Early Look

Monday, November 13, 2023

U.S. futures are paring back modestly after the massive surge on Friday, where stocks rallied, recovering the ground lost in the previous session as Treasury yields stabilized. The Dow Jones Industrial Average advanced 1.1%, the S&P 500 climbed 1.5% and the Nasdaq added 2% (hitting a 2-month peak). For the week, the S&P 500 gained while the Nasdaq 100 climbed 2.9%, its biggest daily percentage gain since May 26^th. Attention turns from earnings back to macro this week as important data is coming up with the October CPI Tuesday morning, expectations for the core index rose 0.34% from September, raising the 12-month rate to 4.2% from 4.1%. The producer price index (PPI) data will follow on Wednesday 11/15. The big news this weekend was that Moody’s Investors Service late Friday cut its outlook on the U.S. sovereign credit rating to negative from stable, citing higher interest rates and doubts about the government’s ability implement effective fiscal policies. Meanwhile the possibility of a US government shutdown looms in just a little over four days as DC remains at odds on a bill. U.S. House of Representatives Speaker Mike Johnson unveiled a Republican stopgap spending measure on Saturday aimed at averting a government shutdown on Friday, but the measure quickly ran into opposition from lawmakers from both parties in Congress. Boeing (BA) shares climbed 3% pre-market after Bloomberg reported that China is considering resuming purchases of 737 Max aircraft when the U.S. and Chinese presidents meet this week at the APEC summit. In Asian markets, The Nikkei Index rose 17 points to 32,585, the Shanghai Index rose 7 points to 3,046, and the Hang Seng Index jumped 222 points to 17,426. In Europe, the German DAX is up 30 points to 15,270, while the FTSE 100 is up 40 points to 7,400. No major data or earnings results on the calendar today.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 67.89 points, or 1.56%, to 4,415.24.

·     The Dow Jones Industrial Average rose 391.16 points, or 1.15%, to 32,283.19.

·     The Nasdaq Composite surged 276.66 points, or 2.05%, to 13,798.11.

·     The Russell 2000 Index advanced 18.09 points, or 1.07% to 1,705.32.

Economic Calendar for Today

·     2:00 PM ET                   Federal Budget for October

Earnings Calendar:

·     Earnings Before the Open: AMPS BWEN EARN HSIC LWAY MBRX ROIV TSN

·     Earnings After the Close: ACM ACTG ASUR AWH CARA CLSD CYCC FSR GLAD HROW ICAD NVGS OWLT PLSE RUM SALM SBIG SKIN TBIO XGN XPER

Other Key Events:

·     American Association for the Study of Liver Disease’s Annual Liver Meeting, 11/10-11/14, in Boston, MA

·     Edison Electric Institute (EEI) Conference, 11/12-11/14, in Phoenix, AZ

·     REITWorld, 11/13-11/15, in Los Angeles, CA

·     Piper 2023 Life Insurance Tour (virtual), 11/13

·     Stephens Annual Investment Conference, 11/13-11/16, in Nashville, TN

World News

·     Moody’s Investors Service late Friday cut its outlook on the U.S. sovereign credit rating to negative from stable, citing higher interest rates and doubts about the government’s ability implement effective fiscal policies. Moody’s continues to rate U.S. sovereign debt Aaa — the only one of the three major credit-rating companies to maintain a triple-A.

·     The United States conducted a new round of airstrikes against facilities used by Iran and its proxies in eastern Syria late Sunday in retaliation for a spate of recent attacks against American troops, Pentagon officials said on Sunday – NY Times.

Sector News Breakdown

Consumer

·     Copart Inc. (CPRT) mentioned positively in Barron’s saying although shares have jumped more than 50% this year, thanks to a string of optimistic earnings reports and an increase in sales volume, it’s expected to keep growing.

Energy, Industrials and Materials

·     Boeing (BA) is closing in on a major order for its 777X widebody model from Emirates. Already the biggest buyer of the widebody aircraft, Emirates, is poised to order a high double-digit number of the 777X – Bloomberg.

·     China is contemplating resuming purchases of Boeing’s (BA) 737 Max aircraft when U.S. President Joe Biden and Chinese President Xi Jinping meet this week https://tinyurl.com/bdza63rk

·     Air Lease (AL) announced long-term lease contracts for 18 new Boeing (BA) 737-8 aircraft with EgyptAir. These new Boeing aircraft are confirmed to deliver to the airline beginning in 2025 through 2026 from ALC’s order book with Boeing.

Healthcare

·     Henry Schein (HSIC) Q3 adj EPS $1.32 and revs $3.2B both in-line with consensus but lowered its full-year guidance to reflect a slowing economy; guides FY adj EPS to $4.43-$4.71 vs. est. $5.20; expects an estimated 55c-75c business interruption impact from a recent cybersecurity incident.

·     KalVista Pharmaceuticals (KALV) provided clinical trial and regulatory updates for its lead program sebetralstat, in development as a potential oral on-demand therapy for hereditary angioedema.

·     Novo Nordisk’s (NVO) obesity drug Wegovy notably cut the risk of heart attacks in a landmark cardiovascular trial that affirms the treatment offers health benefits beyond weight loss. The company in August had announced that in this trial, called Select, Wegovy reduced the overall rate of major heart problems — heart attacks, stroke, or cardiovascular-related death — by 20%.

·     Verve Therapeutics (VERV) said that the first 10 people to receive a one-time treatment powered by a form of CRISPR called base editing showed reductions in bad cholesterol levels — study results that are preliminary but signal the potential for gene-editing treatments to benefit people with an inherited type of cardiovascular disease.

Technology, Media & Telecom

·     Hewlett Packard (HPQ) was upgraded to Buy from Neutral at Citigroup predicated on: 1) continued improvements in PC ecosystem with inventory digestion completed, with potential for AI on PCs to drive higher revenue growth in outer years; 2) significant cost takeout which it believes is supportive of margins and earnings recovery ahead; and 3) undemanding valuations and potential for higher FCF generation to drive higher buybacks.

·     Mobileye Global Inc. (MBLY) mentioned positively in Barron’s saying it had one of the few successful initial public offerings of the past 18 months. After returning to the public market last year at $21 per share, its stock is now at $37. The autonomous-driving systems company could continue to have great momentum.