CAPIS Morning Note – 10/04/23: Futures Again Have Wide Overnight Range, Positive At 7:55 a.m. EDT. Will it Hold?

Overnight Summary: The S&P 500 closed Tuesday lower by -1.37% at 4229.45 from Monday higher by 0.01% at 4288.39. The overnight high was hit at 4270.75 at 7:15 a.m. EDT while the low was hit at 4235.50 at 3:05 a.m. EDT. The range overnight was 35 points as of 7:15 a.m. EDT. The 10-day average of…

Overnight Summary: The S&P 500 closed Tuesday lower by -1.37% at 4229.45 from Monday higher by 0.01% at 4288.39. The overnight high was hit at 4270.75 at 7:15 a.m. EDT while the low was hit at 4235.50 at 3:05 a.m. EDT. The range overnight was 35 points as of 7:15 a.m. EDT. The 10-day average of the overnight range is at 29.30 from 27.40 down from a peak of 31.50 on 8/15.  The average for May-September average was 20.96 from 21.10 in May through August and the September average was 19.87. Currently, the S&P 500 is higher by +9 points which is +0.22% at  7:55 a.m. EDT.

Earnings Out After The Close: 

  • Beats: None of note.
  • Flat: None of note.
  • Misses: CALM (0.31) of note.

Capital Raises:

  • IPOs Priced or News:
    • Guardian Pharmacy Services files for IPO. (MarketWatch)
    • INTC plans to spin off its programmable solutions group in a public offering over the next two to three years.
  • New SPACs launched/News: None of note.
  • Secondaries Priced: None of note.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • SYBX: Announces Closing of $21.0 Million Underwritten Public Offering.
  • Direct Offering:
    • NOK: Board of Directors resolved on issuing shares to the company and on a subsequent directed issuance under Nokia Equity Programs.
  • Selling Shareholders of note:
    • PACB: Files for 8,988,391 share common stock offering by selling shareholders
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings:
    • EPAM: Filed Form S-3ASR.. Mixed Shelf Offering.
    • WLDS: Filed Form F-3.. $30 Million Mixed Security Shelf.
  • Debt/Credit Filing and Notes:
    • General Motors (GM) entered into a new 364-Day Revolving Credit Agreement with JPMorgan Chase Bank.
    • SLCA: Announces Completion of $25 Million Loan Repurchase.
    • SWKH: Announces Closing of Public Offering of Senior Unsecured Notes Due 2027.
  • Tender Offer:
    • HMC: Commences tender offer for shares of Yachiyo Industry Co., Ltd.
  • 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: BROG +27% of note.
    • Trading Down: ATEN -14%, CALM -11% of note.
  • News Items After the Close:
    • Cal-Maine (CALM) stock drops 15% as plunging egg prices cut into profit. (MarketWatch)
    • Intel (INTC) plans to IPO programmable chip unit within three years; stock rises after hours. (CNBC)
    • Palantir (PLTR) Closing In On a Controversial UK Health Data Contract. (Bloomberg)
    • BP explores $1 billion US pipelines stake sale -sources. (Reuters)
    • “I’m very confident we’re going to have a nice rally into year end, much higher from where we are now….I don’t know when it starts…we’re in a rocky period” (@fundstrat Tom Lee)
    • From last night The US Treasury yield curve is de-inverting very rapidly. Was at -108 bp a few months ago. Now at -35 bp. Should put everyone on recession warning, not just recession watch. If the unemployment rate ticks up just a couple of tenths it will be recession alert. Buckle up. (Jeffrey Gundlach Doubleline Capital)
    • AAPL was downgraded to Sector Weight from Overweight at KeyBanc, the analysts saying the stock has been trading at near all-time-high multiples and a historically large premium to the Nasdaq, and that they see “soft growth” from the iPhone maker’s Americas region.
    • United Airlines (UAL) Orders 50 More Boeing 787 Dreamliners (BA) (CNBC)
    • General Dynamics (GD) awarded $967 million U.S. Navy contract modification.
  • Exchange/Listing/Company Reorg and Personnel News:
    • Affimed (AFMD) Announces Listing Transfer to Nasdaq Capital Markets.
    • Globus Maritime Limited (GLBS) Regains Compliance with NASDAQ’s Minimum Closing Bid Price.
    • IGM Biosciences (IGMS) Announces Retirement of Chairman Michael Loberg, Ph.D. from Board of Directors and Appointment of Elizabeth H.Z. Thompson, Ph.D. to Board of Directors.
    • Insulet (PODD) Announces CFO Transition.
    • Lilly (LLY) Announces Leadership Transitions.  David Hyman will become Lilly’s chief medical officer.
    • Selective (SIGI) Announces CFO Transition.
  • Buyback Announcements or News:
    • Forian Inc. (FORA) Announces Stock Repurchase.
    • Molson Coors (TAP) OKs $2 billion buyback program, targets long-term sales growth in the low single digits. (MarketWatch)
  • Stock Splits or News:
    • LifeWallet (LIFW) Announces Reverse Stock Split to Regain Compliance with Nasdaq’s Minimum Bid Price Requirement.
    • StoneCo (STNE) authorizes share repurchase program of up to R$300 million in outstanding Class A common shares..
  • Dividends Announcements or News:
    • Cal-Maine Foods (CALM) to pay $0.006 per share dividend.
  • Insider Sales Of Note:
    • Airbnb (ABNB) director sells $23.0 Million in common stock.

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

S&P 500 +6, Dow Jones +33,  NASDAQ +30, and Russell 2000 +4.  (as of 7:59 a.m. EDT).  Asia is lower while Europe is higher ex the FTSE this morning. VIX Futures are at 19.60 from 17.92 yesterday.  Gold, Silver and Copper are lower this morning for the third consecutive day. WTI Crude Oil and Brent Crude Oil are lower with Natural Gas higher. US 10-year Treasury sees yields at 4.785% from 4.718% yesterday. The U.S. Dollar is lower versus the Euro, lower versus the Pound and lower against the Yen. Bitcoin is at $27,582 from $27,606 yesterday, lower by -0.91%.

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

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

An intensifying bond selloff sparked new losses on Wall Street on Tuesday, wiping out what was left of the Dow Jones Industrial Average’s gain for the year and pushing the yields on U.S. Treasurys to fresh multiyear highs.  The losses were broad, with risky technology firms, rate-sensitive banks and real-estate owners and companies that rely on discretionary spending leading the way lower. Utility shares were the only industry segment in the S&P 500 to rise. They added 1.2%, bouncing off big losses Monday.  The Dow shed about 431 points, or 1.3%, and the blue-chip stock index ended the session down 0.4% so far in 2023. The S&P 500 declined 1.4%, with nearly 13% of the stocks in the index hitting new 52-week lows. The technology-skewed Nasdaq Composite fell 1.9%.  Meanwhile, the yield on the 10-year Treasury note exceeded 4.8% for the first time since August 2007, ending Tuesday at 4.801%. Two-year note yields rose to 5.148% and the payout on 30-year bonds hit 4.936%. (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: AYI +0.24, HELE +0.10, RPM +0.09, ANGO +0.01 of note.
  • Flat: None of note.
  • Misses: TLRY (0.05) of note.
  • Still to Report: None of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: BROG +17%, ONON +5%, IGMS +5%, ARAY +4% of note.
  • Gap Down: ATEN -13%, CALM -12%, TRN -5%, CDNA -5%, NVS -4% of note.

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 premarket: CALM, INTC, AAPL, NVS, FLR, RUN, NOVA (CNBC)
  • 5 Things to Know Before the Stock Market Opens. (CNBC)
  • Bloomberg Lead Story: McCarthy Exit Means More Turmoil Before New US Shutdown Fight. (Bloomberg)
  • Bloomberg Second Most Shared Story: Kevin McCarthy Ousted as US House Speaker By Republican Dissidents. (Bloomberg)
  • Global rout abates as Treasury yields stablize: Market Wrap. (Bloomberg)
  • UK Prime Minister Sunak scraps major high speed rail link as costs spiral. (CNBC)
  • Saudis to stick with 1 million barrel oil supply cut for now. (Bloomberg)
  • Mortgage demand drops to the lowest level since 1996, as interest rates head towards 8%. (CNBC)
  • Kaiser workers launch largest healthcare strike in US history. (Bloomberg)
  • 10 Year yield trades at levels not seen since 2007. (CNBC)
  • NPR Morning Report Marketplace:  The beauty industry generates alot of waste. Technology can help. (Podcast)
  • NY Times The Daily:  The ouster of House Speaker Kevin McCarthy. (Podcast)
  • BBC Global News:  US House Speaker ousted in historic vote. (Podcast) 
  • Bloomberg:  A new smartphone from China has Washington on edge. (Podcast)
  • Wealthion: Changes Ahead: How not to become collateral damage. (Podcast)

Moving Average Update:

  • Score sinks to 11% from 28%.  The Dow Industrials and Russell 2000 (via IWM) have clearly breached the 200 day moving average while SPX is approaching it and NASDAQ is still 4% away.

Geopolitical: 

  • President’s Public Schedule:
    • The President delivers an update on the Administration’s efforts to cancel student debt and support students and borrowers, 1:00 p.m. EDT
    • Press Briefing by Press Secretary Karine Jean-Pierre, 1:30 p.m. EDT
    • The President receives the Presidential Daily Briefing; The Vice President attends, 2:15 p.m. EDT

Economic:

  • MBA Mortgage Applications 7:00 a.m. EDT
    • MBA Mortgage Applications: Composite: -6%, Purchase: -5.7%, ReFi: -6.6%
    • U.S MBA Mortgage Applications (WOW) Actual: -6.0% VS -1.3% Previous
  • September ADP Employment Report is due out at 8:15 a.m. EDT and is expected to fall to 150,000 from 177,000.
  • PMI Composite Final 9:45am ET
  • August Factory Orders is due out at 10:00 a.m. EDT and expected to improve to 0.3% from -2.1%.
  • ISM Services Index 10:00 a.m. EDT
  • EIA Petroleum Report 10:30 a.m. EDT

Federal Reserve / Treasury Speakers:  

  • Federal Reserve St. Louis Kathleen O’Neill Paese 10:00 a.m. EDT
  • Federal Reserve Kansas City President Jeffrey R. Schmid 10:05 a.m. EDT
  • Federal Reserve Board of Governors Michelle Bowman 10:25 a.m. EDT
  • Federal Reserve Chicago President Austan Goolsbee 10:30 a.m. EDT
  • Federal Reserve Chicago President Austan Goolsbee 3:00 p.m. EDT

M&A Activity and News: 

  • PTC Acquires pure-systems.
  • Teledyne (TDY) to Acquire Xena Networks.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • A.G.P Virtual Cannabis Conference
    • Bernstein 7th Annual Healthcare Services Disruptors Conference 2023 (10/04/23-10/05/23)
    • Credit Suisse 6th Annual Brazil Utilities Conference
    • Emerging Growth Conference (10/04/23-10/05/23)
    • Evercore ISI 9th Annual Storage Symposium 2023
    • Raymond James Annual Sustainability Conference 2023
      • Previously posted and ongoing conferences:
        • Bank of America Securities CNS Therapeutics Virtual Conference 2023
        • Deutsche Bank Leveraged Finance Conference (10/02/23-10/04/23)
        • LD Micro 16th Annual Main Event Conference 2023 (10/03/23-10/05/23)
        • TD Cowen Annual Therapeutics Conference
        • Mizuho Annual REIT Conference
  • Top Shareholder Meetings: None of note.
  • Fireside Chat: None of note.
  • Investor/Analyst Day/Calls: ADIL, CNM, IONS, OKTA, ONON, ROAD, NVX, XWEL
  • Update: None of note.
  • R&D Day:
  • Company Event:
    • Microsoft (MSFT) 2nd Annual Power Platform Conference 2023 (10/03/23-10/05/23)
  • 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: