Morning Preview: October 07, 2022

Early Look

Friday, October 7, 2022









S&P 500










To no surprise, US futures are trading in a very narrow range ahead of the monthly jobs report at 8:30 AM, where the market is expecting to see +250K nonfarm payrolls added, +365K private jobs and +19K manufacturing jobs, unemployment rate to hold at 3.7% and average hourly wages to rise +0.3% M/M. Major averages are still up over 4% for the week despite yesterday’s pullback, on track to snap its weekly string of declines, but that could change depending on the upcoming data. A strong jobs report is likely to raise fears of additional aggressive rate hikes and tightening by the Fed until the end of the year and weigh on investor sentiment today. On the flip side, a weaker reading could show the Fed a struggling economy and that their aggressive rate hikes to slow inflation is beginning to take effect and seen as a positive for US markets (for the time being). Commodities have opened Q4 in style, with prices set for the best weekly showing since March after OPEC+ agreed to cut oil output this week. Technology shares are looking lower, specifically semiconductor chip names after giant AMD lowered its revenue outlook for the 2nd time in just a few months, another reminder of how difficult the economy is at this time. In Asian markets, The Nikkei Index dipped -195 points to 27,116, the Shanghai Index remained closed for week-long holiday, and the Hang Seng Index dropped -272 points to 17,740. In Europe, the German DAX is down -15 points to 12,450, while the FTSE 100 is up a few points above the 7,000 level.

Economic Calendar for Today

·     8:30 AM ET           Nonfarm Payrolls for September…est. +250K

·     8:30 AM ET           Private Payrolls for September…est. +265K

·     8:30 AM ET           Manufacturing Payrolls for September…est. +19K

·     8:30 AM ET           Unemployment Rate for September…est. 3.7%

·     8:30 AM ET           Average Hourly Earnings M/M for Sept…est. +0.3%

·     10:00 AM ET         Wholesale Inventory M/M for August…est. +1.3%

·     10:00 AM ET         Fed’s Williams Speaks in Moderated Q&A

·     1:00 PM EST         Baker Hughes Weekly rig count data

·     3:00 PM ET           Consumer Credit for August…est. $24.5B


Market Closing Prices Yesterday

·     The S&P 500 Index dropped -38.76 points, or 1.02%, to 3,744.52

·     The Dow Jones Industrial Average fell -346.93 points, or 1.15%, to 29,926.94

·     The Nasdaq Composite slipped -75.33 points, or 0.68%, to 11,073.31

·     The Russell 2000 Index declined -10.18 points, or 0.58% to 1,752.51





















10-Year Note





Sector News Breakdown


·     DraftKings (DKNG) and Disney’s (DIS) ESPN are near signing an exclusive partnership, Action Network’s Darren Rovell reports, citing sources. ESPN was seeking a partner in hopes of securing $3B over a period that would lead to a sportsbook rebranding itself with the ESPN brand (CNBC reported this morning that there is no truth to ESPN/DraftKings rumor)

·     Elon Musk said last night Tesla (TSLA) is kicking off production of its long-awaited Semi truck and will start deliveries to its first customer Pepsi from Dec. 1

·     Levi Strauss (LEVI) Q3 EPS $0.40 vs. est. $0.37; Q3 sales rose 1.3% y/y to $1.52B, missing the $1.60B estimate; lowers FY22 EPS view to $1.44-$1.49 from prior $1.50-$1.56 (est. $1.54); lowers year revs to up 6%-7% from prior rise of 11%-13%; total inventories in Q3 increased 43% compared to end of corresponding prior year period; said controlling discretionary spending, while maintaining commitment to invest strategically

·     Lyft (LYFT) downgraded to Sector Perform at RBC Capital amid Uber’s ‘competitive intensity


Energy, Industrials and Materials

·     S&P MidCap 400 constituent Targa Resources Corp. (TRGP) will replace Nielsen Holdings plc (NLSN) in the S&P 500, S&P SmallCap 600 constituent Lantheus Holdings Inc. (LNTH) will replace Targa Resources in the S&P MidCap 400, effective prior to the opening of trading on Wednesday, October 12. Elliot Management Corp is acquiring Nielsen Holdings in a transaction expected to close October 11.



·     Credit Suisse (CS) said it will spend around $3 billion to buy back senior bonds to save on interest payments as it prepares to reshape itself as a smaller and safer bank. Credit Suisse said Friday it would repurchase parts of 12 dollar-denominated bonds it issued previously, for up to a total $2 billion. It is also offering to buy back eight Euro and sterling bonds it issued, for up to a total of 1 billion euros, equivalent to around $980 million.

·     Goldman Sachs (GS) upgraded to Outperform from Market Perform at Keefe Bruyette and raises tgt to $429 from $395

·     Zions Bancorp (ZION) downgraded to Market Perform from Outperform at Keefe Bruyette

·     The biggest U.S. banks are expected to report weaker third-quarter profits as the economy slowed and volatile markets put the brakes on dealmaking. Four of the nation’s largest lenders — JPMorgan Chase & Co (JPM), Wells Fargo (WFC), Citigroup Inc (C) and Morgan Stanley (MS) — will report third-quarter earnings Friday, Oct. 14.

·     Payoneer Global Inc. (PAYO) will replace Lantheus Holdings in the S&P SmallCap 600 effective prior to the opening of trading on Wednesday



·     Accolade (ACCD) Q2 EPS loss (-$0.66) vs. est. loss (-$0.27); Q2 revs $87.64M vs. est. $82.86M; sees Q3 revenue $86M-$88M below consensus $89.38M and sees Q3 adjusted EBITDA loss $11M-$13M; raises low end of FY23 revenue view to $358M-$365M from $355M-$365M

·     Allogene Therapeutics (ALLO) initiates industry’s first allogeneic CAR T Phase 2 trial; ALPHA2 Trial, evaluating ALLO-501A in Relapsed/Refractory Large B cell lymphoma patients, is designed to leverage the ease and convenience of a single dose of ALLO-501A

·     BioMarin Pharmaceutical (BMRN) said it will redesign the organization to better focus investments that advance its R&D pipeline, maximize recent commercial launch success, prepare for a potential launch of ROCTAVIAN in the U.S., and drive core infrastructure optimization.

·     Merck (MRK) and Ridgeback Biotherapeutics Provide Update on New Clinical and Non-Clinical Studies of LAGEVRIO (molnupiravir) an investigational oral antiviral #COVID19 medicine.

·     Shares of cannabis growers and sellers extend gains after President Joe Biden took steps to overhaul U.S. policy on marijuana on Thursday. Biden pardoned thousands of people with federal offenses for simple marijuana possession and initiated a review of how the drug is classified, sending pot stocks soaring in previous session


Technology, Media & Telecom

·     Advanced Micro (AMD) shares fall -5% after guides preliminary Q3 revs about $5.6B, lower than prior outlook of $6.7B plus or minus $200M saying results reflect lower than expected client segment revenue; said Q3 gross margin is expected to be approximately 42% and non-Gaap gross margin 50%

·     Aehr Test Systems (AEHR) reports 89% revenue growth y/y in Q1 on strength of wafer level test and burn-in of silicon carbide devices used in electric vehicles

·     SMBC Nikko initiated on the Security Software sector with an Overweight rating and initiating coverage on 6 security stocks saying the current sell-off presents investors an attractive opportunity to purchase quality security stocks at reasonable valuations as our Outperform-rated stocks (FTNT, PANW, CRWD and ZS) offer best-in-class growth at scale alongside expanding margin profiles even though several are already generating 30%+ FCF margin (S, CHKP Neutrals)

·     ChipMOS (IMOS) reported sales for September of NT$1.59 billion; sales NT$1.59 billion


Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.