CAPIS Morning Note – 03/21/24: Let The March Madness Begin, Swiss Cut Rates! Stocks Higher

Overnight Summary: The S&P 500 closed Wednesday higher by 0.89% at 5226.19 from Tuesday higher by 0.56% at 5178.51. The overnight high was hit at 5315.75 at 8:00 a.m. EDT while the overnight low was hit at 5285 at 4:05 p.m. EST. The range overnight is 30 points as of 8:00 a.m. EST. The 10-day…

Overnight Summary: The S&P 500 closed Wednesday higher by 0.89% at 5226.19 from Tuesday higher by 0.56% at 5178.51. The overnight high was hit at 5315.75 at 8:00 a.m. EDT while the overnight low was hit at 5285 at 4:05 p.m. EST. The range overnight is 30 points as of 8:00 a.m. EST. The 10-day average of the overnight range is at 21.05 from 20.34.  The average for May-January average was 20.88 from 20.87 during May-December. Currently, the S&P 500 is higher by +23 points at 8:05 a.m. EDT.

Fun Facts: Wall Street’s biggest names share their March Madness tips. (Bloomberg) The Caitlin Clark Phenomenon, yes there is a women’s tournament as well and it is bigger than ever thanks to her!! (NYT Daily)
Executive Summary: 
  • February Existing Home Sales are due out at 10:00 a.m. EDT and is expected to improve to 4 million from 3.90 million.
  • February Leading Economic Indicators is also due out at 10:00 a.m. EDT and is expected to improve to -0.20% after falling by -0.4% in January.
  • Federal Reserve Vice Chair for Supervision Michael S. Barr 12:00 p.m. EDT

Earnings Out After The Close: 

  • Beats: MU +0.67, GES +0.55, KBH +0.19, CHWY +0.11, WOR +0.11, SCS +0.02 of note.
  • Flat: None of note.
  • Misses: FIVE (0.13) of note.

Capital Raises:

  • IPOs Priced or News:
    • Reddit (RDDT-NYSE) prices 22.0 million share IPO at $34.00 per share, at the high end of the $31-34 expected range
  • New SPACs launched/News: None of note.
  • Secondaries Priced:
    • DNMR:  Prices offering of 15.0 million shares of common stock at $1.00 per share.
  • Notes Priced of note:
    • AL: Announces Pricing of Offering of €600 Million of Senior Unsecured Medium-Term Notes.
  • Common Stock filings/Notes:
    • APVO: Filed Form S-1– Stock Offering
    • CCI: Enters $750 million common stock sales agreements.
    • CSTM: Files ordinary share offering.
    • STVN: Public Offering of Ordinary Shares – $150,000,000 of its ordinary shares. (MS and Blair bookmanagers)
  • Direct Offering:
    • DNMR: Announces $15 Million Registered Direct Offering.
    • CPIX: Form 8K.. prospectus supplement in connection with the Company’s “at-the-market” offering program.
  • Selling Shareholders of note: None of note.
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings:
    • CCI: Filed Form S-3ASR – Mixed Shelf Offering.
    • HLVX: Files $500 million mixed shelf securities offering.
  • Debt/Credit Filing and Notes: None of note.
  • Tender Offer: None of note.
  • Convertible Offering & Notes Filed: None of note.

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: 
    • CURI: +52% Earnings
    • MU: +14% Earnings
    • GES: +10% Earnings
    • FIVE: -13% Earnings
    • SCS: -10% Earnings
  • News Items After the Close:
    • Stocks making the biggest moves after hours: MU, FIVE, CHWY,GES, KBH (CNBC)
    • Shares of Micron (MU) pop 14% on earnings beat driven by AI boom. (CNBC)
    • Chewy (CHWY) says pet business is ‘recession resilient’ as it swings to surprise profit. (MarketWatch)
    • Fed Stays on Track for Rate Cuts With One Eye on Bumpy Inflation. (Bloomberg)
    • Apollo (APO) Offers $11 Billion for Paramount’s (PARA) Hollywood Studio. (WSJ)
    • Reddit (RDDT) Prices IPO at Top of Range. (WSJ)
    • DOJ to Sue Apple (AAPL) for Antitrust Violations as Soon as Thursday. (BloombergLaw)
    • GSK to cap out-of-pocket inhaler costs in US. (Reuters)
    • IBM awarded $576 million U.S. Defense Microelectronics Activity contract.
    • AAPL We do not expect any business model changes for now with DOJ case, but Apple clearly is going to have to find a way to eventually settle this case, pay a hefty fine, and ultimately find some compromise with developers on the App Store down the road. Our bullish thesis unchanged. (Dan Ives)
    • UBS: Expects a Total of Three Rate Cuts in 2024, With the First Fed Rate Cut Projected for June. They Anticipate Two Additional Cuts Of 25 Basis Points Each in the September and December 2024 FOMC Meetings.
    • Gold is trading at another record high this morning, consistent with the market’s’ main takeaway from yesterday’s Federal Reserve meeting — that is, the world’s most powerful central bank seems willing to tolerate higher inflation for longer. — (EL ERIAN)
  • Exchange/Listing/Company Reorg and Personnel News:
    • Grupo Aval (AVAL) announced Dr. Luis Carlos Sarmiento Gutiérrez will become Chairman of the Board.
    • Movella (MVLA) Announces Voluntary Delisting from Nasdaq.
    • Papa John’s (PZZA) announces CEO transition.
    • Shake Shack (SHAK) Names Rob Lynch as Chief Executive Officer.
    • NDAQ Delisting of Securities of Latch, Inc.; Eloxx Pharmaceuticals, Inc.; Collective Audience, Inc. (f.k.a., ABRIC SPAC I); SeqLL Inc.; Nemaura Medical Inc.; LumiraDx Limited; Cemtrex Inc.; COMSovereign Holding Corp.; Global System Dynamics; Arrival; Nubia Brand International Corp.; The Alkaline Water Company Inc.; DMK Pharmaceuticals Corporation; MedAvail Holdings, Inc.; InVivo Therapeutics Holdings Corp.; and ADDvantage Technologies Group, Inc.
  • Buyback Announcements or News: 
    • Darden Restaurants (DRI) Authorizes New $1 Billion Share Repurchase Program.
    • Heritage Insurance (HRTG) authorizes new share repurchase plan for $10 million.
    • U.S. Energy Corp. (USEG) Announces Extension of $5.0 Million Share Repurchase Program.
  • Stock Splits or News:
    • ADVM to trade 1/10 r/s today.
  • Dividends Announcements or News:
    • Guess? (GES) declares special dividend of $2.25 per share in addition to regular dividend of $0.30 per share.

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

S&P 500 +23, Dow Jones +117, NASDAQ +171, and Russell 2000 +16.  (as of 8:05 a.m. EST).  Asia is higher ex Shanghai and Europe is higher  this morning. VIX Futures are at 14.40 from 14.90 yesterday morning.  Gold, Silver and Copper are higher this morning for the first time in four days. WTI Crude Oil and Brent Crude Oil are lower with Natural Gas lower as well. US 10-year Treasury sees its yield at 4.22% from 4.285% this morning. The U.S. Dollar is higher versus the Euro, higher versus the Pound and higher against the Yen. Bitcoin is at $67,195 from $63,107  higher by 2.35% this morning.

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

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

All three major stock indexes closed at records after Federal Reserve officials largely sustained their outlook for delivering interest rate cuts this year. Investors went into Wednesday afternoon on edge, worried that firmer-than-anticipated inflation could cause the central bank to dial-back its signaling about how many rate cuts were likely in 2024. Instead, most officials penciled in three cuts this year in new projections, the same as in December. The Fed left interest rates unchanged, as expected. The benchmark S&P 500 finished the day up 0.9%, with nine of its 11 sectors rising. The Dow Jones Industrial Average added 400 points, or 1%, while the tech-heavy Nasdaq Composite closed 1.3% higher.  The last time all three indexes closed at a record on the same day was Nov. 8, 2021.  (WSJ – edited by QPI)

Upcoming Earnings Of Note:

  • Thursday After the Close: AIR, FDX, LULU, NKE, WS
  • Friday Before the Open: None of note.

Earnings of Note This Morning:

  • Beats: FDS +0.32, ACN +0.11, WGO +0.08, DBI +0.03, TITN +0.03 of note.
  • Flat: SCVL of note.
  • Misses: BZUN (0.36), ASO (0.10), DRI (0.02) of note.
  • Still to Report: None of note.

Company Earnings Guidance:

  • Positive Guidance: MU, CHWY of note.
  • Negative Guidance: SCS, FIVE, SCVL, ACN, DBI, DRI of note.

Erlanger Research Advance/Decline Chart: 

Gap Ups & Down In Early Pre-Market (+2% or down more than -2%):

  • Gap Up: MU +18%, GES +13%, BNOX +11%, WDC +6%, INDI +6%, CAAP +4%, CLVT +4% of note.
  • Gap Down: FIVE -12%, DNMR -9%, LI -6%, BZUN -6%, SCS -5% of note.

Insider Action: ABR see Insider buying with dumb short selling.  NN, CTRN see 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.

  • 5 Things To Know Before the Stock Market Opens Today. (CNBC)
  • What You Need To Know To Start Your Day. (Bloomberg)
  • Bloomberg Lead Story: Switzerland Surprise With Rate Cut Ahead of ECB and Fed. (Bloomberg)
  • Asian stocks gain on Fed, Gold at Record High: Markets Wrap. (Bloomberg)
  • Turkish Central Bank raises rates to 50%. (CNBC)
  • Target (TGT) doubles bonuses for salaried employees. (Bloomberg)
  • Barclays (BCS) readies for hundreds of job cuts at the investment bank. (Bloomberg)
  • Darden (DRI) posts first same-store sales loss since pandemic due to Ruth Chris acquisition. (CNBC)
  • NYT The Daily: The Caitlin Clark Phenomenon. (Podcast)
  • Marketplace:  What is “AI Sovereignty”.(Podcast)
  • Wealthion: Nuclear powers return. (Podcast)
  • Adam Taggart Thoughtful Money:  FOMC reaction with Axel Mark. (Podcast)
  • Money Life With Chuck Jaffe: Consumers need help in shopping for assisted living as well as Geoff Garbacz interview on short interest, starts at 36 minutes. (Podcast)

Moving Average Update: Score motors to 100% from 65%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing (9:00 AM Local)
    • The President departs Dallas, Texas en route Houston, Texas (9:55 AM Local)
    • The President arrives in Houston, Texas (10:55 AM Local)
    • The President participates in a campaign reception (12:45 PM Local)
    • The President departs Houston, Texas en route Joint Base Andrews (2:10 PM Local)
    • The President departs Joint Base Andrews en route the White House, 5:50 p.m. EDT
    • The President arrives at the White House, 6:00 p.m. EDT

Economic:

  • Jobless Claims 8:30 a.m. EDT
  • Philly Fed Mfg Index 8:30 a.m. EDT
  • Current Accounts 8:30 a.m. EDT
  • PMI Composite Flash 9:45 a.m. EDT
  • February Existing Home Sales are due out at 10:00 a.m. EDT and is expected to improve to 4 million from 3.90 million.
  • February Leading Economic Indicators is also due out at 10:00 a.m. EDT and is expected to improve to -0.20% after falling by -0.4% in January.
  • EIA Natural Gas Report 10:30 am ET
  • 10-Yr TIPS Auction 1:00 p.m. EDT

Federal Reserve / Treasury Speakers:

  • Federal Reserve Vice Chair for Supervision Michael S. Barr 12:00 p.m. EDT

M&A Activity and News:

  • GitLab (GTLB) acquires Oxeye, a cloud-native application security and risk management provider.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • Barclays Emerging Growth Climate Technology Company
    • Jefferies Business Services Summit
    • Jefferies Asia Forum
    • KBW’s Porch Non-Deal Roadshow
      • Previously posted and ongoing conferences:
        • BAC APAC TMT Conference
        • Bank of America Global Industrials Conference
        • Gartner Tech Growth & Innovation Conference
        • Morgan Stanley Latin America Executive Conference.
        • Macquarie Bright Ideas Consumer Conference
        • Siebert Williams Shank West Coast Utilities Conference
  • Top Shareholder Meetings: ANIX, CIEN, HOV, KEYS, MSN, NOV, TRVN
  • Fireside Chat: None of note.
  • Investor/Analyst Day/Calls: AJG, ENSC, GNS, IFRX, FEMY
  • Update: None of note.
  • R&D Day: None of note.
  • Company Event:
    • NVDA GTC Conference
  • Industry Meetings:
    • BeyondTheBlack Europe
    • FTTH Conference
    • Future Food-tech
    • IAEA Nuclear Energy Summit
    • North American Board of Certified Energy Practitioners Conf
    • NYSE Energy & Utilities Day
      Synopsys’ Annual User Group Conference

      • Previously posted and ongoing conferences:
        • ACCESS USA Conference
        • BIO-Europe Spring
        • Game Developers Conference
        • Swiss Mining Institute

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: