Early Look

Monday, March 28, 2022

Futures	Up/Down	%	Last
Dow	8.00	0.02%	34,767
S&P 500	-0.50	0.01%	4,536
Nasdaq	-19.00	0.13%	14,736

 

 

U.S. stocks are mixed after futures slipped overnight following another big win for U.S. stocks last week, rising for a second straight week despite rising interest rates as the S&P rose 1.79%, the Dow added 0.31%, and the Nasdaq gained 1.98%. Treasury bond yields extended their March higher (touched overnight highs above 2.55% for the 10-year) and oil prices slumped over 4%, as investors deal with slower near-term growth while pricing-in positive developments from peace talks between Russia and Ukraine. Investors gained confidence last week that the U.S. economy will withstand the escalating war in Ukraine and the Federal Reserve’s plans to lift interest rates to control inflation. The moves follow last week’s rise of more than 6% for the S&P 500 and more than 8% for the Nasdaq. Stocks finished mixed on Friday amid a fresh surge in bond yields as the yield on the benchmark 10-year Treasury note jumped to 2.491% from 2.340% on Thursday. This marked the 12th rise in 15 sessions. The yield on the three-year note climbed to 2.515% from 2.346% on Thursday, while yields on the five- and seven-year notes were also above 2.5%. The week ahead sees two pivotal reports that could help shape market expectations. The Fed’s favored inflation measure, the PCE deflator for March, is due Thursday ahead of the pivotal March Payroll and broad labor reports on Friday. Headline PCE inflation in February rose by a 40-year record 6.1% YoY rate. Bitcoin up 6% above $47,200 its highest since January, while Ethereum rises over 7% to $3,350. In Asian markets, The Nikkei Index fell -205 points or 0.73% to 27,943, the Shanghai Index rises 2 points to 3,214 and the Hang Seng Index gains 280 points, or 1.31% to 21,684. In Europe, the German DAX is up about 250 points to 14,550, while the FTSE 100 rises +0.5% above 7,500. The euro is little changed, but the Japanese Yen extend recent losses, as the buck rises above 1.24 vs. the haven currency.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 22.90 points, or 0.51%, to 4,543.06

·     The Dow Jones Industrial Average rose 153.30 points, or 0.44%, to 34,861.24

·     The Nasdaq Composite dipped -22.54 points, or 0.16%, to 14,169.30

·     The Russell 2000 Index advanced 22.90 points, or 0.51% to 2,077.98

 

Economic Calendar for Today

·     8:30 AM ET         Advance Goods Trade Balance, for February

·     10:30 AM ET       Dallas Fed Manufacturing Index for March

 

Earnings Calendar:

·     Earnings Before the Open: CASI, ITRM, SAIC, TPG, VERO

·     Earnings After the Close: CYCC, EYEN, JEF, LIDR, MBII, PLAY, PROG, WYY, ZEV

 

Other Key Events:

·     Maxim 2022 Growth Conference (virtual), 3/28-3/29

·     Shoptalk 2022, 3/27-3/30, in Las Vegas

·     Truist Gaming Bus Tour, 3/28-3/30

 

 

Macro	Up/Down	Last
Nymex	-4.72	109.20
Brent	-4.63	116.01
Gold	-22.90	1,031.30
EUR/USD	-0.0004	1.0978
JPY/USD	2.11	124.17
10-Year Note	+0.004	2.496%

 

 

World News

·     President Joe Biden will propose a minimum 20% tax rate that would hit both the income and unrealized capital gains of U.S. households worth more than $100 million as part of his budget proposal to be released on Monday. The plan — called the “Billionaire Minimum Income Tax” by the White House — represents the most aggressive proposal by the administration – Bloomberg

·     Oil prices tumbled more than $5 on Monday as fears over weaker fuel demand in China grew after financial hub Shanghai lockdown efforts to curb a surge in COVID-19 infections

·     The Bank of Japan offered to buy unlimited amounts of 10-year Japanese government bonds (JGBs) at 0.25%, after the 10-year JGB yield crept up to a six-year high of 0.245%.

 

Sector News Breakdown

Consumer

·     AMC Entertainment (AMC) CEO Adam Aron says co would embark on more “transformational” deals to capitalize on interest of retail investors

·     Tesla (TSLA) asks shareholders to vote on authorizing additional shares/stock buyback

·     Hasbro Inc. (HAS) is said to have rejected an offer from investor Alta Fox Capital Management to add one of its director nominees to the toymaker’s board – Reuters

·     Tesla (TSLA) plans to suspend production at its Shanghai plant for at least one day as the local government intensifies COVID restrictions after a surge in cases in the city – Bloomberg

·     Altria Group (MO) downgraded to Sector Perform from Outperform at RBC Capital

·     Walmart Inc (WMT) is stopping cigarette sales in some U.S. stores after years of debate within the retail giant’s management team about selling tobacco products – WSJ

 

Energy, Industrials and Materials

·     Deere (DE) upgraded to Neutral from Underweight, and Illinois Tool (ITW) upgraded to Overweight from Neutral at JPMorgan

·     Vermilion Energy Inc. (VET) entered into an arrangement agreement to acquire Leucrotta Exploration Inc. for a net cash purchase price of $477 million

·     India is not considering buying oil from Russia or any other country using Indian rupees, the junior oil minister told parliament on Monday, after Western nations-imposed sanctions on Russia over its invasion of Ukraine – Reuters

 

Financials

·     Bank rating changes at Morgan Stanley: FITB, SYF, ADS downgraded to EW from UW, while Citi, MTB downgraded to Underweight; shares of BAC upgraded to Overweight and BK to EW from UW in financials citing growth risks

 

Healthcare

·     GlaxoSmithKline PLC (GSK) and Vir Biotechnology (VIR) Sotrovimab is no longer authorized to treat Covid-19 in Connecticut, New York, New Jersey, and other states, because it’s unlikely to be effective against the Omicron BA.2 sub-variant, federal health regulators said.

·     Incyte (INCY) says nearly 40% of adults with alopecia areata taking Olumiant 4-mg saw at least 80% scalp hair coverage at 52 weeks in Lilly’s (LLY) phase 3 studies; Lilly expects regulatory decisions in the U.S., European Union, and Japan in 2022

·     Axsome Therapeutics (AXSM) announced that the company has entered into a definitive agreement to acquire Sunosi from Jazz Pharmaceuticals (JAZZ) for an initial $53 million

·     PerkinElmer (PKI) files automatic mixed securities shelf

 

Technology, Media & Telecom

·     Netflix (NFLX) mentioned positively in Barron’s saying it is the only company expected to earn a profit from streaming this year as Amazon.com Inc. (AMZN), Apple Inc. (AAPL) and Paramount Global (PARA) are years behind. Meanwhile, Netflix shares have underperformed versus movie chains AMC Entertainment Holdings (AMC) and Cinemark Holdings (CNK)

·     NVent Electric Plc (NVT) shares may rebound according to Barron’s as growth in automation and data centers boosts demand for surge and heat protectors. In addition, the stock trades at just 16 times earnings, a discount to the S&P 500 Index’s 20 times.

·     Shopee, the e-commerce platform of Sea Ltd. (SE), is closing its India operations less than a year after expanding into the populous South Asian nation; Shopee said in a statement Monday that it will exit India “in view of global market uncertainties.”

·     AT&T (T) announced that it has declared a stock dividend to affect the spin-off of 100% of AT&T’s interest in WarnerMedia to AT&T’s shareholders. The record date for the stock dividend is the close of business on April 5

·     Cevian Capital, one of Ericsson’s (ERIC) biggest investors, said it would vote against a motion this week that would clear some board members of responsibility over the possible payment of bribes to militant organizations in Iraq