CAPIS Morning Note – 06/02/22: Stocks Rebound From Wednesday Selling, Stocks Testing 4100 on S&P 500

Overnight Summary: The S&P 500 closed Wednesday at 4101.23 (lower by -0.75%) from 4132.15 (lower by -0.63%) on Tuesday. Futures have traded mixed overnight. The overnight high of 4124 was hit at 6:50 a.m. EDT. The low was hit at 4083.50 at 8:10 a.m. EDT, a range of 41 points high to low which is…

Overnight Summary: The S&P 500 closed Wednesday at 4101.23 (lower by -0.75%) from 4132.15 (lower by -0.63%) on Tuesday. Futures have traded mixed overnight. The overnight high of 4124 was hit at 6:50 a.m. EDT. The low was hit at 4083.50 at 8:10 a.m. EDT, a range of 41 points high to low which is near the range of late with 45 the average. At 7:15 a.m. EDT the current price is 4119 which is 0.49% and 20 points.

Earnings Out After The Close:

  • Beats: PVH +0.34, MDB +0.30, PSTG +0.20, CHWY +0.17, NTAP +0.14, AI +0.08, VEEV +0.07, ESTC +0.05, SMTC +0.04, S +0.03, PATH +0.03, NCNO +0.02, CRDO +0.02, DSGX +0.01.
  • Flat: None of note.
  • Misses: GME (0.86), HPE (0.01).

Capital Raises:

  • IPOs Priced or News: None of note.
  • New SPACs launched/News: None of note.
  • Secondaries Priced:
    • CNCE prices offering. 10 Million shares at $4.75 per share.
    • NILE: Revised Pricing of Public Offering of Shares of 13.00% Series D Cumulative Redeemable Perpetual Preferred Stock.
    • OWL: Prices secondary offering by NBSH Blue Investments II of 10,698,180 shares of Class A common stock at $11.50 per share.
  • Notes Priced of note:
    • BLDR: Prices Offering of $700 Million of Senior Notes due 2032.
    • CNMD: Announces Pricing of Upsized $700 Million Offering of Convertible Senior Notes.
    • KNTK: Prices $1.0 Billion Sustainability-Linked Senior Notes Offering Due 2030.
  • Common Stock filings/Notes:
    • AMT: intends to offer 8,350,000 shares of its common stock in a registered public offering.
    • OWL: Launch of secondary offering of Class A Common Shares.. 10,698,180 shares .. BAC and Citi bookmanagers.
    • VCSA: Filed Form S-1.. 336,074,144 Shares of Class A Common Stock.
  • Pricing of Over-Allotment/Notes: None of note.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • MGY: announces proposed block trade of 7.5 million Class A shares by selling shareholders; intends to purchase 2 million Class B shares.
  • Private Placement of Public Entity (PIPE):
    • SPRC: Announces Closing of $10 Million Private Placement Priced At-the-Market.
  • Mixed Shelf Offerings:
    • AMT: Filed Form S-3ASR.. Mixed Shelf.
    • DAWN: Filed Form S-3.. $400,000,000 Mixed Shelf.
    • INDP: Filed Form S-3.. $200,000,000 Mixed Shelf.
  • Convertible Offering & Notes Filed:
    • OZON: Has Entered into a Standstill Agreement in Respect of Its $750 Million Senior Unsecured Convertible Bonds Due 2026.
    • Advanced Drainage Systems (WMS) Announces Proposed $500 Million Senior Notes Offering.

Capital Raise Summary From The TradeXchange, bringing traders and investors real time news and Squawk Box, and other sources.

News After The Close:

  • After Hours: 
    • Trading Up: CHWY +21%, RPTX +16%, APRN +12%, CRDO +10%, PSTG +9%, KIND +8%, PATH +6%, MDB +6%, PVH +4%.
    • Trading Down: AI -19%, HPE -6%, RDUS -6%.
  • News Since The Close:
    • Stocks making the biggest moves after hours: HPE, CHWY, MDB  (CNBC)
    • Meta Platforms (FB): Mark Zuckerberg confirms Sheryl Sandberg will depart FB as COO, Javier Olivan will become new COO. (MarketWatch)
    • President Biden to meet with NATO Chief Thursday.
    • GameStop (GME) reports $158 million loss and decline in hardware sales. (CNBC)
    • Shanghai reports 3 new local Covid cases and 4 asymptomatic infections. (Shangguan News)
    • Oil Slides On Report Saudi Prepared To Boost Output, Biden Visit. (Bloomberg)
    • USPS expects to boost purchase of electric delivery vehicles. (Reuters)
    • Cedar Fair (FUN) reports revenues through the Memorial Day weekend increased 21% compared to 2019.
    • Education Department approves $5.8 billion group discharge to cancel all remaining loans for 560,000 borrowers who attended Corinthian.
    • Russian/Ukraine News
      • Biden administration to sell Ukraine four MQ-1C Gray Eagle drones that can be armed with Hellfire missiles for battlefield use against Russia. (Reuters)
      • Ukrainian President Zelenskiy: There Is The Potential For An Inflection Point In The Conflict In Ukraine. (Reuters)
  • Exchange/Listing/Company Reorg and Personnel News:
    • Ferroglobe PLC (GSM) appoints Benjamin Crespy to COO position.
    • Inter Parfums (IPAR) announces retirement of CFO Russell Greenberg.
    • Nu Skin (NUS) Executive Vice President and Chief Global Growth and Customer Experience Officer began a temporary medical leave of absence.
    • Riot Blockchain (RIOT) Announces CFO Transition Plan.
    • Tarena (TEDU) Regains Compliance with Nasdaq Listing Rules.
    • Tonix Pharmaceuticals (TNXP) Regains Compliance with Nasdaq Minimum Bid Price Requirement.
  • Buyback Announcements:
    • Boyd Gaming (BYD) Announces $500 Million Increase to Share Repurchase Authorization.
    • Iteris (ITI) Announces New $10 Million Stock Repurchase Program.
    • Nextdoor (KIND) approves a share repurchase program up to $100 mln through June 30, 2024.
  • Stock Splits:
    • Histogen (HSTO) Announces 1-for-20 Reverse Stock Split.
  • Dividends Announcements: None of note.

What’s Happening This Morning: Futures value reflects the change with fair value.

S&P 500 +20, Dow Jones +138, NASDAQ +85, and Russell 2000 +7. Europe mixed and Asia mixed.  VIX Futures are at 25.87 from 26.35 yesterday morning and the VIX closed at 25.69 from 26.19  yesterday. Gold, Silver  and Copper higher. WTI Crude Oil  and Brent Oil Futures lower and Natural Gas higher. $ is lower vs Euro, lower vs Pound and lower vs Yen. US 10 year Treasury sees yields at 2.91% from 2.87% yesterday morning. Bitcoin is at $29,995 from $31,612  yesterday morning and is lower by -0.62% this morning. As of 8:12 a.m. EDT.

Sector Action – 06/01/22 Close (1/3/6/12/YTD Updated Weekly with Monday release):   

  • Daily Positive Sectors: Energy of note.
  • Daily Negative Sectors: Consumer Defensive, Healthcare, Financial, Real Estate, Consumer Cyclical of note.
  • One Month Winners: Energy, Utilities, Basic Materials of note.
  • Three Month Winners: Energy, Utilities and Basic Materials of note.
  • Six Month Winners: Energy, Utilities, and Basic Materials of note.
  • Twelve Month Winners: Energy and Utilities of note.
  • Year to Date Winners: Energy, Utilities, and Basic Materials of note.

Hurricane Dimon blew through.  Jamie Dimon (JPM) does not like what he sees out in the markets which caused a caution tone for the day.  All indexes pulled back with SPX down 0.75 and COMPQ down 0.72%.  Updated 06/01/22 close.

Upcoming Earnings Of Note: (sorted by market cap, highest to lowest with most visible names)

  • Thursday After the Close: CRWD, COO, OKTA, RH, ASAN, PHR, ZUMZ, CVGW, JOAN of note.
  • Friday Before the Open: None of note.

Earnings of Note This Morning:

  • Beats: DBI +0.24, SPTN +0.19, SCWX +0.06, HRL +0.01.
  • Flat: None of note.
  • Misses: CIEN (0.04).
  • Still to Report: TTC.

Guidance:

  • Positive Guidance: PSTG, ESTC, VEEV, PATH, NCNO, S, CRDO, DBI of note.
  • Negative Guidance: DAL, AI, PVH, SCWX of note.

Erlanger Research Advance/Decline Chart: Updated through 06/01/22 close.

Gap Ups & Down In Early Pre-Market:

  • Gap Up: CHWY +17%, RPTX +17%, PSTG +12%, APRN +11%, PATH +11%, KIND +9%, MDB +9%, CRDO +8%, ESTC +7%, SANA +5%, VEEV +4%, PVH +4%.
  • Gap Down: AI -23%, OZON -19%, HPE -6%, CNCE -5%, DAWN -5%, MGY -4%, OWL -4%.

Insider Action: No stock sees Insider buying with dumb short selling. RMBL  sees Insider buying with smart short sellers. 06/01/22 close.

Rags & Mags: Repeated stories from prior days never listed, i.e. “rehashed news”. Sorted by Global, U.S. and stock specific.

  • Stocks Making The Biggest Moves:  HRL CIEN GME (CNBC)
  • Five Things You Need to Know to Start Your Day (Bloomberg)
  • 5 things to know before the stock market opens Thursday. (CNBC)
  • Bloomberg Lead Story: Drop in oil helps stocks today as inflation fears slow. (Bloomberg)
  • Bloomberg Most Popular Story: Elon Musk ultimatum to Tesla (TSLA) execs, return to office. (Bloomberg)
  • Russia missed interest payment triggering credit default swaps. (WSJ)
  • Russia called U.S. sending rocket systems to Ukraine pouring gasoline on a fire. (NYT)
  • Republicans to gain 20 to 35 House seats and take control. (Axios)
  • President Biden to visit Saudi Arabia later this month. (Bloomberg)
  • Robinhood Snacks looks at Deutsche Bank (DB) and ESG failures in disclosure. iRobot (IRBT) operating system is its future.

Moving Average Update:

  • Status quo.  Score remains at 60% for 3rd day in a row.  Make or break tomorrow.  Updated 06/01/22 close.

Geopolitical: 

  • President’s Public Schedule:
    • The President and The Vice President receive the President’s Daily Brief, 10:15 a.m. EDT
    • The President joins a meeting with NATO Secretary General Jens Stoltenberg National Security Advisory Jake Sullivan to discuss preparations for the NATO Summit in Madrid at the end of June and the strength of our transatlantic Alliance, 11:15 a.m. EDT
    • Press Briefing by Press Secretary Karine Jean-Pierre and Coordinator of the COVID-19 Response Dr. Ashish Jha, 3:00 p.m. EDT
    • The President departs the White House en route Rehoboth Beach, Delaware, 5:30 p.m. EDT
    • The President arrives in Rehoboth Beach, Delaware, 6:30 p.m. EDT

Economic: 

  • May Job Cuts Announced by U.S. Employers 20,712, Down 15.8% Vs Year-Ago. (Challenger Gray).
  • May ADP Employment Report is due out at 8:15 a.m. EDT and is expected to improve to 295,000 from 247,000.
  • Initial Jobless Claims 8:30 a.m. EDT 
  • Productivity and Costs 8:30 a.m. EDT 
  • April Factory Orders are due out at 10:00 a.m. EDT are expected to fall to 0.7% from 2.2%. 
  • EIA natural Gas Report 10:30 a.m. EDT 
  • EIA petroleum Report 11:00 a.m. EDT 

Federal Reserve Speakers:

  • Federal Reserve Cleveland President Loretta Mester 1:00 p.m. EDT

M&A Activity:

  • ASGN Incorporated (ASGN) acquires GlideFast Consulting for $350 mln
  • G-III Apparel Group (GIII) Completes Acquisition of Iconic Karl Lagerfeld Brand.
  • Owens Corning (OC) Completes Acquisition of WearDeck.
  • Rexford Industrial (REXR) Announces $164 million of Acquisitions.
  • Ryerson (RYI) Acquires Ford Tool Steel.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • Cowen Annual Oncology Innovation Summit 2022
    • D.A. Davidson Bitcoin & Blockchain Conference 2022
    • Gabelli and Company 13th Annual Entertainment & Broadcasting Conference 2022
    • Jefferies Conference – NYC Cannabis Summit 2022
      • Previously Announced  Conferences:
        • Bank of America Securities Emerging Markets Debt & Equity Conference 2022 (06/01/22-06/03/22)
        • Bernstein 38th Annual Autonomous Strategic Decisions Conference 2022 (06/01/22-06/03/22)
        • Bank of America Securities 2022 Innovative China Conference(05/30/22-06/10/22)
        • Benchmark Healthcare House Call Virtual 1×1 Conference 2022 (05/26/22-06/02/22)
        • Cowen and Company 50th Annual Technology Media and Telecom Conference 2022 (06/01/22-06/02/22)
        • Credit Suisse Brazil Tech Series: Fintechs
        • Deutsche Bank dbaccess 11th Annual Global Financial Services Conference 2022 (05/30/22-06/02/22)
        • Jefferies Software Conference 2022 (05/31/22-06/02/22)
        • KeyBanc Capital Markets Industrials and Basic Materials Conference 2022 (05/31/22-06/02/22)
        • Loop Capital Markets Investor Conference 2022 (06/01/22-06/02/22)
        • Raymond James 48 Hours Industrials Tour 2022 (06/01/22-06/02/22)
        • RBC Global Consumer and Retail Conference 2022 (06/01/22-06/02/22)
        • Wells Fargo West Coast MedTech Tour 2022 (05/31/22-06/03/22)
        • Wells Fargo Energy Conference 2022 (06/01/22-06/03/22)
  • Company Meetings: CVI, EME, GME, NFLX, NVDA, PYPL, RCL.
  • Fireside Chat: GEVO w/ Water Tower Research.
  • Investor/Analyst Day/Calls: BOSSY, BXC, EB, HUM, INGR, IONS, PEGA, STKL, VMD, ZI.
  • Update: WFAFY.
  • R&D Day: TENX, APTO.
  • Company Event: None of note.
  • Industry Meetings:
    • NOTE – Starting Friday: American Society of Clinical Oncology ASCO Annual Meeting 2022
    • Crypto Valley Conference 2022 (06/02/22-06/03/22)
      • Previously Posted and Ongoing Conferences:
        • Louisiana Energy Conference 2022 (06/01/22-06/03/22)
        • American Society of Clinical Psychopharmacology (ASCP) Annual Meeting 2022 (05/31/22-06/03/22)
        • Texas Emergency Management Conference 2022 (05/31/22-06/03/22)

Top Tier Sell-side Upgrades & Downgrades:

The recommendations listed below in this “Upgrade/Downgrade” section are compiled from what we believe are Tier I, II and III firms. Recommendations posted are taken from a variety of sources each day and we only post upgrades or significant initiations as well as downgrades to underweight or sell. The purpose of this posting it to make the reader aware of market moving recommendations. None of these recommendations should be interpreted as actual recommendations from CAPIS or its employees.

Today’s Upgrades and Downgrades:

Previous Day’s Upgrades and Downgrades: