Early Look

Tuesday, September 27, 2022

U.S. futures are pointing to an early rebound, rising over 1% after major averages finished lower for a 5^th consecutive day on Monday as rising interest rates, higher Treasury yields, and a stronger dollar continue to impact stock markets around the world. The Dow Jones Industrial Average dropped more than 300 points and finished in a bear market on Monday, a drop of 20% or more from the January high. Treasurys sold off again, propelling the 10-year yield to its highest level since 2010, topping 3.9% midday. Today also marked the 10th straight day of negative breadth for Nasdaq as stocks remain in a brutal downtrend. In Asian markets, The Nikkei Index rises 140 points to 26,571, the Shanghai Index gains 1.4% to 3,093, and the Hang Seng Index was up a few points to 17,860. In Europe, the German DAX is up 90 points to 12,320, while the FTSE 100 is little changed at 7,020. Bitcoin prices rising nearly 6% to $20,200; Ethereum +4.6% to $1,385 as risk assets rise early. Treasury yields taking a breather for a change as the 10-yr at lows below 3.82% and the 2-yr at 3.25%, while the dollar index little changed below 114. Meanwhile, European natural gas gained amid uncertainty over future Russian supply after issues were reported at the shuttered Nord Stream pipeline.

Economic Calendar for Today

·     6:15 AM ET                  Fed’s Evans Discusses Economic Outlook

·     7:45 AM ET                  ICSC Weekly Retail Sales

·     8:30 AM ET                  Durable Goods Orders for Aug…est. (-0.4%)

·     8:30 AM ET                  Durable Goods Orders Ex: Transportation for Aug…est. +0.2%

·     8:55 AM ET                  Johnson/Redbook Weekly Sales

·     9:00 AM ET                  Monthly Home Price Index M/M for July

·     9:00 AM ET                  CaseShiller 20 City index M/M for July…est. +0.2%

·     9:30 AM ET                  Fed’s Powell Takes Part in Panel on Digital Currencies

·     10:00 AM ET                Consumer Confidence for September…est. 104.5

·     10:00 AM ET                New Home Sales M/M for August…est. 500K

·     10:00 AM ET                Richmond Fed Index for September…prior (-8)

·     1:00 PM ET                   US Treasury to sell $45B in 3-year notes

·     4:30 PM ET                   API Weekly Inventory Data

Earnings Calendar:

·     Earnings Before the Open: CBRL JBL NEOG NTWK SNX UNFI

·     Earnings After the Close: AYTU CALM IBIO PRGS

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -37.71 points, or 1.02%, to 3,655.52

·     The Dow Jones Industrial Average fell -325.91 points, or 1.10%, to 29,264.50

·     The Nasdaq Composite slumped -65.00 points, or 0.60%, to 10,802.92

·     The Russell 2000 Index declined -23.70 points, or 1.41% to 1,655.89

World News

·     The World Bank said it expects developing economies in East Asia to grow faster than China this year for the first time since 1990 as the lender cut its forecast for Chinese growth this year but said it expects growth among 22 neighboring economies to more than double in 2022 compared with the pace they notched last year – WSJ

·     Fed’s Mester Says More Restrictive Policy Needed for Longer ‘; “High inflation is proving to be more persistent, and more restrictive policy will be needed and for longer to ensure that inflation expectations do not move up and that inflation moves back down,” she said

·     The U.S. Federal Reserve will need to raise interest rates by at least another percentage point this year, Chicago Fed President Charles Evans said on Tuesday, a more aggressive stance than he has previously embraced that underscores the central bank’s hardening resolve to quash too-high inflation. Evans also said that he does not see “recession-like” unemployment rate numbers ahead, even as the Fed’s actions result in below-trend economic growth and a softening in the labor market to bring inflation back down to the central bank’s 2% goal.

Sector News Breakdown

Consumer

·     Ford (F) is asking a Georgia court for a new trial, after a jury reached a $1.7 billion verdict against the auto maker last month over a truck rollover accident that left two people dead – WSJ

·     Grab (GRAB) sees slower growth while it pursues 2024 profitability; the internet giant expects revenue growth of 45% to 55% in 2023 Softbank-backed giant is aiming to turn things around by 2024 per Bloomberg

·     Nautilus (NLS) announced that its Board of Directors, with the support of management, has launched a comprehensive review of strategic alternatives, which may include a potential sale of the Company

·     Starbucks (SBUX) celebrated its 6,000th store in the Chinese mainland, which opens on September 30 at Shanghai Lippo Plaza, where the company opened its first store in Shanghai more than 20 years ago

Energy, Industrials and Materials

·     Cameco (CCJ) files $1.5B mixed securities shelf

·     Lumber prices have fallen to their lowest level in more than two years, bringing two-by-fours back to what they cost before the pandemic building boom and pointing to a sharp slowdown in construction. – WSJ

Financials

·     Fleetcor (FLT) said it currently expects Q3 results to be at least in line with the outlook provided with earnings on August 3, 2022

·     FTX, the crypto exchange controlled by Sam Bankman-Fried, has won the auction for the assets of bankrupt crypto brokerage Voyager Digital with a bid of about $50 million – Bloomberg

Healthcare

·     Amylyx Pharmaceuticals’ (AMLX) eight-year effort to develop a new treatment for ALS could come to fruition Thursday, when the FDA is expected to hand down a decision on AMX0035, its investigational drug. If that ruling goes in Amylyx’s favor, as is widely expected, the company will face pivotal choices that will shape its future – STAT News

·     Biogen Inc. (BIIB) agreed to pay $900 million to settle allegations that it paid kickbacks to doctors between 2009 and March 2014 to induce them to prescribe the company’s drugs, the Justice Department said Monday.

·     Ocular Therapeutix, Inc. (OCUL) announced interim 7-month data from its U.S. Phase 1 clinical trial evaluating OTX-TKI, the Company’s axitinib intravitreal hydrogel implant being developed for the treatment of wet age-related macular degeneration (wet AMD) and other retinal disease

Technology, Media & Telecom

·     Splunk (SPLK) backs Q3 revenue $835M-$855M vs. consensus $846.15M and backs Q3 adjusted operating margin 6%-8% while also reaffirms FY23 rev outlook after CFO leaves

·     Lawyers for Elon Musk and Twitter Inc. (TWTR) are set to debate several pending requests for information in their continuing legal fight, with less than three weeks to go before a scheduled trial over Mr. Musk’s soured $44 billion takeover – WSJ