CAPIS Morning Note – 03/01/24: Back Above 5100 Today? Musk Sues OpenAI.

Overnight Summary: The S&P 500 closed Thursday higher by 0.52% at 5096.27 from Wednesday lower by -0.17% at 5069.76. The overnight high was hit at 5116.25 at 2:05 a.m. EST while the overnight low was hit at 5089.25 at 5:30 a.m. EST. The range overnight was 28 points as of 7:15 a.m. EST. The 10-day…

Overnight Summary: The S&P 500 closed Thursday higher by 0.52% at 5096.27 from Wednesday lower by -0.17% at 5069.76. The overnight high was hit at 5116.25 at 2:05 a.m. EST while the overnight low was hit at 5089.25 at 5:30 a.m. EST. The range overnight was 28 points as of 7:15 a.m. EST. The 10-day average of the overnight range is at 23.45 from 22.94.  The average for May-January average was 20.88 from 20.87 during May-December. Currently, the S&P 500 is lower by -3.75 points at 7:05 a.m EST. 

Executive Summary: Can S&P 500 clear 5100 as the rally refuses to end? The answer is yes. Lots of economic data this morning. Have a great weekend.
  • February ISM Manufacturing is due out at 10:00 a.m. EST and is expected to rise to 49.5% from 49.10%..
  • The February University of Michigan Consumer Sentiment is expected to rise to 79.6 from 78.80 and is also due out at 10:00 a.m. EST.
  • January Construction Spending is due out at 10:00 a.m. EST and is expected to fall to 0.3% from 0.9%.
  • Federal Reserve Board of Governors Christopher Waller 10:15am ET
  • Federal Reserve San Francisco President Mary Daly 11:30pm ET
  • Federal Reserve Board of Governors Adriana D. Kugler 3:30pm ET

Earnings Out After The Close: 

  • Beats: DELL +0.47, AMWD +0.38, NTAP +0.25, MTZ +0.21, ZS +0.18, PTVE +0.14, ADSK +0.14, XENE +0.12, KWR +0.11, VEEV +0.08, COO +0.07, RPAY +0.06, RDNT +0.06, ESTC +0.05, SANA +0.03, TGLS +0.03, ARLO +0.03, HPE +0.03, CUBE +0.02, NVTS +0.01 of note.
  • Flat: None of note.
  • Misses: VYX (2.77), PTCT (2.55), GRBK (0.19), ZYXI (0.13), XPOF (0.09), TDW (0.03), TTEC (0.02), VRRM (0.02), CERT (0.02), DNA (0.02), AVPT (0.02), ETNB (0.01), SOUN (0.01), SG (0.01) of note.

Capital Raises:

  • IPOs Priced or News: None of note.
  • New SPACs launched/News:
    • Digital World Acquisition Corp (DWAC) extended the date by which the Company has to complete its initial business combination from March 8, 2024 to June 8, 2024.
  • Secondaries Priced:
    • APG: Prices secondary offering of of 10,569,106 shares of common stock by funds affiliated with Blackstone (BX) and Viking Global Investors at $34.25 per share.
    • CCCS: Prices offering of 43.0 million shares of common stock at $11.42 per share.
    • CLDX: Prices offering of 8.52 million shares of common stock at $47.00 per share.
    • HUMA: Prices offering of 13.4 million shares of common stock at $3.00 per share.
    • KDP: Prices secondary offering of 86,956,522 shares of common stock at $29.10 per share.
    • TARS: Prices offering of 2,812,500 shares of its common stock at $32.00 per share.
    • TSLX: Prices offering of 4.0 million shares of common stock for gross proceeds of ~$83.4 million.
    • VANI: Announces Pricing of $15.0 Million Registered Direct Offering of Common Stock and Warrants.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • CCCS: Proposed Secondary Offering of 40 Million Shares of Common Stock. (GS, BAC and JPM Bookmanagers)
    • DTIL: Proposed Public Offering of Common Stock and Warrants.(Guggenheim Bookmanager)
    • HUMA: Proposed Public Offering of Common Stock. (TD and Cantor Bookmanager)
    • REE: Proposed Public Offering of Ordinary Shares.
    • SIDU: Proposed Public Offering. (ThinkEquity Bookmanager)
    • TARS: Announces proposed $100 million public offering.
    • TSLX: Announces public offering of 4 million common stocks.
    • VCYT: Filed a prospectus supplement for the purpose of registering for resale up to 1,681,384 shares of common stock issued in connection with the Company’s acquisition of C2i Genomics.
  • Direct Offering:
    • FDUS: Increased the maximum amount of Shares to be sold through the ATM Program to $300.0 million from $150.0 million.
    • MFA: Entered into $300 million ‘at-the-market’ distribution agreement.
    • SCLX: Announces $10 million bought deal offering.
  • Selling Shareholders of note:
    • BANC: Filed prospectus supplement to the Registration Statement on Form S-3, relating to the resale from time to time by certain selling stockholders of up to 51,422,763 shares of the voting common stock.
    • GDDY: Files for 270,508 shares of common stock by selling shareholder.
    • KDP: Announces sale of up to 100 million shares of common stock by JAB and repurchase of 35 million shares by KDP.
  • Private Placement of Public Entity (PIPE):
    • REBN: Closes $1.0 Million Private Placement Equity Investment from Accredited Investor.
    • RYTM: Form 8K.. Sales Agreement with Cowen and Company $100,000,000.
  • Mixed Shelf Offerings:
    • AX: Files $500 million mixed shelf securities offering.
    • CLDT: Files $500 million mixed shelf securities offering.
    • NTAP: Files mixed shelf securities offering.
    • RCL: Files mixed shelf securities offering.
    • SBAC: Files mixed shelf securities offering.
    • TARS: Files mixed shelf securities offering.
    • VCYT: Files mixed shelf securities offering.
    • ZNTL: Files mixed shelf securities offering.
  • Debt/Credit Filing and Notes: None of note.
  • Tender Offer:
    • CNNE: Commences cash tender offer to purchase up to $200 million in value of stock not greater than $23.75 nor less than $20.75 per share.
  • Convertible Offering & Notes Filed:
    • FIVN: Announces exercise of the option to purchase additional 1.00% convertible notes due 2029.

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 Movers: 
    • NXU: +35% Earnings
    • DTIL: +24% Offering
    • CRDF: +31% Provides Clinical Update on Phase 2 Randomized Second-line ONSEMBLE Trial in Patients with RAS-mutated mCRC
    • RAL: +19% Earnings
    • DELL: +17% Earnings 
    • NTAP: +14.5% Earnings
    • SG: +14% Earnings 
    • ADSK: +7% Earnings
    • AVPT: +7% Earnings
    • COO: +6.5% Earnings
    • FSR: -33% Earnings 
    • SIDU: -26% Offering
    • NYCB: -20% Internal Control Issues
    • SOUN: -16% Earnings
    • RILY: -15% Earnings – Launches Review of Strategic Alternatives
    • DNA: -13% Earnings
    • ESTC: -13% Earnings
    • TTEC: -11% Earnings
    • TARS: -11% Offering
    • ZYXI: -10% Earnings
    • PBYI: -10% Earnings
    • ZS: -9% Earnings  
  • News Items After the Close:
    • Stocks making the biggest moves after hours:  (CNBC)
    • Cleveland Fed President Loretta Mester in interview with Yahoo Finance says Fed could lower rates later this year. (YahooFinance)
    • New York Community (NYCB) appoints Alessandro DiNello, Executive Chairman of the Board, as President and Chief Executive Officer, effective immediately. (WSJ)
    • DELL shares soar 15% after beating earnings expectations. (CNBC)
    • President Biden aiming to narrow power plant rule to withstand potential challenges. (Bloomberg)
    • United Airlines (UAL) in 10-K filing: Expects reduction in deliveries from Boeing (BA) during the next couple of years due to the delay of 737 MAX 10 certification.
    • Boeing (BA)
      • Awarded additional $680 million U.S. Navy contract.
      • Awarded $3.41 billion U.S. Navy contract.
    • Billionaire investor Ray Dalio says, based on his analysis, the U.S. stock market ‘doesn’t look very bubbly.’ “The Mag-7 is measured to be a bit frothy but not in a full-on bubble.” “That said, one could still imagine a significant correction in these names if generative AI does not live up to the priced-in impact.” (Ray Dalio LinkedIn Post)

  • Exchange/Listing/Company Reorg and Personnel News:
    • delay 10-K filing: B. Riley Financial (RILY), PureCycle Technologies (PCT), ADTRAN (ADTN), Mattel (MAT), Infinera (INFN), Beyond Meat (BYND), Forward Airlines (FWRD), Archer-Daniels (ADM), New York Community (NYCB)
    • General Electric (GE) announces that its Board of Directors has approved the previously announced spin-off of GE Vernova.
    • Marathon Oil (MRO) promotes Rob White to CFO.
    • Spectral AI (MDAI) Appoints Peter M. Carlson as CEO.
    • Vanguard CEO Tim Buckley to retire at year’s end. (MarketWatch)
    • Veradigm (MDRX) will retain its existing ticker symbol (MDRX) and that its shares of common stock will be quoted on the OTC Expert Market.
  • Buyback Announcements or News: 
    • BellRing Brands (BRBR) announces a $300 million share repurchase authorization over the next two years.
    • Banco Bilbao Vizcaya Argentaria (BBVA) announced share buyback program.  Maximum cash amount will be 781,000,000 euros.
    • Bloomin’ Brands (BLMN) entered into an accelerated share repurchase agreement to repurchase approximately $220 million of the Company’s common stock.
    • Dover (DOV) established an accelerated share repurchase program to repurchase $500 million of its common stock
    • MFA Financial (MFA) authorized $200 million stock repurchase program through December 31, 2025.
    • Old Republic (ORI) has authorized a $1.10 billion share repurchase program. (see Dividends)
    • P10, Inc. (PX) authorizes $40 million for repurchases.
    • Quaker Chemical (KWR) authorizes up to $150 million for repurchases.
    • Tidewater (TDW) approves $48.6 million for repurchases.
    • Zynex (ZYXI) Announces $20 million stock repurchase plan.
  • Stock Splits or News:
    • Reverse Split stocks today FFIE 1/3  VRPX 1/10 RETO 1/10 CJJD 1/20  EGIO 1/40
  • Dividends Announcements or News:
    • Capital City Bank (CCBG) increases quarterly cash dividend 5% to $0.21 per share from $0.20 per share.
    • Dell (DELL) increases dividend by 20%.
    • Fidelis Insurance Holdings Limited (FIHL) has approved the initiation of a dividend program under which the Company intends to pay a quarterly cash dividend.
    • Johnson Outdoors (JOUT) Announces Cash Dividend.
    • Old Republic (ORI) raises annual dividend by 8.2% to $1.06.
    • Taiwan Semiconductor Manufacturing (TSM) discloses adjustment of cash dividend.
    • Tecnoglass (TGLS) approves a 22% increase in its quarterly dividend to $0.11 per share.
    • Wesco (WCC) increases quarterly cash dividend to $0.4125 per share from $0.375 per share.
    • Wyndham Hotels & Resorts (WH) increases quarterly cash dividend 9% to $0.38 per share from $0.35 per share.

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

S&P 500 -2, Dow Jones -45, NASDAQ +15, and Russell 2000 -1.  (as of 7:56 a.m. EST).  Asia is higher ex South Korea while Europe is higher this morning. VIX Futures are at 14.05 from 14.80 yesterday morning.  Gold and Silver higher while Copper is lower this morning. WTI Crude Oil and Brent Crude Oil are higherer along with Natural Gas. US 10-year Treasury sees its yield at 4.239% from 4.307%  yesterday morning. The U.S. Dollar is lower versus the Euro, lower versus the Pound and higher against the Yen. Bitcoin is at $62,175 from $62,710 higher by 4.04% this morning.

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

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

The Nasdaq Composite closed at a record high Thursday for the first time since 2021.  The tech-heavy index rose 0.9%, snapping a streak of 569 trading days without a new high. The S&P 500 advanced 0.5%, also setting a fresh record, while the Dow Jones Industrial Average gained 0.1%, or 47 points.  January and February marked the best two months to start a year for the Dow and S&P 500 since 2019. The Nasdaq has gained 7.2% so far this year.  (WSJ – edited by QPI)

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

  • Friday After the Close: None of note.
  • Monday Before the Open: None of note.

Earnings of Note This Morning:

  • Beats: None of note.
  • Flat: None of note.
  • Misses: SATS (7.40), PLUG (0.78) of note.
  • Still to Report: None of note.

Company Earnings Guidance:

  • Positive Guidance: SG, ZS, ESTC, AVPT, VSEC of note.
  • Negative Guidance: NVTS, TTEC, HPE, VYX, RDNT, ZYXI, MTZ, DNA of note.

Erlanger Research Advance/Decline Chart: 

Gap Ups & Down In Early Pre-Market:

  • Gap Up: EVBG +23%, DELL +23%, AMRX +18%, YMAB +17%, NTAP +17%, SG +15%, NVTS +13%, RPAY +11%, TDCX +10%, AMWD +10%, ADSK +9%, COO +7%, FIHL +7%, XENE +6%, MUX +6%, CERT +5%, AVPT +4% of note.
  • Gap Down: SCLX -33%, NYCB -28%, GRTS -25%, HUMA -24%, SOUN -18%, JAKK -16%, RILY -14%, DNA -13%, TTEC -12%, GRBK -12%, ZYXI -11%, TARS -11%, ESTC -11%, BHVN -8%, ORGO -8%, PTCT -8%, ZS -7%, PX -7%, HPE -6%, VYX -5%, PTVE -5%, KWR -5%, TSLX -5% of note.

Insider Action: No stock sees Insider buying with dumb short selling.  RIG, DAR sees Insider buying with smart short sellers.

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

  • What You Need To Know To Start Your Day. (Bloomberg)
  • The Open: Newsletter for Bloomberg Subscribers *NEW* (Bloomberg)
  • 5 Things To Know Before the Stock Market Opens Today. (CNBC)
  • Bloomberg Lead Story:  Congress Approves Interim Funds To Avert U.S. Government Shutdown. (Bloomberg)
  • Elon Musk sues OpenAI and CEO Sam Altman. (CNBC)
  • Tesla (TSLA) stands to make billions by opening its EV stations to Ford and other manufacturers of EVs. (CNBC)
  • U.S. Futures waiver as post-PCE Core Rally fades: Markets. (Bloomberg)
  • New York Community Bank (NYCB) tumbles 26% as more loan trouble found. (Bloomberg)
  • Bloomberg Daybreak: Shutdown averted and stocks at record. (Podcast)
  • NYT The Daily: Biden and Trump at the border. (Podcast)
  • Marketplace: Data privacy update, Nvidia Chip shortages ease and Apple moves away from EV. (Podcast)
  • Wealthion: Doomsday Dollar and Nourel Roubini. (Podcast)

Moving Average Update: Score improves to 97% from 87%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 10:00 a.m. EST
    • The President holds a bilateral meeting with Prime Minister Giorgia Meloni of Italy, 1:00 p.m. EST
    • Press Briefing by Press Secretary Karine Jean-Pierre and White House National Security Communications Advisor John Kirby, 1:30 p.m. EST
    • The President departs the White House en route to Camp David, 5:45 p.m. EST
    • The President arrives at Camp David, 6:15 p.m. EST

Economic:

  • PMI Mfg Final 9:45 a.m. EST
  • February ISM Manufacturing is due out at 10:00 a.m. EST and is expected to rise to 49.5% from 49.10%..
  • February University of Michigan Consumer Sentiment is expected to rise to 79.6 from 78.80 and is also due out at 10:00 a.m. EST.
  • Michigan Inflation Expectations 10:00 a.m. EST
  • January Construction Spending is due out at 10:00 a.m. EST and is expected to fall to 0.3% from 0.9%.
  • Baker Hughes Rig Count 1:00 p.m. EST

Federal Reserve / Treasury Speakers:

  • Federal Reserve Board of Governors Christopher Waller 10:15am ET
  • Federal Reserve San Francisco President Mary Daly 11:30pm ET
  • Federal Reserve Board of Governors Adriana D. Kugler 3:30pm ET

M&A Activity and News:

  • Clarus Corporation (CLAR) completes the sale of its Precision Sport segment for approximately $175 million and used a portion of the proceeds to retire in full all of the Company’s outstanding debt as of February 29, 2024.
  • Fortune Brands Innovations (FBIN) acquires SpringWell Water Filtration Systems for a purchase price of approximately $105 million.
  • TDCX enters into definitive merger agreement for going-private transaction.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • Deutsche Bank’s Shipping Summit
    • Susquehanna Technology Conference
      • Previously posted and ongoing conferences: None of note.
  • Top Shareholder Meetings: JACK, SYM
  • Fireside Chat: None of note.
  • Investor/Analyst Day/Calls: ANNX, D, XELB
  • Update: None of note.
  • R&D Day: None of note.
  • Company Event: None of note.
  • Industry Meetings:
    • ACTRIMS Forum 2024
    • NeauxCancer Conference
      • Previously posted and ongoing conferences: None of note.

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 is 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: