Morning Preview: May 03, 2021

Early Look

Monday, May 3, 2021

Futures

Up/Down

%

Last

Dow

216.00

0.64%

33,983

S&P 500

22.25

0.53%

4,196

Nasdaq

40.50

0.29%

13,890

 

 

Will it be sell in May, go away? Or will markets extend their recent wins streak? From the looks of things to start the month, market participants are looking to keep the upward momentum going as U.S> stock futures are pointing to a higher open! Last week, the S&P rose 0.03%, the Dow lost 0.48%, and the Nasdaq slid 0.39%. For the month of April, the S&P rose 5.24%, the Dow added 2.72%, the Nasdaq gained 5.40%, Dow Transports rose 4.89% (Dow transports rose a 13th straight week, its longest weekly streak in over 120 years). The 10-year Treasury yield fell 1 basis point on Friday to 1.63%, up about 7 basis points on the week. Stocks ended the week tired, failing to capitalize on mostly very strong mega cap earnings, another dovish performance from Fed chief Jay Powell midweek, very strong economic data (GDP, jobless claims, confidence), and details of more proposed fiscal stimulus as much of the good news remains “baked” into markets. In Asian markets, The Nikkei Index was closed along with the Shanghai Index (both closed Monday thru Wednesday) while the Hang Seng Index dropped -367 points to 28,357. In Europe, the German DAX is up about 30 points to 15,170, while the FTSE 100 is up a few points to 6,970. Strength in the crypto currency space continues as Ethereum extends its recent winning streak, topping $3,000 for the first time (last $3,151) – now up over 1,350% YoY (was $208 same period a year ago), while Bitcoin cash (BCH) tops the $1,000 level and Bitcoin trades to $58.500. Treasury Secretary Janet yelled downplayed the risks of higher inflation while supporting president Joe Biden’s economic plans totaling roughly $6 trillion.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -30.30 points, or 0.72%, to 4,181.17

·     The Dow Jones Industrial Average fell -185.51 points, or 0.54%, to 33,874.85

·     The Nasdaq Composite sunk 119.86 points, or 0.85%, to 13,962.68

·     The Russell 2000 Index declined -29.01 points, or 1.26% to 2,266.45

 

Events Calendar for Today

·     9:45 AM EST      Markit Manufacturing PMI, Apr-F

·     10:00 AM EST    Construction Spending MoM for March

·     10:00 AM EST    ISM Manufacturing PMI for April

 

Earnings Calendar:

·     Earnings Before the Open: BELFA, CNA, DSPG, EL, EPD, GPRE, ITRI, KPTI, L, ON, PETS, RMBS, SBT, WEC

·     Earnings After the Close: ADC, ADUS, AWK, BCEI, BRX, BWXT, CAR, CBT, CC, CHGG, CR, CSR, CVI, EARN, EPRT, EVER, FANG, FLS, FRPT, GAIA, HLIT, IPI, IRBT, JKHY, KFRC, KMT, LEG, LGND, LTHM, MAXR, MOS, MWA, NSP, O, OGS, PLOW, RBC, REGI, RIG, RILY, SANM, SCI, SHO, SPNE, TA, VNO, VNOM, VRNS, WMB, WWD, XPO, ZI

 

 

Macro

Up/Down

Last

Nymex

-0.11

63.47

Brent

-0.30

66.46

Gold

10.00

1,779.10

EUR/USD

0.0033

1.2053

JPY/USD

0.23

109.54

10-Year Note

+0.018

1.649%

 

 

World News

·     German March Retail Sales beat 7.7% m/m vs 3.0% consensus; 11.0% y/y vs -0.3% consensus; German Final Apr Mfg PMI lower 66.2 vs 66.4 consensus

 

Sector News Breakdown

Consumer

·     Crocs (CROX) mentioned positively in Barron’s saying after years of struggling, the company is much more consistent now and sales shouldn’t slow just because the COVID-19 pandemic might finally be drawing to a close, highlighting that the company doubled its full-year revenue guidance for 2021

·     InterContinental (IHG) a mix mention in Barron’s saying shares in Holiday Inn owner InterContinental Hotels Group have gained about 59% over the past 12 months on expectations that a COVID-19 vaccine will eventually ease travel restrictions. The stock looks like it has limited upside, with a return to travel already factored into the price, but investors shouldn’t underestimate its potential gains

·     Nio (NIO) delivered 7,102 vehicles in April, 125% higher than the company’s deliveries tally from a year ago, but 2% below the level seen in March; the deliveries in April consisted of 1,523 ES8s, 3,163 ES6s and 2,416 EC6s

·     Tesla Inc. (TSLA) is said to delay starting production in its new Germany facility until the end of January; Tesla originally wanted to open the plant on July 1

·     Li Auto (LI) announced that the company delivered 5,539 Li ONEs in April 2021, representing a 111.3% year-over-year increase and taking the cumulative deliveries to 51,715

·     XPeng (XPEV) said it delivered a total of 5,147 Smart EVs in April 2021, representing a 285% increase year-over-year. The April deliveries consisted of 2,995 P7s, the company’s sports smart sedan, and 2,152 G3s, its smart compact SUV. As of April 30, 2021, year-to-date deliveries reached 18,487 units, representing a 413% increase year-over-year.

 

Energy

·     OPEC’s share of India’s oil imports fell to the lowest in at least two decades in the year to the end of March as overall purchases by Asia’s third largest economy fell to a six-year low, data obtained from industry and trade sources showed. Total crude imports by the world’s third-biggest oil importer fell to 3.97 million barrels per day (bpd) in the 2021 fiscal year to March 31, down 11.8% from a year earlier, the data showed. – Reuters

·     Enterprise Products (EPD) Q1 EPS 61c vs. est. 48c (includes items) and reports Q1 revenue $9.15B vs. est. $7.07B; Q1 net income was reduced by non-cash, asset impairment charges of approximately $66M

·     Enable Midstream (ENBL) Q1 EPS 33c vs. est. 17c; Q1 revenue $970M vs. est. $764.21M

 

Financials

·     Berkshire Hathaway (BRK/A) Q1 EPS $5.09 vs. est. $2.53; Q1 revenue $64.6B vs. est. $63.66B; investments include gains of approximately $2.8B in Q1, approximately $6.6B was used to purchase shares of class A and class B common stock during Q1. Approximately 69% of Berkshire’s aggregate fair value was concentrated in four companies: American Express (AXP) – $21.4B; Apple (AAPL) – $110.9B; Bank of America (BAC) – $40.0B and Coca-Cola (KO) – $21.1B.

·     Paychex (PAYX) raises quarterly dividend 6% to 66c from 62c per share

·     Progressive (PGR) a positive mention in Barron’s saying it is an unusual corporate creature: a growth company in a slow-growth industry, which has been able to take market share in the U.S. profitably year after year, and its shares, now trading around $100, still look reasonably priced at about 17 times projected 2021 operating earnings of $5.83 a share

 

Healthcare

·     American cannabis companies-such as Curaleaf (CURLF), Green Thumb Industries (GTBIF), Trulieve Cannabis (TCNNF), and Cresco Labs (CRLBF)-have licenses to operate in states that allow weed under their laws, but the industry has been bedeviled by marijuana’s illegality under U.S. federal law, Barron’s noted. Many investors know only Canadian producers such as Canopy Growth (CGC), Tilray (TLRY), or Aphria (APHA), whose wholly legal Canadian activities let them list on the Nasdaq – but now, events are breaking in favor of the American operators

·     Amphastar Pharmaceuticals Inc. (AMPH) received regulatory approval for its morphine sulphate injection in a prefilled syringe system from the U.S. FDA

·     Moderna (MRNA) announces an agreement with Gavi, the Vaccine Alliance to supply up to 500M doses of the COVID-19 Vaccine, including an initial 34M doses to be delivered in Q4 2021.

·     Novartis (NVS) said its Sandoz division will begin enrolling the first patient in MYLIGHT, a Phase III confirmatory efficacy and safety study evaluating aflibercept, shortly.

 

Industrials & Materials

·     Steel stocks (NUE, X, STLD) mentioned cautiously in Barron’s saying when steel prices soar, the return to earth is usually swift and painful-and that goes for steel stocks too. Steel prices have gained nearly 60% in 2021, as commodities have rallied around the globe and with steel companies cutting back on production during the pandemic. But steel prices can’t go up forever, and history suggests they are nearing a peak

·     Altra Industrial Motion (AIMC) offers investors three good reasons to buy its stock, according to Barron’s saying its fast-paced economic growth will increase demand for its products, while shifts to factory automation and reshoring-bringing back manufacturing to the U.S.-could provide a secular boost to sales – says shares, now $64, could be worth about 50% more in coming years

·     Virgin Galactic (SPCE) reschedules Q1 financial results and conference call in response to recent SEC guidance relating to warrants issued by SPACs; does not anticipate restatement will impact previously communicated non-GAAP financial metrics, including adjusted Ebitda and FCF

 

Technology, Media & Telecom

·     Francisco Partners and TPG Capital entered into a definitive agreement with Dell Technologies (DELL) to acquire Boomi, a leading provider of cloud-based integration platform as a service (iPaaS) in a cash transaction valued at $4 billion

·     Alphabet (GOOGL), Facebook (FB) positive mention in Barron’s saying this past week’s wave of tech earnings confirmed both are doing just fine, largely because digital advertisers have returned to their pre-pandemic habits. Alphabet and Facebook will continue to win and lose alongside the digital advertising market and as the economy reopens

·     Samsung Electronics (SSNLF) is looking at Austin, Texas as one possible site for a $17 billion chip plant, but a deal could hang on what tax breaks it is offered – Reuters

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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.