CAPIS Morning Note – 04/26/23: NASDAQ Futures Strong, S&P 500 Up But Off Highs On Bank Woes. UK Regulator Kills Microsoft Activision Deal.

Overnight Summary: The S&P 500 closed Tuesday at 4071.63 lower by -1.58% from Monday at 4137.04 higher by 0.09%. The overnight high of 4116.25 was hit at 6:10 p.m. EDT. The low was hit at 4096.25 at 4:25 a.m. EDT, a range of ~20 points high to low which is below the recent range of…

Overnight Summary: The S&P 500 closed Tuesday at 4071.63 lower by -1.58% from Monday at 4137.04 higher by 0.09%. The overnight high of 4116.25 was hit at 6:10 p.m. EDT. The low was hit at 4096.25 at 4:25 a.m. EDT, a range of ~20 points high to low which is below the recent range of 45. At 7:15 a.m. EDT, the current price was 4141 which is -0.44% and -18.50 points. The biggest drop hit around between 2:0o a.m. EDT and 7:00 a.m. EDT as it fell 19 points. From there, it has rallied 11.50 points.

Earnings Out After The Close: 

  • Beats: CMG +1.55, TX +0.96, WIRE +0.74, OI +0.46, MTDR +0.25, LRN +0.24, MSFT +0.22, ENVA +0.20, JBT +0.20, HA +0.19, BYD +0.17, ENPH +0.15, MANH +0.15, TRMK +0.15, UHS +0.15, GOOG +0.10, V +0.10, PACW +0.09, AIN +0.07, NEX +0.07, BXP +0.05, ILMN +0.05, JNPR +0.05, HIW +0.05, CARR +0.04, TXN +0.04, CSGP +0.04, EGP +0.03, ZWS +0.03, UMBF +0.02, RNST +0.01 of note.
  • Flat:  VICR of note.
  • Misses: AZZ (0.39), WFG (0.21), TFII (0.14), AGR (0.11), CB (0.07), ROIC (0.02), VBTX (0.02), EQR (0.01) of note.

Breaking News: U.K. Regulators prohibit Microsoft and Activision merger. Microsoft to appeal. EU still to decide. (MarketWatch)

Short Interest Initial Review: NYSE saw a change of -0.72% after rising the past four reporting periods by 7.44%. NASDAQ rose 0.58% after rising the past three reporting periods by 7.69%.

Capital Raises:

  • IPOs Priced or News:
    • ISPR: Announces Exercise of Full Over allotment Option from Initial Public Offering.
    • JYD: Announces Closing of Initial Public Offering.
  • New SPACs launched/News: None of note.
  • Secondaries Priced: None of note.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • ARBE: Filed Form 424B5..Up to $50,000,000 Ordinary Shares.
    • OP: Filed Form F-1.. Distribution of Common Shares and 13,157 7.0% Series D Cumulative Convertible Perpetual Preferred Stock.
    • SIDU: Announces Closing of $11.2 Million Public Offering Including Partial Exercise of Over-Allotment Option.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • ETNB: Filed Form S-3ASR.. 795,631 Shares of Common Stock by selling shareholder.
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings:
    • ADVM: Filed Form S-3.. $300 Million Mixed Shelf.
    • WKHS: Filed Form S-3 .. $150 Million Mixed Shelf.
  • Debt/Credit Filing and Notes:
    • ASTI: Announces $5M Financing Agreement with BD1 Holdings.
  • 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: 
    • Trading Up: PACW +16%, CTKB +10%, OI +9%, QTRX +9%, MSFT +8%, CMG +7%, LRN +7%, SMR +5%, ZWS +4% of note.
    • Trading Down: ENPH -16%, WIRE -7%, TFII -4%, GETY -4% of note.
  • News After The Close:   
    • Stocks making the biggest moves after hours: PACW, CMG, MSFT, GOOGL, TXN, V, ENPH (CNBC)
    • Nvidia (NVDA) stock gains as Microsoft (MSFT) details plans to spend on AI infrastructure. (MarketWatch)
    • PacWest Bancorp (PACW): Total deposits increased $1.1 billion to $28.2 billion on March 31, 2023 compared to Company’s most recent update, prior to this update, of $27.1 billion as of March 20, 2023. Deposit balances further increased by approximately another $700 million as of April 24, 2023.
    • Juniper Networks (JNPR) stock falls 5% as supply-chain ‘challenges’ push costs up. (MarketWatch)
    • Enphase (ENPH) stock falls more than 16% as the energy-tech company’s revenue outlook comes up short. (MarketWatch)
    • Bed Bath & Beyond Inc. (BBBY) Receives NASDAQ Delisting Notice.
    • Amazon Studios (AMZN) insiders are speculating about layoffs as soon as Wednesday as Andy Jassy looks for cost savings across the board. (BusinessInsider)
    • Albany Intl (AIN) announces that its subsidiary Albany Engineered Composites has received a $4 mln contract award from the U.S. Army in support of hypersonic development.
  • Exchange/Listing/Company Reorg and Personnel News:
    • Akari Therapeutics (AKTX) Granted 180-Day Extension by Nasdaq to Meet Minimum Bid Price Requirement.
    • Cytek Biosciences (CTKB) Set to Join S&P SmallCap 600.
    • Digital World (DWAC) Receives Expected Notification From Nasdaq Related To Delayed Annual Report on Form 10-K.
    • Getaround (GETR) Receives Continued Listing Standard Notice from NYSE Related to Delayed Filing of Annual Report on Form 10-K.
    • GoodRx (GDRX) Expands Executive Team With New Interim CEO. (MarketWatch)
    • Lithium Americas (LAC) Announces New Chief Financial Officer.
    • Meta Materials (MMAT) Appoints Uzi Sasson as CFO and COO.
    • ServiceNow (NOW) announces new leadership appointments in EMEA.
    • SFR Appreciate Announces Receipt of Notice From Nasdaq Regarding Late Filing of Annual Report on Form 10-K.
    • Virgin Galactic (SPCE) appoints Virgin Group’s Chief Investment Officer Evan Lovell, as Chair of the Board
    • Taylor Morrison Home (TMHC) CFO stepping down.
    • TOP Ships Inc. (TOPS) Announces Receipt of Nasdaq Notice.
    • TreeHouse Foods (THS) appoints Patrick O’Donnell as CFO.
    • Vera Bradley (VRA) to cut corporate jobs to ‘right size’ expenses, CFO to leave. (MarketWatch)
    • WeTrade Group Inc (WETG) Received a Non-compliance Notice from NASDAQ.
  • Buyback Announcements or News:
    • Alphabet (GOOGL) To Buy Back Added Shares Up To $70 billion Class A And C shares.
    • Peapack-Gladstone Financial Corporation (PGC) Announces 5% Stock Repurchase Program.
    • RPC (RES) increases number of shares authorized for repurchase under stock buyback program by 8.0 million.
    • Synchrony (SYF) Announces Approval of an Incremental $1.0 Billion Share Repurchase Program.
  • Stock Splits or News:
    • Churchill Downs Incorporated (CHDN) Announces 2-for-1 Stock Split.
  • Dividends Announcements or News: 
    • Evercore (EVR) increases dividend 6%.
    • LNT Goes ex div tomorrow for $0.4525.
    • MetLife (MET) increases quarterly common stock dividend to $0.52/share from $0.50/share. (MarketWatch)
    • Otis Worldwide (OTIS) increases quarterly dividend 17.2% to $0.34 per share, up $0.05.
    • RPC (RES) reiterates quarterly dividend of $0.04 per share.
    • Synchrony (SYF) plans to Increase Quarterly Common Stock Dividend by 9% to $0.25 Per Share.
    • TFI International (TFII) approved a $0.35 quarterly dividend, an increase of 30%.

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

S&P 500 +5, Dow Jones +63,  NASDAQ +98, and Russell 2000 -5. (as of 8:02 a.m. EDT).  Asia lower ex Hong Kong and Europe lower. VIX Futures are at 20.94 from 19.90 yesterday.  Gold, Silver and Copper higher. WTI Crude Oil and Brent Crude Oil lower with Natural Gas lower as well. US 10-year Treasury sees yields at 3.39% from 3.441% yesterday. The U.S. Dollar is lower versus the Euro, lower versus the Pound and lower against the Yen. Bitcoin is at $28,925 from $27,333  yesterday, higher by 4.87%.

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

  • Daily Positive Sectors: None of note.
  • Daily Negative Sectors: Basic Materials, Technology, Consumer cyclical, Energy, Financial of note.
  • One Month Winners: Utilities, Healthcare, Energy  of note.
  • Three Month Winners: Technology, Communication Services, Consumer Defensive of note.
  • Six Month Winners: Technology, Basic Materials, Industrial of note.
  • Twelve Month Winners: Energy of note.
  • Year to Date Winners: Technology, Communication Services, Consumer Cyclical of note.

U.S. stocks ended sharply lower Tuesday, ending a long stretch of quiet trading the past few weeks. After earnings from First Republic Bank FRC, the stock fell -49.38% over renewed worries over regional banks. Poorly received results from United Parcel Service UPS, -9.99% weighed on transportation stocks, fanning recession worries. Meanwhile, a busy week of earnings from Big Tech companies kicked off after the opening bell, with results from Microsoft MSFT, -2.25% and Google parent Alphabet Inc. GOOG, -2.03% GOOGL, -2.00% that both beat estimates. The Dow Jones Industrial Average ended the day down around 344 points, or 1%, near 33,532, according to preliminary figures, while the S&P 500 shed 1.6% and the Nasdaq Composite dropped 2%. (MarketWatch – edited by QPI)

Click here for a video explanation of Erlanger Value Lines.

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

  • Wednesday After the Close: META, CP, NOW, ORLY, PXD, KLAC, EW, AFL, WCN, AWK, ALGN, ACGL, URI, AVB, EBAY, RJF, ROL, BMRN, MAA, SUI, ICLR, IEX, MOH, TYL, TER, AZPN, PTC, UDR, GGG, EQT, CHRW, CHDN, NLY, ROKU, RHI, FBIN, NOV, WOLF, CACI, AGI, AR, LSTR, MAT, STAG, SPSC, FIX, AXS, MTH, COLB, TDOC, MMSI, AB, ASGN, HP, PEGA, SLM, PI, CNMD, KRC, QS, MEOH, EPR, FIBK, MC, FTAI, PTEN, PLXS, MXL, CVBF, CCS, TROX, GSHD, HELE, SAVE, PEB, OII, CLS, MDRX, UCTT, NVRO, CASH, STC, CLB, KALU, SNBR, NTGR, LXFR, FARO, TWOU, SGMO.
  • Thursday Before the Open: LLY, MA, MRK, ABBV, AZN, CMCSA, BMY, SNY, HON, CAT, SPGI, MO, SO, NOC, HSY, KDP, ROP, VLO, STM, XEL, NEM, CARR, IQV, GWW, FIS, ROK, TSCO, WST, DTE, CBRE, CHD, BAX, CNP, LUV, CMS, DGX, LKQ, SIRI, RS, IPG, TXT, IP, KIM, DPZ, AOS, LII, LECO, CROX, PNR, AAL, WEX, EME, HAS, CFR, FCN, BC, FAF, FTI, EXLS, HOG, AIT, HGV, MPW, SNDR, FCFS, WNS, VLY, KEX, SRCL, BTU, TPH, ITGR, CBZ, CNX, CRS, STRA, ARCH, PPBI, AMBP, B, SAH, THRM, OSIS, PATK, HEES, CTS, BFH, MD, TRS, OSTK, SHYF, ICPT, PBI, HZO.

Earnings of Note This Morning:

  • Beats: PDS +1.36, GPI +1.05, WNC +0.56, OC +0.55, TMHC +0.41, UMC +0.30, PRG +0.27, NAVI +0.24, MAS +0.24, ALLE +0.22, PAG +0.22, NSP +0.19, BPOP +0.19, HUM +0.18, NSP +0.17, RCI +0.13, VRT +0.12, BOKF +0.12, TNL +0.11, TDY +0.10, HLT +0.10, GIB +0.10, HES +0.10, WAB +0.08, ADP +0.08, AMT +0.08, FSV +0.07, TEL +0.07, MKTX +0.06, GD +0.05, BXMT +0.05, OTIS +0.05, AVY +0.05, EVR +0.04, CME +0.04, HCSG +0.04, BSX +0.04, EXTR +0.03, RES +0.02, APH +0.02, FTV +0.02, PB +0.02, ALKS +0.02, SLAB +0.01, DOV +0.01 of note.
  • Flat: IART +0.00, SLGN +0.00, TMO +0.00, UBSI +0.00 of note.
  • Misses: COOP (0.54), ETR (0.24), BA (0.22), CSTM (0.22), R (0.16), ODFL (0.12), TECK (0.06), SF (0.05), CVE (0.02) of note.
  • Still to Report: None of note.

Guidance:

  • Positive Guidance: KMB, CSGP, MANH, EGP, OI, LRNALLE, VRT, HLT, HUM, BSX, WNC, ADP  of note.
  • Negative Guidance: ENPH, ZWS, AIN, TEL, IART, SLGN, AVY, TDY, SLAB, AMT, ACMR, R, HESM, APH of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: PACW +17%, CTKB +9%, OI +9%, QTRX +8%, MSFT +8%, CMG +7%, FSR +7%, LRN +6%, WFRD +6%, IONS +6%, HIW +4%, SPCE +4%, AZZ +4% of note.
  • Gap Down: ENPH -15%, GOL -6%, GETY -5%, WIRE -4%, CSTM -4% of note.

Insider Action: SCWX, TCBI sees Insider buying with dumb short selling.  No stock 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.

  • 5 things to know before the stock market opens. (CNBC)
  • 5 Things You Need to Know to Start Your Day. (Bloomberg) 
  • Bloomberg Lead Story: Musk Bets The House on Lower Prices and Razor-Thin Margins.  (Bloomberg)
  • Bloomberg Most Shared Story: Apple (AAPL) Plans AI Powered Health Coaching Service, Mood Tracker and iPad Health App.  (Bloomberg)
  • US Futures Rise as Big-Tech Earnings Bolster Mood: Market Wrap. (Bloomberg)
  • Futures on the S&P 500 are wavering over bank woes, especially at First Republic. (Bloomberg)
  • NASDAQ Futures stronger on Microsoft beat. (CNBC)
  • First Republic (FRC) to weigh up to $100 billion in asset sales. (Bloomberg)
  • Microsoft (MSFT) sees AI reshaping search as Google calms investors. (Bloomberg)
  • Quants are out of ammo to buy stocks warns Goldman Sachs. (Bloomberg)
  • Mortgage demand rebounds despite interest rates hitting highest level in a month. (CNBC)
  • Boeing (BA) misses on earnings but guidances is strong as the company will produce 38 planes per month. (CNBC)
  • Chipotle (CMG) restaurant traffic grows as pricing power remains a key driver. (CNBC)

Moving Average Update:

  • Score falls to 28% from 54%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 8:00 a.m. EDT
    • The President and The First Lady greet President Yoon and Mrs. Kim of the Republic of Korea for the Official Arrival Ceremony; The Vice President and The Second Gentleman attend, 10:00 a.m. EDT
    • The President holds a bilateral meeting with President Yoon of the Republic of Korea, 10:45 a.m. EDT
    • The President hosts a joint press conference with President Yoon of the Republic of Korea, 12:30 p.m. EDT
    • The President and The First Lady greet President Yoon and Mrs. Kim of the Republic of Korea on arrival for the State Dinner, 7:00 p.m. EDT
    • The President and The First Lady participate in a photo opportunity with President Yoon and Mrs. Kim of the Republic of Korea at the Grand Staircase on the occasion of the State Dinner, 7:25 p.m. EDT
    • The President and The First Lady host President Yoon and Mrs. Kim of the Republic of Korea for a State Dinner; The Vice President and The Second Gentleman attend, 8:30 p.m. EDT

Economic:

  • MBA Mortgage Applications 7:00 a.m. EDT
    • U.S MBA Mortgage Applications (WOW) Actual: 3.7% VS -8.8% Previous
    • MBA Applications: Composite: +3.7%, Purchase: +4.6%, ReFi: +1.7%.
  • March Durable Goods are due out at 8:30 a.m. EDT and are expected to come in at 0.7% from -0.1%. 
  • Int. Trade in Goods 8:30 a.m. EDT
  • Wholesale Inventories 8:30 a.m. EDT
  • EIA Petroleum Report 10:30 a.m. EDT

Federal Reserve / Treasury Speakers: None of note.

M&A Activity:

  • Alarm.com (ALRM) Expands AI Program with Asset Acquisition from Vintra, an AI-based Video Analytics Company.
  • Verisk Analytics (VRSK) acquires Krug Sachverstandigen, terms undisclosed.

Meeting & Conferences 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 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: