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03/03/23 Briefing

The S&P 500 futures are up 11 points and are trading 0.3% above fair value. The Nasdaq 100 futures are up 27 points and are trading 0.2% above fair value. The Dow Jones Industrial Average futures are up 76 points and are trading 0.2% above fair value.

There's a positive disposition in the equity futures market this morning, supported in large part by falling Treasury yields. There is also some technical buying interest boosting the broader market after the S&P 500 found support at its 200-day moving average (3,940) yesterday. Early strength in mega cap space is also helping to boost the futures trade.

The 2-yr note yield is down five basis points to 4.87% and the 10-yr note yield is down six basis points to 4.02%.

Market participants received some supportive economic data overnight, including China's stronger than expected February Caixin Services PMI and cooler than expected January PPI for the Eurozone.

Today's U.S. economic data includes the February IHS Markit Services PMI - Final (prior 50.5) at 9:45 a.m. ET and the February ISM Services PMI (Briefing.com consensus 54.5%; prior 55.2%) at 10:00 a.m. ET.

In corporate news:

  • Hewlett Packard Enterprise (HPE 15.82, +0.32, +2.1%): beats by $0.10, beats on revs; guides Q2 EPS in-line, revs above consensus; guides FY23 EPS mostly above consensus; reiterates long-term ARR guidance of +35-45% annualized; acquires Axis Security, a cloud security provider; financial terms were not disclosed

  • ChargePoint (CHPT 9.90, -1.36, -12.1%): beats by $0.03, misses on revs; guides Q1 revs below consensus

  • Zscaler (ZS 118.89, -15.24, -11.4%): beats by $0.08, beats on revs; guides AprQ EPS above consensus, revs above consensus; guides FY23 (Jul) EPS above consensus, revs above consensus; sees FY23 calculated billings of 1.935-1.945 billion

  • Dell (DELL 39.00, -1.17, -2.9%): beats by $0.16, beats on revs; increase dividend by 12%; also names new CFO; projects Q1 (Apr) and FY24 (Jan) earnings and revs below consensus; remains committed to a long-term revenue CAGR of +3-4% and EPS CAGR of +6% plus

  • Marvell (MRVL 42.44, -3.79, -8.2%): misses by $0.01, reports revs in-line; guides Q1 EPS below consensus, revs below consensus

  • C3.ai (AI 24.77, +3.46, +16.2%): beats by $0.16, beats on revs; guides Q4 revs above consensus; guides FY23 revs above consensus; on track to become non-GAAP profitable by end of FY24 (Apr)

  • Broadcom (AVGO 608.56, +9.91, +1.7%): beats by $0.17, reports revs in-line; guides Q2 revs above consensus

  • Costco (COST 475.53, -10.16, -2.1%): beats by $0.10, reports revs in-line, adj. comparable sales growth of +6.8%

  • Bumble (BMBL 23.07, -1.47, -6.0%): prices secondary offering of 13,750,000 shares of common stock by certain selling stockholders at $22.80 per share

  • Procter & Gamble (PG 141.38, +1.45, +1.0%): upgraded to Overweight from Neutral at JP Morgan

  • Apple (AAPL 147.44, +1.53, +1.1%): Morgan Stanley reiterated Overweight rating

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the week on a higher note. Japan's Nikkei: +1.6% (+1.7% for the week), Hong Kong's Hang Seng: +0.7% (+2.8% for the week), China's Shanghai Composite: +0.5% (+1.9% for the week), India's Sensex: +1.5% (+0.6% for the week), South Korea's Kospi: +0.2% (+0.4% for the week), Australia's ASX All Ordinaries: +0.3% (-0.4% for the week).

    • In economic data:

      • China's February Caixin Services PMI 55.0 (expected 54.7; last 52.9)

      • Japan's February Services PMI 54.0 (expected 53.6; last 52.3). February Tokyo CPI 3.4% (last 4.4%) and Tokyo Core CPI 3.3%, as expected (last 4.3%). January Unemployment Rate 2.4% (expected 2.5%; last 2.6%) and jobs/applications ratio 1.35 (expected 1.36; last 1.35)

      • Hong Kong's February Manufacturing PMI 53.9 (last 51.2)

      • Australia's February Services PMI 50.7 (expected 49.2; last 48.6). January Home Loans -4.9% m/m (expected -1.7%; last -4.2%)

      • Singapore's January Retail Sales -9.4% m/m (last 1.3%); -0.8% yr/yr (last 7.7%)

      • India's February Nikkei Services PMI 59.4 (expected 56.2; last 57.2)

    • In news:

      • The U.S. added 28 Chinese entities to the Commerce Department's Entity List due to alleged ties to Iranian military.

      • People's Bank of China Governor Yi Gang said that real interest rates in China are at an appropriate level at this time.

      • China's National People's Congress will begin on Sunday.

      • Reserve Bank of New Zealand Governor Orr said that early signs of easing price pressures have been spotted.

  • Major European indices trade in the green. STOXX Europe 600: +0.7% (+1.2% week-to-date), Germany's DAX: +1.0% (+1.9% week-to-date), U.K.'s FTSE 100: +0.2% (+1.0% week-to-date), France's CAC 40: +0.8% (+2.2% week-to-date), Italy's FTSE MIB: +1.4% (+3.0% week-to-date), Spain's IBEX 35: +1.2% (+2.5% week-to-date).

    • In economic data:

      • Eurozone's January PPI -2.8% m/m (expected -0.3%; last 1.1%); 15.0% yr/yr (expected 17.7%; last 24.6%). February Services PMI 52.7 (expected 53.0; last 50.8)

      • Germany's January trade surplus EUR16.70 bln (expected EUR11.00 bln; last EUR10.00 bln). January Imports -3.4% m/m (expected 2.0%; last -5.6%) and Exports 2.1% m/m (expected 1.5%; last -6.3%). February Services PMI 50.9 (expected 51.3; last 50.7)

      • U.K.'s February Services PMI 53.5 (expected 53.3; last 48.7)

      • France's January Industrial Production -1.9% m/m (expected 0.1%; last 1.5%). February Services PMI 53.1 (expected 52.8; last 49.4)

      • Italy's Q3 GDP -0.1% qtr/qtr (expected 0.5%; last 0.5%); 1.4% yr/yr (expected 2.6%; last 2.6%). February Services PMI 51.6 (expected 53.1; last 51.2)

    • In news:

      • The market has priced in another 150-bps worth of rate hikes from the European Central Bank. To that end, policymakers Mueller and Vasle said that rate hikes will likely continue after the March meeting, which is expected to result in a 50-bps increase.

      • The U.K. will extend its energy price guarantee for three months.

      • Lufthansa reported strong results and said that it expects significant improvement in profit for the year.

 

U.S. equity futures:

  • S&P 500 Futures: +9 @ 3,990

  • DJIA Futures: +52 @ 33,056

  • Nasdaq 100 Futures: +18 @ 12,063

Overseas:

  • Europe: DAX +1.0%, FTSE +0.2%, CAC +0.8%

  • Asia: Nikkei +1.6%, Hang Seng +0.7%, Shanghai Composite +0.5%

Commodities:

  • Crude Oil -0.36 @ 77.80

  • Nat Gas +0.062 @ 2.827

  • Gold +10.15 @ 1850.65

  • Silver +0.229 @ 21.13

  • Copper +0.0180 @ 4.094

 

Earnings/Guidance:

  • AppFolio (

  • Ardelyx (

  • Broadcom (

  • ChargePoint (

  • Cooper (

  • Costco (

  • Dell (

  • Elastic (

  • Hewlett Packard Enterprise (

  • Hibbett (

  • Integral Ad Science (

  • Marvell (

  • Nordstrom (

  • Nutex Health (

  • PagSeguro Digital (

  • Pearson Plc (

  • Samsara (

  • V2X (

  • Victoria's Secret (

  • VMware (

  • VTEX (

  • Xponential Fitness (

  • Zscaler (

News:

  • Major freight railroads to join federal close call reporting system, according to the Wall Street Journal

  • Academy Sports + Outdoors (

  • AppFolio (

  • Bank of America (

  • Boeing (

  • Bristol-Myers (

  • CareDx (

  • Carter's (

  • Citigroup (

  • Cormedix (

  • Ericsson (

  • Exelixis (

  • Foxconn to build $700 mln facility in India, according to Bloomberg

  • General Motors (

  • Johnson & Johnson's (

  • Marathon Digital Holdings (

  • MarketAxess (

  • NASDAQ (

  • Old Dominion (

  • Personalis (

  • Praxis Precision Medicines (

  • SPS Commerce (

  • Verizon (

  • Veru (

  • Verve Therapeutics (

  • Walmart's (

  • Wyndham Hotels & Resorts (

  • Zoom Video (

M&A:

  • Equinor (

  • Hewlett Packard Enterprise (

  • Johnson Outdoors (

  • McGrath RentCorp (

  • Ryerson (

Syndicate:

  • Bumble Inc. (

  • Cidara Therapeutics (

  • CubeSmart (

  • Ecovyst (

  • Mirion Technologies (

  • Revolution Medicines (

  • Rhythm Pharmaceuticals (

  • Safehold (

  • Sangamo Therapeutics (

  • SVB Financial Group (

IPOs:

  • Expected to Price:

Gapping Up/Down

  • Gapping up:

    • AI +15.9%, ARDX +13.5%, CRMD +11.1%, XPOF +8.3%, IAS +7.7%, PAGS +6.4%, PSNL +4.6%, STAR +3.4%, VMW +3.4%, ERIC +3.1%, SOI +3%, WH +2.8%, HPE +2.6%, IOT +2.5%, NUTX +2.3%, LMND +1.9%, COO +1.3%, FBRT +1.2%, YOU +1.2%

  • Gapping down:

    • VERU -31.2%, CDTX -17.1%, ZS -12%, CHPT -11%, MRVL -8.6%, EXEL -8%, BMBL -4.8%, ESTC -4.2%, VSCO -3.6%, MIR -3.3%, DELL -3.3%, MARA -3%, JOUT -3%, RIOT -2.9%, XMTR -2.7%, COST -2.5%, RVMD -1.7%, SPWR -1.5%, RYTM -1.4%, ZM -1.4%, PSO -1.3%, ECVT -1%

Analyst Research (see Upgrades/Downgrades calendarfor full list):

  • Upgrades

    • Casey's General (CASY) upgraded to Neutral from Underweight at JP Morgan; tgt raised to $211

    • Empire State Realty Trust (ESRT) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt $9

    • First Solar (FSLR) upgraded to Buy from Neutral at UBS; tgt raised to $250

    • Flowers Foods (FLO) upgraded to Hold from Sell at Deutsche Bank; tgt $27

    • Kroger (KR) upgraded to Overweight from Neutral at JP Morgan; tgt $54

    • Marathon Petroleum (MPC) upgraded to Buy from Hold at Jefferies; tgt raised to $157

    • Pioneer Natural Resources (PXD) upgraded to Equal Weight from Underweight at Wells Fargo; tgt lowered to $220

    • Procter & Gamble (PG) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $155

    • RadNet (RDNT) upgraded to Outperform from Mkt Perform at Raymond James; tgt $30

    • Stellantis (STLA) upgraded to Outperform from Sector Perform at RBC Capital Mkts

  • Downgrades:

    • Altra Industrial Motion (AIMC) downgraded to Hold from Buy at Loop Capital; tgt $62

    • BRP Group (BRP) downgraded to Mkt Perform from Outperform at William Blair

    • CareDx (CDNA) downgraded to Mkt Perform from Strong Buy at Raymond James

    • Chesapeake Energy (CHK) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $87

    • dLocal Limited (DLO) downgraded to Sell from Buy at UBS; tgt lowered to $14

    • Domino's Pizza (DPZ) downgraded to Hold from Buy at Gordon Haskett; tgt lowered to $315

    • Douglas Emmett (DEI) downgraded to Underperform from Market Perform at BMO Capital Markets; tgt lowered to $13

    • FEMSA (FMX) downgraded to Equal Weight from Overweight at Barclays; tgt $100

    • Hormel Foods (HRL) downgraded to Underweight from Neutral at JP Morgan; tgt lowered to $38

    • Itron (ITRI) downgraded to Underweight from Neutral at JP Morgan; tgt lowered to $50

    • Tesla (TSLA) downgraded to Neutral from Outperform at KGI Securities; tgt $196

    • Vornado Rlty Trust (VNO) downgraded to Underperform from Market Perform at BMO Capital Markets; tgt lowered to $18

  • Others:

    • Atlantic Union Bankshares (AUB) resumed with an Outperform at Raymond James; tgt $43

    • CompoSecure (CMPO) initiated with a Buy at Compass Point; tgt $15

    • Nextracker (NXT) initiated with an Overweight at Cantor Fitzgerald; tgt $40

    • SmartFinancial (SMBK) resumed with a Mkt Perform at Raymond James

    • The Trade Desk (TTD) initiated with a Neutral at BTIG Research

    • Towne Bank (TOWN) resumed with an Outperform at Raymond James; tgt $34

Upcoming Events:

  • Econ Data:

    • 09:45 ET: IHS Markit Services PMI - Final for Feb (Briefing.com Consensus NA; Prior 50.5)

    • 10:00 ET: ISM Services PMI for Feb (Briefing.com Consensus 54.5%; Prior 55.2%)

  • Earnings:

    • Monday (Feb 27)

      • Morning:  AES BGNE WTRG FSR FRPT FUBO HSC ITRI KOP TREE LI NE PNW TGNA VTRS

      • Afternoon: AAON ACHC ACAD ADUS AMRC BMRN CDNA DAR DRQ EBS FGEN FSK HEI HLIO HIMS ICUI NARI NGVT IIPR JRVR MKSI NSA OXY OKE PRAA PRIM PRA PGNY RRC RLJ ROVR TASK TREX TTEC UHS VRAY VMEO WDAY ZM

    • Tuesday (Feb 28)

      • Morning: AHCO ADT AAP AMWD APG AZO BMO BNS BSY BKI BLDR CBRL CRON DK XRAY DORM DEA ECVT EHTH EXPI FA FRO GOGO HAYW HSKA TILE IGT SJM JLL KTB NFE NXST NCLH OLPX OMI PCRX PRFT PRGO PLTK RDNT SEAS SRE FOUR SHC SRC TGT SKIN TWKS WRBY

      • Afternoon:  DDD A ALLO AMBA AMC AXON BGS BLNK CARG CLNE COMP CPNG CUTR DUOL EDR FATE FIGS FSLR FLYW FRG FLGT GDRX GO HCAT HPQ HURN ICFI IPAR NVTA IOVA JXN JAMF LXFR MQ MASI MRTX MNST MYGN NSTG NTRA KIND NVAX OMCL OSPN PAYO PETQ PUBM RGNX RIVN RKT ROST RYAN SRPT SDGR SHLS SILK SUPN TALO URBN VRSK SPCE VZIO

Asia & Europe detail:

Asia: Nikkei +1.6%, Hang Seng +0.7%, Shanghai Composite +0.5%

Equity indices in the Asia-Pacific region ended the week on a higher note. The U.S. added 28 Chinese entities to the Commerce Department's Entity List due to alleged ties to Iranian military. People's Bank of China Governor Yi Gang said that real interest rates in China are at an appropriate level at this time. China's National People's Congress will begin on Sunday. Reserve Bank of New Zealand Governor Orr said that early signs of easing price pressures have been spotted.

  • In economic data:

    • China's February Caixin Services PMI 55.0 (expected 54.7; last 52.9)

    • Japan's February Services PMI 54.0 (expected 53.6; last 52.3). February Tokyo CPI 3.4% (last 4.4%) and Tokyo Core CPI 3.3%, as expected (last 4.3%). January Unemployment Rate 2.4% (expected 2.5%; last 2.6%) and jobs/applications ratio 1.35 (expected 1.36; last 1.35)

    • Hong Kong's February Manufacturing PMI 53.9 (last 51.2)

    • Australia's February Services PMI 50.7 (expected 49.2; last 48.6). January Home Loans -4.9% m/m (expected -1.7%; last -4.2%)

    • Singapore's January Retail Sales -9.4% m/m (last 1.3%); -0.8% yr/yr (last 7.7%)

    • India's February Nikkei Services PMI 59.4 (expected 56.2; last 57.2)

---Equity Markets---

  • Japan's Nikkei: +1.6% (+1.7% for the week)

  • Hong Kong's Hang Seng: +0.7% (+2.8% for the week)

  • China's Shanghai Composite: +0.5% (+1.9% for the week)

  • India's Sensex: +1.5% (+0.6% for the week)

  • South Korea's Kospi: +0.2% (+0.4% for the week)

  • Australia's ASX All Ordinaries: +0.3% (-0.4% for the week)

---FX---

  • USD/JPY: -0.5% to 136.03

  • USD/CNH: -0.1% to 6.9112

  • USD/INR: -0.6% to 81.88

 

Europe: DAX +1.0%, FTSE +0.2%, CAC +0.8%

Major European indices trade in the green. The market has priced in another 150-bps worth of rate hikes from the European Central Bank. To that end, policymakers Mueller and Vasle said that rate hikes will likely continue after the March meeting, which is expected to result in a 50-bps increase. The U.K. will extend its energy price guarantee for three months. Lufthansa reported strong results and said that it expects significant improvement in profit for the year.

  • In economic data:

    • Eurozone's January PPI -2.8% m/m (expected -0.3%; last 1.1%); 15.0% yr/yr (expected 17.7%; last 24.6%). February Services PMI 52.7 (expected 53.0; last 50.8)

    • Germany's January trade surplus EUR16.70 bln (expected EUR11.00 bln; last EUR10.00 bln). January Imports -3.4% m/m (expected 2.0%; last -5.6%) and Exports 2.1% m/m (expected 1.5%; last -6.3%). February Services PMI 50.9 (expected 51.3; last 50.7)

    • U.K.'s February Services PMI 53.5 (expected 53.3; last 48.7)

    • France's January Industrial Production -1.9% m/m (expected 0.1%; last 1.5%). February Services PMI 53.1 (expected 52.8; last 49.4)

    • Italy's Q3 GDP -0.1% qtr/qtr (expected 0.5%; last 0.5%); 1.4% yr/yr (expected 2.6%; last 2.6%). February Services PMI 51.6 (expected 53.1; last 51.2)

---Equity Markets---

  • STOXX Europe 600: +0.7% (+1.2% week-to-date)

  • Germany's DAX: +1.0% (+1.9% week-to-date)

  • U.K.'s FTSE 100: +0.2% (+1.0% week-to-date)

  • France's CAC 40: +0.8% (+2.2% week-to-date)

  • Italy's FTSE MIB: +1.4% (+3.0% week-to-date)

  • Spain's IBEX 35: +1.2% (+2.5% week-to-date)

---FX---

  • EUR/USD: +0.2% to 1.0610

  • GBP/USD: +0.5% to 1.1998

  • USD/CHF: -0.3% to 0.9395


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