The S&P 500 futures are down 19 points and are trading 0.5% below fair value. The Nasdaq 100 futures are down 64 points and are trading 0.5% below fair value. The Dow Jones Industrial Average futures are down 123 points and are trading 0.3% below fair value.
Equity futures indicate a lower open as market participants play a waiting game ahead of the FOMC Minutes for the September meeting and key PPI and CPI reports later this week. Particpants are also responding to news of the Bank of England intervening again to support the Gilt market. Today the BoE it will buy index-linked gilts to mitigate dysfunction in the market and "fire sale" dynamics.
The U.K.'s Pension and Lifetime Savings Association called on the Bank of England to continue its emergency Gilt buying program until at least the end of the month. GBP/USD +0.3% to 1.1087.
New restrictions were announced in Chinese cities amid rising COVID cases.
President Biden and G7 leaders are set to hold a virtual meeting today to discuss continued support of Ukraine, according to Reuters.
The 10-yr Treasury note yield, which reached 4.00% overnight, is up four basis points to 3.93%. The 2-yr note yield is unchanged at 4.31%.
Earlier this morning, the September NFIB Small Business Optimism reading came in at 92.1 following a reading of 91.8 in August.
In corporate news:
KLA Corporation (KLAC 292.20, -7.14, -2.39%): will stop offering some supplies to Chinese customers, according to Reuters
Zoom (ZM 71.50, -2.22, -3.01%): downgraded to Equal Weight from Overweight at Morgan Stanley
Warner Music Group (WMG 23.00, +0.65, +2.91%): initiated with a Buy at Goldman
Leggett & Platt (LEG 32.00, -2.68, -7.73%): lowers its FY22 outlook due to an increasingly challenged global economic environment and consumer backdrop
American Airlines (AAL 12.31, +0.26, +2.16%): raises Q3 revenue guidance
Amgen (AMGN 238.00, +5.85, +2.5%): Morgan Stanley upgraded to Overweight from Equal Weight
Qorvo (QRVO 78.79, -3.17, -3.87%): Well Fargo downgraded to Equal Weight from Overweight
Reviewing overnight developments:
Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. Japan's Nikkei: -2.6%, Hong Kong's Hang Seng: -2.2%, China's Shanghai Composite: +0.2%, India's Sensex: -1.5%, South Korea's Kospi: -1.8%, Australia's ASX All Ordinaries: -0.4%.
In economic data:
Japan's August Current Account deficit JPY530 bln (expected deficit JPY470 bln; last deficit JPY630 bln). September Economy Watchers Current Index 48.4 (expected 47.9; last 45.5)
Australia's August Building Approvals 28.1% m/m and Private House Approvals 4.1% m/m (last 0.8%). September NAB Business Survey 25 (last 22) and Business Confidence 5 (last 10). October Westpac Consumer Sentiment -0.9% m/m (last 3.9%).
New Zealand's September Electronic Card Retail Sales 1.4% m/m (last 1.0%); 28.6% yr/yr (last 26.9%)
In news:
Japan's Prime Minister Kishida said that he is not looking to shorten the tenure of Bank of Japan Governor Kuroda, adding that he supports the central bank's policy despite its effect on the yen.
China reportedly plans to conduct mass coronavirus testing in Shanghai, fueling concerns about the potential for new lockdowns.
Australia's Treasurer said that the budget, which will be released on October 25, will not forecast a recession.
Major European indices trade in the red. STOXX Europe 600: -0.7%, Germany's DAX: -0.6%, U.K.'s FTSE 100: -0.8%, France's CAC 40: -0.3%, Italy's FTSE MIB: -1.2%, Spain's IBEX 35: -0.6%.
In economic data:
U.K.'s August Average Earnings Index + Bonus 6.0% yr/yr (expected 5.9%; last 5.5%). August three-month employment change -109,000 (expected -155,000; last 40,000) and August Unemployment Rate 3.5% (expected 3.6%; last 3.6%). September Claimant Count 25,500 (expected 4,200; last 1,100)
Italy's August Industrial Production 2.3% m/m (expected 0.2%; last 0.5%); 2.9% yr/yr (expected -0.4%; last -1.3%)
In news:
The U.K.'s Pension and Lifetime Savings Association called on the Bank of England to continue its emergency Gilt buying program until at least the end of the month.
The U.K.'s unemployment rate reached its lowest level since 1974 in the August reading.
Mercedes reported that its Q3 deliveries increased 21% yr/yr thanks to growth in all regions. A German trade union called for a worker strike at Amazon warehouses during this week's sales event.
U.S. equity futures:
S&P 500 Futures: -22 @ 3,591
DJIA Futures: -131 @ 29,072
Nasdaq 100 Futures: -72 @ 10,855
Overseas:
Europe: DAX -0.6%, FTSE -0.8%, CAC -0.3%
Asia: Nikkei -2.6%, Hang Seng -2.2%, Shanghai Composite +0.2%
Commodities:
Crude Oil -1.83 @ 89.30
Nat Gas +0.076 @ 6.511
Gold +0.80 @ 1676.00
Silver -0.263 @ 19.352
Copper +0.0500 @ 3.4365
U.S. Summary:
Earnings/Guidance:
AGNC Investment (AGNC) announces preliminary estimates for certain financial measures for Q3 in light of recent market volatility
American Airlines (AAL) raises Q3 revenue guidance
ASE Technology (ASX) reports Sept revs increased 24% yr/yr to NT$66.65 bln; Q3 revs above consensus
AZZ (AZZ) misses by $0.14, misses on revs
Buenaventura SA (BVN) reports Q3 gold production
Endeavour Silver (EXK) Produces 1,458,448 oz Silver and 9,194 oz Gold for 2.2 Million oz Silver Equivalent in Q3 2022
Gran Tierra Energy (GTE) achieved Q3 average production of approximately 30,391 bopd, up 5% from one year ago
Hecla Mining (HL) raises production guidance
Leggett & Platt (LEG) lowers its FY22 outlook due to an increasingly challenged global economic environment and consumer backdrop
New Relic (NEWR) sees Q2 revs exceeding high end of prior guidance
Orthofix (OFIX) reports upside Q3 sales
SeaSpine (SPNE) raises Q3 guidance; raises FY22 guidance
SkillSoft (SKIL) appoints Richard Walker as CFO effective Oct. 28, 2022; reaffirms FY23outlook
News:
China coronavirus cases are rising again as the country closes some schools and reaffirms zero-COVID policy, CNBC
Goldman Sachs believes it is too early to price in a Fed pivot, according to Bloomberg
10 Year Treasury yield hit 4% overnight, now trading near 3.94%
Bank of England widens gilt purchase operations to include index-linked gilts
Several local and state judges are expanding gun rights and striking down limits on concealed carry, according to the Wall Street Journal
Gartner says worldwide PC shipments totaled 68 million units in the third quarter of 2022, a 19.5% decrease yr/yr
White House announces measures to improve America's cybersecurity
Oxford University nasal version of coronavirus vaccine fails in trial, according to Financial Times
Adobe (ADBE): Cathie Wood purchased more shares of Adobe, according to Bloomberg
AerCap (AER) announced its major business transactions during the third quarter 2022
Air Lease (AL) reports As of September 30, 2022, ALC's fleet was comprised of 405 owned aircraft and 87 managed aircraft, with 412 new aircraft on order from Boeing (BA) and Airbus (EADSY) set to deliver through 2028
Albireo (ALBO) reports positive topline data from Phase 3 Trial of Bylvay (odevixibat) in Alagille Syndrome
Alithya (ALYA) signs largest CRM contract to date in Canada's Higher Education practice
Alpine Income Property Trust (PINE) reports it collected 100% of contractual base rents in Q3
Amarin (AMRN): Sarissa Capital Has Commenced the Process to Call a Special Meeting of Amarin Shareholders to Remove and Replace Certain Board Members
Angi Inc. (ANGI) announces that Oisin Hanrahan steps down as CEO, and appoints Joey Lavin, CEO of IAC and Chairman of Agin, as new CEO
Annovis Bio (ANVS) announces publication of phase 2a clinical data in the journal of prevention of Alzheimer's disease
AssetMark (AMK) issues its September AMK Report; platform assets decreased 8.5% yr/yr to $79.4 bln, net flows down 76.4% to $228 mln
BioLife Solutions (BLFS) and CSafe announce partnership to expand supply chain solutions for the cell and gene therapy market
Brookdale Senior Living (BKD) reports September 2022 occupancy; sequential occupancy grew 50 bps on a weighted average and month-end basis; achieved 11 straight months of yr/yr weighted average occupancy growth
Carvana (CVNA) believes paperwork issues for Michigan dealership have been corrected, according to Bloomberg
CME Group (CME) reports international ADV reached 6.1 mln contracts in Q3
Cohen & Steers (CNS) reports preliminary assets under management of $79.2 billion as of September 30, a decrease of $10.6 billion from assets under management at August 31
DICE Therapeutics (DICE) announces "positive" topline data from its Phase 1 clinical trial of DC-806, an oral small molecule antagonist of the pro-inflammatory cytokine IL-17
Eli Lilly (LLY) factory has more quality problems, according to Reuters
Evolent Health (EVH) provided context regarding the announcement by Bright Health Group (BHG)
Flowserve (FLS) awarded contract to supply vertical turbine pumps to McMillen Jacobs Associates
General Motors (GM) announced the introduction of Ultium Home and Ultium Commercial
Invitation Homes (INVH) provides preliminary assessment of Hurricane Ian impact
Joby Aviation (JOBY) and Delta (DAL) partner to pioneer home-to-airport transportation
Kaman (KAMN) selected to build a logistics UAS prototype for U.S. Marine Corps
KLA Corp (KLAC) will stop offering some supplies to Chinese customers, according to Reuters
Light & Wonder (LNW) names Matt Wilson as President and CEO, effective immediately; Wilson has served as interim CEO since August 2022
Meta Platforms (META): FTC aiming to scale back Meta lawsuit challenging deal to purchase Within Unlimited, according to the Wall Street Journal
Meta Platforms (META): Russian state media reporting that Russia has added META to list of "terrorist organizations" - CNBC
NASDAQ (NDAQ) reports September 2022 volumes; U.S. equity options volume up 2.9% from August to 282 mln contracts, European options and futures volume up 3.3% to 6.2 mln contracts
PagSeguro Digital (PAGS) announced that Mr. Alexandre Magnani will become the company's sole CEO
Procter & Gamble (PG) investors looking to challenge chairman role, according to Reuters
Rigel Pharma (RIGL) receives guidance from FDA's review of its re-analysis of data from the Phase 3 trial of fostamatinib; does not expect to file a supplemental New Drug Application; will reduce workforce by 16%
Regeneron Pharma (REGN) and Sanofi (SNY) report Dupixent (dupilumab) Late-Breaking Phase 3 Data Presented at UEG Week 2022 Showed Significant Histological Remission of Eosinophilic Esophagitis (EoE) in Children 1 to 11 Years Old
Reliance Steel (RS) announces executive leadership succession; Karla Lewis to Succeed James Hoffman as CEO in January 2023
Sarcos Technology (STRC) appoints Drew Hamer as CFO
Sealed Air (SEE) CFO to retire
Sonoco Products (SON) subsidiary Sonoco ThermoSafe expands its Orion Rental packaging program in Europe, adding an additional reclamation service station in Brussels
SWK Holdings' (SWKS) Subsidiary, Enteris BioPharma, Receives $5 Million Milestone Payment from Cara Therapeutics
Voyager Therapeutics (VYGR) presents data characterizing a novel CNS receptor and demonstrating the low-dose potential of TRACER generated capsid families
XPO Logistics' (XPO) board of directors approves previously announced separation of RXO
XPO Logistics (XPO) CFO Ravi Tulsyan to leave the company after assisting with CFO transition; Carl Anderson to succeed as CFO, effective November 8
Zscaler (ZS) President Amit Sinha to resign, effective October 21, to accept CEO position at another company; will remain as member of the Board
M&A:
Andersons (ANDE) agrees to purchase the assets of Mote Farm Service, Inc.; financial details not disclosed
California Water (CWT) subsidiary Washington Water Service receives approval to acquire Stroh's Water Company; expected to close by 1Q23; financial details not disclosed
Horizon Acquisition Corporation II (HZON): Flexjet announces business combination with HZON, plans to trade on the NYSE; deal expected to close in 2Q23
Nektar Therapeutics (NKTR) and PureTech Health plc mutually agreed to terminate discussions regarding a possible business combination
Northern Oil & Gas (NOG) to acquire certain non-operated interests in Delaware Basin for $130.0 mln in cash; proposes convertible senior notes offering
Orthofix (OFIX) and SeaSpine (SPNE) to combine in merger of equals to create leading global spine and orthopedics company
Perficient (PRFT) announces the acquisition of Ameex Technologies Corporation; financial terms were nto disclosed
ReneSola (SOL) acquired Emeren Limited, a United Kingdom-based utility-scale solar power and battery projects developer in Europe; expected to generate healthy EBITDA immediately
Syndicate:
Northern Oil & Gas (NOG) proposes convertible senior notes offering
IPOs:
Expected to Price:
No IPOs expected.
Gapping Up/Down
Gapping up:
SPNE +11.7%, STRC +4.8%, ANGI +4.4%, BKD +4.2%, JOBY +2.9%, VXX +1.9%, OFIX +1.4%, ANDE +1.3%, FLS +1.2%
Gapping down:
RIGL -9.6%, LEG -7.8%, ASX -4.3%, ZS -3.4%, SON-3%, AZZ -2.6%, USO -1.8%, XPO -1.3%, CNS -1.2%, QQQ -0.9%, IWM -0.9%, AGNC -0.9%, CPT -0.8%, SPY -0.8%, DIA -0.7%
Analyst Research (see Upgrades/Downgradescalendarfor full list):
Upgrades
AmerisourceBergen (ABC) upgraded to Buy from Neutral at BofA Securities; tgt raised to $169
Downgrades:
Cogent Communications (CCOI) downgraded to Neutral from Outperform at Credit Suisse; tgt lowered to $56
Others:
Analog Devices (ADI) initiated with an Outperform at Cowen; tgt $180
Barnes Group (B) initiated with a Peer Perform at Wolfe Research
Boeing (BA) initiated with an Outperform at Wolfe Research; tgt $180
Bombardier (BDRBF) initiated with an Outperform at Wolfe Research
Coca-Cola (KO) initiated with an Outperform at Wolfe Research; tgt $63
Curtiss-Wright (CW) initiated with an Outperform at Wolfe Research; tgt $170
Embraer SA (ERJ) initiated with an Outperform at Wolfe Research; tgt $14
General Dynamics (GD) initiated with an Outperform at Wolfe Research; tgt $265
HEICO (HEI) initiated with a Peer Perform at Wolfe Research
Hexcel (HXL) initiated with a Peer Perform at Wolfe Research
Howmet Aerospace (HWM) assumed with an Outperform at Wolfe Research; tgt $44
Huntington Ingalls (HII) initiated with an Outperform at Wolfe Research; tgt $315
L3Harris (LHX) initiated with a Peer Perform at Wolfe Research
Lockheed Martin (LMT) initiated with a Peer Perform at Wolfe Research
Northrop Grumman (NOC) initiated with an Outperform at Wolfe Research; tgt $565
Raytheon Technologies (RTX) initiated with a Peer Perform at Wolfe Research
Spirit Aerosystems (SPR) initiated with an Underperform at Wolfe Research; tgt $24
Transdigm Group (TDG) initiated with an Outperform at Wolfe Research; tgt $650
Triumph Group (TGI) initiated with an Underperform at Wolfe Research; tgt $9
Virgin Galactic (SPCE) initiated with an Underperform at Wolfe Research; tgt $4
Warner Music Group (WMG) initiated with a Buy at Goldman; tgt $32
Woodward (WWD) initiated with an Outperform at Wolfe Research; tgt $100
Upcoming Events:
Econ Data:
06:00 ET: NFIB Small Business Optimism for Sep (Briefing.comConsensus NA; Prior 91.8)
Earnings
Tuesday (Oct 11)
Morning: AZZ
Afternoon: PEP
Wednesday (Oct 12)
Afternoon: DCT
Thursday (Oct 13)
Morning: BLK CMC DAL DPZ FAST PGR TSM WBA
Friday (Oct 14)
Morning: C FRC JPM MS PNC USB UNH WFC
Asia & Europe detail:
Asia: Nikkei -2.6%, Hang Seng -2.2%, Shanghai Composite +0.2%
Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. Japan's Prime Minister Kishida said that he is not looking to shorten the tenure of Bank of Japan Governor Kuroda, adding that he supports the central bank's policy despite its effect on the yen. China reportedly plans to conduct mass coronavirus testing in Shanghai, fueling concerns about the potential for new lockdowns. Australia's Treasurer said that the budget, which will be released on October 25, will not forecast a recession.
In economic data:
Japan's August Current Account deficit JPY530 bln (expected deficit JPY470 bln; last deficit JPY630 bln). September Economy Watchers Current Index 48.4 (expected 47.9; last 45.5)
Australia's August Building Approvals 28.1% m/m and Private House Approvals 4.1% m/m (last 0.8%). September NAB Business Survey 25 (last 22) and Business Confidence 5 (last 10). October Westpac Consumer Sentiment -0.9% m/m (last 3.9%).
New Zealand's September Electronic Card Retail Sales 1.4% m/m (last 1.0%); 28.6% yr/yr (last 26.9%)
---Equity Markets---
Japan's Nikkei: -2.6%
Hong Kong's Hang Seng: -2.2%
China's Shanghai Composite: +0.2%
India's Sensex: -1.5%
South Korea's Kospi: -1.8%
Australia's ASX All Ordinaries: -0.4%
---FX---
USD/JPY: UNCH at 145.66
USD/CNH: +0.2% to 7.1692
USD/INR: -0.1% to 82.31
Europe: DAX -0.6%, FTSE -0.8%, CAC -0.3%
Major European indices trade in the red. The Bank of England expanded its emergency bond buying program to include index-linked Gilts. The U.K.'s Pension and Lifetime Savings Association called on the Bank of England to continue its emergency Gilt buying program until at least the end of the month. The U.K.'s unemployment rate reached its lowest level since 1974 in the August reading. Mercedes reported that its Q3 deliveries increased 21% yr/yr thanks to growth in all regions. A German trade union called for a worker strike at Amazon warehouses during this week's sales event.
In economic data:
U.K.'s August Average Earnings Index + Bonus 6.0% yr/yr (expected 5.9%; last 5.5%). August three-month employment change -109,000 (expected -155,000; last 40,000) and August Unemployment Rate 3.5% (expected 3.6%; last 3.6%). September Claimant Count 25,500 (expected 4,200; last 1,100)
Italy's August Industrial Production 2.3% m/m (expected 0.2%; last 0.5%); 2.9% yr/yr (expected -0.4%; last -1.3%)
---Equity Markets---
STOXX Europe 600: -0.7%
Germany's DAX: -0.6%
U.K.'s FTSE 100: -0.8%
France's CAC 40: -0.3%
Italy's FTSE MIB: -1.2%
Spain's IBEX 35: -0.6%
---FX---
EUR/USD: +0.3% to 0.9736
GBP/USD: +0.4% to 1.1095
USD/CHF: -0.3% to 0.9958
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