Early Look

Thursday, June 20, 2024

U.S. stocks return from the mid-week holiday to higher prices, as Nasdaq futures are rising over 0.65% of 130 points topping 20,000 for the first time ever, getting another boost on “AI” growth hopes and semiconductors. On Tuesday, the Nasdaq and S&P 500 each closed at new records (7^th straight record high for the Nasdaq and 31^st of 2024 for the S&P) as Nvidia overtakes Microsoft as largest company. Investors will now shift focus to more economic data later in the day including building permits and housing starts number for May, jobless claims for the week ended June 15 and the Philly Fed Business Index. In Asian markets, The Nikkei Index rose 62 points to 38,633, the Shanghai Index fell -12 points to 3,005, and the Hang Seng Index dropped -95 points to 18,335. In Europe, the German DAX is up 110 points to 18,178, while the FTSE 100 is up 10 points to 8,215. Central Banks in action overnight as the Swiss National bank cuts rates for a 2^nd straight meeting while Brazil and Norway keep rates steady. Bitcoin prices rise over 1.5% nearing $66,000 after a bullish Bernstein outlook. The U.S. dollar, Treasury yields, and gold prices are all edging higher. Momentum remains a beats to the upside but interesting to note the last few weeks of outperformance has been on very market breadth, with new 52-week lows outpacing 52-week highs as the majority of the rally has been focused on a few hefty stock market heavyweights (AAPL, NVDA, GOOGL, META, AVGO, MSFT etc.)

While markets remain in rally mode, especially in the tech heavy Nasdaq which just posted its 7^th straight record closing high on Tuesday, @jasongoepfert noted: “Here is every time in the past ~30 years the Nasdaq closed at a 3-year high for 7 days in a row. It also shows the number of days there were more stocks at new highs than lows during the streak. Notice anything different about this time? 12/03/96…7 times, 07/11/97…7 times, 07/16/98…7 times, 01/11/99…7 times, 11/08/99…7 times, 12/27/99…7 times, 02/23/15…7 times, 02/15/17…7 times, 12/20/19…7 times, 11/05/21…7 times, 06/18/24…1 time”.  (as he notes every time breadth was positive except for this streak).

• The Dow Jones Industrial Average rose 56.76 points, or 0.15%, to 38,834.86.
• The Nasdaq Composite edged higher 5.21 points, or 0.03%, to 17,862.23.
• The Russell 2000 Index advanced 3.22 points, or 0.16% to 2,025.23.

• 8:30 AM EST                Continuing Claims…est. 1.805M
• 8:30 AM ET                  Current Account for Q1…est. (-$206.4B)
• 8:30 AM ET                  Housing Starts M/M for May…est. 1.37M
• 8:30 AM ET                  Building Permits M/M for May…est. 1.45M
• 8:30 AM ET                  Philly Fed Business Survey for June…est. 5.0 (prior 4.5)
• 10:30 AM ET                Weekly EIA Natural Gas Inventory Data
• 11:00 AM ET                Weekly DOE Inventory Data
• 4:00 PM ET                   Fed’s Barkin Speaks on Economic Outlook

• Earnings After the Close: SWBI

• The Swiss National Bank (SNB) cut interest rates for the second time in a row, cutting its policy rate by 25 basis points to 1.25%, as expected by most following a similar move in March.
• Brazil’s central bank paused its easing cycle Wednesday keeping its Selic benchmark interest rate at 10.5% following seven consecutive cuts since August, when the policy rate was 13.75%.
• Norway’s central bank held its policy interest rate at a 16-year high of 4.50% on Thursday, as expected by analysts, and pushed back its prediction for a rate cut to 2025 from September.
• Foreclosure filings are rising in Texas and Florida as property taxes and insurance costs increase. It’s a warning sign that homeowners are starting to feel distress, per Bloomberg.

• KB Homes (KBH) Q2 EPS $2.15 vs. est. $1.80 as revs fell -3.1% y/y to $1.71B vs. est. $1.66B; said Q2 Homes delivered were 3,523, down -3.9% y/y (compared to 3,666) and the average selling price increased to $483,000, up from $479,500; said Q2 housing gross margin 21.1% vs. 21.1% y/y and net orders rose 1.5% y/t to 3,997; raises lower end of FY24 revenue outlook to $6.7B-$6.9B from prior $6.50B-$6.90B.
• Steelcase (SCS) Q1 adjusted EPS $0.16 vs. est. $0.10; Q1 revs $727.3M vs. est. $729.12M; sees Q2 adjusted EPS $0.36-$0.40 vs. est. $0.30 and revs $850M-$875M vs. est. consensus $865.22M; says has increased confidence of achieving FY25 targets.

• Spirit AeroSystems (SPR) downgraded to Hold from Buy at Benchmark.
• Virgin Galactic (SPCE) announces new research flight contract with repeat customer; mission to take place within first year of delta commercial service, which remains on track to commence in 2026.

• LendingTree (TREE) announces the promotion of Jason Bengel to CFO following the departure of Trent Ziegler on August 9^th and raises Q2 revenue view above previous guidance of $175M-$190M (est. $184.5M), while reaffirms Q2 variable marketing margin and adjusted EBITDA outlook of $70M-$76M and $22M-$26M, respectively.

• DexCom (DXCM) will showcase its focus on Dexcom CGM use among people with Type 2 diabetes and the launch of the Omnipod 5 Automated Insulin Delivery System with Dexcom G7 at the 84th Scientific Sessions of the American Diabetes Association.
• Insulet (PODD) announced that Omnipod 5, compatible with both Dexcom G6 (DXCM) and Abbott (ABT) FreeStyle Libre 2 Plus continuous glucose monitor sensors, is now fully available in the U.K. and the Netherlands for individuals aged two years and older with type 1 diabetes.
• PTC Therapeutics, Inc. (PTCT) shared interim results from the Phase 2 PIVOT-HD study of PTC518 in Huntington’s disease (HD) patients. At Month 12, PTC518 treatment resulted in dose-dependent lowering of mutant huntingtin protein in the blood and cerebrospinal fluid (CSF) in the interim cohort of patients. In addition, favorable trends were demonstrated on several relevant HD clinical assessments.

• Accenture (ACN) Q3 adjusted EPS $3.13 vs. est. $3.15; Q3 revs $16.5B vs. est. $16.53B; Q3 Operating margin 16% vs. 14.2% y/y; now sees FY 24 revs up 1.5%-2.5% in local currency and FY EPS $11.85-$12.00 below prior view $11.97-$12.20 and still sees FY 24 FCF $8.7B-$9.3B.
• Bilibili (BILI) was upgraded to Overweight from Neutral at JPMorgan with $21 tgt as expects Bilibili’s revenue growth to accelerate to 20% in 2024 from 3% in 2023, sees “significant upside” to consensus earnings forecasts.
• Dell In. (DELL) and Super Micro (SMCI) shares rise overnight after AI startup xAI’s founder Elon Musk says SMCI and DELL are supplying server racks for co’s supercomputer. Dell CEO Michael Dell says in a post on X co is building “AI factory” with Nvidia NVDA for xAI, supplying half of the racks for the AI startup. Musk has told investors xAI is planning to build a supercomputer to power the next version of its AI chatbot Grok, according to a report by the Information in May.
• On Semiconductor (ON) announced plans to establish a vertically integrated silicon carbide, or SiC, manufacturing facility in the Czech Republic for up to $2B.
• Trump Media & Technology (DJT) announced that on June 18, the SEC has declared effective the company’s registration statement on Form S-1, related to the resale by certain selling securityholders of certain shares and warrants issued by and issuable from the company.