The S&P 500 futures are down 53 points and are trading 1.4% below fair value. The Nasdaq 100 futures are down 178 points and are trading 1.6% below fair value. The Dow Jones Industrial Average futures are down 380 points and are trading 1.2% below fair value.
Equity futures are decidedly weak as market participants deal with concerns over a hard landing. Aggressive selling in the Treasury market is a major headwind for equities. It's not just the level yields have risen to, but how quickly they've moved up that's concerning.
The 2-yr note yield is up 10 basis points to 4.23% (but hit 4.26% earlier) and the 10-yr note yield is up eight basis points to 3.77% (but hit 3.82% earlier).Â
Another factor weighing on investor sentiment this morning is Goldman Sachs cutting its year end price target for the S&P 500 to 3,600 from 4,300. Goldman, though, sees potential downside to 3,150 in the event of a hard landing.Â
Overseas, gilt yields in the U.K. have surged after it was announced that some taxes will be rolled back while spending will increase. Flash Manufacturing and Services PMI readings for the eurozone weakened while the U.K.'s Manufacturing PMI improved slightly. Germany's readings stand out, not only for remaining in contractionary territory, but also for indicating an increased rate of deceleration.
WTI crude oil futures are below $81.00/bbl, down 3.5% to $80.55/bbl. Natural gas futures are up 0.5% to $7.12/mmbtu.
At 9:45 a.m. ET, market participants will receive the preliminary September IHS Markit Manufacturing PMI (prior 51.5) and IHS Markit Services PMI (prior 43.7) readings.Â
In corporate news:
Costco (COST 471.39, -15.78, -3.24%):Â beats by $0.03, reports revs in-line, adjusted comparable sales increased by 10.4%
Boeing (BA 136.00, -2.71, -1.95%):Â To pay $200 mln to settle SEC charges that it misled investors about the 737 MAX, according to SEC
DocuSign (DOCU 52.70, -1.30, -2.41%):Â appoints Google exec Allan Thygesen as CEO, effective October 10
Domino's Pizza (DPZ 319.26, -0.88, -0.27%): upgraded to Outperform from Market Perform at BMO Capital Markets
Reviewing overnight developments:
Equity indices in the Asia-Pacific region ended the week on a lower note while Japan's market was closed for a holiday. Japan's Nikkei: CLOSED (-1.5% for the week), Hong Kong's Hang Seng: -1.2% (-4.4% for the week), China's Shanghai Composite: -0.7% (-1.2% for the week), India's Sensex: -1.7% (-1.3% for the week), South Korea's Kospi: -1.8% (-3.9% for the week), Australia's ASX All Ordinaries: -1.9% (-2.7% for the week).
In economic data:
South Korea's August PPI -0.3% m/m (last 0.3%); 8.4% yr/yr (last 9.2%)
Singapore's August CPI 7.5% yr/yr (expected 7.2%; last 7.0%) and Core CPI 5.1% yr/yr (expected 5.0%; last 4.8%)
Australia's flash September Manufacturing PMI 53.9 (last 53.8) and flash Services PMI 50.4 (last 50.2)
New Zealand's Q3 Westpac Consumer Sentiment 87.6 (last 78.7)
In news:
There was some speculation that countries other than Japan could intervene in the currency market to slow the dollar's rise.
DigiTimes reported that chip foundries are being pressured by carmakers to renegotiate orders and quotes for next year.
Major European indices trade on a sharply lower note. STOXX Europe 600: -2.7% (-4.7% week-to-date), Germany's DAX: -2.8% (-4.3% week-to-date), U.K.'s FTSE 100: -2.4% (-3.5% week-to-date), France's CAC 40: -2.5% (-5.0% week-to-date), Italy's FTSE MIB: -3.3% (-4.6% week-to-date), Spain's IBEX 35: -3.0% (-5.5% week-to-date).
In economic data:
Eurozone's flash September Manufacturing PMI 48.5 (expected 48.7; last 49.6) and flash Services PMI 48.9 (expected 49.0; last 49.8)
Germany's flash September Manufacturing PMI 48.3, as expected (last 49.1) and flash Services PMI 45.4 (expected 47.2; last 47.7)
U.K.'s flash September Manufacturing PMI 48.5 (expected 47.5; last 47.3) and flash Services PMI 49.2 (expected 50.0; last 50.9). September GfK Consumer Confidence -49 (expected -42; last -44) and September CBI Distributive Trades Survey -20 (expected 10; last 37)
France's flash September Manufacturing PMI 47.8 (expected 49.8; last 50.6) and flash Services PMI 53.0 (expected 50.5; last 51.2)
Spain's Q2 GDP 1.5% qtr/qtr (expected 1.1%; last -0.2%); 6.8% yr/yr (expected 6.3%; last 6.7%)
In news:
Flash Manufacturing and Services PMI readings for the eurozone weakened while the U.K.'s Manufacturing PMI improved slightly but remained in contractionary territory.
Gilt yields in the U.K. have surged after it was announced that some taxes will be rolled back while spending will increase.
Credit Suisse is reportedly looking to raise capital and it denied speculation that it will exit the U.S. market. Right wing parties in Italy are expected to gain support in Sunday's general election.
Â
U.S. equity futures:
S&P 500 Futures: -51 @ 3,707
DJIA Futures: -360 @ 29,716
Nasdaq 100 Futures: -166 @ 11,336
Overseas:
Europe:Â DAX -2.8%, FTSE -2.4%, CAC -2.5%
Asia:Â Nikkei CLOSED, Hang Seng -1.2%, Shanghai Composite -0.7%
Commodities:
Crude Oil -2.90 @ 80.56
Nat Gas +0.034 @ 7.123
Gold -26.95 @ 1654.15
Silver -0.532Â @ 19.085
Copper -0.1390 @ 3.3320
U.S. Summary:
Earnings/Guidance:
AAR Corp (AIR) beats by $0.04, misses on revs
American Public Education (APEI) guides FY22revenue inline
CalAmp (CAMP) beats by $0.02, beats on revs; maintains policy of not providing quarterly guidance, but does expect to achieve low-to-mid single digit percentage sequential revenue growth
Costco (COST) beats by $0.03, reports revs in-line, adjusted comparable sales increased by 10.4%
Daseke (DSKE) appoints Aaron Coley as CFO; reaffirms guidance
Mosaic (MOS) announces August 2022 revs and sales volumes; Potash volumes up 39% yr/yr, Phosphates up 5%, Mosaic Fertilizantes down 14%
Scholastic Corp (SCHL) reports Q1 (Aug) earnings of $(1.33) on sales growth of 1% yr/yr to $262.9 mln; Book Fairs well positioned to increase in-person fair counts to meet goal of 85% pre-pandemic levels
General News:
Senate will vote on continuing resolution to fund government through December 16on Tuesday. The bill will include money for Ukraine, but no money for coronavirus or monkeypox. It is still unclear if energy permitting reforms could be attached to the bill and still pass, according to Politico
UK Chancellor announces new growth plan with biggest package of tax cuts in generations
Storm developing in Caribbean could form Hurricane Hermine and impact the Gulf of Mexico coast next week, according to the Washington Post
White House announces new actions and funding to address the overdose epidemic and support recovery
House passes policing legislation, but it will require 60 votes to pass Senate and is currently opposed by most Republicans, according to CNN
Hong Kong ends quarantine policy for travelers, according to the Wall Street Journal
US regulators looking at Chinese audits, according to the Wall Street Journal
California wants to ban natural gas heaters by 2030, according to Bloomberg
1stdibs.com(DIBS) announces an approximately 10% workforce reduction; substantially all restructuring charges to be incurred in Q3
Amazon (AMZN) contractors were twice as likely to receive unsafe driving scores, according to the Wall Street Journal
AMCI Acquisition Corp. II (AMCI): Givaudan and LanzaTech announce their collaboration on developing sustainable fragrance ingredients from renewable carbon
Apple (AAPL): Breaking Bad series creator Vince Gilligan signs a two-season deal with Apple TV+, according to Apple Insider
Apple (AAPL) Music will sponsor Superbowl Halftime Show, replacing Pepsi (PEP), according to CBS News
Artivion (AORT) follows recommendation to stop PROACT Xa Clinical Trial
AstraZeneca (AZN) reports Ultomiris approved in Europe for the treatment of adults with generalised myasthenia gravis
AXT (AXTI) provided update on IV Tramadol: FDA stated that the proposed study design appears reasonable and agreed on various study design aspects; will effect a previously announced 1-for-15 reverse split on September 23
Ballard Power (BLDP) receives order for 14 x 200 kW fuel cell modules from Siemens Mobility GmbH to power a fleet of seven Mireo Plus H passenger trains
Biohaven Pharmaceutical (BHVN) provides update regarding litigation related to the merger and spin-off
Boeing (BA) to pay $200 mln to settle SEC charges that it misled investors about the 737 MAX, according to SEC
CBTX (CBTX) authorizes new share repurchase program for up to $40 mln beginning after the close of business through September 30, 2023
ClearPoint Neuro (CLPT) receives FDA Clearance for ClearPoint Prism Neuro Laser Therapy System
Corcept Therapeutics (CORT) amends agreement with Optime Care to extend its term to March 31, 2024
Credit Suisse (CS) spokesperson denies report that is considering exiting US market, according to Bloomberg
Daseke (DSKE) CFO resigns
Dentsply Sirona (XRAY) appoints Glenn Coleman as Executive Vice President and Chief Financial Officer, effective September 26, 2022
DocuSign (DOCU) appoints Google exec Allan Thygesen as CEO, effective October 10
Dorchester Minerals (DMLP) CEO to step down; names Bradley Ehrman as CEO
Freshpet (FRPT): Jana Partners confirmed yesterday 9.6% active stake
Green Plains (GPRE) transitions Jim Stark to CFO role succeeding Patrich Simpkins who is transitioning to Chief Transformation Officer role, effective October 1
Guidewire Software (GWRE) approves $400 mln share repurchase program, effective immediately
Immutep (IMMP) received a 1,804,341 (~ A$2,693,046 ) research and development (R&D) tax incentive payment in cash from the French Government under its Crdit d'Impt Recherche scheme
Innate Pharma (IPHA) Presents Data From Ongoing Phase 2 TELLOMAK Trial Demonstrating Clinical Activity of Lacutamab in Advanced Mycosis Fungoides
Ionis Pharma (IONS) provides update on development program evaluating PCSK9 antisense medicine; ION449 will not advance into Phase 3 development based on pre-specified criteria
Kohl's (KSS): Activist investor Ancora Holdings favors Thomas Kingsbury, a board member of Kohl's, as replacement for current CEO -- Axios
LPL Financial (LPLA) reports monthly activity for August
Pfizer (PFE): US slashes target for vaccine donations abroad this year, according to Bloomberg
Qualcomm (QCOM) automotive design-win pipeline has grown to $30 bln, an over $10 bln expansion since its Q3 results and doubled since November 2021
Raytheon Technologies (RTX) awarded $985 mln U.S. Air Force contract for the Hypersonic Attack Cruise Missile
Riot Blockchain (RIOT) is supplementing its disclosures regarding the material weaknesses identified by management
Roku (ROKU) announces that three senior execs have been named as presidents of the company's media, devices, and consumer experience business areas
TechnipFMC (FTI) awarded a significant contract, defined between $75-250 mln, by Shell plc (SHEL) for the Jackdaw development in the UK
Transocean (RIG) receives contract for harsh environment semi-submersible Transocean Norge
Volkswagen (VWAGY) considering shifting production amid European energy prices, according to Bloomberg
M&A:
American Water Works (AWK) subsidiary acquires City of Villa Grove water and wastewater systems for $11 mln
Humana (HUM) is in the running to acquire Cano Health (CANO), according to the Wall Street Journal
IMAX (IMAX) acquires SSIMWAVE Inc. for $18.5 mln in cash and $2.5 mln in stock with additional earn-out consideration of $4 million
Newmont Goldcorp (NEM): Glencore (GLNCY) to acquire Newmont's stake in MARA project
Syndicate:Â
Aadi Bioscience (AADI) announces $72.5 mln private placement equity financing
EDAP TMS SA (EDAP) prices offering of 2,666,667 ADSs at $7.50 per ADS
IPOs:
Expected to Price:
No IPOs expected.
Gapping Up/Down
Gapping up:
CANO +6.4%, CORT +4.5%, LPLA +4.1%, IMAX +3%, XRAY +3%, FTI +2.6%, CBTX +1.5%, VXX +1.5%, CAMP +0.6%
Gapping down:
EDAP -5.8%, SCHL -4.4%, IONS -4.2%, BJ -4%, COST -3.4%, DIBS -2.9%, AZN -2.9%, USO -2.7%, MOS -2.3%, QCOM -2.2%, ROKU -2.1%, SLV -1.9%, DOCU -1.8%, TGT -1.3%, QQQ -1.3%, IWM -1.3%, APEI -1.3%, GPRE -1.2%, BLDP -1.2%, BA -1.1%, SPY -1.1%, GLD -1.1%, WMT -1%, DIA -1%, PVH-0.9%, PFE -0.8%
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Analyst Research (see Upgrades/Downgradescalendarfor full list):
Upgrades
Apollo Global Management (APO) upgraded to Neutral from Underperform at BofA Securities
Avista (AVA) upgraded to Buy from Neutral at Mizuho; tgt $44
Domino's Pizza (DPZ) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt $430
fuboTV (FUBO) upgraded to Outperform from Neutral at Wedbush; tgt $6
Downgrades:
Ally Financial (ALLY) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $32
Digital Realty Trust (DLR) downgraded to Underweight from Equal Weight at Barclays; tgt lowered to $91
Equinix (EQIX) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $674
Others:
Appian (APPN) initiated with a Neutral at Credit Suisse; tgt $45
AppLovin (APP) resumed with an Overweight at Morgan Stanley; tgt $35
Asana (ASAN) initiated with a Neutral at Credit Suisse; tgt $23
BlackLine (BL) initiated with a Neutral at Credit Suisse; tgt $75
Boyd Gaming (BYD) initiated with a Mkt Outperform at JMP Securities; tgt $65
Cheesecake Factory (CAKE) initiated with an Overweight at Stephens; tgt $38
Chipotle Mexican Grill (CMG) initiated with an Overweight at Stephens; tgt $1900
Chuy's (CHUY) initiated with an Overweight at Stephens; tgt $27
Cincinnati Fincl (CINF) initiated with a Mkt Perform at Raymond James
Coupa Software (COUP) initiated with an Underperform at Credit Suisse; tgt $60
Cvent (CVT) initiated with an Outperform at Credit Suisse; tgt $8
Darden Restaurants (DRI) resumed with an Overweight at Stephens; tgt $140
Datadog (DDOG) resumed with an Outperform at Credit Suisse; tgt $145
Datadog (DDOG) resumed with a Neutral from Underweight at JP Morgan; tgt lowered to $105
Domino's Pizza (DPZ) initiated with an Equal-Weight at Stephens; tgt $368
Dynatrace (DT) initiated with a Neutral at Credit Suisse; tgt $38
E2open (ETWO) initiated with an Underperform at Credit Suisse; tgt $5.50
Five9 (FIVN) initiated with a Neutral at Credit Suisse; tgt $90
Flywire (FLYW) initiated with a Buy at Truist; tgt $36
Gaming and Leisure Properties (GLPI) initiated with a Mkt Outperform at JMP Securities; tgt $53
Upcoming Events:
Econ Data:
09:45 ET: IHS Markit Manufacturing PMI - Prelim for Sep (Briefing.comConsensus NA; Prior 51.5)
09:45 ET: IHS Markit Services PMI - Prelim for Sep (Briefing.comConsensus NA; Prior 43.7)
Earnings
Monday (Sep 19)
Morning:Â AZO
Tuesday (Sep 20)
Morning: APOG
Afternoon:Â SFIX
Wednesday (Sep 21)
Morning:Â GIS
Afternoon:Â FUL KBH LEN
Thursday (Sep 22)
Morning: CAN DRI FDS
Afternoon:Â AIR CAMP COST
Friday (Sep 23) Â
None
Asia & Europe detail:
Asia: Nikkei CLOSED, Hang Seng -1.2%, Shanghai Composite -0.7%
Equity indices in the Asia-Pacific region ended the week on a lower note while Japan's market was closed for a holiday. There was some speculation that countries other than Japan could intervene in the currency market to slow the dollar's rise. DigiTimes reported that chip foundries are being pressured by carmakers to renegotiate orders and quotes for next year.
In economic data:
South Korea's August PPI -0.3% m/m (last 0.3%); 8.4% yr/yr (last 9.2%)
Singapore's August CPI 7.5% yr/yr (expected 7.2%; last 7.0%) and Core CPI 5.1% yr/yr (expected 5.0%; last 4.8%)
Australia's flash September Manufacturing PMI 53.9 (last 53.8) and flash Services PMI 50.4 (last 50.2)
New Zealand's Q3 Westpac Consumer Sentiment 87.6 (last 78.7)
---Equity Markets---
Japan's Nikkei: CLOSED (-1.5% for the week)
Hong Kong's Hang Seng: -1.2% (-4.4% for the week)
China's Shanghai Composite: -0.7% (-1.2% for the week)
India's Sensex: -1.7% (-1.3% for the week)
South Korea's Kospi: -1.8% (-3.9% for the week)
Australia's ASX All Ordinaries: -1.9% (-2.7% for the week)
---FX---
USD/JPY: +0.5% to 143.06
USD/CNH: +0.7% to 7.1326
USD/INR: -0.1% to 80.99
Europe: DAX -2.8%, FTSE -2.4%, CAC -2.5%
Major European indices trade on a sharply lower note. Flash Manufacturing and Services PMI readings for the eurozone weakened while the U.K.'s Manufacturing PMI improved slightly but remained in contractionary territory. Gilt yields in the U.K. have surged after it was announced that some taxes will be rolled back while spending will increase. Credit Suisse is reportedly looking to raise capital and it denied speculation that it will exit the U.S. market. Right wing parties in Italy are expected to gain support in Sunday's general election.
In economic data:
Eurozone's flash September Manufacturing PMI 48.5 (expected 48.7; last 49.6) and flash Services PMI 48.9 (expected 49.0; last 49.8)
Germany's flash September Manufacturing PMI 48.3, as expected (last 49.1) and flash Services PMI 45.4 (expected 47.2; last 47.7)
U.K.'s flash September Manufacturing PMI 48.5 (expected 47.5; last 47.3) and flash Services PMI 49.2 (expected 50.0; last 50.9). September GfK Consumer Confidence -49 (expected -42; last -44) and September CBI Distributive Trades Survey -20 (expected 10; last 37)
France's flash September Manufacturing PMI 47.8 (expected 49.8; last 50.6) and flash Services PMI 53.0 (expected 50.5; last 51.2)
Spain's Q2 GDP 1.5% qtr/qtr (expected 1.1%; last -0.2%); 6.8% yr/yr (expected 6.3%; last 6.7%)
---Equity Markets---
STOXX Europe 600: -2.7% (-4.7% week-to-date)
Germany's DAX: -2.8% (-4.3% week-to-date)
U.K.'s FTSE 100: -2.4% (-3.5% week-to-date)
France's CAC 40: -2.5% (-5.0% week-to-date)
Italy's FTSE MIB: -3.3% (-4.6% week-to-date)
Spain's IBEX 35: -3.0% (-5.5% week-to-date)
---FX---
EUR/USD: -0.8% to 0.9752Â
GBP/USD: -2.0% to 1.1032
USD/CHF: +0.4% to 0.9813
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