Early Look

Wednesday, July 26, 2023

Futures	Up/Down	%	Last
Dow	-77.00	0.22%	35,527
S&P 500	-7.25	0.16%	4,588
Nasdaq	-45.50	0.29%	15,627

 

 

U.S. stocks are pointing to a lower open as the Dow Jones Industrial Average 12-day win streak is in jeopardy after shares of MSFT slide on mixed quarterly results and as investors express caution ahead of key catalysts today. Stocks rose again on Tuesday as the S&P 500 Index closed at a fresh 15-month high ahead of big earnings for the remainder of the week and three central bank policy meetings, kicking off with the FOMC later this afternoon (ECB tomorrow and the BoJ Friday). Overnight, WSJ reported Nick Timiraos (also coined “the Fed whisperer”) said “economic growth has likely been too firm in recent months for Fed Chair Jerome Powell to signal that Wednesday’s increase in the Fed’s benchmark short-term rate—to a 22-year high—will be the last of the current tightening cycle.” The comments come ahead of today’s FOMC policy meeting at 2:00 PM ET where another rate hike is widely anticipated to the 5.25%-5.5% range. https://tinyurl.com/2phje4z7 . Earnings reports expected this morning from likes of Dow components Boeing (BA) and Coca-Cola (KO) as well as Union Pacific (UNP) in rails and AT& T (T) in Telecom. On Tuesday, crude oil, copper, and gold all advanced, with the Bloomberg Commodity Spot Index extending its highest levels since April, helped by other positive signs in the economy. In Asian markets, The Nikkei Index slipped -14 points to 32,668, the Shanghai Index dipped -8 points to 3,223, and the Hang Seng Index fell -69 points to 19,365. In Europe, the German DAX is down -115 points to 16,094, while the FTSE 100 slides -42 points to 7,648.

 

Market Closing Prices Yesterday

·     The S&P 500 Index advanced 12.82 points, or 0.28%, to 4,567.46.

·     The Dow Jones Industrial Average rose 26.83 points, or 0.08%, to 35,438.07.

·     The Nasdaq Composite gained 85.69 points, or 0.61%, to 14,144.56.

·     The Russell 2000 Index edged higher 0.43 points, or 0.02% to 1,966.11.

 

Economic Calendar for Today

·     7:00 AM ET             MBA Mortgage Applications Data

·     10:00 AM ET           New Home Sales M/M for June

·     10:30 AM ET           Weekly DOE Inventory Data

·     2:00 PM ET              FOMC rate decision, expected to raise by 25-bps to 5.25%-5.5%

·     2:30 PM ET              Fed Chair Holds Press Conference Following FOMC Meeting

 

Earnings Calendar:

·     Earnings Before the Open: ADP AMG APH BA BOKF CFFN CME COOP DGX EEFT FI FTV GD GPI HES HESM HLT KO LAD MHO MNRO MPX NAVI OC ODFL OMF OTIS PAG PB PRG PROV R RES RPM SLAB SLGN T TDY TEL TMHC TMO TNL UNP USAP VIRT WNC

·     Earnings After the Close: AGR AIN ALGN AM AMP AR ASGN ATEN ATNI AWK CASH CBAN CCS CHDN CHE CLB CMG CNMD CSL EBAY EGBN ENVX EQC ESI ESRT EW FLEX FTAI GGG GL GLAD GSHD GTY HBNC HLX HP IEX INBK INVH IRT LADR LC LHX LRCX LSTR LXU MAA MAT MC META MOH MXL MYRG NOV NOVA NOW NTGR OBK OII ORLY PEGA PI PLXS PPC PTC PTEN QS RBBN RJF ROL SEIC SLM STC STX SUI TCBK TER TNET TROX TYL UDR URI VICI VKTX VMI VSTO WH WU

 

 

Macro	Up/Down	Last
Nymex	-0.79	78.84
Brent	-0.77	82.87
Gold	7.90	1,971.60
EUR/USD	0.0025	1.1078
JPY/USD	-0.47	140.42
10-Year Note	-0.017	3.895%

 

 

Sector News Breakdown

Consumer

·     Cal-Maine (CALM) Q4 EPS $2.27 vs. est. $2.15; Q4 revs $688.7M vs. est. $605.4M; cuts dividend to $0.76; said Q4 conventional egg net average selling price per dozen was $2.038 vs. $2.108 y/y and $2.739 for FY23. However, conventional egg selling prices declined significantly during the latter part of the fourth quarter of fiscal 2023.

·     Hilton (HLT) Q2 adj EPS $1.63 vs. est. $1.58; Q2 revs $2.66B vs. est. $2.58B; Q2 system-wide comparable RevPAR increased 12.1%, on a currency neutral basis vs. Q2 of FY22; sees FY23 adjusted EPS $5.93-$6.06 vs. consensus $5.90; sees FY23 system-wide comparable RevPAR, on a currency neutral basis, up 10%-12% compared to 2022.

·     Robert Half (RHI) Q2 EPS $1.00 vs. est. $1.14; Q2 revs $1.639B vs. est. $1.69B

 

Energy

·     EQT Corporation (EQT) Q2 adj EPS loss (-$0.17) vs. est. loss (-$0.25); Q2 revs $1.019B vs. est. $1.03B; Q2 production of 471 Bcfe and capital expenditures, excluding noncontrolling interests, of $470M, in-line with the midpoint of respective guidance ranges; Q2 cash operating expenses of $1.37 per Mmcfe, near the low-end of guidance.

·     Matador Resources (MTDR) Q2 adj EPS $1.42 vs est. $1.31, adj EBITDA $423.3Mm vs est. $411.83Mm; remains on track to produce over 140,000 BOE per day during Q4 2023 which would result in 40% production growth during 2023; increasing midpoint of 2023 total Nat gas production guidance to 117.0B cubic feet.

·     Nabors (NBR) Q2 adj EBITDA $235.023Mm vs est. $236.03Mm on revs $767.067Mm vs est. $773.23Mm.

·     NexTier Oilfield Solutions (NEX) Q2 adj EPS $0.68 vs. est. $0.63; Q2 revs $945.1M vs. est. $954.74M; Adjusted EBITDA of $233.9M, compared to $227.6M prior quarter.

·     Weatherford (WFRD) Q2 adj EBITDA $291Mm vs est. $265.15Mm on revs $1.274B vs est. $1.235B; adj EBITDA mgn 22.8%; expects 2023 adj FCF to exceed $400Mm for year.

 

Financials

·     Visa Inc. (V) Q3 adjusted EPS $2.16 vs. est. $2.12; Q3 revs $8.1B vs. est. $8.06B; Q3 transactions processed $54B and Q3 cross-border volumes at constant currency up 17%; qtrly payments volume on which fiscal Q3 service revenues are recognized, increased 10% y/y.

·     Banc of California (BANC) & PacWest (PACW) announce transformational merger & $400M equity raise from Warburg Pincus & Centerbridge; PacWest holders will receive 0.6569 of a share of BANC common stock for each share of PACW common stock, which values PACW at $9.60 per share. https://tinyurl.com/5x4up696

·     Chubb Inc. (CB) Q2 core EPS $4.92 vs. est. $4.41; consolidated net premiums written of $11.95B, up 16.1%, or 16.8% in constant dollars, with P&C up 10.4% and combined ratio of 85.4%; YTD net Income Per Share of $8.84, up 20.3%, and Record Core Operating Income Per Share of $9.32.

·     CoStar Group (CSGP) Q2 adj EPS $0.31 vs. est. $0.30; Q2 revs $606M vs. est. $607.2M; raises FY23 EPS view to $1.24-$1.26 from $1.21-$1.24 but lowers FY23 revenue view to $2.45B-$2.46B, below consensus $2.48B; sees year adj EBITDA $510M-$520M.

·     Highwoods Properties (HIW) Q2 FFO/shr $0.94 vs est. $0.94; guides FY FFO/shr $3.69-3.81 vs est. $3.78.

·     UMB Financial (UMBF) Q2 NII $225.6Mm vs est. $243.82Mm, deposit balance $33.5B vs $31.9B at March 31, 2023.

·     Wells Fargo (WFC) board of directors also authorized a new common stock repurchase program of up to $30 billion and boosted its dividend by $0.05 to $0.35.

 

Healthcare

·     Cigna (CI) under pressure as federal lawsuit alleges that health insurance giant used a computer algorithm to automatically reject hundreds of thousands of patient claims without examining them individually as required by California law.

·     Teladoc (TDOC) Q2 adj EBITDA $72.155Mm vs est. $64.57Mm on revs $652.406Mm vs est. $649.19Mm; sees Q3 revs $650-675Mm vs est. $663.11Mm, adj EBITDA $72-82Mm vs est. $75.43Mm; sees FY $2.6-2.675B vs est. $2.625B and adj EBITDA $300-325Mm vs est. $300.29M.

·     Thermo Fisher (TMO) Q2 adj EPS $5.15 vs. est. $5.42; Q2 revs $10.69B vs. est. $10.98B; cuts FY23 adjusted EPS view to $22.28-$22.72 from $23.70 and lowers FY23 revenue view to $43.4B-$44B from $45.3B, consensus $45.21B.

·     United Health Services (UHS) Q2 adj EPS $2.53 vs. est. $2.43; Q2 revs $3.55B vs. est. $3.5B; raises low end of FY23 adj EPS view to $9.85-$10.50 from $9.50-$10.50 (est. $10.18) and boosts FY23 revenue view to $14.13B-$14.33B from $14.04B-$14.31B (est. $14.13B).

 

Industrials & Materials

·     Canadian National Rails (CNI) Q2 EPS C$1.76 vs. est. C$1.82; Q2 revs C$4.05B vs. est. C$4.2B; updating its FY outlook as expects flat to slightly negative year-over-year growth in adjusted diluted eps in 2023.

·     Crane Inc. (CR) Q2 adj EPS $1.10 vs. est. $0.93; Q2 revs $510M vs. est. $512.84M; boosted FY23 adj EPS view to $3.80-$4.10 from $3.60-$3.90 and guides FY sales growth of approximately 6% (vs. prior 5%) and core sales growth of approximately 5% to 7% (vs. prior 4% to 6%).

·     Kaiser Aluminum (KALU) Q2 adj EBITDA $64Mm vs est. $48.33Mm on revs $814Mm vs est. $797.27Mm, adj EBITDA mgn 16.8%; says expects Q3 adj EBITDA and adj EBITDA mgn to be in line with adjusted Q1 results; says expects demand in commercial aerospace to continue to strengthen and approach pre-pandemic levels by end 2023.

·     Rio Tinto (RIO) cut its interim dividend to $1.77 from $2.67 prior after reporting its lowest first-half underlying earnings in three years; reports lower commodity prices during the six months ended June 30.

 

Technology, Media & Telecom

·     Alphabet (GOOGL) Q2 EPS $1.44 vs. est. $1.34; Q2 revs $74.6B vs. est. $72.82B; 2Q google cloud revs $8.03b vs. est. $7.83B, YouTube ads revs $7.67B vs. est. $7.41B; CFO Ruth Porat will assume newly created role of president and CIO of alphabet and google, effective september 1.

·     Microsoft Corp. (MSFT) Q4 EPS $2.69 vs. est. $2.29; Q4 revs $56.2B vs. est. $49.86B; Q4 intelligent cloud revs $23.99B vs. est. $23.8B; Q4 more personal computing revs $13.91B vs. est. $13.58B; Server products and cloud services revenue increased 17%, driven by Azure and other cloud services revenue growth of 26%.

·     Texas Instruments (TXN) Q2 EPS $1.87 vs est. $1.76 on revs $4.53B vs est. $4.364; guides 3Q revs $4.36-4.74B vs est. $4.596B and EPS $1.68-1.92 vs est. $1.91; says like last quarter we experienced weakness across end markets except for automotive.

·     Snap Inc. (SNAP) Q2 adj EPS ($0.02) vs est. ($0.04) on revs $1.07B vs est. $1.05B, says rev growth remained challenged in Q2 as some headwinds from ad platform changes continued into qtr; qtrly daily active users +14% to 397Mm; sees Q3 revs -5% to 0% vs est. -0.3% and adj EBITDA loss $50Mm to $100Mm vs est. -$2.447Mm.

·     AT&T (T) Q2 adj EPS $0.63 vs. est. $0.60; Q2 revs $29.98 vs. est. $30.01B; Q2 adj EBITDA $11.1B, vs. est. $10.71B; Q2 mobility revenue $20.3B, wireless postpaid net adds +464,000, vs. est. +560,193; Q2 free cash flow $4.28 and still sees FY free cash flow at least $168.

·     Dish Network (DISH) jumps 12% after Bloomberg News reported that the company said it will start selling its premium wireless service on Amazon.com later this week.

·     Manhattan Associates (MANH) Q2 adj EPS $0.88 vs. est. $0.72; Q2 revs $231M vs. est. $216.69M; sees FY23 adjusted EPS $3.07-$3.11 vs. est. $2.88 and revs $886M-$894M vs. est. $862.71M.

·     PROS Holding (PRO) Q2 adj EPS ($0.01) vs est. ($0.06) on revs $75.8Mm vs est. $72.69Mm; sees Q3 revs $75-76Mm vs est. $74.98Mm and adj EPS $0.03-0.04 vs est. $0.02; sees FY revs $300-302Mm vs est. $297.33Mm.

·     Tenable Holdings (TENB) Q2 adj EPS $0.22 vs est. $0.13 on revs $195.036Mm vs est. $190.2Mm; sees Q3 revs $197-199Mm vs est. $195.88Mm and adj EPS $0.18-0.19 vs est. $0.16; sees FY revs $783-791Mm vs est. $780.99Mm and adj EPS $0.65-0.69 vs est. $0.59.