Morning Preview: March 08, 2022

Early Look

Tuesday, March 8, 2022

Futures

Up/Down

%

Last

Dow

80.00

0.24%

32,862

S&P 500

13.25

0.32%

4,211

Nasdaq

7.00

0.05%

13,327

 

 

S&P futures rebound amid a sharp recovery off overnight lows of 4,138.75, while Treasury yields rebound with the 10-yr at 1.845%, off overnight lows 1.76%, though fears of a global recession given surging economies and rising interest rates remain a concern. Reports that the EU was rolling out a plan to issue bonds on a grand scale to finance energy and defense to deal with the Ukraine situation helped alleviate some market concerns overnight. The S&P 500 plunged 3% for its worst day since October 2020, while the Dow Jones Industrial Average shed 800 points to join the S&P in correction territory for the first time in two years. It was an absolute brutal day on Wall Street Monday as the S&P 500 and Nasdaq Comp each post their worst days of 2022, as stocks end sharply lower as commodity prices surge as the Nasdaq 100 index falls 3.8% to close at lowest since May 19. The Nasdaq closes more than 20% from its Nov 19th record, confirming a bear market. 

 

The surge in commodity prices over the last year astounding, raising global inflation concerns, with most of the damage done over the last few weeks as: Heating Oil +102%, Wheat +92%, WTI Crude +81%, Natural Gas +79%, Aluminum +75%, Corn +38%, Cotton +33%, Lumber +31% and Palladium +25%. Russia invasion of the Ukraine enters its 13th day, while countries around the world continue to hit Russia with sanctions in response. Overall, World stocks held at a one-year low on Tuesday, while gold climbed above the key $2,000 level, as the prospect of a ban on Russian oil imports pushed up oil prices and raised concerns of soaring inflation and slowing economic growth.

 

In Asian markets, The Nikkei Index dropped -1.7% to 24,790, the Shanghai Index tumbled -2.35% to 3,293, and the Hang Seng Index declined -1.39% to 20.765. In Europe, the German DAX is up nearly 1% to 12,950 a day after falling into bear market territory (20% off all-time highs), while the FTSE 100 is little changed at 6,960. Bitcoin prices edged higher as investors braced for an executive order from President Joe Biden that would set out his administration’s strategy for dealing with cryptocurrencies in the broader financial markets. In corporate news, Apple (AAPL) is expected to introduce a 5G budget-friendly iPhone and a new iPad top expectation at its product event later today.

 

According to one twitter post last night after the straight day of selling pressure: to put the incredible gains of the last few years into perspective…a 20% decline would bring you back to 2021 levels, a 30% decline would bring you back to 2020 levels, a 40-60% decline would bring you back to 2019 levels, and a 70% decline would bring you back to 2017 levels.

 

Market Closing Prices Yesterday

·     The S&P 500 Index tumbled -127.98 points, or 2.96%, to 4,200.89

·     The Dow Jones Industrial Average fell -801.24 points, or 2.38%, to 32,813.56

·     The Nasdaq Composite plunged -482.48 points, or 3.62%, to 12,830.96

·     The Russell 2000 Index declined -49.54 points, or 2.48% to 1,951.36

 

Economic Calendar for Today

·     6:00 AM ET         NFIB Business Optimism for February

·     7:45 AM ET         ICSC Weekly Retail Sales

·     8:30 AM ET         International Trade for January

·     8:55 AM ET         Johnson/Redbook Weekly Sales

·     10:00 AM ET       Wholesale Inventory MoM for January

·     4:30 PM ET         API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: BNED, BW, CNTY, DKS, DM, HBIO, JW/A, KOPN, MTNB, NINE, PMTS, RAND, STIM, VTNR, WOOF

·     Earnings After the Close: ABM, ANIK, ATER, AVD, BMBL, CASY, CDMO, CIVI, DV, EVOK, FIGS FTEK, GWRE, HDSN, IVC, MDB, MNTX, SFIX, SNCR, SND, SUMO, WTI, YEXT

 

Other Key Events:

·     Apple (AAPL) to hold virtual product launch event

·     Citigroup Global Property CEO Conference, 3/6-3/9, in Hollywood, FL

·     Cowen 42nd Annual Healthcare Conference, 3/7-3/9, in Boston, MA

·     JMP Securities Technology Conference, 3/7-3/8, in San Francisco, CA

·     JPMorgan Global Emerging Markets Corporate Conference, 3/7-3/9, in Miami, FL

·     JPMorgan Gaming, Lodging, Restaurant & Leisure, 3/6-3/8, in Las Vegas, NV

·     Morgan Stanley Technology, Media & Telecom Conference, 3/7-3/10, in San Francisco, CA

·     Raymond James Annual Institutional Investors Conference, 3/6-3/9, in Orlando, FL

·     RBC Capital Chemicals and Packaging Conference (virtual) 3/8

·     RBC Capital Global Financial Institutions Conference (virtual), 3/8-3/9

·     Truist Technology, Internet & Services Conference (virtual), 3/8-3/9

·     Wolfe FinTech Forum 2022 (virtual), 3/8-3/10

·     China CPI and PPI for February

 

 

Macro

Up/Down

Last

Nymex

3.40

122.80

Brent

3.73

126.91

Gold

19.10

2,015.00

EUR/USD

0.0032

1.0884

JPY/USD

0.35

115.64

10-Year Note

+0.096

1.846%

 

 

World News

·     Iran will not back down on its red lines in the nuclear talks with Western powers, President Ebrahim Raisi said on Tuesday – Reuters

·     China’s household leverage ratio rose to 72.2% in 2021 from 33.8% in 2012, the central bank said on Tuesday. China’s corporate leverage ratio was at 153.7% in 2021

 

Sector News Breakdown

Consumer

·     Clarus Corporation (CLAR) Q4 adj EPS $0.45 vs. est. $0.36; Q4 revs rose 56% to $118.18M vs. est. $105.81M; sees FY22 revenue up 25% to $470M vs. est. $450.83M; sees FY22 adjusted EBITDA $78M; sees FY22 capital expenditures $9M. Sees FY22 free cash flow $50M-$60M

·     ThredUp Inc. (TDUP) Q4 EPS loss (-$0.18) vs. est. loss (-$0.17); Q4 revs rose 68% to $72.88M vs. est. $69.97M; record number of active buyers of 1.7M and orders of 1.7M in Q4; sees Q1 revenue $70M-$72M vs. est. $76.68M and Q1 adjusted EBITDA margin loss 17%-19%

 

Energy

·     Occidental Petroleum (OXY) downgraded to Neutral from Buy at Bank America

·     OPEC officials met U.S. shale oil company executives on the sidelines of the CERAWeek conference in Houston on Monday as energy prices soared over supply concerns. It was at least the fourth time since 2017 that U.S. shale oil producers and OPEC officials have held such meetings to discuss energy concerns – Reuters

·     Nine Energy (NINE) reported Q4 revenue beat and a lower-than-expected loss; reports Q4 loss per share of 52 cents, lower than expectations of 55 cent loss; revenue of $105.1 mln beats estimates of $95.8 mln

·     Shell PLC (SHEL) said that it intends to withdraw from Russian oil and gas in a phased manner in response to the Russian invasion of Ukraine, including immediately halting all spot market purchases of Russian crude. Shell said it will also shut its service stations, aviation fuels and lubricants operations in Russia, beginning immediately

·     Ranger Oil (ROCC) Q4 EPS $1.56 vs. est. $1.70; Q4 revs $225.1M vs. est. $190M; sees Q1 total sales volumes 36.5K-38K boe/d and sees FY22 total sales volumes 38.5K-41K boe/d

 

Financials

·     Discover (DFS) suspends actions to pursue registration in Russia

·     Heritage Insurance (HRTG) Q4 adjusted EPS $0.41 vs. est. $0.14; Q4 revs $166.71M vs. est. $165.32M

 

Healthcare

·     Voyager Therapeutics (VYGR) shares rise 15% after a deal with Novartis (NVS) for its RNA technology; Novartis will be allowed to use VYGR’s RNA-driven technology for development of gene therapies. VYGR will receive $54M upfront and is entitled to receive up to $37.5M in exercise fees for options for three initial targets along with milestones

·     Anthem (ANTM) said to reaffirm the company’s net income guidance for full year 2022 to be greater than $26.75 per share, including approximately $1.50 per share of net unfavorable items; continues to expect adjusted net income to be greater than $28.25 per share

·     Axonics (AXNX) announced that the U.S. FDA has approved its newly developed, long-lived, recharge-free sacral neuromodulation implantable neurostimulator.

·     908 Devices Inc. (MASS) Q4 EPS loss (-$0.12) vs. est. loss (-$0.18); q4 revs rose 177% to $15.8M vs. est. 415.1M; guides FY revs $52M-$55M vs. est. $53.5M; Expanded installed base to 1,935 devices with 221 devices placed during the fourth quarter

 

Industrials & Materials

·     AZZ Inc. (AZZ) entered into a definitive agreement to acquire Sequa’s Precoat Metals business division for a purchase price of approximately $1.28 billion; raises FY22 EPS view to $3.15-$3.25 from $3.00-$3.20, and narrows FY22 revenue view to $890M-$910M from $865M-$925M

·     Intrepid Potash (IPI) Q4 adj EPS $0.60 vs. est. $1.17; Q4 sales $71.8M; said fertilizer and agriculture market outlook remains very strong and we are poised to drive significant increases in bottom line-results in 2022

 

Technology, Media & Telecom

·     Google (GOOGL) confirmed a late day report yesterday by theinformation, saying it will acquire cybersecurity firm Mandiant (MNDT) in a $5.4B deal, which values the company at $23 per share.

·     Telecom Italia shares rose after an Italian newspaper reported that U.S. fund KKR was still interested in a takeover deal, albeit at a lower price. KKR could confirm its interest in a deal but at a price of around 0.40 euros per share, Italian daily Il Messaggero reported.

·     Apple (AAPL) is expected to introduce a 5G budget-friendly iPhone and a new iPad top expectations at its product event later today

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Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.