CAPIS Morning Note – 08/30/23: Idalia Makes Landfall And Moves To A Category 3 From 4. Stocks Modestly Lower.

Overnight Summary: The S&P 500 closed Tuesday higher by 1.45% at 4497.63 from Monday higher by 0.63% at 4433.31. It was the first three-day winning streak on the S&P 500 for August and first since 7/20 to 7/25. Overnight ranges saw the high hit at 4516.25 at 10:20 p.m. EDT while the low was hit at […]

Overnight Summary: The S&P 500 closed Tuesday higher by 1.45% at 4497.63 from Monday higher by 0.63% at 4433.31. It was the first three-day winning streak on the S&P 500 for August and first since 7/20 to 7/25. Overnight ranges saw the high hit at 4516.25 at 10:20 p.m. EDT while the low was hit at 4496.25 at 5:35 a.m. EDT. The range overnight was 20 points. The 10-day average of the overnight range is at 23.60 for a second day.  The average for May/June/July average was 18.81 from 19.94 in May/June. Currently, the S&P 500 is lower by –4.25 points which is -0.12% at 7:20 a.m. EDT.

Earnings Out After The Close: 

  • Beats: AMWD +0.48, ZTO +0.27, PVH +0.22, AMBA +0.06, HPE +0.02, NCNO +0.02, BOX +0.01 of note.
  • Flat: HPQ of note.
  • Misses: None 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: None of note.
  • New SPACs launched/News:
    • C5 Acquisition (CXAC) gets NYSE noncompliance notice.
    • Graf Acquisition Corp. IV (GFOR) announces intent to adjourn Special Meeting to approve business combination with NKGen Biotech to September 8, 2023.
  • Secondaries Priced: None of note.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • CMRA: Filed Form S-3.. 27,863,058 Shares of Common Stock.
    • FBRX: Filed Form S-3.. 24,856,250 Shares of Common Stock.
    • MVIS: Announces $35 Million At-The-Market Equity Facility.
    • RNAZ: Filed Form S-1.. Shares of Common Stock Pre-Funded Warrants to Purchase Common Stock.
    • TPB: Filed Form RW.
  • Direct Offering: None of note.
  • Selling Shareholders of note: None of note.
  • Private Placement of Public Entity (PIPE):
    • Kamada (KMDA) announces shareholder approval and planned closing of $60 million private placement with FIMI Opportunity Funds.
  • Mixed Shelf Offerings: None of note.
  • 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 and Over the Holiday:

  • After Hours: 
    • Trading Up: None of note.
    • Trading Down:  FGEN -16%, AMBA -15%, BOX -7%, HPQ -5%, MVIS -4% of note.
  • News Items After the Close:
    • Stocks making the biggest moves after hours: HPQ, HPE, BOX, AMBA, PVH (CNBC)
    • Ambarella (AMBA) stock drops 15% after disappointing outlook. (MarketWatch)
    • C: SEC Charges Citigroup Global Markets Inc. With Recordkeeping Failures Concerning Underwriting Expenses. (SEC Release) (WSJ)
    • Science Applications (SAIC) Gets $575 million Air Force Radar Contract.
  • Exchange/Listing/Company Reorg and Personnel News:
    • Addentax Group (ATXG) regains Nasdaq compliance.
    • Altisource Asset Management Corporation (AAMC) Announces Departure of CEO.
    • Cencora (COR) announced the completion of its name and stock ticker change from AmerisourceBergen Corporation (ABC).
    • Choice Hotels (CHH) announced key executive appointments that position the company for continued future growth.
    • Douglas Emmett (DEI) Chairman Dan A. Emmett announced his retirement as an executive officer.
    • MOS: Bruce Bodine to Succeed Joc O’Rourke as President and CEO of The Mosaic Company. (MarketWatch)
    • Nasdaq (NDAQ) Announces CFO Transition.
    • Origin Materials (ORGN) announces appointment of Pam Haley as interim CFO.
    • PotlatchDeltic (PCH) Appoints Wayne Wasechek as Chief Financial Officer.
    • Redfin (RDFN) President of Real Estate Operations Adam Wiener is leaving.
    • RIVN: CEO’s Salary Raised to $1M from $650K, Incentive Equity Bonus also Hiked.
    • Sysco (SYY) appoints Greg Bertrand as COO.
    • The Alkaline Water Company (WTER) Receives Nasdaq Notice on Late Filing of Its Form 10-Q.
    • Vitesse Energy (VTS) Announces Chief Financial Officer Transition.
  • Buyback Announcements or News:  
    • BOX expands stock repurchase program by $100 million.
    • PVH increases FY24 planned repurchases to $400 million.
  • Stock Splits or News: 
    • ARMOUR Residential REIT, Inc. (ARR) Announces  One-for-Five Reverse Stock Split.
  • Dividends Announcements or News: 
    • ARMOUR Residential REIT, Inc. (ARR) Continued Dividend Rate per Common Share.
    • Avnet (AVT) increases quarterly cash dividend 7% to $0.31 per share. (MarketWatch)
    • Brookfield Real Assets Income Fund (RA) will reset its monthly distribution from $0.1990 per share to $0.1180 per share.
    • LiveOne (LVO) Sets Ex-Dividend Date of September 5, 2023 for PodcastOne’s Special Dividend.
  • Insider Sales Of Note: None of note.

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

S&P 500 -1, Dow Jones -2,  NASDAQ -3, and Russell 2000 -5.  (as of 7:55 a.m. EDT).  Asia is higher while Europe is lower this morning ex the  FTSE. VIX Futures are at 15.88 from 16.40 yesterday.  Gold higher with Silver and Copper lower this morning. WTI Crude Oil and Brent Crude Oil higher with Natural Gas higher as well. US 10-year Treasury sees yields at 4.15% from 4.22% yesterday. The U.S. Dollar is lower versus the Euro, lower versus the Pound and higher against the Yen. Bitcoin is at $27,369 from $25,992 yesterday, lower by -1.89%.

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

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

U.S. stocks rose for a third consecutive session, cutting into major indexes’ August losses as shares from technology to industrials and financials advanced.  The S&P 500 notched its largest three-day gain since March, paring its decline this month to 2%. A drop in government bond yields, which have climbed lately, eased pressure on stocks.  The broad stock index advanced 1.5% as all 11 sectors pushed higher. The Dow Jones Industrial Average added 0.8%, or about 293 points. The tech-heavy Nasdaq Composite rallied 1.7%.  (WSJ – edited by QPI)

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

  • Wednesday After the Close: 

  • Thursday Before the Open:

Earnings of Note This Morning:

  • Beats: MCFT +0.24, CONN +0.14 of note.
  • Flat: PDCO of note.
  • Misses: None of note.
  • Still to Report: BF.B of note.

Guidance:

  • Positive Guidance: None of note.
  • Negative Guidance: AMBA, BOX, NCNO, MCFT of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: None of note.
  • Gap Down: OTLK -75%, FGEN -22%, AMBA -21%, BOX -9%, HPQ -8%, NCNO -6%, ZTO -5%, ARR -4% of note.

Insider Action: HTLD, CRL 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: China Moves to Shore Up Finances of Troubled Bank. (Bloomberg)
  • Bloomberg Most Shared Story: Citadel Vets 69,000 Intern Applicants to Find Next Math Geniuses. (Bloomberg) 
  • Bonds, stocks fall as inflation makes comeback: Market Wrap. (Bloomberg)
  • China rejects comment that it is “univestable”. (Reuters)
  • The Bank of England is facing major losses on bond purchases with more to come. (CNBC)
  • Saudi Arabia to prolong oil cut again survey shows. (Bloomberg)
  • Idalia moves to a Category 3 from 4 as it makes landfall. (Bloomberg)
  • Johnson & Johnson (JNJ) revises sales and profit outlook after Kenvue separation but will maintain dividend. (MarketWatch)
  • NPR Marketplace: Today, we learned that job openings fell in July. While it’s an indication that supply and demand in the job market are balancing out, there’s still a ways to go before that sought-after “soft landing” is achieved. Then, we turn to the housing market, looking at some homeowners who bypass high mortgage rates and others who bypass insurance. Later: the return of awkward business lunches. (Podcast)
  • BBC Global News: Wagner boss laid to rest in Russia. (Podcast) 
  • NY Times The Daily: A breakout moment for Vivek Ramaswamy. (Podcast)
  • Bloomberg: Odd Lots:  Adam Posen has a warning on the danger of Bidenomics. (Podcast)

Moving Average Update:

  • The score rockets up to 91% from 60%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 10:00 a.m. EDT
    • Press Briefing by Press Secretary Karine Jean-Pierre, 12:45 p.m. EDT
    • The President delivers remarks on the whole-of-government response and recovery efforts on Maui, Hawaii and the ongoing response from the federal government to Hurricane Idalia, 1:45 p.m. EDT

Economic: 

  • MBA Mortgage Applications 7:00 a.m. EDT
    • MBA Mortgage Applications: Composite: +2.3%, Purchase: +2%, ReFi: +2.5%
    • U.S MBA 30-YEAR MORTGAGE RATE ACTUAL: 7.31% VS 7.31% PREVIOUS
  • August ADP Employment Report is due out at 8:15 a.m. EDT and is expected to fall to 195,000 from 324,000.
  • Q2 GDP (second estimate) is due out at 8:30 a.m. EDT and is expected to remain at 2.40%.
  • Int. Trade in Goods 8:30 a.m. EDT
  • Corporate Profits 8:30 a.m. EDT
  • Wholesale Inventories 8:30 a.m. EDT
  • July Pending Home Sales is due out at 10:00 a.m. EDT and is expected to drop to -1.3% from 0.3%.
  • EIA Petroleum Report 10:30 a.m. EDT

Federal Reserve / Treasury Speakers: None of note.

M&A Activity and News:

  • Cognex (CGNX) To Acquire Moritex Corporation, A Global Leader In Machine Vision Optics Components And Advanced Imaging Solutions

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 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:

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