The S&P 500 futures are up 3 points and are trading roughly in line with above fair value. The Nasdaq 100 futures are up 24 points and are trading 0.3% above fair value. The Dow Jones Industrial Average futures are up 19 points and are trading somewhat above fair value.
The equity futures market indicates a modestly higher open as stocks try to bounce from yesterday's weakness.
The Reserve Bank of Australia raised its cash rate by 25 bps to 3.10%, as expected, while pointing to the likelihood of further tightening. European Central Bank Chief Economist Lane said that he has confidence about being near the inflationary peak, but also acknowledged that more rate hikes are needed while policymaker Herodotou said that more rate hikes will take place, but neutral rates are "very close."
Treasury yields are moving lower and the dollar is weakening. The U.S. Dollar Index is down 0.3% to 105.00. The 2-yr note yield is down two basis points to 4.36% and the 10-yr note yield is down four basis points to 3.56%.
WTI crude oil futures are down 1.5% to $75.78/bbl and natural gas futures are down 1.6% to $5.49/mmbtu.
Economic data today is limited to the October Trade Balance (Briefing.com consensus -$77.2 billion; prior -$73.3 billion) at 8:30 a.m. ET.
In corporate news:
JP Morgan (JPM 133.28, +1.91, +1.5%): upgraded to Overweight from Underweight at Morgan Stanley
Alcoa (AA 47.41, +0.89, +1.9%): moving higher on reports that the US and EU are weighing new tariffs on Chinese steel and aluminum, according to Bloomberg
Royal Caribbean (RCL 58.19, -1.23, -2.1%): downgraded to Underweight from Overweight at JP Morgan
GameStop (GME 25.75, +0.19, +0.7%): has started layoffs, according to Axios
GitLab (GTLB 45.13, +6.80, +17.7%): beats by $0.05, beats on revs; guides Q4 EPS above consensus, revs in-line
PepsiCo (PEP 183.44, +0.32, +0.2%): moving higher as company plans to lay off hundreds of workers at its North American snacks and beverage division headquarters, according to The Wall Street Journal
Vivint Smart Home (VVNT 11.86, +2.87, +31.9%): NRG Energy (NRG) to acquire Vivint for $12 per share or $2.8 bln in an all-cash transaction
Signet Jewelers (SIG 62.00, +4.17, +7.2%): beats by $0.42, beats on revs; guides Q4 revs below consensus; guides FY23 EPS above consensus, revs in-line
AutoZone (AZO 2520.00, -6.92, -0.3%): beats by $2.17, beats on revs; Q1 domestic comps +5.6%
Reviewing overnight developments:
Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. Japan's Nikkei: +0.2%, Hong Kong's Hang Seng: -0.4%, China's Shanghai Composite: UNCH, India's Sensex: -0.3%, South Korea's Kospi: -1.1%, Australia's ASX All Ordinaries: -0.5%.
In economic data:
Japan's October Household Spending 1.1% m/m (expected 1.5%; last 1.8%); 1.2% yr/yr (expected 1.0%; last 2.3%). October overall wage income 1.8% yr/yr (last 2.2%)
Australia's Q3 Current Account deficit AUD2.30 bln (expected surplus of AUD10.50 bln; last surplus of AUD14.70 bln)
In news:
There was continued focus on reopening efforts in China.
Japan's household spending increased for the second consecutive month in October.
Japan's Finance Minister Suzuki said that ruling parties are consulting on the appropriate level of defense funding after it was reported that the country plans to increase its defense spending by 50% over the next five years.
The Reserve Bank of Australia raised its cash rate by 25 bps to 3.10%, as expected.
Major European indices trade in the red. STOXX Europe 600: -0.3%, Germany's DAX: -0.1%, U.K.'s FTSE 100: -0.3%, France's CAC 40: -0.2%, Italy's FTSE MIB: -0.3%, Spain's IBEX 35: -0.4%.
In economic data:
Germany's October Factory Orders 0.8% m/m (expected 0.1%; last -2.9%)
U.K.'s November Construction PMI 50.4 (expected 52.0; last 53.2)
In news:
European Central Bank Chief Economist Lane said that he has confidence about being near the inflationary peak, but also acknowledged that more rate hikes are needed while policymaker Herodotou said that more rate hikes will take place, but neutral rates are "very close."
Grocery prices in Britain decreased for the first time in almost two years in November.
U.S. equity futures:
S&P 500 Futures: +4 @ 4,003
DJIA Futures: +22 @ 33,969
Nasdaq 100 Futures: +27 @ 11,814
Overseas:
Europe: DAX -0.1%, FTSE -0.3%, CAC -0.2%
Asia: Nikkei +0.2%, Hang Seng UNCH, Shanghai Composite UNCH
Commodities:
Crude Oil -1.23 @ 75.70
Nat Gas -0.104 @ 5.473
Gold +10.65 @ 1792
Silver +0.286 @ 22.703
Copper +0.0150 @ 3.81
Earnings/Guidance:
AutoZone ( AZO ▾ 1.36% ) beats by $2.17, beats on revs; Q1 domestic comps +5.6%
Braemar Hotels & Resorts ( BHR ▴ 0.57% ) reports preliminary November 2022 RevPAR of $253, up 5% yr/yr and up 15% compared to 2Q19
Conn's ( CONN ▴ 11.47% ) beats by $0.05, beats on revs
Couchbase ( BASE ▾ 0.11% ) beats by $0.11, beats on revs; guides Q4 revs below consensus
GitLab ( GTLB ▴ 10.25% ) beats by $0.05, beats on revs; guides Q4 EPS above consensus, revs in-line
Keurig Dr Pepper ( KDP ▴ 0.28% ) reiterates its FY22 outlook
Kforce ( KFRC ▾ 0.81% ) reaffirms Q4 revenue guidance; to pursue an immediate divestiture or exit of its equity stake in WorkLLama
LGI Homes ( LGIH ▾ 1.06% ) reports it closed 412 homes in November
Lilium ( LILM ▾ 2.08% ) releases Q3 Business Update
Signet Jewelers ( SIG ▴ 14.94% ) beats by $0.42, beats on revs; guides Q4 revs below consensus; guides FY23 EPS above consensus, revs in-line
Sumo Logic ( SUMO ▴ 15.40% ) beats by $0.11, beats on revs; guides Q4 EPS above consensus, revs above consensus
Sunoco LP ( SUN ▴ 1.22% ) announces 2023 business outlook and guidance in Investor Presentation slides
United Micro ( UMC ▾ 0.95% ) reports November sales increased 14.7% yr/yr to ~NT$22.55 bln
News:
China is reporting fewer coronavirus cases amid relaxation in testing requirements, according to Bloomberg
White House Chief of Staff Ron Klain expects President Biden to announce his reelection campaign after the new year, according to Bloomberg
White House announces U.S.-EU Trade and Technology Council advances concrete action on transatlantic cooperation
The U.S. FTC probes several crypto firms over allegations of deceptive or misleading advertisements, according to Bloomberg
A traffic jam of oil tankers has occurred near Turkey after Russian oil price cap went into effect, according to Financial Times
Alcoa ( AA ▴ 4.36% ) and Century Aluminum (CENX): US and EU are weighing new tariffs on Chinese steel and aluminum, according to Bloomberg
AMC Networks ( AMCX ▴ 0.08% ) appoints current Chairman James L. Dolan as Interim Executive Chairman following the departure of Christina Spade last week
BellRing Brands ( BRBR ▴ 2.73% ) approves a new $50 mln share repurchase authorization
BioVie ( BIVI ▾ 7.87% ) Announces Positive Results for NE3107 in Parkinson's and Alzheimer's Phase 2 Trials
Blink Charging ( BLNK ▾ 0.72% ) appoints Mark Pastrone, current COO of subsidiary SemaConnect, to COO of the company
Buckle ( BKE ▴ 2.04% ) authorizes $2.65 per share special cash dividend
Cboe Global Markets ( CBOE ▴ 1.05% ) reports monthly trading volume statistics for November; total U.S. options volume reached all-time high for fourth consecutive month
Celldex Therapeutics ( CLDX ▴ 1.31% ) Presents Positive Data from Barzolvolimab Phase 1b Study in Chronic Inducible Urticaria at Global Urticaria Forum 2022
CURO Group ( CURO ▴ 2.55% ) has appointed Ismail Dawood as Chief Financial Officer, effective January 3, 2023
Deutsche Bank ( DB ▴ 0.33% ): EU Commission sends statement of objections to Deutsche Bank and Rabobank over Euro-denominated bonds trading cartel case
Editas Medicine ( EDIT ▴ 2.64% ) announces positive safety and efficacy data from the first two patients treated in the RUBY Trial of EDIT-301 for the treatment of severe sickle cell disease
Eldorado Gold ( EGO ▴ 1.55% ) Released Updated Mineral Reserve and Mineral Resource Statement; 2022 Gold Reserves of 12.3 million ounces and M&I Gold Resources of 19.2 million ounces
Emergent BioSolutions ( EBS ▴ 2.21% ) receives FDA acceptance and Priority Review of Supplemental NDA for over-the-counter NARCAN
Exscientia plc ( EXAI ▾ 1.27% ) presents novel immuno-oncology biomarker for EXS-21546 at the ESMO I-O Annual Congress
F-star Therapeutics ( FSTX ▾ 0.09% ) presents clinical data on FS222, a CD137/PD-L1 tetravalent bispecific antibody, at ESMO-IO 2022 Congress
Funko ( FNKO ▴ 4.72% ) announces a series of leadership changes, including appointment of Brian Mariotti as CEO and the resignation of CFO Jennifer Fall Jung
GameStop ( GME ▾ 1.60% ) beginning a round of layoffs, according to Axios
Gibraltar Industries ( ROCK ▾ 0.42% ) COO to depart, effective December 30; responsibilities of the position will be reallocated among members of existing management team
Goldman Sachs ( GS ▾ 0.47% ) wants to purchase or invest in cryptocurrency companies, according to Reuters
GOL Linhas Aereas Inteligentes S.A. ( GOL ▴ 5.52% ) reports November traffic figures
Gossamer Bio ( GOSS ▾ 67.12% ) announces seralutinib meets primary endpoint in Phase 2 TORREY study in pulmonary arterial hypertension
Great Lakes Dredge & Dock ( GLDD ▾ 0.14% ) provides update on fleet renewal program; the Galveston Island, the first of two newbuild hopper dredges, is scheduled to be in operation in 1H23 as planned
Grupo Aeroportuario Del Sureste ( ASR ▴ 0.70% ) reports November traffic
Hanover Insurance ( THG ▴ 0.47% ) increases quarterly dividend to $0.81/share from $0.75/share, new yield is 2.3%
Karuna Therapeutics ( KRTX ▾ 11.90% ) appoints Bill Meury as President and CEO
Lattice Semi ( LSCC ▴ 0.18% ) unveils Lattice Avant, a new FPGA platform, expanding its portfolio and doubling its addressable market
Leonardo DRS ( DRS ▴ 2.69% ) receives contract from U.S. Army worth $39.5 mln
Liquidia Technologies ( LQDA ▴ 2.51% ) enters into collaboration with Sandoz and Mainbridge Health Partners to develop new infusion pump for infusion of Treprostinil Injection
Matador Resources ( MTDR ▴ 1.64% ) amends its quarterly cash dividend policy to $0.15/share
MediciNova ( MNOV ▴ 2.83% ) Announces Positive Results from Secondary Analysis of Phase 2 Trial of MN-166 (ibudilast) Published in The American Journal of Drug and Alcohol Abuse
Meta Platforms ( META ▾ 3.24% ) says it would remove news from its platforms if Congress passes the Journalism Competition and Preservation Act, according to Reuters
Microsoft ( MSFT ▴ 0.47% ) is offering Sony (SONY) a 10-year contract for Call of Duty releases on PlayStation, according to Reuters
Microsoft ( MSFT ▴ 0.47% ): Workers at Microsoft gaming studio could form a union, according to Axios
NASDAQ ( NDAQ ▴ 0.04% ) reports November monthly volume data, Nov US equity options volume 271 mln, down slightly from 273 mln in Oct
Natera ( NTRA ▾ 0.73% ) Announces Publication of Clinical Experience Study with 18,984 Twin Pregnancies Supporting Excellent Performance of Panorama NIPT
NeoGenomics ( NEO ▾ 3.56% ) names Jeffrey Sherman as CFO
News Corp. ( NWSA ▴ 0.43% ) Special Committee provides update on exploration of combination with Fox (FOX)
NY Times ( NYT ▴ 0.07% ) union could strike, according to the New York Post
Northrop Grumman ( NOC ▾ 0.23% ) awarded a $406 mln US Air Force task order for engineering services
PepsiCo ( PEP ▴ 0.02% ) plans to lay off hundreds of workers at its North American snacks and beverage division headquarters, according to the Wall Street Journal
Pfizer ( PFE ▾ 0.30% ) and Clear Creek Bio to collaborate on a research program targeting SARS-CoV-2 papain-like protease
Quanterix's ( QTRX ▾ 0.69% ) Simoa Technology Drives Advances in Alzheimer's Disease Research Presented at 2022 Clinical Trials on Alzheimer's Disease Conference
SAGE Therapeutics ( SAGE ▾ 0.94% ) and Biogen (BIIB) complete rolling submission of NDA for Zuranolone
Samsung ( SSNLF ) planning to invest billions in Vietnam, according to Reuters
Sempra Energy ( SRE ▴ 0.11% ) unit entered into a long-term sale and purchase agreement with ENGIE S.A. (ENGIY)
Silvergate Capital ( SI ▾ 0.12% ) issues letter relating to FTX and SI's role in the digital asset ecosystem
Summit Materials ( SUM ▴ 1.57% ) declares special stock dividend of 0.017 shares of company's Class A common stock for each outstanding share of common stock
TSMC ( TSM ▾ 0.87% ) will invest $40 bln in Arizona chip plant, according to the Wall Street Journal
WM Technology ( MAPS 0.00% ) approved plans to reduce the current workforce by up to 175 employees, representing ~25% of the total global workforce
Zai Lab ( ZLAB ▴ 0.98% ) Partner Mirati Therapeutics (MRTX) Presents Late-Breaking Results Evaluating Concurrent Adagrasib and Pembrolizumab in First-Line Advanced/Metastatic Non-Small Cell Lung Cancer
M&A:
Ares Acquisition Corp. ( AAC ▴ 0.40% ): X-Energy to go public via business combination with AAC
Installed Building Products ( IBP ▴ 1.27% ) announces acquisition of Orr Industries, which had annual revenue of approximately $10 mln
Orthofix ( OFIX ▴ 1.59% ) receives $24.00/share unsolicited non-binding indication of interest letter from the same two private equity fund sponsors from the prior indication of interest letter
SS&C Techs ( SSNC ▾ 0.28% ) acquires Complete Financial Ops; financial terms were not disclosed
Vivint Smart Home ( VVNT ▴ 32.48% ): NRG Energy (NRG) to acquire Vivint for $12 per share or $2.8 bln in an all-cash transaction
Syndicate:
Axon ( AXON ▾ 5.93% ) to offer $500 mln convertible notes in a private offering
BioVie Inc. ( BIVI ▾ 7.87% ) filed prospectus supplement to increase shares of Class A common stock to $17.5 mln from $8.1 mln that may be sold pursuant to the previously disclosed Controlled Equity Offering Sales Agreement, dated August 31, 2022
Herbalife Nutrition ( HLF ▾ 16.85% ) announces $250 mln proposed offering of convertible notes
Scorpio Tankers ( STNG ▴ 0.49% ) announces that all holders of its convertible bond due 2025 have converted their bonds into an aggregate of 5,757,698 shares
IPOs:
Expect to Price:
No IPOs expected.
Gapping Up/Down
Gapping up:
VVNT +31.6%, GTLB +18.1%, BIVI +14.6%, EBS +8.9%, SUMO +8.6%, ZLAB +3.6%, LQDA +3.3%, MNOV +2.8%, CENX +2.1%, NWSA +1.5%, BHR +1.4%, GME +1.3%, AMCX +1.3%, STNG +1.2%, FOX +1.2%, HOOD +0.8%, AA +0.8%, QTRX +0.8%, DRS +0.6%, CBOE +0.6%
Gapping down:
MRTX -10.5%, HLF -9.8%, PSTX -4.1%, LSCC -3.9%, CONN -3.7%, AXON -2.2%, FNKO -0.9%, SI -0.7%, META -0.5%
Analyst Research (see Upgrades/Downgrades calendar for full list):
Upgrades
Activision Blizzard (ATVI) upgraded to Buy from Hold at Edward Jones
PennyMac (PFSI) upgraded to Overweight from Equal Weight at Wells Fargo; tgt raised to $75
Downgrades:
Conagra (CAG) downgraded to Sell from Hold at Deutsche Bank; tgt raised to $34
General Mills (GIS) downgraded to Hold from Buy at Deutsche Bank; tgt $88
Royal Caribbean (RCL) downgraded to Underweight from Overweight at JP Morgan; tgt lowered to $47
Others:
Albertsons (ACI) initiated with a Outperform at Bernstein; tgt $26
Home Depot (HD) initiated with a Mkt Perform at Bernstein; tgt $337
Kroger (KR) initiated with an Outperform at Bernstein; tgt $58
Lowe's (LOW) initiated with a Mkt Perform at Bernstein; tgt $237
Norwegian Cruise Line (NCLH) assumed with an Overweight at JP Morgan; tgt lowered to $30
Target (TGT) initiated with an Outperform at Bernstein; tgt $190
United Therapeutics (UTHR) initiated with a Buy at UBS; tgt $320
Valvoline (VVV) initiated with an Outperform at RBC Capital Mkts; tgt $39
Walmart (WMT) initiated with a Mkt Perform at Bernstein; tgt $159
Xponential Fitness (XPOF) initiated with a Buy at Citigroup; tgt $29
Upcoming Events:
Econ Data:
08:30 ET: Trade Balance for Oct (Briefing.com Consensus -$77.2 B; Prior -$73.3 B)
Earnings:
Monday (Dec 5)
Morning: SAIC
Afternoon: GTLB SUMO
Tuesday (Dec 6)
Morning: AZO CONN BASE SIG
Afternoon: AVAV CASY PLAY GWRE MDB S SWBI CXM SFIX TOL ZUO
Wednesday (Dec 7)
Morning: ASO BF.B CPB LOVE OLLI THO UNFI
Afternoon: AI DSGX GME GEF HCP OXM SPWH VRNT
Thursday (Dec 8)
Morning: CIEN GMS MOMO KFY MANU
Afternoon: AVGO CHWY COO COST DOCU DOMO LULU PHR RH CURV MTN
Friday (Dec 9)
Morning: LI
Asia & Europe detail:
Asia: Nikkei +0.2%, Hang Seng UNCH, Shanghai Composite UNCH
Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. There was continued focus on reopening efforts in China. Japan's household spending increased for the second consecutive month in October. Japan's Finance Minister Suzuki said that ruling parties are consulting on the appropriate level of defense funding after it was reported that the country plans to increase its defense spending by 50% over the next five years. The Reserve Bank of Australia raised its cash rate by 25 bps to 3.10%, as expected.
In economic data:
Japan's October Household Spending 1.1% m/m (expected 1.5%; last 1.8%); 1.2% yr/yr (expected 1.0%; last 2.3%). October overall wage income 1.8% yr/yr (last 2.2%)
Australia's Q3 Current Account deficit AUD2.30 bln (expected surplus of AUD10.50 bln; last surplus of AUD14.70 bln)
---Equity Markets---
Japan's Nikkei: +0.2%
Hong Kong's Hang Seng: -0.4%
China's Shanghai Composite: UNCH
India's Sensex: -0.3%
South Korea's Kospi: -1.1%
Australia's ASX All Ordinaries: -0.5%
---FX---
USD/JPY: -0.3% to 136.30
USD/CNH: +0.2% to 6.9869
USD/INR: +0.5% to 82.33
Europe: DAX -0.1%, FTSE -0.3%, CAC -0.2%
Major European indices trade in the red. European Central Bank Chief Economist Lane said that he has confidence about being near the inflationary peak, but also acknowledged that more rate hikes are needed while policymaker Herodotou said that more rate hikes will take place, but neutral rates are "very close." Grocery prices in Britain decreased for the first time in almost two years in November.
In economic data:
Germany's October Factory Orders 0.8% m/m (expected 0.1%; last -2.9%)
U.K.'s November Construction PMI 50.4 (expected 52.0; last 53.2)
---Equity Markets---
STOXX Europe 600: -0.3%
Germany's DAX: -0.1%
U.K.'s FTSE 100: -0.3%
France's CAC 40: -0.2%
Italy's FTSE MIB: -0.3%
Spain's IBEX 35: -0.4%
---FX---
EUR/USD: +0.3% to 1.0521
GBP/USD: +0.3% to 1.2228
USD/CHF: -0.3% to 0.9397