Early Look

Monday, November 6, 2023

U.S. stock futures are edging higher, but in a very tight trading range of about 12 points (4,386.75 high vs. 4,374 low), looking to make it a 6^th straight daily advance. Stocks rose Friday after a soft jobs report drove bond yields lower as U.S. equities posted their biggest winning week of 2023 as the S&P 500 jumped 5.85%, the Dow industrials climbed 5.07% and the Nasdaq gained 6.61% and underperforming Smallcaps led as the Russell 2000 surged 7.56% (both the SPY, QQQ with their largest weekly % gains since Nov ’22, the Dow its largest weekly % gain since Oct ’22 and the IWM its largest weekly % gain since Feb ’21). The CBOE Volatility Index (VIX) tumbled nearly 30% on the week to just above 15 – from a high of 21.16 on Monday. The US dollar is down slightly, looking at a 7-week low, while oil rebounds on Saudi Arabia production cut headlines, after prices fell 6% last week. U.S. stocks closed sharply higher Friday, extending a monster rally in equities that saw the big three indexes sweep to their biggest weekly gains of 2023. Bond yields tumbled last week with the 10-year Treasury yield falling back to 4.557% after briefly touching 5% in recent weeks. Earnings season is about 80% complete with more than 400 of the S&P 500 having been reported thus far (less than half have beaten revenue ests for Q3 according to Bloomberg, lowest since same period 2019). In Asian markets, The Nikkei Index surged 758 points to 32,708, the Shanghai Index rose 27 points to 3,058, and the Hang Seng Index advanced 302 points to 17,966. In Europe, the German DAX is down -30 points to 15,156, while the FTSE 100 is flat at 7,416. After the FOMC meeting last week, there are over ten Fed speakers this week alone as the “blackout” period is lifted, though economic data in the US is light.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 46.49 points, or 0.94%, to 4,358.34.

·     The Dow Jones Industrial Average rose 222.24 points, or 0.66%, to 34,061.32.

·     The Nasdaq Composite gained 184.09 points, or 1.38%, to 13,478.28.

·     The Russell 2000 Index advanced 46.49 points, or 2.71% to 1,760.70.

Economic Calendar for Today

·     10:00 AM ET                Employment Trends for October

Earnings Calendar:

·     Earnings Before the Open: AL AMG AXSM CEG DISH FRPT HGV JBI KNF KOS KRYS LINC NEO NSSC OPRX OSG SATS SWAG THS VVX

·     Earnings After the Close: AAON ACVA ADTN AIN AIV ALTO AMRC AOSL ATEC AWR AYX AZPN BKD CBT CE CHRS CNO COH COMP CTRA CXW DCGO DO DSP EVER FANG FGEN GATO GH GOOD GT HALO HIMS ICHR ICUI IFF JELD KE MED MGNX MTTR MWA MYGN NSTG O OPK PARR PAY PLL RAIL RNG SANM SBRA SIBN SKT SWAV TASK TCMD TDC TDUP TDW TRIP TRUE UIS VECO VMEO VNOM VRTX VYGR

Other Key Events:

·     China Imports and Exports for October

Sector News Breakdown

Consumer

·     Lucid Group (LCID) cut prices of its Air range of luxury sedans earlier this week for a limited time ahead of the holiday season; slashed the price of its Air Touring model to $87,500 from $95,000 and the more powerful Grand Touring by $10,000 to $115,600 – Reuters.

·     Tesla (TSLA) is increasing pay for workers in Germany as executives disclosed a 4% wage increase for workers at its site near Berlin during CEO Elon Musk’s visit to the factory last week, The Wall Street Journal reported on Sunday, citing people familiar with the matter.

·     Tyson Foods (TSN) is recalling nearly 30,000 pounds of breaded chicken “Fun Nuggets” after consumers complained of finding metal pieces in the dinosaur-shaped patties.

·     Vestis Corp. (VSTS) mentioned positively in Barron’s saying the company is set to win after its spinoff from food-services company Aramark (ARMK) in early October. Vestis stock has fallen 13% since the start of trading on Oct. 2, but there’s still a lot to like about it.

·     BJ’s Wholesale (BJ) downgraded to Hold from Buy at Deutsche Bank.

Energy, Industrials and Materials

·     Saudi Arabia confirmed it would extend a production cut of 1 million barrels a day, which first took effect in July, through the end of December citing an Energy Ministry official. The statement said Saudi production would be approximately 9 million barrels a day in December. Russia reportedly said it would also extend a cut of 300,000 barrels a day through the end of December.

·     Chevron (CVX) mentioned positively in Barron’s saying the stock has been punished enough for earnings and the Hess deal.

·     Eversource (ES) Q3 adj EPS $0.97 vs. est. $0.99; Q3 revs $2.79B vs est. $3.3B; narrows 2023 non-GAAP EPS view to $4.30-$4.43 from $4.25-$4.43 while reiterated long-term EPS growth rate from its core regulated businesses in the upper half of 5-7%.

·     Kosmos (KOS) Q3 adj EPS $0.26 vs. est. $0.31; Q3 revs $526.55M vs. est. $507.97M; Net Production: 68,200 barrels of oil equivalent per day (boepd), with sales of 73,100 boepd; Production in the quarter increased by around 17% versus the second quarter.

Financials

·     AIG (AIG) is offering 50M existing shares of common stock of CoreBridge Financial (CBRG).

·     Berkshire Hathaway (BRK/A) reported Q3 operating earnings of $10.76B vs. $7.65B last year; Q3 Insurance Underwriting operating earnings were up to $2.42B vs. ($1.07B) last year, Insurance-Investment income operating earnings rose to $2.47B from $1.41B last year.

·     Bank of America (BAC) upgraded to Market Perform from Underperform at Keefe Bruyette.

·     KeyCorp (KEY) upgraded to Outperform from Market Perform at Keefe Bruyette

·     W. R. Berkley (WRB) files automatic mixed securities shelf.

Healthcare

·     Acadia Pharmaceuticals Inc. (ACAD) upgraded to Buy at Mizuho and Raise PT to $35, bullish on Daybue, increasing our 2030 sales forecast to ~$1.1Bn (up from $838M) and believe the Phase 3 ADVANCE trial for pimavanserin in negative schizophrenia has a high likelihood of reading out positive data in 1Q24; and see limited downside to the patent case against MSN.

·     C4 Therapeutics (CCCC) upgraded to Equal Weight from Underweight at Morgan Stanley.

·     Vir Biotechnology (VIR) files automatic mixed securities shelf.

Technology, Media & Telecom

·     Dish Networks (DISH) Q3 EPS loss (-$0.26) vs. est. $0.04; Q3 revs $3.7B vs. est. $3.72B; Net Pay-TV subscribers decreased approximately 64K in Q3 vs. net increase of about 30K y/y; closed the quarter with 8.84M Pay-TV subs including 6.72M DISH TV subs and 2.12M SLING TV subs; retail wireless net subscribers decreased by approximately -225K in Q3.

·     Telecom Italia approved the 19-billion-euro ($20 billion) sale of its fixed-line network to U.S. private equity firm KKR, becoming the first telecoms group in a major European country to part ways with its landline grid. – Reuters