The S&P 500 futures are down 20 points and are trading 0.5% below fair value. The Nasdaq 100 futures are down 89 points and are trading 0.6% below fair value. The Dow Jones Industrial Average futures are down 103 points and are trading 0.3% below fair value.
The stock market is poised for a lower open, pressured by ongoing concerns about global growth and by weak mega cap stocks. Following yesterday's slate of central bank policy rate hikes, market participants are digesting a batch of disappointing global Manufacturing PMIs.
Specifically, flash June Manufacturing PMI readings from Germany, France, and the U.K. showed a deepening contraction while France's Services PMI also fell into contractionary territory (i.e. sub-50 readings). Australia's Manufacturing PMI contracted for the fourth consecutive month, albeit showing some improvement from last month, while Japan's Manufacturing PMI fell back into contraction after expanding slightly in May.
Those reports have fed into a general sense that global manufacturing activity is weakening amid ongoing rate hikes.
Treasury yields are moving lower. The 2-yr note yield is down four basis points to 4.75% and the 10-yr note yield is down six basis points to 3.74%.
As a reminder, the Russell Reconstitution is final after the close of the US equity markets.
In corporate news:
CarMax (KMX 82.80, +4.48, +5.7%): beats by $0.65, beats on revs
3M (MMM 104.27, +.384, +3.8%): enters into broad class resolution to support PFAS remediation for public water suppliers that detect PFAS at any level; agreement includes commitment of up to $10.3 bln payable over 13 yrs
Ford (F 14.13, -0.06, -0.4%): preparing new round of layoffs for U.S. salaried workers, according to WSJ
Lululemon (LULU 376.84, -1.12, -0.3%): unable to find a buyer for fitness product Mirror, according to NY Post
Under Armour (UAA 7.16, -0.19, -2.6%): downgraded to Equal Weight from Overweight at Wells Fargo
C3.ai (AI 37.13, -0.31, -0.8%): Deutsche Bank reiterated its Sell rating with a $16 price target
Virgin Galactic (SPCE 4.77, -0.55, -10.3%): entered into a distribution agency agreement for the offer and sale of up to $400,000,000 of shares of common stock
Starbucks (SBUX 99.56, -1.29, -1.3%): union says workers at 150 stores will strike over "treatment of LGBTQIA+ workers"
Reviewing overnight developments:
Equity indices in the Asia-Pacific region ended the week on a lower note while markets in China remained closed for Dragon Boat Festival. Japan's Nikkei: -1.5% (-2.7% for the week), Hong Kong's Hang Seng: -1.7% (-5.7% for the week), China's Shanghai Composite: CLOSED (-2.3% for the week), India's Sensex: -0.4% (-0.6% for the week), South Korea's Kospi: -0.9% (-2.1% for the week), Australia's ASX All Ordinaries: -1.3% (-2.2% for the week).
In economic data:
Japan's flash June Manufacturing PMI 49.8 (expected 50.7; last 50.6) and flash Services PMI 54.9 (expected 56.2; last 55.9). May National CPI 3.2% yr/yr (expected 4.1%; last 3.5%) and National Core CPI 3.2% (expected 3.1%; last 3.4%)
Singapore's May CPI 0.3% m/m (last 0.1%); 5.1% yr/yr (expected 5.5%; last 5.7%). May Core CPI 4.7%, as expected (last 5.0%)
Australia's flash June Manufacturing PMI 48.6 (expected 48.1; last 48.4) and flash Services PMI 50.7 (expected 50.1; last 52.1)
In news:
Hong Kong's Hang Seng reopened after a one-day holiday with tech and property names leading the index lower.
Australia's Manufacturing PMI contracted for the fourth consecutive month in the flash reading for June while Japan's Manufacturing PMI fell back into contraction after expanding slightly in May.
Major European indices trade in the red. STOXX Europe 600: -0.1% (-2.6% week-to-date), Germany's DAX: -0.7% (-3.0% week-to-date), U.K.'s FTSE 100: -0.3% (-2.1% week-to-date), France's CAC 40: -0.2% (-2.7% week-to-date), Italy's FTSE MIB: -0.4% (-2.0% week-to-date), Spain's IBEX 35: -0.7% (-2.1% week-to-date).
In economic data:
Eurozone's flash June Manufacturing PMI 43.6 (expected 44.8; last 44.8) and flash Services PMI 52.4 (expected 54.5; last 55.1)
Germany's flash June Manufacturing PMI 41.0 (expected 43.5; last 43.2) and flash Services PMI 54.1 (expected 56.2; last 57.2)
U.K.'s flash June Manufacturing PMI 46.2 (expected 46.8; last 47.1) and flash Services PMI 53.7 (expected 54.8; last 55.2). May Retail Sales 0.3% m/m (expected -0.2%; last 0.5%); -2.1% yr/yr (expected -2.6%; last -3.4%) and Core Retail Sales 0.1% m/m (expected -0.3%; last 0.7%); -1.7% yr/yr (expected -2.1%; last -3.0%)
France's flash June Manufacturing PMI 45.5 (expected 45.4; last 45.7) and flash Services PMI 48.0 (expected 52.0; last 52.5)
Spain's Q1 GDP 0.6% qtr/qtr (expected 0.5%; last 0.5%); 4.2% yr/yr (expected 3.8%; last 3.1%)
In news:
Flash June Manufacturing PMI readings from Germany, France, and the U.K. showed a deepening contraction while France's Services PMI also fell into contractionary territory.
British homebuilders are among the laggards after yesterday's 50-bps hike from the Bank of England.
Siemens Energy is down more than 33.0% in Frankfurt after withdrawing its guidance due to a substantial increase in failure rates of wind turbine components at Siemens Gamesa.
U.S. equity futures:
S&P 500 Futures: -20 @ 4,403
DJIA Futures: -103 @ 34,107
Nasdaq 100 Futures: -89 @ 15,125
Overseas:
Europe: DAX -0.7%, FTSE -0.3%, CAC -0.2%
Asia: Nikkei -1.5%, Hang Seng -1.7%, Shanghai Composite closed for holiday
Commodities:
Crude Oil -0.80 @ 68.71
Nat Gas +0.026 @ 2.634
Gold +5.00 @ 1928.70
Silver -0.097 @ 22.370
Copper -0.0570 @ 3.8330
Earnings/Guidance:
Apogee Enterprises (APOG) beats by $0.15, beats on revs; raises FY24 EPS above consensus
CarMax (KMX) beats by $0.65, beats on revs
IonQ (IONQ) increases its 2023 bookings expectations by 25% to $45-55 mln
Ouster (OUST) reaffirms Q2 revenue guidance; announces further cost reductions
Smith & Wesson Brands (SWBI) beats by $0.03, beats on revs; also increases quarterly dividend by 20%
News:
EU adopts 11th package of sanctions against Russia for its continued illegal war against Ukraine
President Biden will issue an executive order on strengthening access to affordable, high-quality contraception
Flash June Manufacturing PMI readings from Germany, France, and the U.K. showed a deepening contraction while France's Services PMI also fell into contractionary territory
3M (MMM) enters into broad class resolution to support PFAS remediation for public water suppliers that detect PFAS at any level; agreement includes commitment of up to $10.3 bln payable over 13 yrs
Amgen (AMGN): CA, MN, and WI join FTC lawsuit to stop its $27.8 bln deal to buy Horizon Therapeutics (HZNP), according to Reuters
Apartment Investment & Mgmt (AIV) closes on partial sale of Parkmerced mezzanine loan and announces amended agreement for sale of remaining investment
Apple (AAPL) aiming to launch credit card in India, according to Mint
Eagle Bulk Shipping (EGLE) agrees with Oaktree Capital Management to repurchase 3.8 mln shares, representing Oaktree's entire ownership of approximately 28% for $219.3 mln
Ford (F) preparing another round of layoffs for salaried workers in U.S., according to The Wall Street Journal
Intercept Pharma (ICPT) to restructure to focus on rare and serious liver diseases; significantly reduces operating expenses
Jazz Pharma (JAZZ) seeks court action to declare FDA's approval of Lumryz as unlawful
Leggett & Platt (LEG) appoints Benjamin M. Burns as CFO, effective June 21; succeeds Jeffrey L. Tate, who departed from his position
lululemon athletica (LULU) having difficulty finding a buyer for Mirror, according to NY Post
Meta Platforms (META) will restrict news access in Canada amid new law, according to BBC
Microsoft (MSFT) agrees to FTC demand for lower revenue splits for video games, according to Verge
Moderna (MRNA) completes submission to FDA for its updated COVID-19 vaccine for the XBB.1.5 variant
Realty Income (O) CFO Christie Kelly to retire; names Jonathan Pong as new CFO
Sonic Automotive (SAH) implementing plans to align EchoPark brand with current unfavorable market conditions; suspends operations at eight EchoPark locations and Delivery/Buy Centers; maintains goal of EBITDA breakeven for EchoPark by 1Q24
Starbucks (SBUX) union says workers at 150 stores will strike over "treatment of LGBTQIA+ workers"
Tenet Healthcare () announced the appointment of Sun Park as Executive Vice President & Chief Financial Officer of the Company, effective January 1THC, 2024
Thomson Reuters (TRI) announces share consolidation ratio for return of capital transaction; Shares to begin trading today on the TSX and NYSE on a post-consolidated basis
Warner Bros. Discovery (WBD) negotiating to sell around half of Warner studio's film and TV music-publishing assets for $500 mln, according to Variety
Wynn Resorts (WYNN) launches WynnBET online casino and sports betting app in West Virginia; becomes its 11th operational online state
M&A:
Celanese (CE) and Mitsui sign definitive agreement to form Nutrinova, a food ingredients joint venture
H.B. Fuller (FUL) completes strategic acquisition of Adhezion Biomedical and XCHEM International; financial details not disclosed
Tilray (TLRY) completes accretive acquisition of HEXO Corp; accelerates realization of operating and cost synergies in excess of $27 million
Syndicate:
Carrols Restaurant Group (TAST) files for 14,814,815 shares of common stock by selling shareholder
Madison Square Garden Entertainment (MSGE) prices secondary offering of and concurrent share repurchase
Starwood Property Trust (STWD) prices offering of $350 mln of its 6.750% Convertible Senior Notes due 2027
Tigo Energy (TYGO) files for 5,768,750 shares of common stock issuable upon exercise of warrants; also files for 49,734,570 shares of common stock by selling shareholders
Virgin Galactic (SPCE) entered into a distribution agency agreement for the offer and sale of up to $400,000,000 of shares of common stock
IPOs:
No IPOs expected.
Gapping Up/Down
Gapping up:
TRUP +13.3%, MGTX +9.3%, SWBI +8.2%, IONQ +7.6%, GSK +6.1%, MMM +3.7%, CE +3%, HRT +3%, APOG +2.8%, MATX +2.2%, BC +2.1%, OUST +1.9%, EGLE +1.8%
Gapping down:
SPCE -18.2%, XAIR -8%, ICPT -3.8%, ERAS -3%, TAST -2.7%, AVDL -2.7%, GNW -2.4%, MSGE -1.7%, MRNA -1.5%, JAZZ -1%, LULU -0.6%, WBD -0.5%
Analyst Research (see Upgrades/Downgradescalendarfor full list):
Upgrades
Evotec SE (EVO) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $16
Principal Fincl (PFG) upgraded to Hold from Underperform at Jefferies; tgt raised to $65
Ventas (VTR) upgraded to Strong Buy from Outperform at Raymond James; tgt $55
Wayfair (W) upgraded to Market Perform from Underperform at MoffettNathanson; tgt $44
Downgrades:
Accenture (ACN) downgraded to Market Perform from Outperform at TD Cowen; tgt lowered to $300
Intercontinental Hotels Group (IHG) downgraded to Hold from Buy at Kepler
Planet Fitness (PLNT) downgraded to Underperform from Neutral at Exane BNP Paribas; tgt $57
Reinsurance Group of America (RGA) downgraded to Hold from Buy at Jefferies; tgt lowered to $160
Sarepta Therapeutics (SRPT) downgraded to In-line from Outperform at Evercore ISI; tgt $139
Tesla (TSLA) downgraded to Sell from Buy at DZ Bank; tgt $210
Ultrapar Participacoes (UGP) downgraded to Hold from Buy at HSBC Securities; tgt raised to $3.80
Under Armour (UAA) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $8
Viatris (VTRS) downgraded to Underweight from Equal Weight at Barclays; tgt $11
Welltower (WELL) downgraded to Outperform from Strong Buy at Raymond James; tgt raised to $90
Others:
Affirm (AFRM) initiated with a Neutral at Compass Point; tgt $14.50
Celsius (CELH) initiated with an Overweight at Stephens; tgt $180
Floor & Decor (FND) initiated with a Buy at Truist; tgt $120
Fluence (FLNC) initiated with a Neutral at Piper Sandler; tgt $24
Gambling.comGroup Ltd. (GAMB) initiated with a Buy at BTIG Research; tgt $13
Hain Celestial (HAIN) initiated with an Overweight at Stephens; tgt $17
Knightscope (KSCP) initiated with a Buy at Ascendiant Capital Markets
Lancaster Colony (LANC) initiated with a Buy at Loop Capital; tgt $237
SoFi Technologies (SOFI) initiated with a Sell at Compass Point; tgt $5
Sovos Brands (SOVO) initiated with an Overweight at Stephens; tgt $23
Stem (STEM) initiated with a Neutral at Piper Sandler; tgt $6
SunOpta (STKL) initiated with an Overweight at Stephens; tgt $10
The Vita Coco Company (COCO) initiated with an Equal-Weight at Stephens; tgt $30
Valvoline (VVV) initiated with an Overweight at Stephens; tgt $43
Econ Data:
09:45 ET: June Preliminary IHS Markit Manufacturing (Prior 48.4)
09:45 ET: June Preliminary IHS Markit Services PMI (Prior 54.9)
Earnings:
Tuesday (Jun 20)
Afternoon: FDX LZB
Wednesday (Jun 21)
Morning: PDCO WGO
Afternoon: KBH SCS
Thursday (Jun 22)
Morning: ACN CMC DRI FDS GMS
Afternoon: SWBI
Friday (Jun 23)
Morning: APOG KMX
Asia & Europe detail:
Asia: Nikkei -1.5%, Hang Seng -1.7%, Shanghai Composite CLOSED
Equity indices in the Asia-Pacific region ended the week on a lower note while markets in China remained closed for Dragon Boat Festival. Hong Kong's Hang Seng reopened after a one-day holiday with tech and property names leading the index lower. Australia's Manufacturing PMI contracted for the fourth consecutive month in the flash reading for June while Japan's Manufacturing PMI fell back into contraction after expanding slightly in May.
In economic data:
Japan's flash June Manufacturing PMI 49.8 (expected 50.7; last 50.6) and flash Services PMI 54.9 (expected 56.2; last 55.9). May National CPI 3.2% yr/yr (expected 4.1%; last 3.5%) and National Core CPI 3.2% (expected 3.1%; last 3.4%)
Singapore's May CPI 0.3% m/m (last 0.1%); 5.1% yr/yr (expected 5.5%; last 5.7%). May Core CPI 4.7%, as expected (last 5.0%)
Australia's flash June Manufacturing PMI 48.6 (expected 48.1; last 48.4) and flash Services PMI 50.7 (expected 50.1; last 52.1)
---Equity Markets---
Japan's Nikkei: -1.5% (-2.7% for the week)
Hong Kong's Hang Seng: -1.7% (-5.7% for the week)
China's Shanghai Composite: CLOSED (-2.3% for the week)
India's Sensex: -0.4% (-0.6% for the week)
South Korea's Kospi: -0.9% (-2.1% for the week)
Australia's ASX All Ordinaries: -1.3% (-2.2% for the week)
---FX---
USD/JPY: +0.2% to 143.31
USD/CNH: +0.4% to 7.2199
USD/INR: +0.1% to 84.35
Europe: DAX -0.7%, FTSE -0.3%, CAC -0.2%
Major European indices trade in the red. Flash June Manufacturing PMI readings from Germany, France, and the U.K. showed a deepening contraction while France's Services PMI also fell into contractionary territory. British homebuilders are among the laggards after yesterday's 50-bps hike from the Bank of England. Siemens Energy is down more than 33.0% in Frankfurt after withdrawing its guidance due to a substantial increase in failure rates of wind turbine components at Siemens Gamesa.
In economic data:
Eurozone's flash June Manufacturing PMI 43.6 (expected 44.8; last 44.8) and flash Services PMI 52.4 (expected 54.5; last 55.1)
Germany's flash June Manufacturing PMI 41.0 (expected 43.5; last 43.2) and flash Services PMI 54.1 (expected 56.2; last 57.2)
U.K.'s flash June Manufacturing PMI 46.2 (expected 46.8; last 47.1) and flash Services PMI 53.7 (expected 54.8; last 55.2). May Retail Sales 0.3% m/m (expected -0.2%; last 0.5%); -2.1% yr/yr (expected -2.6%; last -3.4%) and Core Retail Sales 0.1% m/m (expected -0.3%; last 0.7%); -1.7% yr/yr (expected -2.1%; last -3.0%)
France's flash June Manufacturing PMI 45.5 (expected 45.4; last 45.7) and flash Services PMI 48.0 (expected 52.0; last 52.5)
Spain's Q1 GDP 0.6% qtr/qtr (expected 0.5%; last 0.5%); 4.2% yr/yr (expected 3.8%; last 3.1%)
---Equity Markets---
STOXX Europe 600: -0.1% (-2.6% week-to-date)
Germany's DAX: -0.7% (-3.0% week-to-date)
U.K.'s FTSE 100: -0.3% (-2.1% week-to-date)
France's CAC 40: -0.2% (-2.7% week-to-date)
Italy's FTSE MIB: -0.4% (-2.0% week-to-date)
Spain's IBEX 35: -0.7% (-2.1% week-to-date)
---FX---
EUR/USD: -0.8% to 1.0871
GBP/USD: -0.1% to 1.2721
USD/CHF: +0.5% to 0.8967
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