Early Look

Wednesday, October 25, 2023

Futures	Up/Down	%	Last
Dow	+42.00	0.13%	33,311
S&P 500	-14.25	0.34%	4,256
Nasdaq	-85.50	0.58%	14,761

 

 

After snapping its 4-day losing streak on Tuesday, S&P futures are pointing to a lower open, pressured by another bounce in Treasury yields and weakness in technology stocks after GOOGL shares fall on weak growth in its cloud division, pressuring software stocks. U.S. markets rose on Tuesday, halting a four-day decline as markets amid better earnings in some large cap companies and as investors await earnings from the five biggest companies in the S&P 500 this week which account for about a quarter of the benchmark’s market capitalization. Overnight, Microsoft shares advanced following better earnings and revenue while Alphabet (GOOGL) posted slowing cloud revenue growth, sending shares lower. Oil fell below $84 amid signs the crude market’s tightness has slackened and the Israel-Hamas war will remain contained for the time being. Of the 118 S&P 500 companies that have reported so far, 81% have beaten analysts’ earnings expectations according to Refinitiv. There is some housing data later this morning, but GDP tomorrow and PCE inflation data on Friday remain the key focus this week. In Asian markets, The Nikkei Index rose 207 points to 31,269, the Shanghai Index gained 11 points to 2,974, and the Hang Seng Index advanced 93 points to 17,085. In Europe, the German DAX is down -23 points to 14,856, while the FTSE 100 is flat at 7,391.

 

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 30.64 points, or 0.73%, to 4,247.68.

·     The Dow Jones Industrial Average rose 204.97 points, or 0.62%, to 33,141.38.

·     The Nasdaq Composite jumped 121.55 points, or 0.93%, to 13,139.88.

·     The Russell 2000 Index advanced 13.62 points, or 0.82% to 1,679.50.

 

Economic Calendar for Today

·     7:00 AM ET                  MBA Mortgage Applications Data

·     10:00 AM ET                New Home Sales M/M for September

·     10:30 AM ET                Weekly DOE Inventory Data

·     1:00 PM ET                   US Treasury to sell $49B in 5-year notes.

 

Earnings Calendar:

·     Earnings Before the Open: ADP APH AVY BA BLFY BOKF BXMT CFFN CME CNX COOP CPF EVR FTV GBX GD GPI HES HESM HLT IART LAD LTH MCO MHO MKTX MNRO MPX MSM NAVI NSC OC ODFL OMF OPCH OTIS PAG PB PROV R RES ROP SF SLGN TDY TMHC TMO TMUS TNL VRT WAB WNC

·     Earnings After the Close: ALGN ALRS ALSN AM AMP AR ASGN ATNI AVB BELFA BHE BKR CACI CASH CCS CHDN CHE CNMD CVLG CYH EGBN EIG EPR EQIX EQT ESI ESRT EW FBIN FLEX FLS FTAI GGG GL GSHD GTY HBNC IBM IEX INBK INVH KALU KLAC KRC LC LSTR MAA MAT META MOH MXL NBR NEU NLY NOVA NOW NTGR NTST NXT OBK OII ORLY ORN PEGA PI PLXS PPC QCRH QS RBBN RJF ROL SEIC SLM SUI TER TROX UCTT UHS URI VICI VKTX VLTO VMI WH WHR WSBC WU

 

 

Macro	Up/Down	Last
Nymex	-0.21	83.53
Brent	-0.13	87.94
Gold	-3.20	1,982.90
EUR/USD	-0.0015	1.0573
JPY/USD	0.01	149.92
10-Year Note	+0.025	4.866%

 

 

World News

·     The U.S. Federal Reserve is expected on Wednesday to propose an official review of the fees banks can charge retailers for debit card transactions, setting up a battle between the two industries that could result in a court challenge. The scheduled Fed board meeting will mark the first time in over a decade that the central bank has proposed revising the fees, which generated around $24.31 billion for lenders in 2019, the most recent Fed data shows. – Reuters

·     The worst selloff of longer-term Treasuries in more than four decades is putting a spotlight on the market’s biggest missing buyer: the Federal Reserve. The Fed is shrinking its portfolio of government securities at a $720 billion annual pace, making the Treasury Department’s job of funding a near-$2 trillion federal deficit all the harder – Bloomberg.

·     Israel’s credit outlook was cut to negative by S&P Global Ratings, which cited risks related to its war with Hamas.

 

Sector News Breakdown

Consumer

·     Boyd Gaming (BYD) Q3 adj EPS $1.36 vs. est. $1.47; Q3 revs $903.2M vs. est. $879.82M; said quarterly results impacted by declines in play from retail customers and ongoing cost pressures, both related to the challenging economic environment.

·     Hawaiian Holdings (HA) Q3 adj EPS loss (-$1.06) vs. est. loss (-$0.94); Q3 revs $727.68M vs. est. $735.66M; cuts FY capacity +7.5% to +8.5%, vs. prior +8% to +10%; Raises FY23 CASM-ex view to up 4%-5.5% from up 3%-5%.

·     Hilton (HLT) Q3 adj EPS $1.67, in-line with consensus on better revs at $2.67B vs. est. $2.62B; Q3 system-wide comparable RevPAR increased 11.4%, on a currency neutral basis; sees FY23 adjusted EPS $6.04-$6.09, consensus $6.07; sees FY23 system-wide comparable RevPAR, on a currency neutral basis, up 12.0%-12.5% compared to 2022.

 

Energy

·     ChampionX (CHX) Q3 EPS $0.41 vs. est. $0.50; Q3 revs fell -8% y/y to $939.8M (while rose 1% sequentially) vs. est. $971.12M; on a consolidated basis, in Q4 expect revenue to be between $930M-$970M and Ebitda $187M-$197M.

·     Matador Resources (MTDR) Q3 adj EPS $1.86 vs est. $1.65 with adj FCF $144.6Mm; sees Q4 production avg approx $145,000 BOE/day.

·     Range Resources (RRC) Q3 adj EPS $0.46 vs. est. $0.35; Q3 revs $649M vs. est. $603.74M; 2023 all-in capital budget is $570M-$615M and targeting a maintenance program in 2023, resulting in approximately flat production at 2.12 – 2.16 bcfe per day.

·     SunPower (SPWR) said to restate financial statements as finds material weakness in control over financial reporting.

 

Financials

·     Visa Inc. (V) Q4 adj EPS $2.33 vs est. $2.24 on revs $8.6B vs est. $8.552B; qtrly payment volume +9%; boosts qtr div to 52c from 45c per share; authorized a new $25B multi-year share buyback program; total cross-border volume on constant-dollar basis +16%; total processed transactions +10%; seen resilient consumer spending and ongoing recovery of cross-border travel spend.

·     Chubb Inc. (CB) Q3 core EPS $4.95 vs. est. $4.44; Q3 consolidated net premiums written of $13.1B, up 9.1%, with global P&C up 12.3%; P&C combined ratio of 88.4%; year-to-date net income per share of $13.79, up 48.9%.

·     CoStar Group (CSGP) Q3 EPS $0.22 vs est. $0.30 on revs $625Mm vs est. $625.9Mm; guides Q4 revs $630-635Mm vs est. $644.27Mm and adj EBITDA $123-128Mm vs est. $148.91Mm; sees FY revs $2.445-2.450B vs est. $2.461B, adj EBITDA $485-490Mm vs est. $517.84Mm and adj EPS $1.21-1.22 vs est. $1.25.

·     Deutsche Bank (DB) net profit attributable to shareholders was 1.031B euros, beating the around 937M; said it would potentially return more capital to investors than the 8 billion euros it had envisaged through 2025.

·     Robert Half (RHI) Q3 EPS $0.90 vs. est. $0.81; Q3 revs $1.56B vs. est. $1.54B; sees Q4 EPS $0.75-$0.89 vs. est. $0.78; sees Q4 revs $1.415B-$1.515B vs. consensus $1.5B.

·     European payments company Worldline SA shares plummeted after cutting its sales outlook; Worldline said it now sees organic sales growth in 2023 of between 6% and 7%, compared with 8% to 10% previously. It also forecasts a 150-basis-point drop in its operating margin. The stock’s plunge mirrored that of peer Adyen NV (ADYEY) in August – shares of US payment companies (PYPL, SQ, GPN, FIS, FI) are looking lower this morning.

·     Marathon Digital (MARA) files automatic mixed securities shelf.

 

Healthcare

·     Teladoc (TDOC) Q3 EPS loss (-$0.35) vs. est. loss (-$0.37); Q3 revs rose 8% y/y to $660.24M vs. est. $664.11M; Q3 adjusted EBITDA of $88.8 million, up 73% y/y; Access fees revenue grew 8% to $582.1M and other revenue grew 10% to $78.2M; sees Q4 EPS loss (33c)-(23c) vs. est. loss (-$0.15) and revenue $658M-$683M below consensus $686.56M.

·     Thermo Fisher (TMO) Q3 adj EPS $5.69 vs. est. $5.63; Q3 revs $10.57B vs. est. $10.61B.; cuts FY23 adjusted EPS view to $21.50 from $22.28-$22.72 (est. $22.31) and cuts FY23 revenue view to $42.7B from $43.4B-$44B (est. $43.53B) citing the current macroeconomic environment.

 

Industrials & Materials

·     Canadian National (CNI) Q3 EPS C$1.69 vs. est. C$1.72 and vs. C$2.13 last year; Q3 revenue C$3.99B vs. C$4.51B last year; said continues to expect flat to slightly negative y/y growth in adjusted diluted eps in 2023; reiterates longer-term financial perspective; remain confident in ability to accelerate sustainable, profitable growth in 2024 through 2026; now assumes flat North American industrial production in 2023.

·     Livent (LTHM) upgraded to Buy from Hold at Deutsche Bank but cut tgt to $21 from $27, implying over 35% upside from current levels, noting shares are down 32% since early June, which represents an attractive entry point.

·     MSC Industrial (MSM) Q4 adj EPS $1.64 vs. est. $1.62; Q4 revs $1.04B vs. est. $1.01B.

·     Waste Management (WM) Q3 adj EPS $1.63 vs. est. $1.61; Q3 revs $5.2B vs. est. $5.27B; sees FY23 free cash flow $1.825B-$1.925B; says confident in ability to deliver on guidance communicated in July.

 

Technology, Media & Telecom

·     Microsoft Corp. (MSFT) Q3 EPS $2.99 vs est. $2.65 on revs $56.5B vs est. $54.5B; Azure and other cloud services revs +29% above ests of around 26%; intelligent cloud revs +19%.

·     Alphabet (GOOGL) Q3 EPS $1.55 vs est. $1.45 on revs $76.693B vs est. $75.971B, op mgn 28%; cloud revs slowed to +22.5% at $8.411B vs est. $8.6B and down from 28% growth last quarter; posts ad revs $59.65B up from $54.48B last year.

·     F5 networks (FFIV) Q4 adj EPS $3.50 vs. est. $3.22; Q4 revs $707M vs. est. $701.59M; sees Q1 adj EPS $2.97-$3.09 vs. est. $3.03 and Q1 revs $675M-$695M vs. est. $694.79M; sees FY24 revenue flat to down low single digits vs. FY23.

·     Snap Inc. (SNAP) Q3 adj EPS $0.02 vs. est. loss (-$0.04); Q3 revs $1.189B vs. est. $1.11B; Q3 DAUs up 12% y/y to 406M; sees Q4 revenue $1.32B-$1.375B vs. est. $1.33B; expects muted spending from many brand-oriented ad campaigns following the onset of the war in the Middle East.

·     Texas Instruments (TXN) Q3 EPS $1.85 vs. est. $1.81; Q3 revs $4.53B vs. est. $4.58B; guides Q4 EPS $1.35-$1.57 below consensus $1.75 and revs $3.93B-$4.27B below consensus $4.49B; said demand suffers across its key markets including industrial as vendors pull back on orders.

·     Manhattan Associates (MANH) Q3 adj EPS $1.05 vs est. $0.76 on revs $238.4Mm vs est. $226.21Mm; guides FY revs $912-916Mm vs est. $891.57Mm, adj op mgn 28.9-29.1%, adj EPS $3.51-3.53 vs est. $3.10.