Early Look

Friday, June 16, 2023

U.S. futures are flat, but remain on track for one of the biggest weekly advances of the year, as central bank meetings failed to dent investor euphoria, keeping the YTD rally alive. The unstoppable upside momentum in U.S. stocks continued yet again on Thursday as the S&P 500 Index made it a 6^th straight day of gains, topping the 4,400 level for another 52-week high into quadruple option expiration on Friday. Stocks began Thursday on a down note, but any dip has been met with aggressive buying for months now as the Nasdaq Composite remains on track for an 8^th straight weekly advance. Markets refuse to believe the Fed will raise rates in future meetings after holding rates steady on Wednesday. Meanwhile the People’s Bank of China lowered the rate on its one-year loans by 10 basis points to 2.65% after official data showed economic activity weakened in May. The euro climbed after the European Central Bank lifted interest rates by another quarter point. In Asian markets, The Nikkei Index rose 220 points to 33,706, the Shanghai Index gained 20 points to 3,273, and the Hang Seng Index jumped 211 points to settle back above 20K at 20,040. In Europe, the German DAX is up about 30 points to 16,319, while the FTSE 100 rises 25 points to 7,652. European stocks on course for the largest weekly gain in two months after central bank decisions did little to dent investor sentiment this week.

Market Closing Prices Yesterday

• The S&P 500 Index gained 53.25 points, or 1.22%, to 4,425.84.
• The Dow Jones Industrial Average rose 428.73 points, or 1.26%, to 34,408.06.
• The Nasdaq Composite jumped 156.34 points, or 1.15%, to 13,782.82.
• The Russell 2000 Index advanced 15.18 points, or 0.81% to 1,889.28.

Economic Calendar for Today

• 10:00 AM ET                University of Michigan Sentiment
• 10:00 AM ET                University of Michigan Sentiment Inflation Expectations
• 1:00 PM ET                   Baker Hughes Weekly rig count data
• Paris Airshow for 2023 kicks off on 6/18
• S&P June Quarterly Rebalance, 6/16

World News

• The Bank of Japan (BoJ) BOJ maintained short term interest rate target at -0.1%; maintained 10Y JGB yield target around zero %; maintained target bands on 10Y JGBs at up/down 0.5%; decision on YCC was unanimous; economy is picking up and likely will continue recovering moderately; CPI likely to slow pace of increase towards middle of current fiscal year.
• U.S. April net overall capital flow +$48.4B vs +$129.0B in March (previous +$56.7B); U.S. April net official capital flow +$45.9B vs +$40.4B in March; China’s U.S. Treasury securities holdings $869B in April vs $869B in March.

Sector News Breakdown

Consumer

• Amazon’s (AMZN) $1.7 billion acquisition of iRobot (IRBT) was cleared by the UK’s antitrust regulator this morning.
• DraftKings Inc. (DKNG) said it delivered a letter to both the Non-Executive Chairman and Chief Executive Officer of PointsBet Holdings Ltd. setting forth an indicative offer to acquire its U.S. business in an all-cash transaction with a purchase price of $195 million.

Energy, Industrials, and Materials

• Cabot (CBT) withdraws FY23 EPS guidance; said sales volumes in its performance chemicals business dropped 13% in April and May compared with the same period in 2022.
• Coterra Energy (CTRA) selected Talos Energy (TALO) finance head Shannon Young as its new CFO effective September 30, succeeding Scott Schroeder, who is retiring.
• Enovix Corp (ENVX) achieved its Q2 forecast of 18,000 units manufactured out of its fab1 location in Fremont; said it expects to exceed its quarterly guidance for number of units produced, with more than two weeks remaining in quarter.
• Nucor (NUE) said it sees Q2 EPS $5.45-$5.55, below est. $5.24; said it expect earnings for steel mills segment to improve in Q2 of 2023 as compared to Q1; said steel products segment is expected to deliver strong results in Q2 of 2023 that will be comparable to Q1.
• Virgin Galactic (SPCE) sets first commercial flight as soon as June 27; second commercial spaceflight, ‘Galactic 02,’ will follow in early August 2023.
• The U.S. Department of Agriculture (USDA) estimated 57% of the domestic corn crop and 51% of soybeans are dealing with drought conditions, up 12% from last week for both, as the trouble spreads in the Midwest and Plains (news sent prices higher on Thursday).

Financials

• BlackRock (BLK) has filed paperwork with the SEC to establish a spot bitcoin ETF to be known as the iShares Bitcoin Trust; the filing names Coinbase (COIN) as the custodian for the ETF’s bitcoin holdings.
• Regulators are seeking documents related to Goldman Sachs’s (GS) role in buying Silicon Valley Bank’s securities portfolio while it was working on its doomed capital raise. The Justice Department has also subpoenaed Goldman – WSJ reported.
• SoFi Technologies (SOFI) downgraded to Neutral from Overweight at Piper saying some outperformance is warranted, though the rise in interest rates over the last two months will be an incremental near-term headwind.

Healthcare

• Clene (CLNN) said it intends to offer and sell common stock and warrants to purchase shares of common stock in a public offering.
• Lexicon (LXRX) said late Thursday that the US FDA has approved its oral tablet Inpefa to reduce the risk of heart failure.
• Mustang Bio (MBIO) announces final results from follicular lymphoma cohort of single-institution phase 1/2 clinical trial of mb-106, cd20-targeted autologous car t therapy; said initial data from ongoing multicenter trial expected shortly; 95% overall response rate (ORR) and 80% complete response rate across all patients in study.

Technology, Media & Telecom

• Adobe (ADBE) raised its full-year revenue and profit outlooks on optimism that generative AI features will spur demand for its software; Q2 adjusted EPS $3.91 vs. est. $3.79; Q2 revs rose 9.9% y/y to $4.82B vs. est. $4.77B; Q2 subscription revs rose 11% y/y to $4.52B; sees Q3 revs $4.83B-$4.87B vs. est. $4.86B; sees Q3 Digital Media revs $3.55B-$3.57B vs. est. $3.53B.
• Intel (INTC) said it plans to invest up to $4.6B to set up a semiconductor assembly and test facility near Wrocław, Poland.
• Micron (MU) plans to invest ~$604 million over the next few years in its chip packaging facility in the Chinese city of Xian, and is also nearing a deal to commit ~$1 billion to build a similar factory in India, according to media reports.
• Millicom (TIGO) announces that discussions with Apollo Global Management and Claure Group regarding a potential acquisition of all outstanding shares in Millicom have terminated. These discussions were referenced by Millicom in a press release it issued on January 25, 2023.
• Oracle (ORCL) lays off hundreds, rescinds job offers, and cuts open positions in its $28 billion Cerner health unit after troubles with a massive government contract – Bloomberg.
• Squarespace (SQSP) said it will buy the assets of Google Domains, which will be shutting down after a transition period.