Early Look

Thursday, September 1, 2022

Futures	Up/Down	%	Last
Dow	-198.00	0.63%	31,334
S&P 500	-29.25	0.75%	3,927
Nasdaq	-130.50	1.06%	12,154

 

 

The overnight picture looks bleak for U.S. stocks, with the S&P 500 down -0.75%, at its lowest levels since late July on several negative developments overnight. More concerns in the tech sector after semiconductor-chip giants Nvidia (NVDA) and AMD revealed that the U.S. moved to restrict its AI chip and data-center sales in China, sending shares of semiconductors lower. Headlines that Taiwan shoots down drone for first time off Chinese coast also adding to geopolitical tensions. Global growth fears also weigh on sentiment as China Aug Caixin Manufacturing PMI (final) showed contraction with a 49.5 reading vs 50.2 consensus (hits commodity prices). Meanwhile, the southwestern Chinese metropolis of Chengdu announced a lockdown of its 21.2 million residents as it launched four days of citywide COVID-19 testing. In Asian markets, The Nikkei Index tumbled -430 points to 27,661, the Shanghai Index fell -17 points to 3,184, and the Hang Seng Index declined -357 points to 19,597. In Europe, the German DAX is down -165 points to 12,669, while the FTSE 100 is down over -100 points to 7,177. Commodity prices tumbling again as oil is down over 2% and gold nearly 1%, extending their August slide where both finished the month in negative territory for a 3^rd straight month.

 

U.S. stocks ended lower for 4th straight day Wednesday, with major indexes finishing August down 4% after a stellar July (Nasdaq 100 down over 5%) and after yesterday’s slide the S&P 500 is down 17% in the first 167 trading days of 2022, the 5th worst start to a year in history, according to data. Nine of the 11 sectors of the S&P 500 ended in the red for August, with Information Technology the top loser (-6.2%) followed by healthcare (-5.8%), while Energy and Utilities advanced. Oil prices mark their longest monthly losing streak in more than 2 years, falling a third straight month along with gold as commodity prices slide on slowing global growth fears, a stronger dollar, and rising yields.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -31.16 points, or 0.78%, to 3,955.00

·     The Dow Jones Industrial Average fell -280.44 points, or 0.88%, to 31,510.43

·     The Nasdaq Composite slipped -66.93 points, or 0.56%, to 11,816.20

·     The Russell 2000 Index declined -11.48 points, or 0.62% to 1,844.12

 

Economic Calendar for Today

·     7:30 AM ET                  Challenger Layoffs for August

·     8:30 AM ET                  Weekly Jobless Claims

·     8:30 AM EST                Continuing Claims

·     8:30 AM ET                  Nonfarm Productivity for Q2

·     8:30 AM ET                  Unit Labor Costs for Q2

·     9:45 AM ET                  S&P Global Manufacturing PMI, Aug-F

·     10:00 AM ET                ISM Manufacturing PMI for Aug

·     10:30 AM ET                Weekly EIA Natural Gas Inventory Data

·     3:30 PM ET                   Fed’s Bostic Speaks to Business School Students

 

Earnings Calendar:

·     Earnings Before the Open: BBW BRC CIEN CPB DLTH FLWS GCO GMS HOV HRL JILL LE MEI OLLI PDCO SAIC SCWX SIG TTC

·     Earnings After the Close: AVGO CVGW FARM HCP JOAN NCNO NX OOMA OXM PD SMAR SPWH TLYS

 

Other Key Events:

·     Deutsche Bank 2022 Technology Conference, 8/31-9/1, in Las Vegas

·     Mizuho Storage & AI Conference (virtual), 8/30-9/1

·     Piper Texas Bank Tour, 8/30-9/1, in Dallas

·     William Blair MedTech & Life Sciences Trip, 8/29-9/1, in San Francisco

 

 

Macro	Up/Down	Last
Nymex	-2.21	87.34
Brent	-2.22	93.42
Gold	-15.10	1,711.10
EUR/USD	-0.0049	1.0008
JPY/USD	0.37	139.34
10-Year Note	+0.066	3.198%

 

 

World News

·     China Aug Caixin Manufacturing PMI (final) showed contraction with a 49.5 reading vs 50.2 consensus

·     Taiwan’s military for the first time shot down an unidentified civilian drone that entered its airspace near an islet off the Chinese coast on Thursday, after the government vowed to take tough measures to deal with an increase in such intrusions. – Reuters

·     The southwestern Chinese metropolis of Chengdu announced a lockdown of its 21.2 million residents as it launched four days of citywide COVID-19 testing, as some of the country’s most populous and economically important cities battle outbreaks. Residents of Chengdu, the capital of Sichuan province, were ordered to stay home from 6 p.m. on Thursday, with households allowed to send one person per day to shop for necessities – Reuters

 

Sector News Breakdown

Consumer

·     Five Below (FIVE) 2Q EPS $0.74 vs est. $0.78 on sales $668.9Mm vs est. $679.5Mm; guides 3Q sales $600-619Mm vs est. $633Mm and EPS $0.08-0.19 vs est. $0.28, sees FY net sales $2.97-3.02B vs est. $3.06B and EPS $4.26-4.56 vs est. $4.77

·     Costco (COST) Total Aug comparable sales +10.1% and US comparable sales excluding fuel, currencies +8.7%

·     Li Auto (LI) reported vehicle deliveries for August of 4,571 units vs. 9,433 y/y; vehicle deliveries 4,571 units, -52% y/y; total stores 265 vs. 114 y/y

·     NIO Inc. (NIO) reported deliveries for August of 10,677 vs. 10,052 m/m; deliveries 10,677, +6.2% m/m; premium smart electric SUVs 7,551, -0.4% m/m; premium smart electric sedans 3,126, +26% m/m

 

Energy

·     According to the new monthly data from the EIA, US total oil demand in June was 20.772m b/d (that’s ~740,000 b/d higher than implied by the weekly data). June 2022 was above pre-covid June 2019, and the highest for the month since 2006. June 2022 total oil demand in the US was so strong that there’re only 3 other June months in history with higher consumption: June 2006, June 2005, and June 2004.

 

Healthcare

·     AnaptysBio (ANAB) announced top-line data from its HARP Phase 2 trial for the treatment of moderate-to-severe hidradenitis suppurativa. The trial indicated imsidolimab was safe and well tolerated, however did not demonstrate efficacy over placebo in the trial’s primary endpoint and key secondary endpoints

·     Cooper Companies (COO) 3Q adj EPS $3.19 vs est. $3.22 on revs $843.4Mm vs est. $830.2Mm, adj EBIT margin 23%; sees 4Q revs $830-850Mm vs est. $841.4Mm and adj EPS $3.05-3.20 vs est. $3.42; guides FY revs $3.29-3.31B vs est. $3.29B and adj EPS $12.72-12.87 vs est. $13.13

·     GoodRx (GDRX) to cut about 140 jobs, about 16% of workforce per 8-K; sees pretax charges $5M-$7M for job cuts

 

Industrials & Materials

·     Base metals slumped, with copper falling further after capping its fifth consecutive monthly loss — the longest downward streak since the 2008 financial crisis — after China’s lockdown of megacity Chengdu added to demand woes – Bloomberg

·     Dover (DOV) announced an accelerated share repurchase program to buy back $500M of stock.

·     Greif Inc. (GEF) 3Q adj EPS $2.35 vs est. $2.00 on sales $1.622B vs est. $1.596B; guides FY adj EPS $7.90-8.10 vs est. $7.62

·     Scotts Miracle (SMG) lowers year free cash flow to range from negative $275 million to negative $325 million compared to its previous guidance of negative $150 million; reaffirmed the other aspects of its earnings guidance for fiscal 2022 as announced on August 3rd.

·     SpaceX awarded $1.4 billion NASA contract modification for five additional crew dragon missions to the international space station for the U.S. Space agency

 

Technology, Media & Telecom

·     Advanced Micro (AMD) said it was told to stop exporting its top artificial intelligence chip to China. Reuters reported that AMD said it had received new license requirements that will stop its MI250 artificial intelligence chips from being exported to China, but it believes its MI100 chips will not be affected.

·     Nvidia (NVDA) shares fell after hours after an SEC filing revealed that the U.S. has installed new license requirements for its A100 and forthcoming H100 integrated circuits, its highest-performance products for servers, in sales to China and Russia. The filing specifically states that Nvidia’s forecast for the current quarter includes an expected $400 million in data-center sales to China that could be affected by the move

·     C3.ai, Inc. (AI) shares fell -15%; Q1 adj EPS loss (-$0.12) vs. est. loss (-$0.24); Q1 revs rose 25% y/y to $65.3M vs. est. $66.02M; cuts FY23 revenue view to $255M-$270M from $308M-$316M (est. $310.58M); sees FY23 adjusted loss from operations $90M-$98M; guides Q3 revs below views

·     Credo Technology (CRDO) 1Q adj EPS $0.03 vs est. $0.03 on revs $46.5Mm vs est. $45.7Mm; sees 2Q revs $48.5-52.5Mm vs est. $49.2Mm

·     MongoDB (MDB) Q2 adj EPS loss (-$0.23) vs. est. loss (-$0.28); Q2 revs rose 53% y/y to $303.7M vs. est. $282.4M; continued strong customer growth with over 37,000 customers as of July 31, 2022; said Q2 Atlas revs up 73% y/y; 64% of Total Q2 Revenue; sees Q3 adj EPS loss (19c)-(16c) on revs $300M-$303M vs. est. loss (14c) and $294.85M

·     Nutanix (NTNX) Q4 adj EPS loss (-$0.17) vs. est. loss (-$0.38); Q4 revs fell -1.3% y/y to $385.5M vs. est. $354M; guides Q1 revs $410M-$415M and FY $1.77B-$1.78B vs. est. $1.67B; Q4 Hardware revenue fell -89% y/y and subscription revenue down -0.4% y/y

·     Okta Inc. (OKTA) 2Q adj EPS ($0.10) vs est. ($0.30) on revs $452Mm vs est. $430.7Mm; sees 3Q adj EPS ($0.25)-($0.24) vs est. ($0.27) and revs $463-465Mm vs est. $464Mm; sees FY adj EPS ($0.73)-($0.70) vs est. ($1.11) and revs $1.812-1.820B vs est. $1.816B

·     Pure Storage (PSTG) 2Q adj EPS $0.32 vs est. $0.22 on revs $646.8Mm vs est. $634.2Mm; guides 3Q revs about $670Mm vs est. $651.6Mm, sees FY revs $2.75B vs est. $2.64B

·     Semtech (SMTC) Q2 EPS $0.87 vs. est. $0.85; Q2 revs $209.3M vs. est. $208.4M; guides Q3 EPS $0.60-$0.66 vs. est. $0.91 and revs $170M-$180M, below consensus $216.9M

·     SentinelOne (S) Q2 EPS loss (-$0.35) vs. est. loss (-$0.25); Q2 revs $102.5M vs. est. $95.64M; A2 Annualized recurring revenue (ARR) increased 122% to $438.6M; Q2 total customer count grew about 60% to over 8,600 customers as of July 31, 2022; customers with ARR over $100K grew 117% to 755 as of July 31, 2022; raises year revs to $415M-$417M from $403M-$407M

·     Veeva Systems (VEEV) Q2 non-GAAP EPS $1.03 vs. est. $1.01; Q2 revs rose 17% to $534.2M vs. est. $530.6M; boosts 2022 non-GAAP EPS view to $4.17 from $4.16 and lowers FY23 revenue view to $2.14B-$2.15B from $2.165B-$2.175B (est. $2.17B); said hit milestone with Veeva Vault Quality, as more than 500 customers are now using at least one Vault Quality Suite product

·     Walt Disney Co. (DIS) is exploring a membership program that could offer discounts or special perks to encourage customers to spend more on its streaming services, theme parks, resorts, and merchandise, according to people familiar with the discussions, the WSJ reported. The program would be somewhat akin to Amazon Prime and are in the early stages