Early Look

Tuesday, May 16, 2023

Futures	Up/Down	%	Last
Dow	-87.00	0.26%	33,311
S&P 500	-4.25	0.10%	4,145
Nasdaq	1.50	0.01%	13,469

 

 

U.S. futures are looking at a flattish open for the S&P and Nasdaq while shares of Dow component Home Depot (HD) are looking lower after mixed Q1 results (revs misses) and lowered its year profit and sales forecast. In Asian markets, The Nikkei Index rose 216 points to 29,842, the Shanghai Index fell -19 points to 3,290 after weaker retail sales and industrial output data, and the Hang Seng Index edged higher 7 points to 19,978. In Europe, the German DAX is up 18 points to 15,936, while the FTSE 100 rises a few points to 7,786. The expected highlight today is for Democratic President Joe Biden and top congressional Republican Kevin McCarthy to sit down to try to make progress on a deal to raise the U.S. government’s $31.4 trillion debt ceiling and avert an economically catastrophic default. The focus will also be on economic data, with retail sales expected to increase 0.8% in April, after falling 0.6% in the month before. The data follows weaker than expected China retail sales data overnight. Oil prices are flat, the dollar edges lower and treasury yields down slightly.

 

Market Closing Prices Yesterday

·     The S&P 500 Index bounced 12.47 points, or 0.30%, to 4,136.55.

·     The Dow Jones Industrial Average rose 49.78 points, or 0.15%, to 33,350.40.

·     The Nasdaq Composite climbed 80.47 points, or 0.66%, to 12,365.21.

·     The Russell 2000 Index advanced 20.71 points, or 1.19% to 1,761.55.

 

Economic Calendar for Today

·     7:45 AM ET             ICSC Weekly Retail Sales

·     8:15 AM ET             Fed’s Mester Discusses the economic and Policy Outlook

·     8:30 AM ET             Advance Retail Sales M/M for April…est. +0.8%

·     8:30 AM ET             Retail Sales – Less Autos M/M for April…est. +0.4%

·     8:55 AM ET             Johnson/Redbook Weekly Sales

·     9:15 AM ET             Industrial Production M/M for April…est. 0.0%

·     9:15 AM ET             Capacity utilization for April…est. 79.7%

·     10:00 AM ET           Business Inventories M/M for March…est. unchanged

·     10:00 AM ET           NAHB Housing Market Index for May…est. 45 (prior 45)

·     12:15 PM ET           Fed’s Williams Discusses Economic Outlook and Monetary

·     4:30 PM ET             API Weekly Inventory Data

·     7:00 PM ET             Fed’s Bostic and Goolsbee Discuss the Economic Outlook

 

Earnings Calendar:

·     Earnings Before the Open: HD NRXP SSYS

·     Earnings After the Close: AGYS DOCS KD KEYS NXGN QUIK TCS

 

Other Key Events:

·     Davidson 25th Annual Financial Institutions Conference, 5/15-5/17, in CO

·     JMP Securities Life Sciences Conference, 5/15-5/16, in New York

·     JPMorgan Homebuilding & Building Products Conference (virtual), 5/16-5/17

·     Needham 18th Annual Technology & Media Conference, 5/16-5/18

·     RBC Capital Global Healthcare Conference, 5/16-5/17, in New York

·     RBC Capital Canadian Automotive, Industrials & Transportation Conference, 5/16-5/18

·     China Industrial Output for April and Retail Sales

 

 

Macro	Up/Down	Last
Nymex	0.03	71.14
Brent	0.05	75.28
Gold	-10.50	2,012.20
EUR/USD	0.0018	1.089
JPY/USD	-0.34	135.77
10-Year Note	-0.04	3.468%

 

 

World News

·     China April retail sales rose 18.4% y/y, accelerating from a 10.6% increase in March, but was below the 20.5% growth expected by economists. China industrial production rose 5.6% in April y/y rising from March’s 3.9% increase, but lower than the 11.0% growth expected. China’s industrial output fell 0.47% in April from a month earlier, the statistics bureau said.

·     Berkshire Hathaway 13-F revealed: increases Stake in AAPL by 20,424,207 to 915,560,382 shares; eliminates stake in RH, BK, TSM, USB; takes New Stake in COF with 9,922,000 shares; boosts BAC stake by 22,751,400 to 1,032,852,006; cuts share stake in GM by 20% to 40.0 mln shares. Overall raised stakes in current positions of AAPL, OXY, HPQ, PARA, C and MKL.

·     U.S. March net long-term flow (ex-swaps/other) +$133.3B vs +$56.6B in Feb; U.S. March net foreign holdings of U.S. Treasury bonds, notes +$35.8B vs. $+57.6B in Feb; U.S. March net official capital flow +$43.6B vs +$57.0B in Feb

 

Sector News Breakdown

Consumer

·     Home Depot (HD) Q1 EPS $3.82 vs. est. $3.80; Q1 revs $37.26B vs. est. $38.31B; Q1 comp sales decreased (-4.5%), and comparable sales in the U.S. decreased (-4.6%); cuts FY23 EPS view to down 7%-13% from down mid-single digits percent and lowers FY23 revenue view to down 2%-5% from flat, consensus $156.34B; sees FY23 comparable sales down 2%-5%.

·     On Holding (ONON) Q1 EPS and sales topped consensus, raises outlook for FY23 and maintains outlook for gross profit margin in 2023 to reach 58.5%.

·     Newell Brands (NWL): Carl Icahn cuts share stake by 9.3% to 29.99 mln shares – 13F filing.

 

Energy, Industrials and Materials

·     Northern Oil and Gas (NOG) announces offering of 6.65M shares of common stock.

·     Southwest Gas (SWX): Carl Icahn raises stake by 59.1% to 10.52M – 13F filing.

 

Financials

·     Wells Fargo & Co. (WFC) has agreed to pay $1 billion to settle a shareholders lawsuit related to its 2016 fake-accounts scandal, according to the Wall Street Journal. https://on.wsj.com/42XCPKt

·     Futu (FUTU), Tiger (TIGR) to Remove China Trading Apps as Regulatory Pressure Mounts, the WSJ reported, sending shares of both sharply lower. https://on.wsj.com/451D9tE

·     Nu Holdings (NU) reported Monday that revenue nearly doubled in the first quarter versus the prior year.

 

Healthcare

·     Horizon Therapeutics PLC (HZNP) shares dropped -15% after hours after Bloomberg News reported the FTC is expected to file a lawsuit to block Amgen Inc.’s (AMGN) $27.8 billion acquisition of Horizon. The Federal Trade Commission will argue the deal would harm competition for drug development https://bloom.bg/3M5vMsp

·     Agilon Health (AGL) announces secondary public offering of 70M shares of its common stock by the selling stockholder, CD&R Vector Holdings, an affiliate of Clayton, Dubilier & Rice.

·     Cara Therapeutics (CARA) Q1 EPS loss (-$0.49) vs est. loss (-$0.52); Q1 revs $6.17M vs. est. $4.98M; said has enough cash, securities to fund currently anticipated operating plan into 2H’24.

·     Gilead Sciences (GILD) upgraded to Outperform at BMO Capital and tgt raised to $100.

·     Globus Medical (GMED) announces FDA approval for its non-fusion scoliosis correction system, the latest advancement for young patients with idiopathic scoliosis.

·     Kodiak Sciences (KOD) Q1 EPS loss (-$1.35) vs. est. loss (-$1.33); ended Q1 with $421.2M of cash, cash equivalents and marketable securities.

·     Invitae (NVTA) announced that it intends to appeal the verdict delivered by a jury at the U.S. District Court for the District of Delaware. The jury found that Invitae’s products using Anchored Multiplex PCR, or AMP, chemistry infringe certain Natera (NTRA) patents, and the jury awarded Natera a total of $19.35M, based on lost profits and a royalty rate of 10% on certain products.

 

Technology, Media & Telecom

·     Baidu (BIDU) Q1 EPS $2.34 vs. est. $1.79; Q1 revs rose 9.6% y/y to $4.54B vs. est. $4.31B; beat due to gains in online marketing and other sales; said Tuesday that its quarterly GAAP net profit was 5.825 billion yuan ($837.8 million), compared with a loss of CNY885 million a year earlier.

·     Sea Limited (SE) Q1 EPS $0.16 vs. est. $0.39; Q1 revs rose 4.9% y/y to $2.9B vs. est. $3.06B.

·     Alphabet (GOOGL): Bill Ackman’s Pershing Square with new Google position as per 13F filing; GOOG (~8.07 mln shares) and GOOGL (~2.19 mln)

·     Ducommun (DCO) 2M share Spot Secondary priced at $40.00.

·     Vodafone’s (VOD) new boss to cut 11,000 jobs as cash flow to fall – Reuters.