Early Look

Wednesday, November 29, 2023

Futures	Up/Down	%	Last
Dow	85.00	0.24%	35,530
S&P 500	15.25	0.33%	4,578
Nasdaq	70.50	0.44%	16,118

 

 

S&P futures (Spuz) are rising +0.32% to 4,578, moving above yesterday’s high of 4,577.25 as Treasury yields fall (10-yr at 4.28%) for a third consecutive session, boosted by speculation that the Fed will start cutting interest rates next year. Oil prices advanced, with WTI rising 1.4% to trade near $77.40. Dueling comments from Federal Reserve officials on Tuesday impacted broader markets (Waller dovish and Bowman hawkish), but major averages finished mostly higher, staying in a tight range as Tuesday marked the 5th day that the S&P 500 open and close were within 10 points. Also, with yesterday’s small late-day push higher, the S&P avoided its first 2-day losing streak since the end of Oct (10/25-10/27). Overall, after a somewhat scary October, markets have been on a straight move up, rising more than 10% off those lows and remain on track for gains in 2023 with only one month left of trading. There is also no fear whatsoever in the market as the CBOE Volatility Index (VIX) is currently at its 2nd lowest level since January 2020 at 12.56 yesterday. In Asian markets, The Nikkei Index dropped -87 points to 33,321, the Shanghai Index fell -16 points to 3,021, and the Hang Seng Index tumbled -360 points to 16,993. In Europe, the German DAX is up 138 points to 16,130, while the FTSE 100 is down -9 points to 7,446.

 

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 4.47 points, or 0.10%, to 4,554.90.

·     The Dow Jones Industrial Average rose 83.31 points, or 0.24%, to 35,416.78.

·     The Nasdaq Composite gained 40.73 points, or 0.29%, to 14,281.76.

·     The Russell 2000 Index declined -8.35 points, or 0.46% to 1,792.81.

 

Economic Calendar for Today

·     7:00 AM ET                  MBA Mortgage Applications Data

·     8:30 AM ET                  Gross Domestic Product (GDP) for Q3…est. 5.0%

·     8:30 AM ET                  Consumer Spending for Q3…

·     8:30 AM ET                  GDP Price Deflator for Q3…est. 3.5%

·     8:30 AM ET                  PCE Prices Preliminary for Q3…est.

·     8:30 AM ET                  Core PCE Prices Prelim for Q3…est. 2.4%

·     8:30 AM ET                  Advance Goods Trade Balance for October…est.

·     10:30 AM ET                Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: DCI DLTR FL HRL PDCO ROAD VSTS WOOF

·     Earnings After the Close: ARWR CRDO CRM FIVE LZB NCNO NTNX OKTA PSTG PVH SNOW SNPS VSCO ZUO

 

Other Key Events:

·     Bank America European Tech Fieldtrip, 11/27-12/1 (virtual)

·     Piper Annual Healthcare Conference, 11/28-11/30, in NY

·     UBS Global Technology Conference, 11/27-11/30, in Scottsdale, AZ

·     China NBS Manufacturing PMI for November

 

 

Macro	Up/Down	Last
Nymex	1.03	77.44
Brent	0.92	82.60
Gold	-0.40	2,059.80
EUR/USD	-0.0018	1.0972
JPY/USD	0.18	147.66
10-Year Note	-0.052	4.284%

 

 

Sector News Breakdown

Consumer

·     Azek Company (AZEK) Q4 adj EPS $0.36 vs est. $0.29, adj EBITDA $106.4Mm vs est. $93.44Mm and sales $388.812Mm vs est. $368.82Mm, sees Q1 net sales $230-236Mm vs est. $247.35Mm and adj EBITDA $45-48Mm vs est. $47.92Mm, sees FY net sales $1.335-1.395B vs est. $1.43B, adj EBITDA $320-335Mm vs est. $341.44Mm.

·     Dollar Tree (DLTR) Q3 EPS $0.97 vs. est. $1.01; Q3 revs $7.31B vs. est. $7.4B; narrows FY23 EPS view to $5.81-$6.01 from $5.78-$6.08 (est. $5.97) while cuts FY23 revenue view to $30.5B-$30.7B from $30.6B-$30.9B (est. $30.82B); sees mid-single-digit comp store net sales increase for FY23.

·     Foot Locker (FL) Q3 adj EPS $0.30 vs. est. $0.21; Q3 sales fell -8.6% y/y to $1.99B vs. est. $1.96B; Q3 comp sales ell -*% vs. est. -9.8%; said did not buyback any shares during Q3; forecasts FY comp sales -8.5% to -9%, forecast -9% to -10%; still expect to end year with inventory levels flat to down slightly, as compared with prior year.

·     GameStop (GME) shares rose over 10% pre mkt on no news, ahead of earnings next week.

·     General Motors (GM) reinstates 2023 earnings guidance and announces a $10 billion accelerated share repurchase program and 33% dividend increase starting in 2024; said will deliver strong profits in 2023; now sees 2023 adj EPS $7.20-$7.40 from prior $7.15-$8.15 and lowers 2023 adj Ebit view to $11.7B-$12.7B from prior $12B-$14B.

·     Hormel Foods Corp. (HRL) Q4 adj EPS $0.42 vs est. $0.44 and sales fell -2.6% y/y to $3.2B below the consensus of $3.26B, as overall volume declined -0.4%, with retail down 2.7% and foodservice up 4.8%; sees FY adj EPS $1.51-$1.65 below consensus $1.66.

·     Leslie’s Inc. (LESL) Q4 adj EPS $0.14 vs est. $0.18 on sales $432.4Mm vs est. $419.39Mm, adj EBITDA $59.5Mm vs est. $65.31Mm; guides FY23 sales $1.41-1.47B vs est. $1.496B, adj EBITDA $170-190Mm vs est. $217.06Mm, adj EPS $0.25-0.33 vs est. $0.50.

·     Las Vegas Sands (LVS) 46.26M share Spot Secondary priced at $44.00.

 

Energy, Industrials and Materials

·     Donaldson (DCI) Q1 EPS $0.75 vs. est. $0.72; Q1 revs $846.3M vs. est. $855.06M; Still sees EPS $3.14 to $3.30 (est. $3.18), still sees sales +3% to +7% and still sees operating margin 14.7% to 15.3%.

·     Maxeon Solar Technologies, Ltd. (MAXN) announced that it has initiated an investigation of several companies for infringement of Maxeon patents pertaining to TOPCon (Tunnel Oxide Passivated Contact) solar cell technology in the United States.

·     PG&E Corporation (PCG) announces proposed offering of $1.5b convertible senior secured notes due 2027 to repay portion of existing term loan.

·     Textron (TXT) approved a restructuring plan developed by management in connection with the company’s annual operating plan process cutting 2% of jobs; plan will reduce operating expenses through headcount reductions at the Industrial, Bell and Textron Systems segments.

 

Financials

·     Intuit (INTU) Q1 adj EPS $2.47 vs est. $1.98 on revs $2.978B vs est. $2.878B; guides Q2 revs +11-12% vs est. +11.91%, adj EPS $2.25-2.31 vs est. $2.56; sees FY24 revs $15.89-16.105B vs est. $16.022B, adj EPS $16.17-16.47 vs est. $16.36.

·     Alipay plans to sell its 3.4% stake in Zomato, an Indian food delivery company, for nearly $400M – Reuters reported.

 

Healthcare

·     United Healthcare (UNH) forecasts 2024 operating cash flow $30B to $31B, vs. est. $31.52B; forecasts 2024 adj EPS $27.50 to $28.00 vs. est. $27.83, and forecasts 2024 revenue of $400B to $403B vs. est. $394.97B.

 

Technology, Media & Telecom

·     Crowdstrike (CRWD) Q3 adj EPS $0.82 vs est. $0.74 on revs $786.014Mm vs est. $777.13Mm; sees Q4 revs $836.6-840Mm vs est. $836.71Mm and adj EPS $0.81-0.82 vs est. $0.78; sees FY revs $3.0468-3.0502B vs est. $3.038B and adj EPS $2.95-2.96 vs est. $2.83; ending ARR surpasses $3 billion milestone, growing 35% YoY to reach $3.15B.

·     Hewlett Packard Enterprise (HPE) Q4 EPS $0.52 vs. est. $0.50; Q4 revs $7.35B vs. est. $7.36B; raises quarterly dividend to $0.13 from $0.12; see promising indicators of continued demand in areas of market we are prioritizing, especially in AI; guides Q1 EPS $0.42-$0.50 vs. est. $0.46 and revs $6.9B-$7.3B vs. est. $7.27B; and reaffirms year outlook.

·     Jabil Inc. (JBL) cuts Q1 revenue view to $8.3B-$8.4B from $8.4B-$9B (est. $8.74B) saying at end of Q1, experienced softening in demand, because of short-term inventory corrections across certain end-markets; guides Q2 revs $7.0B-$7.6B vs. est. $8.1B; sees FY24 revs roughly $31B below consensus $33.7B; said continue to expect to deliver more than $1B in adj free cash flow for year.

·     NetApp Inc. (NTAP) Q2 adj EPS $1.58 vs. est. $1.39; Q2 revs $1.56B vs. est. $1.53B; guides Q3 adj EPS to $1.64-$1.74 above est. $1.53 and revs $1.51B-$1.67B vs. est. $1.56B; boosts FY24 EPS view to $6.05-$6.25 from $5.65-$5.85 (consensus $5.73).

·     Okta Inc. (OKTA) has discovered that hackers who breached its network two months ago stole information on all users of its customer support system — a scope far greater than the 1% of customers the company had previously said were affected – Bloomberg reported.

·     Open Text (OTEX) announced that it has reached a definitive agreement to divest its AMC business to Rocket Software, a Bain Capital portfolio company, for $2.275B in cash.

·     Splunk (SPLK) Q3 adj EPS $1.52 vs est. $1.15 on revs $1.067B vs est. $1.029B, adj gr mgn 83.6%; will not host a conference call or provide a financial outlook.

·     Unity Software (U) said it will eliminate 265 jobs or 3.8% of its global workforce and end an agreement with a digital video effects company founded by the “Lord of the Rings” director as part of a “reset,” the company said.

·     Workday (WDAY) Q3 adj EPS $1.536 vs est. $1.41 on revs $1.87B vs est. $1.846B; sees FY adj EBIT mgn 23.8%, raises FY subscription revs guide to $6.598B; Total Q3 subscription revenue backlog was $18.45B, up 30.9% y/y.

·     Electronic Arts (EA) files mixed securities shelf.