The S&P 500 futures trade six points, or 0.1%, above fair value following yesterday's sell-off, as investors continue to digest the Fed while Treasury yields continue to push higher. The tech-heavy Nasdaq 100 futures trade 0.5% below fair value amid continued selling pressure in the growth stocks.
Yesterday's sell-off was linked to a passage in the December FOMC Minutes, which showed Fed officials thought it would be appropriate to normalize policy relatively quickly due to a strong economic outlook and the size of the balance sheet.
This morning, the 10-yr yield is up another three basis points to 1.74% (+23 bps this week) while the 2-yr yield is up two basis points to 0.85%. The quick ascent in the 10-yr yield is weighing on the growth stocks for valuation reasons, but value stocks have held up relatively well amid rebalancing efforts.
Walgreens Boots Alliance (WBA 55.07, +1.07, +2.0%) is one value standout after beating top and bottom-line estimates and raising its FY22 EPS guidance. WBA shares are up 2.0% ahead of the open.
In addition, travel-related stocks are seeing some gains in pre-market action after the CDC recommended the Pfizer (PFE 55.52, -0.11, -0.2%)-BioNTech (BNTX 215.19, +3.76, +1.8%) COVID-19 booster shot for 12-15 year-olds.
On the data front, investors will receive weekly Initial Claims (Briefing.comconsensus 198,000) and the Trade Balance for November (Briefing.comconsensus -$69.4 billion) at 8:30 a.m. ET, followed by the ISM Non-Manufacturing Index for December (Briefing.comconsensus 67.1%) and Factory Orders for November (Briefing.comconsensus 1.2%) at 10:00 a.m. ET.
In U.S. Corporate news:
Walgreens Boots Alliance (WBA 55.07, +1.07): +2.0% after beating top and bottom-line estimates and raising its FY22 EPS guidance.
Pfizer (PFE 55.52, -0.11): -0.2% after the CDC recommended the company's COVID-19 booster shot for 12-15 year-olds.
Bed Bath & Beyond (BBBY 12.10, -1.26): -9.5% after missing top and bottom-line estimates and guiding Q4 EPS and revenue below consensus.
Conagra (CAG 33.40, -0.75): -2.2% after missing EPS estimates on above-consensus revenue. The company reaffirmed its FY22 EPS guidance.
Dollar General (DG 228.95, -4.85): -2.1% after the stock was downgraded to Equal Weight from Overweight at Wells Fargo.
Reviewing overnight developments:
Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note with Australian stocks leading the retreat. Japan's Nikkei: -2.9% Hong Kong's Hang Seng: +0.7% China's Shanghai Composite: -0.3% India's Sensex: -1.0% South Korea's Kospi: -1.1% Australia's ASX All Ordinaries: -2.8%.
In economic data:
China's December Caixin Services PMI 53.1 (last 52.1)
Japan's December Services PMI 52.1 (expected 51.1; last 53.0)
Australia's December Services PMI 55.1, as expected (last 55.7)
In news:
The Bank of Japan conducted an unscheduled JPY2 trln repurchase operation. The central bank will raise its forecast for CPI in FY22 to the low 1% range.
Tokyo's governor said that there are no plans to ask the national government to implement a quasi-emergency despite a rising number of coronavirus cases.
Xinhua reported that the Chinese government plans to strengthen audits of fiscal spending.
Chinese citizens have been asked to shorten long distance trips planned for the Lunar New Year.
Major European indices trade in the red after their recent string of gains. STOXX Europe 600: -1.1% Germany's DAX: -1.3% U.K.'s FTSE 100: -0.7% France's CAC 40: -1.3% Italy's FTSE MIB: -1.2% Spain's IBEX 35: -0.4%.
In economic data:
Eurozone's November PPI 1.8% m/m (expected 1.2%; last 5.4%); 23.7% yr/yr (expected 22.9%; last 21.9%)
Germany's November Factory Orders 3.7% m/m (expected 2.1%; last -5.8%) and December IHS Markit Construction PMI 48.2 (last 47.9)
U.K.'s December Services PMI 53.6 (expected 53.2; last 58.5)
In news:
The French government will reportedly look to loosen eurozone's fiscal rules during the country's six-month stint at the helm of the European Council.
Credit Agricole offered to acquire Italian lender Banca Carige.
British Prime Minister Johnson is being pressured to forego a planned GBP12 bln increase to the country's national insurance contributions.
U.S. equity futures:
S&P 500 Futures: -2 @ 4,699
DJIA Futures: +75 @ 36,482
Nasdaq 100 Futures: -86 @ 15,686
Overseas:
Europe: DAX -1.3%, FTSE -0.7%, CAC -1.3%
Asia: Nikkei -2.9%, Hang Seng +0.7%, Shanghai Composite -0.3%
Commodities:
Crude Oil +1.43 @ 79.28
Nat Gas -0.041 @ 3.841
Gold -29.35 @ 1795.75
Silver -0.998 @ 22.172
Copper -0.0620 @ 4.3515
U.S. Summary:
Earnings/Guidance (Full Earnings Calendar):
AngioDynamics (ANGO) misses by $0.02, reports revs in-line; reaffirms FY22 EPS guidance, revs guidance
Axonics Modulation (AXNX) sees Q4 revs above consensus
Bath & Body Works (BBWI) sees Q4 at high-end of guidance
Bed Bath & Beyond (BBBY) misses by $0.25, misses on revs; guides Q4 EPS below consensus, revs below consensus; Q3 comps -7%
Berkeley Lights (BLI) guides FY21 revs below consensus; expects FY22 revenue growth of +30% yr/yr; CEO Eric Hobbs to step down from his current role
Buckle (BKE) reports December comparable store net sales +17.7% from comparable store net sales for the 5-week period ended January 2, 2021
Conagra (CAG) misses by $0.04, beats on revs; reaffirms FY22 EPS guidance
Constellation Brands (STZ) beats by $0.33, beats on revs; raises FY22 EPS above consensus
Costco (COST) reports December adjusted comparable sales growth of 11.5%; net sales up 16.2% yr/yr
Helen of Troy (HELE) beats by $0.54, beats on revs; raises FY22 guidance
Humana (HUM) to reaffirm 2021 guidance at upcoming conferences; initial 2022 Adjusted EPS guidance will include an explicit COVID related headwind
Kirklands (KIRK) reports Q4 comps -6.4% yr/yr; co continues to expect a mid-to-high-single-digit same-store sales decrease for Q4; authorized a new share repurchase plan providing for the purchase in the aggregate of $30 million
Lindsay Corp (LNN) beats by $0.25, beats on revs
Resources Connection (RGP) beats by $0.09, beats on revs; provides upside Q3 revenue guidance
Turtle Beach (HEAR) sees FY21revenue at low end of prior guidance range, which is below consensus estimate
Walgreens Boots Alliance (WBA) beats by $0.34, beats on revs; raises FY22guidance; Q1 comps +7.9%
General News:
Democrats have no clear path to pass Build Back Better Act or voting rights legislation amid opposition from moderate Senate Democrats, according to CNN
Supreme Court will hear case tomorrow challenging President Biden's vaccination mandates on private businesses, according to Bloomberg
Saudi Arabia lowers oil prices for Asian buyers, according to Bloomberg
Airlines cancel another 1000 flights, according to the Wall Street Journal
NFL considering moving Super Bowl 56 site from California to Texas because of coronavirus restrictions in California, according to ABC News
Italy mandates coronavirus vaccines for anyone 50 and older, according to the New York Times
2seventy bio (TSVT) has entered into an option and license agreement with Novo Nordisk (NVO) for joint research and development of an in vivo gene editing treatment for hemophilia A
Alnylam Pharma (ALNY) announced a collaboration with Novartis (NVS) to leverage Alnylam's proven, proprietary siRNA technology
Ambarella (AMBA): Seeing Machines Limited announced a collaboration with Ambarella to bring integrated Advanced Driver Assistance System and occupant and driver monitoring system solutions to the market
BeiGene (BGNE): China NMPA approves Tislelizumab as second- or third-line treatment for patients with locally advanced or metastatic non-small cell lung cancer
Biohaven Pharmaceutical (BHVN) announced preliminary net product revenue of NURTEC ODT (rimegepant) for the fourth quarter of 2021
Black Hills Corp's (BKH) natural gas utility subsidiaries in Colorado, Iowa, and Kansas receive approvals for rate review settlements
Cboe Global Markets (CBOE) reports total options volume for 2021 was 3.0 billion contracts, the highest yearly volume on record and up 19 percent from 2020
Constellation Brands (STZ) enters agreement with The Coca-Cola Company (KO) to bring the FRESCA brand into beverage alcohol
Cricut (CRCT) announces CFO transition with retirement of Marty Peterson, effective September 30, 2022
Crown Castle (CCI) and T-Mobile (TMUS) announce that the companies have signed a new 12-year agreement to support the continued build-out of T-Mobile's nationwide 5G network with increased access to Crown Castle's towers and small cell locations
Curis (CRIS) announces positive updated clinical data from the ongoing open label Phase 1/2 dose escalation and expansion study of CA-4948in patients with relapsed or refractory (R/R) acute myeloid leukemia
Datadog (DDOG) announces partnership with AWS for observability and security
Eli Lilly (LLY) and Entos Pharmaceuticals enter into research and collaboration agreement to support the development of innovative therapies in multiple neurologic indications
Enanta Pharmaceuticals (ENTA) announces that Jay R. Luly, Enanta's President and Chief Executive Officer, will provide an update across its pipeline of virology programs and plans for 2022 during Enanta's presentation at the 40th Annual J.P. Morgan Healthcare Conference
Fidelity National (FNF) appoints Mike Nolan as CEO, effective February 1
Finch Therapeutics (FNCH): USPTO issued two new patents covering the company's FIN-211 enriched consortia microbiome product candidate in development for children with autism spectrum disorder (ASD) and significant gastrointestinal (GI) symptoms
Frontier Communications (FYBR) Parent adds 45,000 fiber broadband customers in Q4
Geo Group (GEO) has not yet reached agreement with the Noteholder Group, the Term Lender Group, or the RCF Lenders with respect to the material terms of a potential transaction
GoDaddy (GDDY) appoints Roger Chen as COO, effective January 3
GOL Linhas Aereas Inteligentes S.A. (GOL) reports traffic figures for December
Granite Constr (GVA) selected by California Dept of Transportation as general contractor on $90 mln State Route 70 project
Hasbro (HAS) promotes Chris Cocks to CEO position; names Eric Nyman as COO
Intercontinental Hotels Group (IHG) seals four-hotel destination resorts portfolio deal with strategic partner Sun Group
Joby Aviation (JOBY) confirmed it received FAA Special Airworthiness Certification and US Air Force Airworthiness Approval for a second pre-production prototype aircraft in December 2021
LGI Homes (LGIH) announced it closed 1,004 homes in December, a total of 2,526 home closings in the fourth quarter and a record 10,442 home closings for the full year 2021
Manchester United (MANU) announces that Richard Arnold, formerly Group Managing Director, will become Chief Executive Officer, effective from 1st February 2022
MGM Resorts (MGM) to launch reimagined loyalty rewards program MGM Rewards on February 1
Missfresh Ltd. (MF) signs 20+ major regional grocery store chains to use its retail cloud services
New Found Gold Corp. (NFGC) Intercepts 70.65 g/t Au Over 5.25m at Golden Joint Main Vein, Extending Zone to 285m Vertical Depth
Nike (NKE) files lawsuit against Lululemon (LULU) over patent infringement, according to the Wall Street Journal
ObsEva (OBSV) announces positive topline results for Linzagolix 200 mg with add-back therapy in the phase 3 edelweiss 3 trial in patients with moderate-to-severe endometriosis-associated pain
Opportunity Financial (OPFI) authorized share repurchase program of up to an aggregate of $20 mln of its Class A common stock; will expire in December 2023
Patterson-UTI (PTEN) reported that for the month of December 2021, it had an average of 110 drilling rigs operating in the United States
Pfizer (PFE): CDC panel recommends its booster for 12-15 year olds, according to CNBC
PGT Inc. (PGTI) announces the appointment of John Kunz as Senior Vice President and Chief Financial Officer, effective January 17, 2022
Pharming (PHAR) receives positive EMA decision on paediatric investigation plan (PIP) for leniolisib in Europe
Precision Drilling (PDS) introduces capital allocation framework through 2025 and provides balance sheet and operational updates
Privia Health (PRVA) announces entrance into capitated Medicare Advantage agreements
REGENXBIO (RGNX) announced FDA clearance of its Investigational New Drug application to evaluate RGX-202; expects to initiate trial in the first half of 2022
Riot Blockchain (RIOT) produced 425 Bitcoin in December, up 334% yr/yr
Roivant Sciences (ROIV) announces license agreement with Eisai (ESALY) for RVT-2001
Sangamo Therapeutics (SGMO) was notified that Sanofi (SNY) terminated licensing agreement
SomaLogic (SLGC) announces strategic collaboration with Illumina (ILMN) to develop sequencing-based proteomic solutions
Starbucks (SBUX) workers in Buffalo store walk out over safety concerns, according to NPR
Stellantis's (STLA) Chrysler announces plan for brand's first battery-electric vehicle by 2025, all-electric lineup by 2028
Sutro Biopharma (STRO) Announces Interim Data from Dose-Expansion Cohort of STRO-002 Phase 1 Study for Patients with Advanced Ovarian Cancer
The RealReal (REAL) provides business update for December; GMV for December was approx. $153 mln
TransMedics Group (TMDX) announces publication of OCS Liver PROTECT trial results in JAMA Surgery
West Pharm (WST) authorizes share repurchase program for calendar year 2022 of up to 650,000 shares of common stock
Zai Lab (ZLAB) announces NDA acceptance of margetuximab for patients with pretreated metastatic HER2-positive breast cancer in China by the NMPA
Zymeworks (ZYME) appoints Kenneth Galbraith as Chair and CEO, effective on or before February 1
M&A:
AMC Networks (AMCX) acquires Sentai, a supplier of anime content, including Sentai's HIDIVE streaming service
Comfort Systems (FIX) announces three acquisitions, which are expected to be neutral to slightly accretive to EPS in 2022 and 2023
Corsair Gaming (CRSR) acquires 51% stake in Taiwan-based company iDisplay Technology
Primo Water (PRMW) acquires Sip-Well, a leading distributor of water solutions in Belgium
Sterling Construction (STRL) announces acquisition of Petillo for aggregate consideration of $195 mln at closing
SWK Holdings' (SWKH) special committee to its board of directors concludes it's not able to reach agreement with Carlson Capital with respect to $20.20/share buyout proposal
TopBuild (BLD) acquired Insulating Products, a residential and light commercial insulation distribution company headquartered in Lewisville, Texas
WarnerMedia (T) and Viacom (VIAC) mulling sale of CW network, according to the Wall Street Journal
Syndicate:
AFC Gamma (AFCG) prices its underwritten public offering of 3,000,000 shares of its common stock at a public offering price of $20.50/share
Core & Main (CNM) prices secondary public offering of 20 mln shares of its Class A common stock by certain selling stockholders at $26.00/share
Federal Realty (FRT) files mixed securities shelf offering
IPOs:
Expected to Price:
Amylyx Pharmaceuticals (Nasdaq: AMLX): The developer of therapies for the treatment of ALS and neurodegenerative diseases is expected to price its 8.8 M share IPO between $18-$20.
CinCor (Nasdaq: CINC): The clinical-stage biopharmaceutical company developing its lead clinical candidate, CIN-107, for treatment of hypertension and other cardio-renal diseases is expected to price its 11.0 M share IPO between $15-$17.
Gapping Up/Down
Gapping up:
OPFI +10.2%, OBSV +6.8%, SLGC +6.4%, DDOG+2.7%, STLA +2.2%, MF +2.1%, LGIH +2.1%, IHG+2%, AMBA +1.6%, JOBY +1.1%
Gapping down:
BLI -30.9%, STRO -15.2%, HEAR -3.8%, RIOT -1.6%, CNM -1.1%
Analyst Research (see Upgrades/Downgradescalendarfor full list):
Upgrades
Allbirds (BIRD) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt lowered to $17
Avis Budget (CAR) upgraded to Hold from Sell at Deutsche Bank; tgt $210
C.H. Robinson (CHRW) upgraded to Outperform from Peer Perform at Wolfe Research; tgt $124
Canada Goose (GOOS) upgraded to Overweight from Equal Weight at Barclays; tgt $56
Cigna (CI) upgraded to Overweight from Equal Weight at Wells Fargo; tgt raised to $278
Coinbase Global (COIN) upgraded to Buy from Neutral at BofA Securities; tgt $340
Comerica (CMA) upgraded to Neutral from Underperform at BofA Securities; tgt raised to $105
DTE Energy (DTE) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $133
Five9 (FIVN) upgraded to Buy from Hold at Jefferies
GitLab (GTLB) upgraded to Overweight from Neutral at Piper Sandler; tgt $100
Houlihan Lokey (HLI) upgraded to Buy from Neutral at Goldman; tgt raised to $126
Humana (HUM) upgraded to Overweight from Equal Weight at Wells Fargo; tgt raised to $529
Downgrades:
ADT (ADT) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt $10
Akamai Tech (AKAM) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $127
ANSYS (ANSS) downgraded to Neutral from Outperform at Robert W. Baird; tgt lowered to $405
Aon (AON) downgraded to Underperform from In-line at Evercore ISI; tgt raised to $292
Berkeley Lights (BLI) downgraded to Sell from Hold at Stifel; tgt lowered to $12
Cellectis (CLLS) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $16
Ceridian HCM (CDAY) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $100
Covenant Logistics (CVLG) downgraded to Underperform from Peer Perform at Wolfe Research; tgt $23
Dollar General (DG) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $220
Elastic (ESTC) downgraded to Hold from Buy at Jefferies; tgt lowered to $125
Entergy (ETR) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt $106
Evercore (EVR) downgraded to Neutral from Buy at Goldman and removed from Conviction Buy List; tgt lowered to $141
Forward Air (FWRD) downgraded to Peer Perform from Outperform at Wolfe Research
Gilead Sciences (GILD) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $74
Goldman Sachs (GS) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $475
Home Point Capital (HMPT) downgraded to Sell from Neutral at Goldman; tgt $4.50
Kearny Financial (KRNY) downgraded to Neutral from Overweight at Piper Sandler; tgt $14
Knight-Swift (KNX) downgraded to Underperform from Peer Perform at Wolfe Research; tgt $58
Others:
Advanced Energy (AEIS) initiated with a Buy at The Benchmark Company; tgt $110
Akoya Biosciences (AKYA) resumed with an Overweight at Piper Sandler; tgt $23
Ascendis Pharma (ASND) initiated with a Market Perform at Cowen; tgt $136
Capital One (COF) removed from Goldman's Conviction Buy List
Colfax (CFX) initiated with a Hold at Loop Capital; tgt $45
CrowdStrike (CRWD) initiated with an Overweight at Wells Fargo; tgt $275
Cytek Biosciences (CTKB) resumed with an Overweight at Piper Sandler; tgt $20
Dynavax (DVAX) resumed with a Buy at Goldman; tgt $38
Heska Corp (HSKA) resumed with an Overweight at Piper Sandler; tgt $210
Illumina (ILMN) resumed with an Equal-Weight at Morgan Stanley; tgt $425
Illumina (ILMN) resumed with an Overweight at Piper Sandler; tgt $450
Upcoming Events:
Econ Data:
08:30 ET: Initial Claims for Jan 1 (Briefing.comConsensus 198K; Prior 198K)
08:30 ET: Continuing Claims for Dec 24 (Briefing.comConsensus NA; Prior 1.716M)
08:30 ET: Trade Balance for Nov (Briefing.comConsensus -$69.4B; Prior -$67.1B)
10:00 ET: Factory Orders for Nov (Briefing.comConsensus 1.2%; Prior 1.0%)
10:00 ET: ISM Non-Manufacturing Index for Dec (Briefing.comConsensus 67.1%; Prior 69.1%)
10:30 ET: EIA Natural Gas Inventories for Jan 1 (Briefing.comConsensus NA; Prior -136 bcf)
Earnings:
Tuesday (Jan 4)
Afternoon: MLKN SGH
Wednesday (Jan 5)
Morning: RPM SMPL
Afternoon: RGP
Thursday (Jan 6)
Morning: ANGO BBBY CAG STZ HELE LW LNN SCHN WBA
Afternoon: DCT PSMT WDFC
Friday (Jan 7)
Morning: AYI GBX
Asia & Europe detail:
Asia: Nikkei -2.9%, Hang Seng +0.7%, Shanghai Composite -0.3%
Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note with Australian stocks leading the retreat. The Bank of Japan conducted an unscheduled JPY2 trln repurchase operation. The central bank will raise its forecast for CPI in FY22 to the low 1% range. Tokyo's governor said that there are no plans to ask the national government to implement a quasi-emergency despite a rising number of coronavirus cases. Xinhuareported that the Chinese government plans to strengthen audits of fiscal spending. Chinese citizens have been asked to shorten long distance trips planned for the Lunar New Year.
In economic data:
China's December Caixin Services PMI 53.1 (last 52.1)
Japan's December Services PMI 52.1 (expected 51.1; last 53.0)
Australia's December Services PMI 55.1, as expected (last 55.7)
---Equity Markets---
Japan's Nikkei: -2.9%
Hong Kong's Hang Seng: +0.7%
China's Shanghai Composite: -0.3%
India's Sensex: -1.0%
South Korea's Kospi: -1.1%
Australia's ASX All Ordinaries: -2.8%
---FX---
USD/JPY: -0.3% to 115.76
USD/CNH: +0.2% to 6.3857
USD/INR: +0.3% to 74.48
Europe: DAX -1.3%, FTSE -0.7%, CAC -1.3%
Major European indices trade in the red after their recent string of gains. The French government will reportedly look to loosen eurozone's fiscal rules during the country's six-month stint at the helm of the European Council. Credit Agricole offered to acquire Italian lender Banca Carige. British Prime Minister Johnson is being pressured to forego a planned GBP12 bln increase to the country's national insurance contributions.
In economic data:
Eurozone's November PPI 1.8% m/m (expected 1.2%; last 5.4%); 23.7% yr/yr (expected 22.9%; last 21.9%)
Germany's November Factory Orders 3.7% m/m (expected 2.1%; last -5.8%) and December IHS Markit Construction PMI 48.2 (last 47.9)
U.K.'s December Services PMI 53.6 (expected 53.2; last 58.5)
---Equity Markets---
STOXX Europe 600: -1.1%
Germany's DAX: -1.3%
U.K.'s FTSE 100: -0.7%
France's CAC 40: -1.3%
Italy's FTSE MIB: -1.2%
Spain's IBEX 35: -0.4%
---FX---
EUR/USD: UNCH at 1.1311
GBP/USD: -0.1% to 1.3542
USD/CHF: +0.2% to 0.9181