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06/07/23 Briefing


The S&P 500 futures are down 22 points and are trading 0.5% below fair value. The Nasdaq 100 futures are down 72 points and are trading 0.5% below fair value. The Dow Jones Industrial Average futures are down 180 points and are trading 0.5% below fair value.

Stock futures are lower this morning, pressured in part by some softness in the mega cap stocks. Participants have also turned their attention to higher market rates after the 10-yr Treasury note yield nearly reached 4.00% overnight. That move has seemingly stirred some valuation concerns for the equity market. 

On a related note, yesterday's FOMC Minutes highlighted that most officials see additional rate increases as needed. New York Fed President Williams (FOMC voter), in turn, said recent data suggests that the Fed has more work to do, according to Bloomberg.  

The weekly MBA Mortgage Applications Index fell 4.4% with purchase applications dropping 5.0% and refinance applications falling 4.0%.

Other economic data releases today include:

  • 8:15 ET: June ADP Employment Change (Briefing.comconsensus 245,000; prior 278,000)

  • 8:30 ET: Weekly Initial Claims (Briefing.comconsensus 250,000; prior 239,000), Continuing Claims (prior 1.742 mln), May Trade Balance (Briefing.comconsensus -$69.0 bln; prior -$74.6 bln)

  • 9:45 ET: June IHS Markit Services PMI - Final (prior 54.9)

  • 10:00 ET: June ISM Non-Manufacturing Index (Briefing.comconsensus 51.1%; prior 50.3%) and May job openings (prior 10.103 mln)

  • 10:30 ET: Weekly natural gas inventories (prior +76 bcf)

  • 11:00 ET: Weekly crude oil inventories (prior -9.60 mln)

In corporate news:

  • Meta Platforms (META 300.10, +5.73, +2.0%): introduces Threads, a new app, built by the Instagram team, for sharing text updates and joining public conversations; CEO Mark Zuckerberg says Threads had 10 million sign ups in seven hours

  • Exxon Mobil (XOM 105.82, -1.09, -1.0%): details items that will impact Q2 results; changes in gas prices negatively impacting Q2 upstream earnings by $1.8-2.2 bln

  • Bank of America (BAC 29.10, +0.02, +0.1%): to increase its quarterly dividend 9% to $0.24/share beginning in 3Q23

  • JetBlue Airways (JBLU 9.21, -0.12, -1.3%): issues statement regarding its Northeast Alliance, or NEA, with American Airlines (AAL): strongly disagree with court ruling against the NEA, but will not appeal

  • American Express (AXP 172.65, -2.32, -1.3%): downgraded to Neutral from Outperform at Robert W. Baird

  • Affirm (AFRM 14.57, -0.85, -5.5%):  downgraded to Underweight from Neutral at Piper Sandler

  • Fidelity Nat'l Info (FIS 61.56, +1.76, +2.9%): accelerates path to create two highly focused independent companies; announces agreement for GTCR to acquire majority stake in Worldpay at $18.5 bln valuation

  • Perion Network (PERI 33.25, +2.37, +7.7%): sees Q2 revs above consensus

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note. Japan's Nikkei: -1.7%, Hong Kong's Hang Seng: -3.0%, China's Shanghai Composite: -0.5%, India's Sensex: +0.5%, South Korea's Kospi: -0.9%, Australia's ASX All Ordinaries: -1.2%.

  • In economic data:

  • Australia's May trade surplus AUD11.791 bln (expected surplus of AUD10.500 bln; last surplus of AUD10.454 bln). May Imports 2.5% m/m (last 1.7%) and Exports 4.4% m/m (last -6.4%)

  • In news:

  • Chinese banks listed in Hong Kong underperformed amid reports that large lenders lowered rates for corporate dollar deposits. Separately, banks reportedly halted purchases of bonds in the Shanghai free trade zone due to increased regulatory scrutiny.

  • Taiwan Semiconductor Manufacturing said that it does not expect a negative impact from China's impending export restrictions on gallium and germanium.

  • The utilization of the discount window at the Hong Kong Monetary Authority reached a record on Wednesday.

  • Major European indices trade in the red. STOXX Europe 600: -1.3%, Germany's DAX: -1.2%, U.K.'s FTSE 100: -1.3%, France's CAC 40: -1.8%, Italy's FTSE MIB: -1.0%, Spain's IBEX 35: -1.0%.

  • In economic data:

  • Eurozone's May Retail Sales 0.0% m/m (expected 0.2%; last 0.0%); -2.9% yr/yr (expected -2.7%; last -2.9%)

  • Germany's May Factory Orders 6.4% m/m (expected 1.2%; last 0.2%)

  • U.K.'s June Construction PMI 48.9 (expected 51.0; last 51.6)

  • In news:

  • A survey conducted by the British Chambers of Commerce showed that fewer than half of polled companies plan to raise prices in the next three months, adding that wage pressures have become the main driver of inflation.

  • There are some concerns that the water level in Germany's Rhine river could decrease to a point where cargo ships would not be able to pass.

 

U.S. equity futures:

  • S&P 500 Futures: -21 @ 4,426

  • DJIA Futures: -165 @ 34,124

  • Nasdaq 100 Futures: -70  @ 15,134

Overseas:

  • Europe: DAX -1.2%, FTSE -1.3%, CAC -1.8%

  • Asia: Nikkei -1.7%, Hang Seng -3.0%, Shanghai Composite -0.5%

Commodities:

  • Crude Oil +0.24 @ 72.03

  • Nat Gas +0.011 @ 2.668

  • Gold +5.95 @ 1933.15

  • Silver +0.011 @ 23.413

  • Copper -0.0090 @ 3.7595


 

Earnings/Guidance:

  • Abcam (ABCM) provides 1H23financial update; reiterates FY23 and FY24 guidance

  • Buckle (BKE) reports June 2023 net sales

  • Coty (COTY) raises FY23 outlook at investor event

  • Exxon Mobil (XOM) details items that will impact Q2 results; changes in gas prices negatively impacting Q2 upstream earnings by $1.8-2.2 bln

  • L.B. Foster (FSTR) divests Concrete Rail Tie Operations; reaffirms FY23 outlook

  • Perion Network (PERI) sees Q2 revs above consensus

  • Polestar Automotive Holding UK PLC (PSNY) reports it its best ever second quarter, delivering approximately 15,800 vehicles, a growth of 36% compared to last year

  • UMH Properties (UMH) reports Q2 updates

  • United Micro (UMC) reports June sales declined 23.2% yr/yr to ~NT$19.06 bln

  • Vimeo (VMEO) announces departure of Anjali Sud as CEO on August 31; co also reaffirms Q2 guidance

News:

  • Treasury Secretary Janet Yellen has arrived in China, CNBC

  • Dubai topped the list of luxury property transactions for the first time, according to Financial Times

  • The Biden administration will appeal ruling that banned White House contact with social media companies, according to CNN

  • June class 8 truck orders increased 5% yr/yr to 16,200 units, ACT Research

  • 10x Genomics (TXG): CAR T-Cell Study Enabled by 10x Genomics Single Cell Technology Published in Nature Medicine

  • Aegon N.V. (AEG) begins share buyback program

  • Amazon (AMZN) Celebrates Prime Members With More Deals Than Any Past Prime Day Event

  • Axon (AXON) promoted Brittany Bagley to COO and CFO on June 28

  • Banc of California (BANC) appoints Joseph Kauder as Executive Vice President and Chief Financial Officer of the Company and the Bank, effective July 10, 2023

  • Bank of America (BAC) to increase its quarterly dividend 9% to $0.24/share beginning in 3Q23

  • Bausch + Lomb (BLCO) announces an affiliate has purchased the Blink product line of eye and contact lens drops from Johnson & Johnson (JNJ) Vision

  • Biogen (BIIB) Canada's Biosimilar Byooviz now reimbursed in Quebec to treat serious retinal disorders

  • COMPASS Pathways (CMPS) releases language of first new current procedural terminology code for psychedelic therapies

  • Ford Motor (F) extends the term of the Joint Development Agreement with Solid Power (SLDP) subsidiary to December 31, 2024

  • Genius Sports (GENI) and NFL agreed to a multi-year extension of their existing strategic partnership

  • Granite Constr (GVA) awarded an ~$48 million contract by the U.S. Army Corps of Engineers to mitigate flood risk and damage in Wharton, Texas

  • Grupo Aeroportuario Del Sureste (ASR) announces that passenger traffic for June 2023 reached a total of 5.9 million passengers, 4.5% above the levels reported in June 2022

  • InnovAge (INNV) names Ben Adams its CFO, effective July 10

  • JetBlue Airways (JBLU) issues statement regarding its Northeast Alliance, or NEA, with American Airlines (AAL): strongly disagree with court ruling against the NEA, but will not appeal

  • Kazia Therapeutics (KZIA) has been awarded Fast Track Designation (FTD) by the FDA for the treatment of solid tumor brain metastases harboring PI3K pathway mutations in combination with radiation therapy

  • Leidos (LDOS) to provide pilot training for U.S. Army aviators as part of transition to the High Accuracy Detection, Exploitation System (HADES) program

  • Magnite (MGNI) chosen by Foxtel Media to enable programmatic advertising on BINGE's ad-supported tier BINGE Basic

  • Marathon Digital Holdings (MARA) reports it produced 979 BTC in June 2023 and 5,120 BTC year-to-date

  • MarketAxess (MKTX) announces monthly volume statistics for June and Q2

  • Merus (MRUS): Zenocutuzumab (Zeno) granted second Breakthrough Therapy Designation by the U.S. Food & Drug Administration

  • Meta Platforms (META) introduces Threads, a new app, built by the Instagram team, for sharing text updates and joining public conversations; CEO Mark Zuckerberg says Threads had 10 million sign ups in seven hours

  • Nikola Corporation (NKLA) awarded $41.9 mln grant by the California Transportation Commission to build six heavy-duty hydrogen refueling stations across Southern California

  • Nkarta (NKTX) appoints Alyssa Levin as Chief Financial and Business Officer; joins from Viacyte where she was CFO

  • NuScale Power (SMR) announced that Carl Fisher will join the company as COO beginning July 24, 2023

  • Offerpad Solutions (OPAD) announced that Jawad Ahsan will become Chief Financial Officer of Offerpad effective July 10, 2023, succeeding Michael Burnett

  • Patterson-UTI (PTEN) reported June average of 126 drilling rigs operating in the United States

  • Petrobras (PBR) says no decision yet on Shareholder Remuneration Policy

  • Plymouth Industrial REIT (PLYM) provides activity update for second quarter 2023

  • Regeneron Pharma (REGN) receives FDA orphan drug designation for treatment of myasthenia gravis

  • Rivian (RIVN) CEO RJ Scaringe in interview says supply chain is keeping up with production, according to Bloomberg

  • Silvercorp (SVM) reports high-grade silver-lead drill results from the sgx mine

  • Sociedad Quimica y Minera (SQM) and LG Energy SOlution announce new long-term agreement to supply refined lithium products; replaces previous agreement

  • Taiwan Semiconductor Manufacturing (TSM) spokesperson expects no direct impact from China's metal export restrictions, according to CNBC TV 18

  • Target (TGT) Announces Deals for Back-to-School and Back-to-College, Including Deeper Savings for Teacher Appreciation Event

  • Tradeweb Markets (TW) reports June 2023 total trading volume of $29.3 trillion and average daily volume of $1.38 trillion

  • Verastem Oncology (VSTM) Announces Design for Confirmatory Trial of Avutometinib and Defactinib in Recurrent Low-Grade Serous Ovarian Cancer

  • Wabtec (WAB) wins significant component order for major German-Austrian transit consortium project

M&A:

  • CBIZ (CBZ) acquires American Pension Advisors of Indianapolis, IN, effective July 1 2023; financial terms were not disclosed

  • Fidelity Nat'l Info (FIS) accelerates path to create two highly focused independent companies; announces agreement for GTCR to acquire majority stake in Worldpay at $18.5 bln valuation

  • ResMed (RMD) acquires Somnoware, a supplier of sleep and respiratory care diagnostics software

Syndicate:

  • Intuitive Machines (LUNR) files for 4,885,057 shares of its common stock by selling shareholder

IPOs:

  • There are no IPOs scheduled at this time

Gapping Up/Down

  • Gapping up:

  • PERI +8.1%, VSTM +4.7%, MITK +4.6%, HUT +4.6%, MARA +3.6%, BANC +3.4%, MRUS +2.8%, COTY+2.2%, SAVE +2%, ACT +1.1%, NKTX +0.9%, LDOS+0.8%, WAB +0.7%, AEG +0.6%

  • Gapping down:

  • ASLN -3.1%, JBLU -2.5%, ABCM -1.8%, XOM -1.3%, AAL -1.3%, PAC -1.1%, SLDP -0.8%, F -0.8%, VMEO-0.7%, MPWR -0.5%, UMC -0.5%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • Assoc Banc-Corp (ASB) upgraded to Outperform from Mkt Perform at Raymond James; tgt $20

  • First Horizon (FHN) upgraded to Outperform from Mkt Perform at Raymond James; tgt $13

  • Keurig Dr Pepper (KDP) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt $37

  • Truist (TFC) upgraded to Outperform from Mkt Perform at Raymond James; tgt $36

  • Downgrades:

  • American Express (AXP) downgraded to Neutral from Outperform at Robert W. Baird; tgt $185

  • Horizon Bancorp (HBNC) downgraded to Mkt Perform from Outperform at Raymond James

  • HubSpot (HUBS) downgraded to Neutral from Overweight at Piper Sandler; tgt raised to $520

  • Martin Marietta (MLM) downgraded to Neutral from Overweight at JP Morgan; tgt raised to $470

  • Summit Materials (SUM) downgraded to Underweight from Neutral at JP Morgan; tgt raised to $37

  • Vulcan Materials (VMC) downgraded to Neutral from Overweight at JP Morgan; tgt raised to $230

  • Others:

  • Core Molding Technologies (CMT) assumed with a Buy at EF Hutton; tgt raised to $26

  • Instructure (INST) initiated with an Overweight at KeyBanc Capital Markets; tgt $32

  • Nine Energy Service (NINE) assumed with a Buy at EF Hutton; tgt $7

  • World Kinect Corporation (WKC) initiated with an Outperform at Raymond James; tgt $30

Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for July 1 (Briefing.comConsensus NA; Prior 3.0%)

  • 08:15 ET: ADP Employment Change for June (Briefing.comConsensus 245K; Prior 278K)

  • 08:30 ET: Initial Claims for July 1 (Briefing.comConsensus 250 K: Prior 239K)

  • 08:30 ET: Trade Balance for May (Briefing.comConsensus -$69.0B; Prior -$74.6B)

  • 09:45 ET: IHS Markit Services PMI - Final for June (Briefing.comConsensus NA; Prior 54.9)

  • 10:00 ET: ISM Non-Manufacturing Index for June (Briefing.comConsensus 51.1; Prior 50.3)

  • 10:00 ET: JOLTS - Job Openings for May (Briefing.comConsensus NA; Prior 10.103M)

  • 10:30 ET: EIA Natural Gas Inventories for July 1 (Briefing.comConsensus NA; Prior +76 BCF)

  • 11:00 ET: EIA Crude Oil Inventories for for July 1 (Briefing.comConsensus NA; Prior -9.60 M)

Earnings:

  • Monday (July 3)

  • Morning: None

  • Afternoon: None

  • Tuesday (July 4)

  • Morning: Closed for holiday

  • Afternoon: Closed for holiday

  • Wednesday (July 5)

  • Morning: None

  • Afternoon: None

  • Thursday (July 6)

  • Morning: None

  • Afternoon: LEVI

  • Friday (Jul 7) 

  • Morning: None

  • Afternoon: AZZ

 

Asia & Europe detail:

Asia: Nikkei -1.7%, Hang Seng -3.0%, Shanghai Composite -0.5%

Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note. Chinese banks listed in Hong Kong underperformed amid reports that large lenders lowered rates for corporate dollar deposits. Separately, banks reportedly halted purchases of bonds in the Shanghai free trade zone due to increased regulatory scrutiny. Taiwan Semiconductor Manufacturing said that it does not expect a negative impact from China's impending export restrictions on gallium and germanium. The utilization of the discount window at the Hong Kong Monetary Authority reached a record on Wednesday.

  • In economic data:

  • Australia's May trade surplus AUD11.791 bln (expected surplus of AUD10.500 bln; last surplus of AUD10.454 bln). May Imports 2.5% m/m (last 1.7%) and Exports 4.4% m/m (last -6.4%)

---Equity Markets---

  • Japan's Nikkei: -1.7%

  • Hong Kong's Hang Seng: -3.0%

  • China's Shanghai Composite: -0.5%

  • India's Sensex: +0.5%

  • South Korea's Kospi: -0.9%

  • Australia's ASX All Ordinaries: -1.2%

---FX---

  • USD/JPY: -0.5% to 143.83

  • USD/CNH: -0.2% to 7.2477

  • USD/INR: +0.1% to 82.43

 

Europe: DAX -1.2%, FTSE -1.3%, CAC -1.8%

Major European indices trade in the red. A survey conducted by the British Chambers of Commerce showed that fewer than half of polled companies plan to raise prices in the next three months, adding that wage pressures have become the main driver of inflation. There are some concerns that the water level in Germany's Rhine river could decrease to a point where cargo ships would not be able to pass.

  • In economic data:

  • Eurozone's May Retail Sales 0.0% m/m (expected 0.2%; last 0.0%); -2.9% yr/yr (expected -2.7%; last -2.9%)

  • Germany's May Factory Orders 6.4% m/m (expected 1.2%; last 0.2%)

  • U.K.'s June Construction PMI 48.9 (expected 51.0; last 51.6)

---Equity Markets---

  • STOXX Europe 600: -1.3%

  • Germany's DAX: -1.2%

  • U.K.'s FTSE 100: -1.3%

  • France's CAC 40: -1.8%

  • Italy's FTSE MIB: -1.0%

  • Spain's IBEX 35: -1.0%

---FX---

  • EUR/USD: +0.3% to 1.0886

  • GBP/USD: +0.5% to 1.2769

  • USD/CHF: -0.3% to 0.8958

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