion. Clearwater said the planned sale concludes its review of strategic options for the business and supports its transformation to become an independent supplier of paperboard to North American converters.
• Enovix (ENVX) initiated at Buy and $25 tgt by Benchmark.
• Ryanair (RYAAY) cuts Q2 forecast, now forecasts fares ‘materially lower’; still forecasts customers 198M to 200M, est. 199.06M; Q1 rev. Eu3.63B, vs. est. Eu3.92B; Q1 profit after tax eu360M, est. Eu512M.
• Tellurian (TELL) shares jumped over 60% early after Woodside Energy said it intends to acquire Tellurian for around $900 million. Australia-based Woodside on Monday said it agreed to buy Tellurian and its liquefied natural gas development in the southern U.S. for $1.00 per share in cash.
• Williams Cos. (WMB) said it will start building its delayed Louisiana Energy Gateway natural gas pipeline in the coming weeks.

• Fiserv (FI) upgraded to Overweight from Equal Weight at Morgan Stanley.
• Globe Life (GL) said an audit committee completed review of allegations by two short sellers; the independent review did not identify any matters requiring adjustments to Co’s previously issued financial statements.
• Truist Financial (TFC) Q2 EPS $0.91 vs. est. $0.82; Q2 tangible book value per share $42.71; announced up to $5 billion multi-year share repurchase authorization with buybacks expected to commence in 3q24.
• The Federal Reserve fined Green Dot Corp. (GDOT) $44 million late Friday over the firm’s handling of prepaid debit cards and tax preparation payment services.  The Fed said on Friday that Green Dot violated consumer laws with its marketing practices. The company also has a “deficient consumer compliance risk management program.

• Microsoft (MSFT) on Saturday said 8.5M Windows devices had been affected by the global outage caused due to a faulty update provided by cybersecurity firm CrowdStrike (CRWD), an event that crippled several industries worldwide. According to the tech giant, that number represented less than one percent of all Windows machines. A defect in a CrowdStrike (CRWD) Falcon content update for Windows hosts led to the so-called “blue screen of death” on several Windows systems across the globe on Friday.
• Onsemi (ON) announced it has signed a multi-year deal with Volkswagen Group to be the primary supplier of a complete power box solution as part of its next-generation traction inverter for its Scalable Systems Platform (SSP).