Early Look

Monday, March 6, 2023

Futures	Up/Down	%	Last
Dow	-31.00	0.09%	33,383
S&P 500	-3.25	0.09%	4,046
Nasdaq	-6.50	0.05%	12,305

 

 

U.S. stock futures looking at a muted open, slipping after last week’s strong gains into a heavy week of key economic data and Fed headlines as the semi-annual testimony from Federal Reserve Chair Jerome Powell and February U.S. nonfarm payrolls data will be key for the dollar’s direction this week. Powell testifies on the economy and monetary policy on Tuesday and Wednesday, just a few days ahead of the payrolls report, which could lift U.S. Treasury yields and the dollar if average earnings beat forecasts as it could trigger a further increase in Fed rate rise expectations. Over the weekend, China set a GDP growth target of around 5%, which is lower than market expectations, with a CPI target of ~ 3%; and aiming to keep jobless rate ~ 5.5%. WTI crude for April delivery traded 1.5% lower at $78.49 a barrel following the modest China GDP growth targets provided this weekend; watch potential weakness in other commodity sectors. In Asian markets, The Nikkei Index rose 310 points to 28,237, the Shanghai Index fell -6 points to 3,322, and the Hang Seng Index rose 35 points to 20,603. In Europe, the German DAX is up about 40 points to 15,620, while the FTSE 100 is down about -25 points to 7,917. A generally strong week last week that saw the S&P 500 rise 1.9%, the Nasdaq 2.5% and Dow 1.75%.

 

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 64.29 points, or 1.61%, to 4,045.64.

·     The Dow Jones Industrial Average rose 387.40 points, or 1.17%, to 33,390.97.

·     The Nasdaq Composite surged 226.02 points, or 1.97%, to 11,689.01.

·     The Russell 2000 Index advanced 25.60 points, or 1.35% to 1,928.26.

 

Economic Calendar for Today

·     10:00 AM ET                Durable Goods M/M for January

·     10:00 AM ET                Factory Orders M/M for January

 

Earnings Calendar:

·     Earnings Before the Open: BSDX CECO CIEN FSTR PASG QSI QTRX RIDE

·     Earnings After the Close: ANIK AVAV CARA CHRS CVGI CVGW CYCC DAVE DOMO EARN GAIA GWRE IMRX IPI OCUL PX RXST TDUP ZYXI

 

Other Key Events:

·     Cowen Healthcare Conference, 3/6-3/8, in Boston, MA

·     JMP Securities Technology Conference, 3/6 in San Francisco, CA

·     JPMorgan Global Emerging Markets Corporate Conference, 3/6-3/8, in Miami, FL

·     JPMorgan Global High Yield and Leveraged Finance Conference, 3/6-3/8, in Miami, FL

·     Optical Fiber Communications Conference, 3/7-3/9, in San Diego, CA

·     China Imports and Exports for February

 

 

Macro	Up/Down	Last
Nymex	-1.21	78.47
Brent	-1.30	8453
Gold	-0.00	1,854.60
EUR/USD	-0.0003	1.0632
JPY/USD	0.19	136.05
10-Year Note	-0.048	3.915%

 

 

World News

·     S&P Index changes announced Friday:

·     S&P MidCap 400 constituent Fair Isaac & Co Inc. (FICO) will replace Lumen Technologies Inc. (LUMN) in the S&P 500, and Lumen Technologies will replace Bed Bath & Beyond Inc (BBBY) in the S&P SmallCap 600. Valaris Limited (VAL) will replace Fair Isaac & Co in the S&P MidCap 400.

·     Axalta Coating Systems (AXTA), Autoliv (ALV), Starwood Property Trust (STWD), SouthState (SSB), Chord Energy (CHRD), Advanced Drainage Systems (WMS), Hilton Grand Vacations (HGV), Hertz Global Holdings (HTZ), Aramark (ARMK) and US Foods Holding (USFD) will replace SL Green Realty (SLG), Cracker Barrel Old Country Store (CBRL), ViaSat (VSAT), Washington Federal (WAFD), Dycom Industries (DY), Kennametal (KMT), JBG Smith Properties (JBGS), Pebblebrook Hotel Trust (PEB), Hanesbrands (HBI) and Tandem Diabetes Care (TNDM) in the S&P MidCap 400.

·     All constituents being removed from the S&P MidCap 400 will be added to the S&P SmallCap 600 replacing The Pennant Group (PNTG), Unisys (UIS), Organogenesis Holdings (ORGO), Surmodics (SRDX), Hersha Hospitality Trust (HT), Park Aerospace (PKE), Granite Point Mortgage Trust (GPMT), Industrial Logistics Properties Trust (ILPT), OptimizeRx (OPRX), and ZimVie (ZIMV).

·     Kennedy-Wilson Holdings (KW), Atlantic Union Bankshares (AUB), NexTier Oilfield Solutions (NEX) and Radian Group (RDN) will replace WW International (WW), Franklin Street Properties (FSP), Motorcar Parts of America (MPAA) and Universal Electronics (UEIC) respectively in the S&P SmallCap 600 at the open on 3/20.

 

Sector News Breakdown

Consumer

·     Boot Barn Holdings Inc. (BOOT) mentioned positively in Barron’s calling it the undisputed leader in the market for cowboy fashion. The company is one of the most attractive names in retail, Hood River Small-Cap Growth co-manager Swank told Barron’s.

·     LGI Homes (LGIH) announced it closed 506 homes in February 2023. As of February 28, 2023, the Company had 97 active selling communities.

·     Tesla Inc (TSLA) has cut prices on its two most expensive electric vehicles in the United States, according to the company’s website; Tesla’s website showed it had cut prices on both versions of its Model S by $5,000. The basic version of Model S was cut by 5% to $89,990, while the price of the performance, Plaid variant was cut by 4% to $109,990.

 

Energy, Industrials and Materials

·     Valaris (VAL) to replace FICO (FICO) in S&P 400 at open on 3/20.

·     Barron’s noted rising farmland prices have presented owners with big gains. Another beneficiary is Farmland Partners Inc. (FPI), a REIT that has returned 82% cumulatively over the past three years, more than double that of the S&P 500 index. Companies like Deere & Co. (DE) and AGCO Corp. (AGCO) have also rallied as they supply new machinery and technology to boost efficiencies, according to Barron’s.

·     A second Norfolk Southern (NSC) train derailed in Springfield, Ohio over the weekend, though no hazards were on board of the 21-car derailment.

·     NGL Energy Partners (NGL) announced the signing of two definitive agreements to sell all of its marine assets for $111.65M in cash in the aggregate.

 

Financials

·     FICO (FICO) to replace Lumen (LUMN) in S&P 500 at open on 3/20.

·     Chubb Ltd. (CB) mentioned positively in Barron’s noting shares trade at less than 12 times estimated 2023 earnings, a reasonable valuation for the company which leads in property and casualty insurance.

·     More than 40% of all US mortgages were originated in 2020 or 2021, when the pandemic drove borrowing costs to historic lows and triggered a refinancing boom, according to data from Black Knight. That’s good news for all the homeowners who locked in cheap loans – Bloomberg.

·     Silvergate Capital Corp. (SI) discontinued the payments network that has served as a vital hub for investors in the cryptocurrency industry, days after the firm raised questions about its own viability – Bloomberg.

·     Wedbush downgrades Silvergate Capital (SI) to Underperform, lowers price target to $4.

 

Healthcare

·     Esperion Therapeutics (ESPR) announced the full results from the CLEAR Outcomes trial, a global study of nearly 14,000 patients with or at risk for cardiovascular disease who were unable to maximize or tolerate a statin. The study showed that Nexletol significantly reduced the risk of hard MACE-4 and MACE-3 by 13% and 15%, respectively, and significantly reduced the risk of heart attack and coronary revascularization by 23% and 19%, respectively, compared to placebo.

·     Incyte Corp. (INCY) shares fell after saying it would discontinue its Phase 3 LIMBER-304 trial following an interim analysis that indicated the myelofibrosis study was unlikely to meet its primary endpoint.

·     Merck (MRK): FDA approves intramuscular administration for Merck’s MMRV family of vaccines: M-M-Rii (measles, mumps, and rubella virus vaccine live), varivax (varicella virus vaccine live), and proquad (measles, mumps, rubella, and varicella virus vaccine live).

·     Kala Pharmaceuticals (KALA) files $350M mixed securities shelf.

·     Vir Biotechnology (VIR) upgraded the biotech to overweight from neutral at JPMorgan on the potential of the company’s flu shot and HBV therapies.

 

Technology, Media & Telecom

·     Apple Inc. (AAPL) initiated as new buy at Goldman Sachs with $199 tgt saying the iPhone maker’s growing installed base of users underpins the “Apple-as-a-Service” opportunity.

·     Lumen (LUMN) to replace Bed Bath & Beyond (BBBY) in S&P 600 at open on 3/20.