The S&P 500 futures are down 17 points and are trading 0.4% below fair value. The Nasdaq 100 futures are down 55 points and are trading 0.4% below fair value. The Dow Jones Industrial Average futures are down 92 points and are trading 0.2% below fair value.
Stock futures are a little softer this morning as market participants continue to wait on the passage of the debt ceiling and digest increasing calls that suggest mega cap stocks and growth stocks are due for a period of consolidation. Concerns about global growth prospects have been a limiting factor, too, after China's Manufacturing PMI remained in contraction for the second consecutive month.
Also, worries are mounting about the Fed sticking to a hawkish line after Cleveland Fed President Loretta Mester (not a voting FOMC member) in interview said there is no "compelling reason to pause," according to the FT.
The 2-yr Treasury note yield is down seven basis points to 4.42% and the 10-yr note yield is down six basis points to 3.65%.
In corporate news:
Advance Auto (AAP 83.50, -28.70, -25.6%): misses by $1.84, reports revs in-line; guides FY23 EPS below consensus, revs below consensus
HP Inc. (HPQ 29.07, -1.86, -6.0%): beats by $0.04, misses on revs; guides JulQ EPS in-line; guides FY23 EPS in-line
Hewlett Packard Enterprise (HPE 14.22, -1.30, -8.4%): beats by $0.03, misses on revs; guides Q3 EPS in-line, revs below consensus; guides FY23 EPS in-line
Ambarella (AMBA 66.50, -15.46, -18.9%): beats by $0.05, reports revs in-line; guides Q2 revs below consensus
Box (BOX 28.26, +0.24, +0.9%): beats by $0.05, reports revs in-line; guides Q2 EPS above consensus, revs in-line; guides FY24 EPS in-line, revs in-line
Twilio (TWLO 64.88, +2.21, +3.5%): moving higher on report it will lose supervoting protection next month; also co has been meeting with activist, according to TheInformation
Teck Resources (TECK 39.38, +1.28, +3.4%): Glencore (GLNCY) mulling higher bid for Teck Resources (TECK), according to Bloomberg
Microsoft (MSFT 332.71, +1.50, +0.5%): Piper Sandler maintained Overweight rating and raised price target to $400 from $348
American Airlines (AAL 14.99, +0.37, +2.5%): raises Q2 guidance; reaffirms FY23 guidance
Reviewing overnight developments:
Equity indices in the Asia-Pacific region ended the midweek session on a lower note amid the release of disappointing economic data from China, Japan, and South Korea with China's Manufacturing PMI remaining in contraction for the second consecutive month. Japan's Nikkei: -1.4%, Hong Kong's Hang Seng: -1.9%, China's Shanghai Composite: -0.6%, India's Sensex: -0.6%, South Korea's Kospi: -0.3%, Australia's ASX All Ordinaries: -1.5%.
In economic data:
China's May Manufacturing PMI 48.8 (expected 51.4; last 49.2) and Non-Manufacturing PMI 54.5 (expected 54.9; last 56.4)
Japan's April Retail Sales 5.0% yr/yr (expected 5.8%; last 6.9%) and April Industrial Production -0.4% m/m (expected 0.5%; last 1.1%). April Housing Starts -11.9% yr/yr (expected -4.3%; last -3.2%) and April Construction Orders 16.2% yr/yr (expected 3.7%; last -4.1%). May Household Confidence 36.0 (expected 36.1; last 35.4)
South Korea's April Retail Sales -2.3% m/m (expected 0.8%; last 0.1%) and April Industrial Production -1.2% m/m (expected -0.9%; last 5.3%); -8.9% yr/yr (expected -7.3%; last -7.6%). April Service Sector Output -0.3% m/m (expected -0.2%; last -0.5%)
Australia's April CPI 6.8% yr/yr (expected 6.4%; last 7.0%). April Private Sector Credit 0.6% m/m (expected 0.3%; last 0.2%) and Q1 Construction Work Done 1.8% qtr/qtr (expected 1.5%; last 1.0%)\
New Zealand's May ANZ Business Confidence -31.1 (expected -43.4; last -43.8)
In news:
Japan's top currency diplomat said that a trilateral meeting between the Ministry of Finance, Bank of Japan, and Financial Services Agency was not intended to serve as a verbal intervention to support the yen.
Goldman Sachs expects the Reserve Bank of Australia's terminal rate to reach 4.35%, up from the previous forecast of 4.10%.
North Korea had a failed spy satellite launch, but another attempt is expected to be made.
Major European indices trade in the red despite the release of cooler than expected CPI readings from France and five German states. STOXX Europe 600: -0.2%, Germany's DAX: -0.4%, U.K.'s FTSE 100: -0.1%, France's CAC 40: -0.5%, Italy's FTSE MIB: -0.3%, Spain's IBEX 35: UNCH.
In economic data:
Germany's April Import Price Index -1.7% m/m (expected -0.9%; last -1.1%); -7.0% yr/yr (expected -5.9%; last -3.8%). May Unemployment Change 9,000 (expected 14,000; last 23,000) and May Unemployment Rate 5.6%, as expected (last 5.6%)
France's April Consumer Spending -1.0% m/m (expected 0.3%; last -0.8%). May CPI -0.1% m/m (expected 0.4%; last 0.6%); 5.1% yr/yr (expected 5.7%; last 5.9%). April PPI -5.1% m/m (expected 1.2%; last 1.9%). Q1 GDP 0.2% qtr/qtr, as expected (last 0.1%); 0.8% yr/yr, as expected (last 0.5%)
Italy's Q1 GDP 0.6% qtr/qtr (expected 0.5%; last -0.1%); 1.9% yr/yr (expected 1.8%; last 1.4%)
Spain's March Current Account surplus EUR5.58 bln (last surplus of EUR2.29 bln)
Swiss April Retail Sales -3.7% yr/yr (expected -1.4%; last -1.9%) and May ZEW Expectations -32.2 (expected -36.8; last -33.3)
In news:
Germany's total CPI will be released at 8:00 ET.
The European Central Bank's latest Financial Stability Review described the financial outlook as fragile and that banks might need to increase their loss provisions.
European Central Bank policymaker Villeroy de Galhau said that the inflationary peak has probably been passed in France while policymaker Muller said that one more rate hike is likely and that expectations for rate cuts in 2024 are too optimistic.
U.S. equity futures:
S&P 500 Futures: -16 @ 4,190
DJIA Futures: -100 @ 32,943
Nasdaq 100 Futures: -55 @ 14,300
Overseas:
Europe: DAX -0.4%, FTSE -0.1%, CAC -0.5%
Asia: Nikkei -1.4%, Hang Seng -1.9%, Shanghai Composite -0.6%
Commodities:
Crude Oil -1.91 @ 67.55
Nat Gas -0.040 @ 2.287
Gold +1.35 @ 1978.45
Silver +0.183 @ 23.422
Copper -0.0286 @ 3.635
Earnings/Guidance:
Ambarella (AMBA) beats by $0.05, reports revs in-line; guides Q2 revs below consensus
American Airlines (AAL) raises Q2 guidance; reaffirms FY23 guidance
Advance Auto (AAP) misses by $1.84, reports revs in-line; guides FY23 EPS below consensus, revs below consensus
Box (BOX) beats by $0.05, reports revs in-line; guides Q2 EPS above consensus, revs in-line; guides FY24 EPS in-line, revs in-line
Capri Holdings (CPRI) beats by $0.03, beats on revs; guides Q1 EPS below consensus, revs below consensus; guides FY24 EPS above consensus, revs in-line
CVS Health (CVS) reaffirms FY23 guidance
Donaldson (DCI) beats by $0.02, reports revs in-line; reaffirms FY23 EPS guidance
Equity Residential (EQR) raises FY23 FFO guidance, still inline
Frontline (FRO) reports Q1 results; beats on revs
Hewlett Packard Enterprise (HPE) beats by $0.03, misses on revs; guides Q3 EPS in-line, revs below consensus; guides FY23 EPS in-line
HP Inc. (HPQ) beats by $0.04, misses on revs; guides JulQ EPS in-line; guides FY23 EPS in-line
Semtech (SMTC) announces appointment of Paul Pickle as new President and CEO
Sportsman's Warehouse (SPWH) misses by $0.02, reports revs in-line; guides Q2 EPS in-line, revs in-line
News:
House Rules Committee votes to advance 2 year debt ceiling/spending cap bill to a full House vote, which will take place tonight at 8:30 PM ET
CBO estimates that debt ceiling bill will cut deficit by $1.5 trillion over the 2023--2033 period
Cleveland Fed President Loretta Mester (not a voting FOMC member) in interview says there is no "compelling reason to pause", according to Financial Times
AbbVie (ABBV) reports Phase 2 Study of Upadacitinib (RINVOQ) alone or as a combination therapy meets primary and key secondary endpoints in patients with systemic lupus erythematosus
ABM Industries (ABM) announces a five-year partnership with the Orlando's International Airport
Aehr Test Systems (AEHR) appoints Chris Siu as CFO
Anika (ANIK) Completes Enrollment in Hyalofast U.S. Pivotal Phase III Study Achieving Key Milestone
Baidu (BIDU) launched a new $145 mln AI fund, according to Reuters
Boeing (BA) has increased production of its 787 Dreamliner from three to four planes per month, according to Reuters
Boeing (BA): Judge rules that families can seek compensation for Boeing 737 2019crash, according to the Wall Street Journal
Bumble Inc. (BMBL) reports in a filing that Tariq Shaukat, President of the company, notified the company of his decision to resign, effective September 1, 2023
CAE (CAE) awarded $455 mln subcontract for US Army Flight School training support services
CGI Group (GIB) unit announces that it successfully completed pilot testing of Microsoft Azure (MSFT) Orbital Cloud Access and Nokia (NOK) Private 5G communications within the Marine Corps Platform Integration Center systems at Blount Island Command
ChipMOS TECHNOLOGIES (IMOS) shareholders have approved a cash dividend distribution of NT$2.30 per common share or approximately US$1.50 per ADS at the AGM on May 30, 2023
Coinbase Global (COIN): U.S. Securities and Exchange Commission (SEC) announces settlement with former product manager Ishan Wahi and his brother, Nikhil Wahi, on charges they engaged in insider trading -- SEC Press Release
Freshpet (FRPT) responds to JANA Partners' letter regarding freshpet board actions
Glatfelter Co (GLT) is closing its Ober-Schmitten, Germany, facility due to the ongoing financial underperformance of the electrical and glassine specialty papers manufactured at the site
Great Lakes Dredge & Dock (GLDD) awarded a $157 mln US Army contract
IGM Biosciences (IGMS) announces FDA clearance to begin clinical studies of imvotamab in lupus and rheumatoid arthritis
Immersion (IMMR) CFO Aaron Akerman will step down upon the appointment of a successor and will depart from the co, effective August 11; co names Michael Dodson as new CFO, effective June 12
iRhythm (IRTC) discloses in a filing that, on May 25, 2023, it received a warning letter from the FDA resulting from the inspection of the company's facility located in Cypress, California
Lantronix (LTRX) announces that Paul Pickle will be resigning from his role as president and CEO to beccome the CEO and director of Semtech Corporation (SMTC)
Lindblad Expeditions (LIND) announced the departure of Chief Executive Officer Dolf Berle, effective June 30, 2023, who is pursuing a non-competitive opportunity in the Dallas area
Mirati (MRTX) To Encore Compelling Clinical Data Demonstrating Adagrasib's Potential as a Targeted Treatment for KRASG12C-Mutated Advanced Solid Tumors at 2023 ASCO Annual Meeting
New Found Gold Corp. (NFGC) extends strike length of iceberg ten-fold to 550m With 375m step-out north & 110m step-out south, intercepts 19.6 g/t au over 5.25m & 21.7 g/t au over 4.45m
Nvidia (NVDA) is open to partnership with Intel (INTC), according to Digitimes
Occidental Petro (OXY) 10% owner Berkshire Hathaway (Warren Buffett) bought another 4,660,809 shares worth approx. $273 mln
Omega Therapeutics (OMGA) Presents New Preclinical Data Demonstrating the Potential of Omega Epigenomic Controllers to Synergize with Immunotherapies at the ASCO 2023 Annual Meeting
Omnicell (OMCL) announces changes to its leadership structure designed to create a more streamlined organization
PepGen Inc. (PEPG) Announces Clinical Hold in the U.S. on IND Application to Initiate a Phase 1 Study of PGN-EDODM1 for Myotonic Dystrophy Type 1
Pinterest (PINS) announces that Julia Brau Donnelly will be joining the co as CFO
Portland Gen Elec (POR) reached an agreement to procure the Evergreen battery energy storage system (BESS), a new 75 megawatt facility to be located in Hillsboro, Oregon
Primo Water (PRMW) announces CEO retirement and transition plan
Prudential Plc (PUK) CFO resigns; appoints Ben Bulmer as CFO
Rocket Pharmaceuticals (RCKT) receives EMA Priority Medicines designation for RP-A501 gene therapy for Danon Disease
Sanofi (SNY) reports Phase 2 data of novel investigational anti-CD40L antibody frexalimab show significantly reduced disease activity in relapsing multiple sclerosis
Selecta Biosciences (SELB) presents data from Phase 3 DISSOLVE Program of SEL-212 in Chronic Refractory Gout during late-breaking session at the EULAR 2023 European Congress of Rheumatology
Seres Therapeutics (MCRB) receives a $125 million milestone payment from Nestl Health Science related to the U.S. FDA approval of VOWST
Sharecare (SHCR) concludes strategic review, announces $50 mln share repurchase program
Taboola (TBLA): Israeli court approves motion to extend share buyback date
Travere Therapeutics (TVTX) announces positive topline results from cohort 6 in the phase 1/2 compose study of pegtibatinase in classical homocystinuria
Twilio (TWLO) will lose supervoting protection next month; also co has been meeting with activist, according to TheInformation
UiPath (PATH): Cathie Wood is positive on UiPath, Twilio (TWLO), and Teladoc Health (TDOC), according toBloomberg
Visa (V) announces volume and transaction data for April-May
Wells Fargo (WFC): SEC settles with former exec
Wolverine (WWW) announces new leadership appointments to drive future growth; Chris Hufnagel named Company President and Key Brand Leaders appointed to Support Global Brand-building Strategy
Xencor (XNCR) Presents Clinical Results from Phase 1a Study of XmAb564 at the EULAR 2023 Congress
M&A:
Clear Channel Outdoor (CCO) to sell its businesses in Italy and Spain to subsidiaries of JCDecaux for US$81 mln
Eastman Kodak (KODK) announces acquisition of Graphic Systems Services Inc.; terms of deal not disclosed
Glencore (GLNCY) mulling higher bid for Teck Resources (TECK), according to Bloomberg
LL Flooring Holdings (LL): F9 Investments prepared to consider an offer of $5.76/sh for LL
Mercer Intl (MERC) receives court sales order approval to acquire Structurlam Mass Timber assets
United Comm Banks (UCBI) receives regulatory approval from the FDIC to complete previously announced acquisition of First Miami Bancorp and its subsidiary First National Bank of South Miami
Syndicate:
AerSale (ASLE) announces that certain of its stockholders, including affiliates of Leonard Green & Partners, L.P. intend to offer for sale in an underwritten secondary offering 4 mln shares of common stock
Belite Bio (BLTE) commences public offering of ADSs
Bioceres (BIOX) files for 14,759 ordinary share offering by selling shareholders
DLH (DLHC) files for $100 mln mixed securities shelf offering
Eldorado Gold (EGO) announces C$81.5 mln strategic investment by EBRD and concurrent C$135 mln bought deal financing
FEMSA (FMX) announces the pricing of the offering of shares of Heineken N.V. (HEINY) and Heineken Holding N.V.
Horizon Technology Finance (HRZN) prices offering of 3.25 mln shares of common stock at $12.50 per share
NaaS Technology (NAAS) announces $21 million of registered direct offering to certain investors
Ready Capital Corporation (RC) stockholders approve issuance of common stock in merger with Broadmark Realty Capital (BRMK)
IPOs:
Expected to Price: No IPOs expected.
Gapping Up/Down
Gapping up:
LL +21.7%, CCO +5.5%, CPRI +4.4%, TWLO +3.5%, CAE +3.1%, BOX +2.5%, ANIK +2.1%, NAAS +2.1%, MRTX +1.1%, SNY +1.1%, RC +0.9%, GLDD +0.6%, MCRB +0.6%, UCBI +0.6%
Gapping down:
BLTE -37.1%, AAP -24.9%, AMBA -17.7%, PEPG-16.3%, ASLE -9.7%, HRZN -8.1%, HPE -7.9%, SPWH-7.8%, LTRX -7.6%, FRO -5.7%, EGO -5.2%, HPQ-4.8%, PUK -4%, UHAL -3.2%, COIN -2.2%, MERC-1.7%, FRPT -1%, KODK -0.8%, BMBL -0.8%
Analyst Research (see Upgrades/Downgradescalendarfor full list):
Upgrades
Avis Budget (CAR) upgraded to Buy from Hold at Deutsche Bank; tgt raised to $263
Chevron (CVX) upgraded to Neutral from Underweight at JP Morgan; tgt raised to $170
Q2 Holdings (QTWO) upgraded to Buy from Neutral at BTIG Research; tgt $36
Xylem (XYL) upgraded to Outperform from Neutral at Robert W. Baird; tgt raised to $135
Downgrades:
Ambarella (AMBA) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets
BRF SA (BRFS) downgraded to Sell from Neutral at Goldman
PDC Energy (PDCE) downgraded to Neutral from Buy at Seaport Research Partners
Others:
America Movil SA (AMX) initiated with a Neutral at Goldman; tgt $24
argenx (ARGX) initiated with a Buy at UBS; tgt $480
Cedar Fair (FUN) initiated with a Buy at Goldman; tgt $50
Colliers (CIGI) initiated with an Outperform at RBC Capital Mkts; tgt $128
Five9 (FIVN) initiated with a Buy at Mizuho; tgt $100
Genmab (GMAB) initiated with a Neutral at UBS
Inventiva (IVA) initiated with a Buy at ROTH MKM; tgt $11
Liberty Latin America (LILA) initiated with a Buy at Goldman; tgt $10
MasterCraft (MCFT) initiated with a Neutral at DA Davidson; tgt $29
MDxHealth SA (MDXH) initiated with an Outperform at TD Cowen; tgt $7
MorphoSys (MOR) initiated with a Buy at UBS
Nevro (NVRO) initiated with an Outperform at RBC Capital Mkts; tgt $40
NICE (NICE) initiated with a Buy at Mizuho; tgt $244
PROCEPT BioRobotics (PRCT) initiated with an Outperform at William Blair
Qualys (QLYS) initiated with an Outperform at William Blair
SeaWorld Entertainment (SEAS) initiated with a Buy at Goldman; tgt $75
Six Flags (SIX) initiated with a Sell at Goldman; tgt $26
Telefonica Brasil (VIV) initiated with a Buy at Goldman; tgt $10
TelevisaUnivision (TV) initiated with a Buy at Goldman; tgt $6.10
Terns Pharmaceuticals (TERN) initiated with a Buy at ROTH MKM; tgt $23
TIM S.A. (TIMB) initiated with a Neutral at Goldman; tgt $15
Viking Therapeutics (VKTX) assumed with a Buy at ROTH MKM; tgt $32
Econ Data:
07:00 ET: MBA Mortgage Applications Index for May 27 (Briefing.comConsensus NA; Prior -4.6%)
09:45 ET: Chicago PMI for May (Briefing.comConsensus 46.1; Prior 48.6)
10:00 ET: JOLTS - Job Openings for April (Briefing.comConsensus NA; Prior 9.590M)
14:00 ET: Fed's Beige Book
Earnings:
Tuesday (May 30)
Morning: SKY
Afternoon: AMBA BOX HPE HPQ SPWH
Wednesday (May 31)
Morning: AAP CAE CPRI DCI FRO
Afternoon: AI CHWY CRDO CRWD DSGX NCNO NTAP JWN OKTA PHR PSTG PVH CRM VEEV VSCO
Thursday (Jun 1)
Morning: BILI CAL CONN DG HRL M SPTN
Afternoon: ASAN AVGO CHPT COO DELL ESTC FIVE GWRE LULU MDB PD S VMW ZS ZUMZ
Asia & Europe detail:
Asia: Nikkei -1.4%, Hang Seng -1.9%, Shanghai Composite -0.6%
Equity indices in the Asia-Pacific region ended the midweek session on a lower note amid the release of disappointing economic data from China, Japan, and South Korea with China's Manufacturing PMI remaining in contraction for the second consecutive month. Japan's top currency diplomat said that a trilateral meeting between the Ministry of Finance, Bank of Japan, and Financial Services Agency was not intended to serve as a verbal intervention to support the yen. Goldman Sachs expects the Reserve Bank of Australia's terminal rate to reach 4.35%, up from the previous forecast of 4.10%. North Korea had a failed spy satellite launch, but another attempt is expected to be made.
In economic data:
China's May Manufacturing PMI 48.8 (expected 51.4; last 49.2) and Non-Manufacturing PMI 54.5 (expected 54.9; last 56.4)
Japan's April Retail Sales 5.0% yr/yr (expected 5.8%; last 6.9%) and April Industrial Production -0.4% m/m (expected 0.5%; last 1.1%). April Housing Starts -11.9% yr/yr (expected -4.3%; last -3.2%) and April Construction Orders 16.2% yr/yr (expected 3.7%; last -4.1%). May Household Confidence 36.0 (expected 36.1; last 35.4)
South Korea's April Retail Sales -2.3% m/m (expected 0.8%; last 0.1%) and April Industrial Production -1.2% m/m (expected -0.9%; last 5.3%); -8.9% yr/yr (expected -7.3%; last -7.6%). April Service Sector Output -0.3% m/m (expected -0.2%; last -0.5%)
Australia's April CPI 6.8% yr/yr (expected 6.4%; last 7.0%). April Private Sector Credit 0.6% m/m (expected 0.3%; last 0.2%) and Q1 Construction Work Done 1.8% qtr/qtr (expected 1.5%; last 1.0%)
New Zealand's May ANZ Business Confidence -31.1 (expected -43.4; last -43.8)
---Equity Markets---
Japan's Nikkei: -1.4%
Hong Kong's Hang Seng: -1.9%
China's Shanghai Composite: -0.6%
India's Sensex: -0.6%
South Korea's Kospi: -0.3%
Australia's ASX All Ordinaries: -1.5%
---FX---
USD/JPY: +0.2% to 140.00
USD/CNH: +0.5% to 7.1273
USD/INR: +0.1% to 82.74
Europe: DAX -0.4%, FTSE -0.1%, CAC -0.5%
Major European indices trade in the red despite the release of cooler than expected CPI readings from France and five German states. Meanwhile, Germany's total CPI will be released at 8:00 ET. The European Central Bank's latest Financial Stability Review described the financial outlook as fragile and that banks might need to increase their loss provisions. European Central Bank policymaker Villeroy de Galhau said that the inflationary peak has probably been passed in France while policymaker Muller said that one more rate hike is likely and that expectations for rate cuts in 2024 are too optimistic.
In economic data:
Germany's April Import Price Index -1.7% m/m (expected -0.9%; last -1.1%); -7.0% yr/yr (expected -5.9%; last -3.8%). May Unemployment Change 9,000 (expected 14,000; last 23,000) and May Unemployment Rate 5.6%, as expected (last 5.6%)
France's April Consumer Spending -1.0% m/m (expected 0.3%; last -0.8%). May CPI -0.1% m/m (expected 0.4%; last 0.6%); 5.1% yr/yr (expected 5.7%; last 5.9%). April PPI -5.1% m/m (expected 1.2%; last 1.9%). Q1 GDP 0.2% qtr/qtr, as expected (last 0.1%); 0.8% yr/yr, as expected (last 0.5%)
Italy's Q1 GDP 0.6% qtr/qtr (expected 0.5%; last -0.1%); 1.9% yr/yr (expected 1.8%; last 1.4%)
Spain's March Current Account surplus EUR5.58 bln (last surplus of EUR2.29 bln)
Swiss April Retail Sales -3.7% yr/yr (expected -1.4%; last -1.9%) and May ZEW Expectations -32.2 (expected -36.8; last -33.3)
---Equity Markets---
STOXX Europe 600: -0.2%
Germany's DAX: -0.4%
U.K.'s FTSE 100: -0.1%
France's CAC 40: -0.5%
Italy's FTSE MIB: -0.3%
Spain's IBEX 35: UNCH
---FX---
EUR/USD: -0.5% to 1.0677
GBP/USD: -0.4% to 1.2366
USD/CHF: +0.5% to 0.9101
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