Early Look

Wednesday, May 29, 2024

U.S. futures are looking lower after strong returns on Tuesday as the technology heavy Nasdaq Composite posted another closing record highs, with its first ever close above 17,000 led by NVDA, AMD and other chipmakers yet again (SOX +13.8% MTD and 25% YTD) topping prior ATH 16,996.38 in May. The Dow Jones Industrials -0.5% overnight after falling 3 of the last 4 trading days after topping 40K for the first time this month. A recent spike in Treasury yields is taking its toll on sentiment with the 10-yr popping to 4.56% and the 2-yr 4.95%. In Transports, airlines looking lower after American Airlines (AAL) lowered its earnings, CASM outlook, pressuring shares this morning along with other airlines (DAL, UAL, LUV). In the Energy sector, the Financial Times reports that Conoco (COP) is in talks to acquire Marathon (MRO). In Asian markets, The Nikkei Index declined -298 points to 38,556, the Shanghai Index edged higher a point to 3,111, and the Hang Seng Index dropped -344 points to 18,477. In Europe, the German DAX is down -109 points to 18,568, while the FTSE 100 is down -23 points to 8,230. Not a lot of data this morning in the U.S. but Australia saw o “hotter” CPI print overnight and today we get the Fed Beige Book and 7-year auction results. Markets will also closely monitor comments from this year’s voting policymakers, including New York President John Williams and Raphael Bostic through the day.

• The Dow Jones Industrial Average fell -216.73 points, or 0.55%, to 38,852.86.
• The Nasdaq Composite jumped 99.09 points, or 0.59%, to 17,019.88.
• The Russell 2000 Index declined -2.82 points, or 0.14% to 2,066.85.

• 8:55 AM ET                  Johnson/Redbook Weekly Sales
• 10:00 AM ET                Richmond Fed Manufacturing Index for May
• 2:00 PM ET                   Federal Reserve Releases Beige Book
• 1:00 PM ET                   US Treasury to sell $44B in 7-year notes.
• 4:30 PM ET                   API Weekly Inventory Data

• Earnings After the Close: A AEO AI CRDO CRM HPQ NCNO NTNX OKTA PATH PSTG RRGB SSYS UHAL

• Deutsche Bank 14th Annual Global Financial Services Conference, 5/29-5/30 in New York
• Goldman Sachs Electrify Europe: Utilities and Clean Energy Conference, 5/28-5/29, in London
• Goldman Sachs Global Semiconductor Conference, 5/28-5/30, in New York
• Jefferies Software Conference, 5/29-5/30, in Newport, CA
• Keybanc Industrials and Basic Materials Conference 5/28-5/30, in Boston, MA
• TD Cowen 52nd Annual Technology, Media & Telecom Conference, 5/29-5/30, in New York

• Australian headline CPI came in at 3.6% YoY in April (above est. 3.4%, and vs. previous 3.5%), highest since Nov. 23, and the second month of upturn; excluding volatile items CPI was steady at 4.1%. The most significant contributors to the April annual rise were Housing (+4.9%), Food and non-alcoholic beverages (+3.8%), Alcohol and tobacco (+6.5%).

• CAVA Group (CAVA) Q1 EPS $0.12 vs est. $0.04, adj EBITDA $33.3Mm vs est. $23.16Mm on revs $256.3Mm vs est. $245.93Mm, comps +2.3%; guides FY coms +4.5-6.5% vs prior +3.0-5.0%, restaurant level margin 23.7-24.3% vs prior 22.7-23.3%, adj EBITDA $100-105Mm vs prior $86-92Mm and est. $91.26Mm; says no price increases planned for remainder of the year, says consumers becoming increasingly discerning.
• Faraday Future Intelligent Electric (FFIE) shares tumble after saying it is withdrawing production forecast for 2024 due to current market conditions and level of funding; FFIE said it is pursuing additional strategic investors to support growth, and intellectual property-backed financing to reduce reliance on dilutive funding.

• American Airlines (AAL) cuts Q2 EPS view to $1.00-$1.15 from $1.15-$1.45 (est. $1.30), cuts Q2 operating margin view to 8.5%-10.5% from 9.5%-11.5%, affirms Q2 ASM of up 7% to up 9% y/y; and cuts Q2 CASM to flat to up 1% from up 1% to up 3%; watch shares of other airlines DAL, LUV, UAL.
• Anglo American (NGLOY) rejected BHP Group’s (BHP) last-ditch request for more time to discuss a $49 billion takeover offer, dismissing it as highly complex and likely ending a five-week pursuit by the bigger rival. Anglo had granted BHP a one-week extension to its original May 22 deadline to submit a binding offer.
• First Solar (FSLR) price target raised to $350 from $270 at UBS and keeps Buy rating saying has greater confidence in underlying utility-scale projects demand driven by corporate "100% renewable" demand and recent positive news on U.S. import tariffs.
• FTAI Aviation (FTAI) 2.09M share Spot Secondary priced at $82.00.
• HEICO Corp. (HEI) Q2 $0.88 vs est. $0.81 on revs $955.4Mm vs est. $951.21Mm, EBITDA $252.4Mm vs est. $239.98Mm; sees FY24 sales growth in Flight Support, Electronic Technologies groups.

• Neurocrine Biosciences (NBIX) announces CEO succession plan.
• Prothena (PRTA) announces Bristol Myers Squibb (BMY) opt-in for exclusive global license for prx019, the second program from global neuroscience research and development collaboration; PRTA to receive $80M from Bristol Myers Squibb for exclusive global license to PRX019; PRTA will initiate a phase 1 clinical trial for PRX019 in 2024.

• CCC Intelligent Solutions (CCCS) 50M share Spot Secondary priced at $11.50.
• Digital Turbine (APPS) Q4 adj EPS $0.12 vs est. $0.07, adj EBITDA $12.3Mm vs est. $11.99Mm on revs $112.2Mm vs est. $117.69Mm; sees FY25 revs $540-560Mm vs est. $553.18Mm and adj EBITDA $85-95Mm vs est. $94.62Mm.
• Microchip (MCHP) announces proposed private offering of $1.1B of convertible senior notes.
• Ooma Inc. (OOMA) shares rise after Q1 adj EPS $0.14 vs est. $0.11, adj EBITDA $5Mm vs est. $4.41Mm on revs $62.5Mm vs est. $61.84Mm; sees Q2 revs $62.5-63Mm vs est. $62.28Mm, adj EPS $0.13-0.14 vs est. $0.12; sees FY revs $250.7-253Mm vs est. $251.37Mm and adj EPS $0.55-0.58 vs est. $0.53.