Early Look

Wednesday, September 25, 2024

After another record run yesterday for the S&P and Dow, U.S. futures are looking little changed to down slightly as we still await key economic data tomorrow and Friday. The S&P 500 Index and Dow Jones Industrial Average both closed at record highs again this week (41^st of year for the S&P) and the tech-heavy Nasdaq 100 rose 0.5% to reverse earlier declines, boosted by a jump in semiconductors (NVDA) as market momentum remains in full swing to the upside. Stock markets got a big bounce on Tuesday after the People’s Bank of China announced aggressive stimulus measures to boost its economy, lifting Materials, Industrials, and Consumer Discretionary names tied to China. Bond prices gained (yields dipped for the first time since the Fed meeting last Wednesday) after consumer confidence unexpectedly fell in September by the most in three years on concerns about the labor market while the Richmond Fed manufacturing index declined for a fourth straight month and the employment measure was especially soft. Precious metals extending gains as gold hit a new record high Tuesday and Silver rose over 5% topping $32 per troy ounce. Gold is just relentless: another day, another record high (4th in row), up 30% on the year to $2662 (and looking higher again this morning). In Asian markets, The Nikkei Index fell -70 points to 37,870, the Shanghai Index rose 33 points to 2,896, and the Hang Seng Index jumped 128 points to 19,129. In Europe, the German DAX is down -75 points to 18,921, while the FTSE 100 is up about 20 points to 8,304. Earnings reports are expected on Wednesday from Micron Technology, Cintas, Jefferies Financial, H.B. Fuller, and Concentrix. In Company news, SAP shares are lower on potential price fixing investigation headlines, autos GM, Ford, RIVN were all downgraded at Morgan Stanley while upgrading auto dealer stocks (ABG, LAD, SAH, PAG); homebuilders lower on KBH earnings results as margins weaken.

• The Dow Jones Industrial Average rose 83.57 points, or 0.20%, to 42,208.22.
• The Nasdaq Composite gained 100.25 points, or 0.56%, to 18,074.52.
• The Russell 2000 Index edged higher 3.72 points, or 0.17% to 2,224.00

• 10:00 AM ET                New Home Sales M/M for August…est. 700K
• 10:30 AM ET                Weekly DOE Inventory Data
• 1:00 PM ET U.S. Treasury to sell $70B in 5-year notes

• Earnings After the Close: CNXC FUL JEF MU WS

• Deutsche Bank 32nd Annual Leveraged Finance Conference, 9/23-9/25, in Scottsdale, AZ
• RBC Capital Global Communications Infrastructure Conference 9/24-9/25, in Chicago, IL
• RBC Capital Global Industrials Conference 9/24-9/25, in Las Vegas

• Group 1 (GPI), Auto Nation (AN) and Penske Auto (PAG) were upgraded to Overweight from Equal Weight at Morgan Stanley, Asbury Auto (ABG), Lithia (LAD) and Sonic Auto (SAH) were all upgraded to Equal Weight from Underweight saying they are less cautious on auto dealers. GPI tgt to $430 from $285, LAD to $310 from $255, PAG to $180 from $115, SAH to $58 from $40, AN to $200 from $145 and ABG to $240 from $190.
• Stitch Fix (SFIX) shares fall on guidance; Q4 EPS ($0.29) vs est. ($0.19), adj EBITDA $9.5Mm vs est. $8.22Mm on revs $319.6Mm vs est. $318.5Mm; sees Q1 net revs $303-310Mm vs est. $319.1Mm and adj EBITDA $5-9Mm vs est. $7.39Mm; sees FY revs $1.11-1.16B vs es.t $1.308B and adj EBITDA $14-28Mm vs est. $34.19Mm.
• Lifeway Foods (LWAY) confirmed that it has received an unsolicited, non-binding proposal from Danone North America PBC (DANOY) to acquire all outstanding shares of common stock of Lifeway, which it does not already own for $25.00 per share in cash.
• DoorDash (DASH) upgraded to Overweight from Sector Weight at KeyBanc.
• Tyson Foods (TSN) downgraded to Underweight from Neutral at Piper Sandler.

• Worthington industries (WOR) reported Q1 earnings and revenue that came in well below estimates as EPS of $0.50 missed the $0.71 estimate and revs of $257.3M missed consensus of $296.1M on weakness in the company’s building products division.

• Rithm Capital (RITM) 30M share Spot Secondary priced at $11.43.

• Merck (MRK) provides update on phase 3 keyform-007 trial evaluating investigational fixed-dose combination of favezelimab and pembrolizumab for patients with previously treated pd-l1 positive microsatellite stable metastatic colorectal cancer; phase 3 keyform-007 trial did not meet primary endpoint; no new safety signals observed in fixed-dose combination; fixed-dose combination did not improve overall survival compared to standard of care.
• Wave Life Sciences (WVE) announces $175M ordinary shares, warrants offering.

• Progress Software (PRGS) Q3 adj EPS $1.26 vs. consensus $1.14 and revs rose +1.7% y/y to $178.7M vs. est. $176M; said Q3 Software License revenue $57.9M, +14% y/y; guided FY24 EPS $4.75-$4.85 vs. est. $4.76 and revs sees $745M-$755M vs. est. $730M; guided Q4 EPS $1.15-$1.25 vs. est. $1.28.
• SAP AG (SAP) is trading lower after a Bloomberg report said the German software company and others were being investigated by U.S. officials for potentially conspiring to overcharge government agencies over the course of a decade. Justice Department lawyers since at least 2022 have been looking at whether SAP illegally conspired with product reseller Carahsoft Technology to fix prices on sales to the U.S. military and other parts of the government.