CAPIS Morning Note – 10/27/22: Stocks Higher This Morning Despite Meta -19% Drop

Overnight Summary: The S&P 500 closed Wednesday at 3830 (lower by -0.74%)  from Tuesday at 3859.11 (higher by 1.63%).  The overnight high of 3867.75 was hit at 1:45 a.m. EDT. The low was hit at 3838.75 at 6:45 a.m. EDT, a range of 29 points high to low which is below the recent range of…

Overnight Summary: The S&P 500 closed Wednesday at 3830 (lower by -0.74%)  from Tuesday at 3859.11 (higher by 1.63%).  The overnight high of 3867.75 was hit at 1:45 a.m. EDT. The low was hit at 3838.75 at 6:45 a.m. EDT, a range of 29 points high to low which is below the recent range of 45.  At 7:15 a.m. EDT, the S&P 500 was up +1.75 points which is 0.05%.  

Earnings Out After The Close: 

  • Beats: MUSA +2.27, AZPN +0.95, KLAC +0.83, WFG +0.77, ORLY +0.67, MTH +0.65, PLXS +0.50, RE +0.47, OLN +0.36, ETD +0.32, PPC +0.31, CCS +0.24, MSA +0.21, URI +0.21, TYL +0.20, OMF +0.19, FIX +0.18, PI +0.17, BOOT +0.16, SNBR +0.16, MOH +0.13, FLEX +0.12, CACI +0.11, PTEN +0.11, SAVE +0.11, MMSI +0.11, NOW +0.11, ACGL +0.10, MEOH +0.10, AVT +0.09, AEM +0.09, OII +0.09, SEIC +0.09, FBHS +0.08, JBT +0.08, MAA +0.08, RJF +0.08, VMI +0.08, NLY +0.07, BHE +0.07, UPWK +0.05, GSHD +0.05, GL +0.05, CHDN +0.04, COUR +0.04, LC +0.04, TDOC +0.04, EHC +0.03, FWRD +0.03, CLB +0.03, FORM +0.03, ULCC +0.03, ESS +0.03, CNMD +0.02, GGG +0.02, NTGR +0.02, CYH +0.02, ALSN +0.01, ASGN +0.01, ESI +0.01, UDR +0.01, WOLF +0.01.
  • Flat: AGI +0.00, ENSG +0.00, F +0.00, PGRE +0.00, UCTT +0.00, VFC +0.00.
  • Misses: ALGN (0.81), BMRN (0.46), STC (0.41), META (0.21), SLM (0.19), AR (0.16), MYRG (0.13), AMED (0.07), QS (0.07), TROX (0.06), FTI (0.06), PEGA (0.05), AM (0.05), AXS (0.04), SLP (0.04), CP (0.03), NOVA (0.02), DLR (0.01), EQT (0.01), INVH (0.01).

Capital Raises:

  • IPOs Priced or News: None of note.
  • New SPACs launched/News: None of note.
  • Secondaries Priced:
    • TSHA: Prices offering of 14.0 mln shares of common stock at $2.00 per share.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • AADI: Filed Form S-3.. 5,800,019 Shares of Common Stock.
    • KAL: Announces Pricing of $8.84 Million Public Offering.
    • QBTS: Filed Form 424B3.. Up to 15,500,000 Common Shares.
  • Pricing of Over-Allotment/Notes: None of note.
  • Direct Offering: None of note.
  • Selling Shareholders of note: None of note.
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings: None of note.
  • Debt Filing/Notes:
    • VIEW: View Raises $200M in Convertible Senior Notes..
  • 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: NOW +13%, PI +13%, TDOC +10%, GSHD +9%, COUR +7%, OII +7%, ETD +6%, PPC +6%, ALSN +6%, VMI +5%, MOH +5%, UCTT +4%, FLEX +4%, AMSF +4%.
    • Trading Down: WOLF -27%, SNBR -26%, ALGN -17%, META -17%, FORM -15%, TROX -13%, SLP -10%, LC -9%, NTGR -7%, FTI -6%, DLR -5%, BOOT -5%, CYH -4%.
  • News Since The Close:
    • Stocks making the biggest moves after hours: META, F, KLAC, NOW ALGN, SNBR, TDOC, ORLY, URI (CNBC)
    • Meta (META) earnings cut in half, Meta stock sinks toward lowest prices in more than 6 years. (MarketWatch)
    • Elon Musk’s Twitter (TWTR) Takeover Close at Hand as Banks Begin to Turn Over $13 Billion of Cash. (WSJ)
    • Ford (F) reveals third-quarter net loss, weighed down by supply chain problems and Argo AI investment. (CNBC)
    • KLA Corp. (KLAC) posts beat-and-raise quarter like others in the chip-equipment sector as long-term goals underscored. (MarketWatch)
  • Exchange/Listing/Company Reorg and Personnel News:
    • Evolution Petroleum (EPM) Announces Selection of New Chief Executive Officer.
    • Faraday Future (FFIE) Announces Chief Accounting Officer and Interim Chief Financial Officer.
    • FedNat Holding Company (FNHC) Announces Voluntary Nasdaq Delisting.
    • Globe Life Inc. (GL) Co-CEOs both stepping down.
    • China Life Insurance (LFCHY) announces CFO Huang Xiumei tendered her resignation.
    • Robert M. Davis to Succeed Kenneth C. Frazier as Chairman of Merck (MRK).
    • SelectQuote, Inc. (SLQT) Announces Receipt of Continued Listing Standard Notice from NYSE.
    • Turtle Beach (HEAR) appointed Terry Jimenez to the Board; four new independent directors have been appointed since May 2022 in furtherance of agreement with Donerail.
  • Buyback Announcements or News:
    • AutoNation (AN) today announced that the Board of Directors authorized the repurchase of up to an additional $1 billion of AutoNation common stock.
    • CARR: Board approves $2 billion share repurchase authorization.
    • FirstCash (FCFS) Authorizes New $100 Million Share Buyback Plan (see Dividends).
    • LKQ Corporation (LKQ) Announces $1 Billion Increase to its Stock Repurchase Program (aggregate authorization now $3.5 Billion through October 2025). (see Dividends).
    • Patterson-UTI (PTEN) increases share repurchase authorization to $300 million (see Dividends).
    • Ultra Clean Holdings (UCTT) initiates $150 million share repurchase program over a three year period.
    • United Rentals (URI) announces new $1.25 billion share repurchase program.
    • WEX Board of Directors Authorizes Increased Share Repurchase Program.
  • Stock Splits or News: None of note.
  • Dividends Announcements or News: 
    • Arch Coal (ARCH) The third quarter dividend payment of $10.75 per share.
    • Agnico Eagle’s (AEM) Board of Directors has declared a quarterly cash dividend of $0.40 per common share.
    • AMERISAFE (AMSF) Declares Special Dividend of $4.00 Per Share and Regular Quarterly Dividend.
    • Capital Southwest Corp. (CSWC) declares supplemental dividend of $0.05 per share.
    • Comfort Systems USA (FIX) Increases Quarterly Dividend.
    • Dorian LPG (LPG) declares irregular cash dividend of $1.00 per share.
    • FirstCash (FCFS) Declares $0.33 Quarterly Cash Dividend.
    • FS Bancorp, Inc. (FSBW) Thirty-Ninth Consecutive Quarterly Dividend.
    • LKQ Corporation (LKQ) Announces 10% Increase to its Quarterly Dividend.
    • Lincoln Electric (LECO) Board of Directors declared a 14.3% increase in the quarterly cash dividend.
    • MCD 10% increase in quarterly cash dividend.
    • Methanex (MEOH) increased dividend 20%.
    • Marathon Oil (MRO) increases quarterly dividend to $0.09 per share.
    • Patterson-UTI (PTEN) doubles quarterly dividend to $0.08 per share.
    • Postal Realty (PSTL) increases quarterly dividend to $0.235 per share.
    • Sonic Automotive (SAH) approved a 12% increase to the Company’s quarterly cash dividend.
    • Tennant (TNC) increases quarterly cash dividend to $0.265 per share.

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

S&P 500 -2, Dow Jones +217,  NASDAQ -68, and Russell 2000 +3. (as of 8:17 a.m. EDT). Europe lower ex Germany and Asia higher.  VIX Futures are at 27.85 from 28.53 yesterday morning and the VIX closed at 27.28 from 28.44 yesterday. Gold, Silver and Copper lower. WTI Crude Oil and Brent Oil Futures higher with Natural Gas lower higher. $ is higher vs Euro, higher vs Pound and higher vs Yen. US 10-year Treasury sees yields at 4.069% from 4.061%  yesterday. Bitcoin is at $20,606 from $20,672 yesterday morning and is lower by  -0.68% this morning.

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

  • Daily Positive Sectors: Basic Materials, Energy, Healthcare of note.
  • Daily Negative Sectors: Communication Services, Technology of note.
  • One Month Winners:  Energy, Basic Materials, Healthcare of note.
  • Three Month Winners:  Energy of note.
  • Six Month Winners: Energy of note.
  • Twelve Month Winners: Energy of note.
  • Year to Date Winners: Energy of note.

Tech took it on the chin today with NASDAQ down 2.04%.  Take a moment to look at the Value Lines in the chart below.  If you are doing ANYTHING intraday and not using Erlanger Value Lines – contact Geoff Garbacz ([email protected]) RIGHT NOW.  Action went right to the resistance line (red), bounced on pivot (pink line) and then found that as resistance.  Value lines are used on indexes, equities, etfs….intraday…we got ’em.  Available on Bloomberg Terminals too!

Click here for a video explanation of Erlanger Value Lines.

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

  • Thursday After the Close: AAPL, AMZN, TMUS, INTC, GILD, VRTX, PXD, EW, LHX, RSG, DXCM, AJG, COF, RMD, VICI, SGEN, WY, HIG, LPLA, PFG, VRSN, MPWR, CSL, PINS, FSLR, SSNC, GLPI, BIO, TFII, ZEN, DECK, EMN, CUBE, SWN, NOV, FFIN, TXRH, ATR, MHK, HLI, STAG, NATI, X, EXPO, COLM, SPSC, AUY, CWST, PTCT, CUZ, ABCB, ONTO, OFC, LOPE, HUBG, TEX, PFSI, AX, MGRC, PEB, MTX, FTAI, LTC, TVTX, NBHC, COHU, CASH, KN, LMAT, ENVA, EIG, MERC, CDNA, SKYW, DRQ, EGHT, OIS, SPNE of note.
  • Friday Before the Open: XOM, CVX, ABBV, NEE, SNY, AON, CL, CHTR, IMO, GWW, LYB, FTS, CHD, AVTR, BAH, DVA, GTLS, NWL, GNTX, FHB, AB, CRI, JKS, ABR, PIPR, BLMN, B, CRTO, PFS, NMRK, HTLD, SLCA, SMP, WETF of note.

Earnings of Note This Morning:

  • Beats: PDS +1.62, PBF +1.38, CAT +0.79, BFH +0.56, MSGS +0.38, AIT +0.34, VC +0.30, RS +0.29, LAZ +0.24, HEES +0.23, TPH +0.22, BWA +0.21, HZO +0.20, FCFS +0.17, GBX +0.17, LIN +0.17, TFX +0.16, ALLE +0.16, MRK +0.14, SPGI +0.13, EXLS +0.13, JHG +0.13, TXT +0.13, STM +0.13, FCN +0.11, TECK +0.10, CHKP +0.10, HON +0.10, MCD +0.10, LECO +0.09, SHYF +0.09, WEX +0.09, FAF +0.08, LUV +0.08, OSTK +0.08, NTCT +0.08, CBRE +0.08, WTW +0.07, INMD +0.07, BUD +0.07, SWK +0.06, AEP +0.06, EME +0.06, CMCSA +0.06, SHOP +0.05, CCJ +0.05, ALGM +0.05, CBZ +0.05, CARR +0.05, CMS +0.03, DTE +0.03, EXTR +0.03, BC +0.03, TW +0.02, DAN +0.02, KIM +0.02, NVCR +0.01, ARES +0.01, LKQ +0.01, OPCH +0.01, VLY +0.01, ABG +0.01.
  • Flat: GEO +0.00, KDP +0.00, AOS +0.00, CMCO +0.00, BAX +0.00, HTZ +0.00, TNL +0.00, TROW +0.00, LII +0.00, LH +0.00.
  • Misses: CNX (3.00), ARCH (0.42), LAC (0.30), AN (0.27), MDC (0.26), SAH (0.24), AMT (0.23), NOC (0.22), INSM (0.22), IP (0.19), OSK (0.18), GEL (0.14), WST (0.09), FISV (0.06), XEL (0.04), AMBP (0.03), HOUS (0.02), MO (0.02), SO (0.02).
  • Still to Report: ALNY , CRS , CFR , ITGR , MMP , MA , MPW , OSIS , PATK , PRFT , SNDR , TNC , TRS , WDC.

Guidance:

  • Positive Guidance: WING, TMO, KLAC, ENSG, FLEX, AVT, MMSI, VMI, MOH, FWRD, BHE, MAA, PLXS, PI, ORLY, ALSN, ALLE, ACMR, GBX, EXLS, MRK, AIT, CBZ, WEX, LUV, KIM, HZO, RS, VC, ALGM, INMD,  of note.
  • Negative Guidance: STX, SNBR, FORM, WOLF, UPWK, VFC, FBHS, NTGR, ASGN, SLP, INVH, ESI, BOOT, LC, AMED, UDR, JBT, INFA, EHC, GEO, SWK, WST, BC, AIMC, CARR, CMS, LH, SPGI, BAX, WDC, TRS of note.

Erlanger Research Advance/Decline Chart: 

Gap Ups & Down In Early Pre-Market:

  • Gap Up: PI +18%, NOW +12%, GSHD +9%, TDOC +9%, COUR +7%, ETD +7%, BUD +7%, OII +7%, PPC +6%, UCTT +6%, ALSN +5%, MOH +5%, ACMR +5%, GENI +5%, AMSF +5%, PGRE +5%, FLEX +5%, VMI +5%, MMSI +5%, OMF +4%, PLXS +4%, AZPN +4%, CCS +4%, ARES +4%.
  • Gap Down: SNBR -26%, WOLF -24%, META -19%, ALGN -19%, FORM -17%, AMED -14%, SLP -10%, CS -9%, TROX -9%, STM -7%, ACGL -6%, LC -6%, UPWK -5%, BOOT -4%, VFC -4%, CNMD -4%.

Insider Action: No stock 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.

  • Stocks Making The Biggest Moves:  META F HON CAT NOC CMCSA MCD ALGN NOW SNBR  (CNBC)
  • Five Things to Know This Morning. (CNBC)
  • Five Things You Need to Know to Start Your Day. (Bloomberg)
  • Bloomberg Lead Story: Credit Suisse to Raise $4 Billion and Cut 9,000 Jobs. (Bloomberg)
  • Bloomberg Most Read Story: Xi Vow of World Domination By 2049 Sends A Chill Through Markets. (Bloomberg)
  • Foxconn factory in China has Covid-19 breakout. (FT)
  • China Southern Airlines (ZNH) to begin flying the Boeing (BA) 737 Max as of October 30th. (Reuters)
  • Analysts remain bullish on the U.S. Dollar. (Bloomberg)
  • U.S. Banks have begun to send money for Elon Musk’s takeover of Twitter (TWTR). (Bloomberg)
  • Caterpillar (CAT) is up 3.6% driving gains in the Dow Jones Industrial Average. (MarketWatch)
  • McDonalds (MCD) also has an earnings beat. (MarketWatch)
  • Meta (META) down -19% and may drop out of the Top 20 Market Cap names. (Bloomberg)

Moving Average Update:

  • Score improves to 68% from 65%. Inching up.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 9:00 a.m. EDT
    • The President departs the White House en route Joint Base Andrews, 12:25 p.m. EDT
    • The President departs Joint Base Andrews en route Syracuse, New York, 12:45 p.m. EDT
    • The President arrives in Syracuse, New York, 1:50 p.m. EDT
    • The President delivers remarks on Micron’s plan to invest in CHIPS manufacturing in upstate New York, which will create good-paying jobs and help ensure the future is made in America, 3:30 p.m. EDT
    • The President departs Syracuse, New York en route New Castle, Delaware, 5:15 p.m. EDT
    • The President arrives in New Castle, Delaware, 6:20 p.m. EDT

Economic: 

  • Q3 GDP is due out at 8:30 a.m. EDT and is expected to rise to 2.3% from last quarter’s -0.6%. 
  • September Durable Orders are due out at 8:30 a.m. EDT and are expected to rise to 0.6% from -0.2%.
  • Initial Jobless Claims 8:30 a.m. EDT
  • EIA Natural Gas Report 10:30 a.m. EDT
  • KC Fed Mfg Index 11:00 a.m. EDT

Federal Reserve / Treasury Speakers:

  • We enter a blackout period for the Fed – No speakers until  Fed Announcement on November 2nd.

M&A Activity:

  • Agrofresh Solutions (AGFS) Agrees To Be Acquired By Paine Schwartz For $3 Per Share.
  • Regal Rexnord (RRX) to acquire Altra Industrial Motion (AIMC) for $62 per share.

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: