Early Look

Monday, September 18, 2023

A tight trading range overnight for US futures as the S&P (Spuz) in a narrow 10-point range overnight (4,498.25 low and 4,507.50 high) ahead of a big week of macro related headlines and several central bank policy meetings. Stocks tumbled on Friday, ending the week mixed as the S&P fell 0.16%, the Dow added 0.12%, the Nasdaq shed 0.39% over the 5-days. Some key macro events this week include the FOMC interest rate policy meeting on Wednesday 9/20 and Fed Chairman Powell press conference, the Bank of England (BoE) and Swiss National Bank (SNB) rate meetings Thursday 9/21 and the Bank of Japan (BoJ) central bank rate decision on Friday. Also this month, the Republican-controlled House of Representatives and the Democratic-led Senate have until Sept. 30 to avoid the U.S.’ fourth partial government shutdown in a decade by passing spending legislation that President Joe Biden can sign into law to keep federal agencies afloat. In Asian markets, The Nikkei Index was closed, the Shanghai Index rose 8 points to 3,125, and the Hang Seng Index declined -252 points to 17,930. In Europe, the German DAX is down -87 points to15,805, while the FTSE 100 is down -20 points to 7,687. No major earnings of economic data in the U.S. today, awaiting the FOMC policy meeting midweek.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -54.78 points, or 1.22%, to 4,450.32.

·     The Dow Jones Industrial Average fell -288.34 points, or 0.83%, to 34,618.77.

·     The Nasdaq Composite tumbled -217.72 points, or 1.56%, to 13,708.33.

·     The Russell 2000 Index declined -19.60 points, or 1.05% to 1,847.03.

Economic Calendar for Today

·     4:00 PM ET            Net Long-term TIC Flows for July

Earnings Calendar:

·     Earnings Before the Open: None

·     Earnings After the Close: ICMB SFIX

Other Key Events:

·     CL King Annual Best Ideas Conference (virtual), 9/18

·     Oracle Cloud World 2023, 9/18-9/21

Sector News Breakdown

Consumer

·     The United Auto Workers strike against the Detroit Three automakers enters its fourth day on Monday as both sides try to hammer out deals to avoid costly disruptions to more plants. Auto strike continues as auto industry (GM, Ford, STLA) deals with United Auto Workers proposal: 40% increase in hourly pay over 4 years, reduced 4-day, 32-hour workweek, Faster path to top pay, shift back to defined benefit pensions, cost-of-living adjustments, 5+ weeks of vacation, more paid holidays, extended parental leave.

·     Tesla (TSLA) estimates lowered at Goldman Sachs lowered its 2023 and 2024 EPS estimates, mostly on lower average selling prices that in turn, drive auto gross margin ex-credit assumptions, after Tesla “materially” reduced S/X pricing on September 1 by 15%-19% and reduced Model Y pricing in China in mid-August.

·     Clorox (CLX) said a cyberattack that was disclosed last month is disrupting operations and hurting the availability of the bleach and cleaning wipe maker’s products.

·     Ralph Lauren (RL) upgraded to Buy from Neutral at Guggenheim with $166 tgt.

·     Skechers (SKX) upgraded to Overweight from Neutral at Piper Sandler.

·     VF Corp. (VFC) downgraded to Neutral from Overweight at Piper Sandler.

Energy, Industrials and Materials

·     Mercury Systems Inc. (MRCY) mentioned positively in Barron’s saying the defense contractor is suffering through growing pains, but new management has the chance to help the Andover, electronics maker mature.

·     A Marine Corps pilot safely ejected from a fighter jet over North Charleston on Sunday afternoon and the search for his missing F-35 aircraft was focused on two lakes north of North Charleston, military officials said.

·     In the Defense sector, L3Harris Technologies (LHX) was upgraded to Overweight from Equal Weight at Wells Fargo and the firm upgraded Lockheed Martin (LMT) to Equal Weight.

·     Valero Energy Corp (VLO) board authorized Co to repurchase up to $2.5B of shares.

Financials

·     China’s Ant Group is planning to pull its investment from a $100 million fund as it retreats from crypto – Bloomberg https://tinyurl.com/2x4uzzd2

Healthcare

·     BioNTech (BNTX) and CEPI announce partnership to advance MRNA MPox vaccine development and support CEPI’s 100 days mission.

·     PTC Therapeutics (PTCT) downgraded to Neutral from Buy at Citigroup.

Technology, Media & Telecom

·     Private equity firm Advent International is exploring a sale of CCC Intelligent Solutions Holdings Inc (CCCS), a provider of software to the car insurance industry that has a market value of $7.1B, people familiar with the matter said on Friday – Reuters https://tinyurl.com/nha6zmmu

·     Alteryx (AYX) upgraded to overweight from equal weight at Morgan Stanley saying the current valuation undervalues its growth and profit potential.

·     Cisco Systems Inc. (CSCO) will lay off 350 employees in Silicon Valley next month, in the tech giant’s latest round of job cuts.

·     DirecTV and Nexstar (NXST) have agreed to temporarily return the signals of the Nexstar-owned stations and national cable news network NewsNation to DirecTV, DirecTV Stream and U-verse, Reuters reported.

·     Micron (MU) was upgraded to buy from hold at Deutsche Bank, noting that prices for DRAM chips have started to improve faster than expected.