CAPIS Morning Note – 05/26/22: S&P 500 Clears 4000 This Morning

Overnight Summary: The S&P 500 closed Wednesday at 3978.50 (higher by 0.95%) from 3941.48 (lower by -0.81%)  on Tuesday. Futures have traded mixed overnight but are now higher. The overnight high of 4000 was hit at 7:15 a.m. EDT. The low was hit at 3960 at 2:00 a.m. EDT, a range of 40 points high…

Overnight Summary: The S&P 500 closed Wednesday at 3978.50 (higher by 0.95%) from 3941.48 (lower by -0.81%)  on Tuesday. Futures have traded mixed overnight but are now higher. The overnight high of 4000 was hit at 7:15 a.m. EDT. The low was hit at 3960 at 2:00 a.m. EDT, a range of 40 points high to low which is the typical range of late with 45 the average. At 7:25 a.m. EDT the current price is 3997 which is 0.51% and 20.25 points.

Breaking News:  Broadcom announces plans to buy VMware in $61 billion deal. (CNBC)

Earnings Out After The Close:Beats: WSM +0.61, SPLK +0.43, NTNX +0.16, NVDA +0.07, ELF +0.07, ENS +0.05.

  • Flat: None of note.
  • Misses: SNOW (0.53), VSAT (0.30), DXC (0.15), ZUO (0.14), GES (0.05), BOX (0.02), CHNG (0.02).

Capital Raises:

  • IPOs Priced or News: None of note.
  • New SPACs launched/News:
    • Southland Holdings and Legato Merger Corp. II (LGTO) Announce Merger.
  • Secondaries Priced:
    • ADC: Prices offering of 5.0 million shares of common stock at $68.65 per share.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • ADC: COMMON STOCK OFFERING.. 5 Million shares.. Citi and WFC Bookmanagers.
    • BRDS: Filed Form S-1.. up to 55,217,203 Shares of Class A Common Stock.
    • CLSN: Filed Form 424B5.. Up to $7,500,000 Common Stock.
    • MIRM: Filed Form S-3.. 841,792 Shares of Common Stock.
    • TENX: Filed Form S-3.. 21,192,054 Shares of Common Stock.
  • Pricing of Over-Allotment/Notes:
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • ACADIA Pharmaceuticals (ACAD) files for 42,393,855 share common stock offering by selling shareholders.
    • MDWD: Filed Form F-3.. Up to 12,738,460 Ordinary Shares Offered by Selling Shareholders — $125 Million Mixed Security Shelf.
  • Private Placement of Public Entity (PIPE):
  • Mixed Shelf Offerings:
    • G: Filed Form S-3ASR.. Mixed Security Shelf.
    • HQI: Filed Form S-3.. $100 Million Mixed Security Shelf.
    • MDWD – See above in Selling Shareholders.
  • Convertible Offering & Notes Filed:
    • BX: Prices €500 Million Senior Notes Offering.
    • CCL: Closing of $1.0 Billion Senior Unsecured Notes due 2030 to Refinance 2023 Maturities.
    • Costamare Inc. (CMRE) Announces Closing of $500 Million Syndicated Loan Facility.

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: MOD +14%, WSM +9%, SPLK +5%, GES +5%, TWTR +5%.
    • Trading Down: NTNX -28%, BBIG -15%, SNOW -15%, NVDA -6%, DDOG -6%, VSAT -5%, MIRM -4%.
  • News Since The Close:
    • Stocks making the biggest moves after hours: NVDA, TWTR, NTNX, SNOW, WSM  (CNBC)
    • TWTR TSLA In SEC filing, Elon Musk commits to provide an additional $6.25 billion in equity financing to fund a portion of the Merger Consideration by amending and restating the Amended Equity Commitment Letter, dated as of May 4, 2022, to increase the aggregate principle amount of the equity commitment thereunder to $33.5 billion. (Filing)
    • Twitter (TWTR) jumps after Musk increases commitment in takeover bid to $33.5 billion, in talks for other funding. (CNBC)
    • Nvidia (NVDA) earnings top Street view with record data-center, gaming revenue, but supply constraints still a concern. (MarketWatch)
    • Snowflake (SNOW) stock slides after earnings as forecast underwhelms. (MarketWatch)
    •  Russian/Ukraine News
      • EU Working On Gas Deal With Egypt, Israel To Shore Up Supplies. (Bloomberg)
      • Russia’s central bank cut its interest rate from 14% down to 11%.
  • Exchange/Listing/Company Reorg and Personnel News:
    • Burlington Stores (BURL) announced that Kristin Wolfe has been appointed Chief Financial Officer.
    • Cinemark (CNK) appoints Carlos Sepulveda to succeed Lee Roy Mitchell as Executive Chairman.
    • ClearOne (CLRO) Announces Change in Leadership.
    • Clover Health (CLOV) appoints Scott J. Leffler as CFO.
    • Ekso Bionics (EKSO) Appoints Jerome Wong Interim Chief Financial Officer.
    • Lufax (LU) announces CFO James Zheng will be taking early retirement from the end of this June after many years career with the company.
    • MeridianLink (MLNK) Announces Chief Financial Officer Transition.
    • Singularity Future Technology (SGLY) Received Nasdaq Delinquency Notice on Late Filing of its Form 10-Q.
    • WeWork (WE) names Andre J. Fernandez As Chief Financial Officer.
  • Buyback Announcements:
    • Ashland (ASH) approves evergreen $500 million common stock repurchase program.
    • Bogota Financial Corp. (BSBK) Announces Adoption of 2nd Repurchase Program.
    • Callaway Golf Company (ELY) Announces New $100 Million Stock Repurchase Program.
    • City Holding Company (CHCO) Announces Approval of Stock Repurchase Plan for up to 1 million shares.
    • Horace Mann (HMN) authorizes new $50 million share repurchase program.
    • GES: Entered Into $175 Million Accelerated Share Repurchase Arrangement.
    • Meritage (MTH) adds $200 million to existing share repurchase program
    • NVDA increases buyback program to repurchase additional common stock up to $15 billion.
    • Vivid Seats (SEAT) Announces Exchange Offer and Consent Solicitation Relating to Public Warrants and Authorization of $40 Million Share Repurchase Program.
  • Stock Splits: None of note.
  • Dividends Announcements:
    • Ashland (ASH) raises dividend by 12%.
    • CIBC (CM) declared a dividend of $0.83 per share share for Q2.
    • MDT: announces 8% dividend increase.
    • Universal Corp (UVV) increases quarterly dividend $0.01 to $0.79 per share.

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

S&P 500 +23, Dow Jones +192, NASDAQ +31, and Russell 2000 +14. Europe higher and Asia closed mixed.  VIX Futures are at 28.41 from 28.15 from 29.40 yesterday morning and the VIX closed at 29.45  from 28.48 yesterday. Gold lower, Silver higher and Copper lower. WTI Crude Oil  and Brent Oil Futures higher and Natural Gas higher. $ is lower vs Euro, lower vs Pound and lower vs Yen. US 10 year Treasury sees yields at 2.763% from 2.723% Wednesday morning. Bitcoin is at $29,038 from $29,527  yesterday morning and is lower by -2.12% this morning. As of 8:11 a.m. EDT.

Sector Action – 05/25/22 Close:   

  • Daily Positive Sectors: Consumer Cyclical, Energy, Technology, Communication Services, Real Estate, Financial, Industrial of note.
  • Daily Negative Sectors: none of note.
  • One Month Winners: Energy of note.
  • Three Month Winners: Energy, Utilities and Healthcare 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 of note.

Fed minutes and discussion of greater tightening was enough to help indexes stay in the green today.  NASDAQ was up 1.51%.  Small Cap stocks (RUT) were up 1.95%.  Updated 05/25/22 close.

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

  • Thursday After the Close: COST, MRVL, WDAY, VMW, ADSK, ULTA, ZS, PLAN, GPS, OLLI, STEP, AEO, ME, DOMO, SUMO, YEXT, RRGB of note.
  • Friday Before the Open: BIG, HIBB of note.

Earnings of Note This Morning:

  • Beats: BIDU +5.64, BABA +0.78, GCO +0.53, DLTR +0.39, AVGO +0.35, RY +0.28, TITN +0.26, M +0.25, BKE +0.22, HLNE +0.11, DG +0.10, BRC +0.10, TD +0.09, CM +0.05, AMWD +0.04.
  • Flat: None of note.
  • Misses: BZUN (0.64), BURL (0.09), MDT (0.04), MANU (0.01).
  • Still to Report: JACK, ROLL, SAFM.

Guidance:

  • Positive Guidance: MAXR, SPLK, BOX, MOD, LUV, TITN, DG, M, BRC, JBLU, AVGO of note.
  • Negative Guidance: CARG, NTNX, ELF, ZUO, DXC, GES, NVDA, BURL, MDT of note.

Erlanger Research Advance/Decline Chart: Updated through 05/25/22 close.

Gap Ups & Down In Early Pre-Market:

  • Gap Up: WSM +8%, TWTR +5%, HYLN +5%, BIDU +4%, SPLK +4%, ELF +4%.
  • Gap Down: NTNX -35%, SNOW -14%, BBIG -9%, VSAT -6%, DDOG -5%, NVDA -5%, MIRM -4%, ZUO -4%, HQI -4%.

Insider Action: RAPT, DGICA, MIDD, NSIT, LQDA sees Insider buying with dumb short selling. GHL, GRPN sees Insider buying with smart short sellers. 05/25/22 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: M, TWTR, MDT, BABA, DG, DLTR  (CNBC)
  • Five Things You Need to Know to Start Your Day (Bloomberg)
  • Secretary of State Blinken to speak on China at 10:00 a.m. EDT. (Bloomberg)
  • Shanghai officials provide more details on plans to exit lockdown June 1st. (Reuters)
  • The trend of leaving cities continues as San Francisco sees a loss of 6%, New York City 3.5% and Chicago 1.6%. (WSJ)
  • Senators from both parties discuss gun red flag laws but long way from passage. (The Washington Post)
  • Apple (AAPL) to increase worker pay. (WSJ)
  • Apple (AAPL) to keep iPhone production flat this year. (Bloomberg)
  • Dollar General (DG) raises guidance. (MarketWatch)
  • Macy’s (M) raises guidance for full year. (MarketWatch)
  • Robinhood Snacks looks at the rise of inventory levels at retailers. Backlash to exec-pay packages.

Moving Average Update:

  • Score goes to 34% from 13%.  Updated 05/25/22 close.

Geopolitical: 

  • President’s Public Schedule:
    • The President and The Vice President receive the President’s Daily Brief, 1:45 p.m. EDT
    • Press Briefing by Press Secretary Karine Jean-Pierre, 3:00 p.m. EDT

Economic: 

  • Q1 GDP Second Estimate is due out at 8:30 a.m. EDT and is expected to improve to -1.3% from -1.4%.
  • Initial Jobless Claims 8:30 a.m. EDT
  • April Pending Home Sales are due out at 10:00 a.m. EDT are expected to fall to -1.9% from -1.2%,
  • EIA Natural Gas Report 10:30 a.m. EDT
  • KC Fed Mfg Index 11:00 a.m. EDT
  • Results of $42B, 7-Year Note Auction 1:00 p.m. EDT
  • Fed Balance Sheet 4:30 p.m. EDT

Federal Reserve Speakers:

  • None of note.

M&A Activity:

  • Broadcom (AVGO) to buy VMWare (VMW) for $61 billion in cash and stock.
  • EnLink Midstream (ENLC) agrees to acquire North Texas gathering and processing assets from Crestwood Equity Partners LP (CEQP) for $275 million.
  • FCPT Announces Acquisition of a Caliber Collision Property for $1.9 Million.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • Benchmark Healthcare House Call Virtual 1×1 Conference 2022 (05/26/22-06/02/22)
    • Jefferies Australia Private Healthcare Capital & Biotech Summit 2022
    • Jefferies Automotive Aftermarket Conference 2022
    • KBW Keefe, Bruyette & Woods Real Estate Finance & Technology Conference 2022
    • Wells Fargo IT Bootcamp
  • Previously Announced  Conferences:
    • B. Riley Securities 22nd Annual Institutional Investor Conference 2022 (05/25/22-05/26/22)
    • Barclays High Yield Bond & Syndicated Loan Conference 2022 (05/23/22-05/26/22)
    • Daiwa America Corporate Day
    • H.C. Wainwright Global Investment Conference 2022 (05/23/22-05/26/22)
    • HC Wainwright Global Life Sciences Conference 2022 (05/23/22-05/26/22)
    • Jefferies Virtual Renewable Energy Conference: Key Debate Across the Value Chain 2022 (05/24/22-05/27/22)
    • Morgan Stanley Virtual China Summit 2022 (05/24/22-05/26/22)
    • Morgan Stanley Sustainable Futures Conference
    • Morgan Stanley Global Towers Symposium 2022
    • Morgan Stanley Global Ingredients Conference
    • Wolfe Research 14th Annual Global Transportation & Industrials Conference 2022 (05/24/22-05/26/22)
  • Company Meetings: DD, FSLR, HFS, JLL, MS, SEE, STKL.
  • Fireside Chat: None of note.
  • Investor/Analyst Day/Calls: AMAT, LTRN, NRIX, NVEE, VRM.
  • Update: None of note.
  • R&D Day: ARWR, FMTX.
  • Company Event: None of note.
  • Industry Meetings:
    • 33rd Annual NYC Fleet Show 2022
      • Previously Posted and Ongoing Conferences:
        • Autonomous Vehicle USA
        • Digital Transformation in Insurance Conference (05/25/22-05/26/22)
        • Reuters Events Supply Chain Planning USA 2022 (05/25/22-05/26/22)
        • Retail Week Live

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: