CAPIS Morning Note – 08/03/23: Stocks Continue To Selloff As Overseas Weak

Overnight Summary: The S&P 500 closed Wednesday lower by -1.38% at 4513.39 from Tuesday lower by -0.27% at 4576.73. Overnight ranges saw the high hit at 4547.50 at 9:25 p.m. EDT while the low was hit at 4510.25 at 4:00 a.m. EDT. The range overnight was 37 points. The 10-day average of the overnight range is…

Overnight Summary: The S&P 500 closed Wednesday lower by -1.38% at 4513.39 from Tuesday lower by -0.27% at 4576.73. Overnight ranges saw the high hit at 4547.50 at 9:25 p.m. EDT while the low was hit at 4510.25 at 4:00 a.m. EDT. The range overnight was 37 points. The 10-day average of the overnight range is at 25.40 from 23.30 yesterday.  The average for May/June/July average was 18.81 from 19.94 in May/June. Currently, the S&P 500 is lower by 11 points and by -0.25% at 7:22 a.m. EDT.

Earnings Out After The Close: 1

  • Beats: ALB +2.85, SRPT +1.51, MCK +1.40, MELI +0.82, CF +0.52, SDGR +0.52, CLX +0.50, RUN +0.49, EQIX +0.44, FICO +0.41, MOD +0.41, ACLS +0.40, HUBS +0.35, WTS +0.30, BOOT +0.29, FARO +0.25, NCR +0.25, KW +0.24, SPXC +0.23, ZG +0.20, CPE +0.20, QRVO +0.19, CW +0.19, SM +0.19, EVGO +0.18, NARI +0.17, LNC +0.17, MKSI +0.15, MTG +0.15, MMS +0.14, ETD +0.13, KAR +0.13, STAA +0.13, NOG +0.13, EQH +0.12, BAND +0.12, RDN +0.12, SUM +0.12, CTSH +0.11, ACAD +0.11, PCOR +0.11, AEE +0.11, RGR +0.11, ANSS +0.10, CORT +0.10, UPWK +0.10, NFG +0.10, APA +0.09, GXO +0.09, IR +0.08, PSA +0.08, SHOP +0.08, XRAY +0.08, SITM +0.08, CCRN +0.08, TS +0.07, CAKE +0.06, LMND +0.06, QCOM +0.06, ATUS +0.06, FSLY +0.06, CFLT +0.06, COOK +0.06, FROG +0.06, PACB +0.06, ALLO +0.06, OHI +0.06, FRT +0.06, HLF +0.05, INFA +0.05, KGC +0.05, IIPR +0.04, MET +0.04, PLMR +0.04, CYH +0.04, HOOD +0.04, RSI +0.04, NGVT +0.04, MUSA +0.04, CDAY +0.03, EPR +0.03, ETSY +0.03, RVLV +0.03, MRO +0.03, WMB +0.03, HI +0.03, MGM +0.03, ESTE +0.02, FORM +0.02, NVST +0.02, RGLD +0.02, WSC +0.02, ERII +0.02, ADPT +0.02, GKOS +0.01, KN +0.01, LUNG +0.01, NUVA +0.01, ORA +0.01, PK +0.01, PYPL +0.01, RPT +0.01, WCN +0.01, CWAN +0.01, LESL +0.01, RMAX +0.01 of note.
  • Flat: BTG, O, SIGI, SRI, THG of note.
  • Misses: SBGI (0.81), CODI (0.74), U (0.59), VAC (0.57), QTWO (0.54), RGNX (0.47), GT (0.46), HCC (0.44), AFG (0.40), FWRD (0.36), CHRD (0.23), NTR (0.23), DXC (0.19), ECPG (0.17), ALKT (0.14), AMWL (0.11), NRDS (0.11), ZETA (0.11), RELY (0.11), RYN (0.11), FMC (0.11), EOLS (0.07), ET (0.07), ATO (0.05), PR (0.05), OXY (0.05), SPG (0.04), UFPI (0.03), BKH (0.03), CIVI (0.03), DASH (0.03), HST (0.03), UGI (0.02), AMK (0.02), CHRW (0.01), NE (0.01), EVH (0.01), TRIP (0.01) of note.

Unusual Options Activity:

Daily Screen in Erlanger Chartroom that highlights unusual Call and Put Options activity in the S&P 500.  It looks for volume outliers relative to the Open interest in Calls or puts.  Usually, the stock price activity reflects the outlier situation (earnings/buyout/announcement), but once in a while, you can uncover stocks prior to a pop or drop.

 

Capital Raises:

  • IPOs Priced or News:
    • MIRA Pharmaceuticals, Inc. (MIRA) Announces Pricing of $8.9 Million Initial Public Offering and Nasdaq Listing.
  • New SPACs launched/News: None of note.
  • Secondaries Priced:
    • KRP: Pricing of Upsized Public Offering of Common Units.. 7,250,000 common units @$14.
    • RBOT: Prices offering of 45.0 mln shares of common stock $1.00 per share.
  • Notes Priced of note:
    • TNET: Announces Pricing of Private Offering of $400 Million of Senior Notes due 2031.
  • Common Stock filings/Notes:
    • KRP: Has commences an underwritten public offering of 6,000,000 common units representing limited partner interests, subject to market and other conditions.
    • QS: Proposed Public Offering of Class A Common Stock.
    • RBOT: Launch of Proposed Public Offering.. $45.0 million of shares. (MS and Cowen bookmanagers)
  • Direct Offering: None of note.
  • Selling Shareholders of note: None of note.
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings:
    • ALZN: Filed Form S-3 .. $25Million Mixed Shelf.
    • BLCO: Files mixed shelf securities offering.
    • CDW: Filed Form S-3ASR Mixed Shelf.
    • FSLY: Filed Form S-3ASR Mixed Shelf
    • NNN: Files mixed shelf securities offering.
  • Debt/Credit Filing and Notes:
    • HNRG: Secures $140 million credit facility through 2026, increasing liquidity to $56.9 million.
    • NOG: Announces Expansion of Revolving Credit Facility.
    • SDPI: Enters Into New Loan and Line of Credit Agreement.
  • 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 and Over the Holiday:

  • After Hours: 
    • Trading Up: UPWK +21%, COOK +19%, RELY +14%, LUNG +13%, EVGO +13%, FARO +12%, CFLT +11%, ZETA +10%, CYH +9%, NARI +8%, CLX +8%, CTSH +8%, RUN +7%, MOD +6%, HLF +6%, NCR +6%, QRVO +6%, BOOT +5%, MELI +5%, SM +5%, U +4%, ALB +4%, DASH +4%, RSI +4%, FSLY +4%, CENT +4%, PACB +4% of note.
    • Trading Down: RBOT -29%, DXC -15%, SDGR -14%, QS -12%, RVLV -11%, STAA -10%, NGVT -9%, OM -9%, GT -9%, RGNX -9%, CCRN -8%, ERII -8%, ACAD -7%, PYPL -7%, HUBS -7%, VAC -7%, QCOM -7%,  KRP -7%, HOOD -7%, MGM -6%, ETSY -6%, AMN -6%, FWRD -6%, AMWL -5%, CODI -5%, LMND -5%, HST -4%, AFG -4%, MUSA -4%, HCC -4%, KN -4%, PK -4% of note.
  • News Items After the Close:
    • Stocks making the biggest moves after hours: PYPL, HOOD, QCOM, CLX, DASH, QRVO, ZG, ETSY, TRIP, U, MGM (CNBC)
    • QuantumScape (QS) stock drops 14% after solid-state battery maker plans stock offering. (MarketWatch)
    • Unity Software (U) stock rallies more than 5% as results top Street estimates (MarketWatch)
    • Costco (COST) shares up 1% in after hours after 4.5% rise in July sales (MarketWatch)
    • ETSY stock falls nearly 5% despite 7.5% revenue growth in Q2 (MarketWatch)
    • Zillow (Z) stock slips as outlook falls short of Street view (MarketWatch)
    • US budget deficit is near 9% of GDP in an economy not viewed as being in recession. That means if a year ago we actually (*shock*) balanced the budget, GDP would have been near -6% last 12 months. If rates stay at 5.5% long enough interest payments will go up another $1 TRILLION….And that is $1 Trillion per annum. More than 3% of GDP! (Tweet Jeffrey Gudlach, DoubleLine Capital)
    • Jacobs Engineering (J) receives $450 million US environmental protection agency contract.
  • Exchange/Listing/Company Reorg and Personnel News:
    • AgileThought (AGIL) Announces Resignation of Chief Financial Officer and Appointment of New CFO.
    • Cognizant Tech (CTSH) CFO Jan Siegmund to retire in early 2024.
    • Confluent (CFLT) Announces CFO Transition.
    • Daqo New Energy (DQ) announces its Chairman and Founder, Mr. Guangfu Xu, will step down from his position as Chairman of the Board of Directors.
    • EVgo (EVGO) Announces Leadership Succession Plan.
    • First Foundation (FFWM) appoints James Britton as CFO.
    • Fulcrum Therapeutics (FULC) Appoints Chief Financial Officer.
    • Karuna Therapeutics (KRTX) promotes Jason Brown to CFO.
    • Mid-Southern Bancorp, Inc. (MSVB) Announces Voluntary Nasdaq Delisting and SEC Deregistration.
    • Molecular Templates (MTEM) Announces Executive Leadership Changes.
    • Rivian Automotive (RIVN) appoints former Waymo CEO John Krafcik to its board of directors.
  • Buyback Announcements or News:
    • BBSI: Announces New $75 Million Stock Repurchase Program.
    • Cadence Design (CDNS) approved the repurchase of up to an additional $1 billion of the Company’s common stock under its existing share repurchase program.
    • CSG Systems (CSGS) instituting $100 million share repurchase plan through year-end 2024.
    • Equillium (EQ) Announces $7.5 Million Share Repurchase Program.
    • Federal Realty (FRT) increased the regular quarterly cash dividend to $1.09 per common share.
    • Gildan Activewear (GILD) announces renewal of Normal Course Issuer Bid to repurchase up to 5% of issued and outstanding shares.
    • Group 1 Automotive (GPI) Board Approves Increase to Share Repurchase Authorization. (see Dividend)
    • Revolve Group, Inc. (RVLV) Announces $100 Million Stock Repurchase Program.
    • VRAX: Nasdaq Approves 180-Day Extension for Virax Biolabs Group to Meet Minimum $1 Bid.
    • Vistra Energy (VST) announced that its board of directors has declared a quarterly dividend of $0.2060 per share.
    • Watts Water Tech. (WTS) announces $150 million share repurchase program.
  • Stock Splits or News: None of note.
  • Dividends Announcements or News: 
    • Acushnet’s (GOLF) Board of Directors today declared a quarterly cash dividend of $0.195 per share of common stock.
    • Curtiss-Wright (CW) raises dividend 5%.
    • Ethan Allen (ETD) Board approved a special cash dividend of $0.50 per share and our regular quarterly cash dividend of $0.36 per share.
    • Group 1 Automotive (GPI) Board Declares Quarterly Dividend.
    • Hyatt Hotels (H) Board of Directors has declared a cash dividend of $0.15 per share for the third quarter of 2023.
    • Iron Mountain (IRM) increases quarterly dividend to $0.65 from $0.6185 per share.
    • PacWest Bancorp (PACW) declared a quarterly cash dividend of $0.01 per common share.
    • Papa Johns (PZZA) Board of Directors declared a third quarter dividend of $0.46 per common share.
    • Public Storage (PSA) Board of Trustees declared a regular common quarterly dividend of $3.00 per common share.
    • Simon Properties (SPG) raises dividend 8.6% yr/yr to $1.90 per share.
    • Sturm, Ruger & Company, Inc. (RGR) Declares Quarterly Dividend of 36¢ Per Share.
    • Terreno Realty (TRNO) increases quarterly cash dividend $0.05 to $0.45 per share.
  • Insider Sales Of Note:
    • NXPI: CEO sold 20890 shares at $223.40 worth ~$4.67 million.

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

S&P 500 -11, Dow Jones -53,  NASDAQ -55, and Russell 2000 -4.  (as of 7:58 a.m. EDT).  Asia (Nikkei -1.6%) and Europe lower this morning. VIX Futures are at 16.81 from 16.09   yesterday.  Gold, Silver and Copper lower this morning. WTI Crude Oil and Brent Crude Oil lower with Natural Gas higher. US 10-year Treasury sees yields at 4.134% from 4.078%. The U.S. Dollar is higher versus the Euro, lower versus the Pound and lower against the Yen. Bitcoin is at $29,109 from $29,157 yesterday, lower by -0.16%.

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

  • Daily Positive Sectors: None of note.
  • Daily Negative Sectors: Technology, Communication Services, Consumer Cyclcial, Basic materials, Energy, Financial of note.
  • One Month Winners: Communication Services, Financials, Basic Materials of note.
  • Three Month Winners: Technology, Consumer Cyclical, Communication Services of note.
  • Six Month Winners: Technology, Communication Services, Consumer Cyclical of note.
  • Twelve Month Winners: Technology, Industrials, Basic Materials of note.
  • Year to Date Winners:  Technology, Communication Services, Consumer Cyclical of note.

U.S. stocks and bonds suffered a wave of selling after America’s credit downgrade, sending Treasury yields to the highest levels of the year and major indexes toward their worst session in months.   The S&P 500 fell 1.4%, while the tech-heavy Nasdaq Composite lost 2.2%, its worst one-day performance since February. The Dow Jones Industrial Average shed 348 points, or 1%, dragged down by shares of Intel (INTC) and Microsoft (MSFT). The declines followed a global selloff in markets in Europe and Asia.  The yield on the 10-year Treasury note rose to 4.077%, its highest level since November, as bond prices fell. (WSJ – edited by QPI)

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

  • Thursday After the Close:

  • Friday Before the Open:

Earnings of Note This Morning:

  • Beats: LNG +2.80, CEG +1.83, W +0.94, CARS +0.91, BLD +0.90, WIX +0.82, PH +0.60, WMS +0.48, DINO +0.41, WRK +0.40, VMC +0.37, UPBD +0.36, REGN +0.36, MRNA +0.31, EPAM +0.30, DFH +0.29, DIN +0.28, ACIW +0.26, APTV +0.24, MGPI +0.24, DLX +0.23, LNTH +0.23, TFX +0.20, BCE +0.19, GOLF +0.17, EPC +0.17, ITT +0.15, CGNX +0.15, HII +0.15, KTB +0.14, NJR +0.14, ITCI +0.14, BDC +0.14, SRE +0.14, IDA +0.12, MIDD +0.12, PBF +0.10, AUPH +0.10, FVRR +0.10, PLNT +0.10, CI +0.10, TNK +0.10, ENTG +0.09, PRVA +0.08, SHAK +0.08, ENOV +0.08, APD +0.06, NVMI +0.06, PACK +0.06, SABR +0.06, ICE +0.06, AGIO +0.05, PBH +0.05, TRMB +0.05, LEV +0.05, BV +0.05, BDX +0.05, SO +0.04, SHC +0.04, LSPD +0.03, CQP +0.02, GIL +0.02, HGV +0.02, KRTX +0.02, CLVT +0.02, ECVT +0.02, TPX +0.02, AHH +0.01, BRKR +0.01, DNB +0.01, PWR +0.01, STWD +0.01, WD +0.01, APG +0.01 of note.
  • Flat: BALL, DOC, MTSI, NWN, PGTI, PZZA, SBH, VNT of note.
  • Misses: LAMR (5.62), JLL (1.52), WCC (0.74), INSM (0.65), WLK (0.61), VC (0.42), BALY (0.29), COMM (0.18), BBIO (0.18), WBD (0.17), THRY (0.15), FOUR (0.10), SAVE (0.10), COP (0.09), NTLA (0.08), CMI (0.07), TKR (0.07), HAS (0.07), BKI (0.06), FOCS (0.06), GOOS (0.06), GEL (0.05), ESMT (0.04), HEP (0.04), H (0.03), IRM (0.03), KYMR (0.03), BIP (0.01), MD (0.01), MUR (0.01), OCSL (0.01), PBI (0.01), BCRX (0.01) of note.
  • Still to Report: ALNY, ARW, BHC, COHU, DGII, EXPE, IDCC, ITRI, K, KOP, MDU, MFA, MMP, NSIT, PNW, PTLO, SNDR, SWI, TGNA, UNIT of note.

Guidance:

  • Positive Guidance: FTDR, TTMI, MIR, ACLS, CTSH, QRVO, BAND, UPWK, CORT, CFLT, FRT, SPXC, GKOS, FROG, RELY, FICO, PYPL, ALB, BOOT, HUBS, PCOR, EPR, ZETA, CW, COOK, NRDS, ALKT, CWAN, XRAY, LMND, CENT, WIX, EPAM, ITT, APTV, APG, GOOS, KTB, FOUR, NVMI, MGPI, UPBD, CARS, SABR of note.
  • Negative Guidance: CVS, DRS, SBGI, KN, FSLY, EQIX, ZG, VAC, DXC, WCN, ANSS, EVH, HST, FMC, FWRD, AMWL, QTWO, CCRN, NTR, AFG, LAMR, CGNX, CLVT, BV, AHH, HAS, VNT, TPX, ECVT, IRM, GIL, LNTH, TKR, SHAK, BDC of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: COOK +24%, UPWK +18%, EVGO +14%, RELY +14%, ZETA +13%, CENT +12%, WIX +11%, FARO +11%, CYH +10%, CFLT +9%, RUN +9%, FSLY +7%, CTSH +7%, BOOT +6%, HLF +6%, AUPH +6%, NCR +6%, U +6%, NARI +6%, CLX +6%, RGR +5%, MOD +5%, QRVO +5%, ALKT +5%, PBH +5%, ALB +4%, DASH +4%, MELI +4%, KGC +4%, RSI +4%, IR +4%, KAR +4%, FUN +4%, ATUS +4% of note.
  • Gap Down: RBOT -26%, DXC -20%, SDGR -17%, STAA -14%, CCRN -12%, OM -12%, QS -11%, GT -9%, AMWL -9%, FWRD -9%, NGVT -9%, RGNX -9%, QCOM -8%, RVLV -8%, ETSY -8%, KRP -8%, HUBS -8%, PYPL -8%, ACAD -7%, LMND -7%, VAC -7%, MGM -6%, WCC -6%, HOOD -6%, ERII -6%, CODI -5%, NFG -4%, UGI -4%, ADPT -4%, MUSA -4%, AFG -4%, HST -4%, ECPG -4% of note.

Insider Action: BA, TDW 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.

  • Five Things You Need to Know to Start Your Day. (Bloomberg)
  • Bloomberg Lead Story: Treasury Selloff Unnerves Traders as Stocks Retreat (Bloomberg)
  • Bloomberg Second Most Shared Story: NYC Considers Central Park Among Sites to House Migrants as Crisis Mounts (Bloomberg)
  • Warren Buffett says he’s not worried about Fitch’s U.S. downgrade. (CNBC)
  • Bill Ackman Says He’s Short 30-Year Treasuries as Supply Ramps Up. (Bloomberg)
  • Apple (AAPL) and Amazon (AMZN) Results Pose Tech Rally’s Toughest Hurdle Yet. (Bloomberg)
  • A Sudden Jump in Volatility Spells Trouble for Stocks. (Bloomberg)
  • E-Cigarette Maker Juul Labs Is Seeking $1 Billion in Funding. (Bloomberg)
  • NPR Marketplace: The economy seems pretty strong right now: Inflation is moderating and consumer sentiment is up. In other words, the vibes are good. So is it possible we’ve skirted a recession? Or that the “vibecession” is over? Also on today’s program: claims of a superconductor breakthrough, AI’s impact on voice assistants and calls to end “scholarship displacement.”(Podcast)
  • BBC Global News: Niger blackouts blamed on coup sanctions. (Podcast) 

Moving Average Update:

  • Score down to 48% as 5 and 10 day MA’s are breached.

Geopolitical: 

  • President’s Public Schedule:
    • On Thursday, the President has no public events scheduled, Biden Beach House, Rehoboth Beach, DE

Economic:

  • Challenger Job Cuts 7:30 a.m. EDT
  • Jobless Claims 8:30 a.m. EDT
  • Productivity and Costs 8:30 a.m. EDT
  • PMI Composite Final 9:45 a.m. EDT
    June Factory Orders is due out at 10:00 a.m. EDT and is expected to rise to 2.00% from 0.3%.
  • July ISM Non-Manufacturing Index is due out at 10:00 a.m. EDT and is expected to fall to 53% from 53.9%.
  • EIA Natural Gas Report 10:30 a.m. EDT

Federal Reserve / Treasury Speakers: 

  • Federal Reserve Richmond President Thomas Barkin 9:15 a.m. EDT.

M&A Activity:

  • Pacific Biosciences (PACB) has entered into an agreement to acquire Apton Biosystems.

Meeting & Conferences of Note:

  • Sellside Conferences: None of note.
    • Previously posted and ongoing conferences: None of note.
  • Top Shareholder Meetings: INPX, RL, SYTA
  • Fireside Chat: None of note.
  • Investor/Analyst Day/Calls: FSR
  • Update: None of note.
  • R&D Day: None of note.
  • Company Event: None of note.
  • Industry Meetings:

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: