Early Look

Wednesday, November 22, 2023

S&P futures (Spuz) edge higher, just off overnight highs of 4,560.75 as blowout earnings and guidance from NVDA overnight receive only a muted response, with shares +1% premarket ahead of the Thanksgiving Day holiday tomorrow. Not much else on the calendar today outside of weekly jobless claims data at 8:30 AM, consumer confidence at 10:00 AM, and earnings from machinery giant Deere (DE) which reported a quarterly beat, but lower guidance sending shares lower. Stocks took a breather from November gains with the Fed minutes from the October 31-November 1st meeting did little to change future rate expectations. All members of the committee saw rates remaining restrictive for some time and all agreed to “proceed carefully” on future changes in interest rates. Treasury yields are mixed overnight lows, with the 10-yr down at 4.37% but the 2-yr up around 4.89%. The 10-year Treasury yield has fallen 46 basis points so far in November, to trade near two-month lows. In Asian markets, The Nikkei Index rose 97 points to 33,451, the Shanghai Index fell -24 points to 3,043, and the Hang Seng Index was flat at 17,734. In Europe, the German DAX is up 69 points to 15,969, while the FTSE 100 is flat at 7,482. Gold steadied just above the $2,000 threshold ahead of US jobless claims data that may bolster bets on rapid interest rate cuts next year.

Market Closing Prices Yesterday

·     The S&P 500 Index dipped -9.19 points, or 0.20%, to 4,538.19.

·     The Dow Jones Industrial Average fell -62.75 points, or 0.18%, to 35,088.29.

·     The Nasdaq Composite dropped -84.55 points, or 0.59%, to 14,199.98.

·     The Russell 2000 Index declined -23.82 points, or 1.32% to 1,783.26.

Economic Calendar for Today

·     8:30 AM ET              Weekly Jobless Claims…est. 226K

·     8:30 AM ET              Continuing Claims…est. 1.875M

·     8:30 AM ET              Durable Goods M/M for October…(-3.1%)

·     10:00 AM ET            University of Michigan Nov-F…est. 60.6

Earnings Calendar:

·     Earnings Before the Open: DE

World News

·     Hamas agreed to free 50 hostages from Gaza in return for a four-day ceasefire with Israel and the release of 150 Palestinian prisoners.

Sector News Breakdown

Consumer

·     Guess Inc. (GES) Q3 adj EPS $0.49 vs est. $0.61, adj EBIT $57.9Mm vs est. $51.47Mm on revs $651Mm vs est. $655.6Mm; guides Q4 revs $+4.0-6.0% vs est. +7.2%, adj op mgn 14.1-14.4% and adj EPS $1.53-1.60 vs est. $1.68; cuts FY24 revenue growth view to 1.8%-2.4% from 2.5%-4%.

·     Jack in the Box (JACK) Q4 adj EPS $1.09 vs est. $1.15 on revs $372.524Mm vs est. $372.48Mm, adj EBITDA $68.4Mm vs est. $67.48Mm; sees FY24 adj EBITDA $325-335Mm vs est. $327.75Mm, operating EPS $6.25-6.50 vs est. $6.60.

·     Nordstrom (JWN) Q3 adj EPS $0.25 vs. est. $0.12; Q3 revs fell -6.4% y/y to $3.32B vs. est. $3.4B; Nordstrom’s label recorded a 9.4% drop in sales while discount banner Rack declined only 1.8%, its smallest fall in five quarters; posts a 180-bps increase in gross profit for the quarter; narrows FY23 adjusted EPS view to $1.90-$2.10 from $1.80-$2.20 (est. $2.00) and reaffirms sales view.

·     Urban Outfitters (URBN) Q3 adj EPS $0.88 vs. est. $0.82; Q3 sales $1.28B vs. est. $1.26B; as of October 31, 2023, total inventory decreased by $22.6M or 3.0%, compared to total inventory y/y; Q3 Free People net sales $331.8M vs. est. $335.4M.

Energy, Industrials and Materials

·     Deere Inc. (DE) reported Q4 EPS $8.26 vs. est. $7.46; Q4 sales fell about -1% y/y to $15.41B vs. est. $13.64B; Q4 production and precision agriculture sales fell 6% and small agriculture and turf sales declined 13%; forecast 2024 net income between $7.75B-$8.25B vs. ests $9.33B; said rising dealer inventories have investors worried that demand for farming equipment might have peaked; sees 2024 production & precision ag net sales down 15 to 20%.

·     Air Lease (AL) announced the first of 25 new Boeing (BA) 737-8 aircraft delivered to Malaysia Airlines Berhad from ALC’s order book with Boeing.

Financials

·     Raymond James (RJF) said October Financial AUM was aum $196.5B, +8.4% y/y and said Oct. client assets under administration $1.24 trillion.

Healthcare

·     Novo Nordisk (NVO) said it will ration starter kits of Ozempic in Europe and reduce supplies of another diabetes drug, Victoza, to prioritize producing Ozempic, which has seen a surge in demand from people using it to lose weight – Reuters.

Technology, Media & Telecom

·     NVIDIA Corp. (NVDA) beat and raise as Q3 data center revenue $14.51B (+279% y/y) above est. $12.82B; Q3 adj EPS $4.02 vs est. $3.37 on revs $18.12B (+34% from Q2 and +206% y/y) vs est. $16.182B, gross margins 74%; guides Q4 revs $20B plus/minus 2% vs est. $17.86B, adj gross mgn 74.5-75.5% plus/minus -50bps, adj op exp $2.2B, adj other Inc & exp approx $200Mm Inc, adj tax rate 15% +/-1%; said expect sales to China to decline significantly in Q4.

·     ChatGPT-maker OpenAI has reached an agreement for Sam Altman to return as CEO days after his ouster, as the company also agreed to revamp the board of directors that had dismissed him. OpenAI named Bret Taylor, formerly co-CEO of Salesforce, as chair and appointed Larry Summers, former U.S. Treasury Secretary, to the board. Altman said in a post on X, “I’m looking forward to returning to OpenAI.”

·     Autodesk (ADSK) Q3 adj EPS $2.07 vs est. $1.99 on revs $1.4B vs est. $1.387B, adj EBIT mgn 39%; guides Q4 revs $1.422-1.437B vs est. $1.432B, adj EPS $1.91-1.97 vs est. $2.01; sees FY FCF $1.2-1.26B.

·     HPQ Inc. (HPQ) Q1 adj EPS $0.90 vs. est. $0.90; Q1 revs $13.82B vs. est. $13.79B; guides Q1 adj EPS $0.76-$0.86 vs. est. $0.86; reported Q3 revenue declines in both its personal systems and printing divisions; said sales have improved in recent months and that he expects the PC market will grow over the next year; raised dividend by 5%; cuts year EPS outlook to $2.68-$3.08.