The S&P 500 futures are down 11 points and are trading 0.2% below fair value. The Nasdaq 100 futures are down 48 points and are trading 0.2% below fair value. The Dow Jones Industrial Average futures are down 72 points and are trading 0.2% below fair value.
Stock futures indicate a lower open, pressured by several airlines warning about rising jet fuel costs, concerns about a slowdown in discretionary spending due to high gas prices, and festering worries about rising interest rates.
The weekly MBA Mortgage Applications Index dropped 2.9% with purchase applications falling 2.0% and refinance applications declining 5.0%.
The 2-yr note yield is down two basis points to 4.94% and the 10-yr note yield is down two basis points to 4.24%.
Other economic data today include:
8:30 ET: July Trade Balance (Briefing.comconsensus -$68.0 bln; prior -$65.5 bln)
9:45 ET: Final August S&P Global US Services PMI (prior 51.0)
10:00 ET: August ISM Non-Manufacturing Index (Briefing.comconsensus 52.4%; prior 52.7%)
14:00 ET: September Fed Beige Book
In corporate news:
Toast (TOST 22.70, +1.03, +4.8%): upgraded to Buy from Neutral at UBS
Constellation Brands (STZ 260.27, +2.77, +1.1%): upgraded to Outperform from market perform at TD Cowen
Roku (ROKU 94.07, +10.34, +12.4%): sees Q3 revs above consensus; to reduce workforce by 10%
Enbridge (ENB 32.76, -2.53, -7.2%): acquires three U.S.-based utilities from Dominion Energy (D) for an aggregate purchase price of $14.0 bln; to be accretive to adjusted EPS in first full-year of ownership
Zscaler (ZS 160.10, -2.64, -1.6%): beats by $0.15, beats on revs; guides Q1 EPS above consensus, revs above consensus; guides FY24 EPS above consensus, revs above consensus
HealthEquity (HQY 68.11, +1.27, +1.9%): beats by $0.05, beats on revs; guides FY24 EPS above consensus, revs in-line
GitLab (GTLB 52.89, +3.15, +6.3%): beats by $0.04, beats on revs; guides Q3 EPS above consensus, revs above consensus; guides FY24 EPS above consensus, revs above consensus
AeroVironment (AVAV 110.68, +15.39, +16.2%): beats by $0.74, beats on revs; reaffirms FY24 EPS guidance, raises FY24 revenue guidance
Block (SQ 57.15, -1.59, -2.7%): downgraded to Neutral from Buy at UBS
Southwest Air (LUV 29.35, -1.42, -4.6%): updates Q3 guidance metrics; sees Q3 RASM of down 5-7% versus prior guidance down 3-7%
NextGen Healthcare (NXGN 23.49, +2.94, +14.3%): enters into definitive agreement to be acquired by Thoma Bravo for $23.95/share in cash
Reviewing overnight developments:
Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. Japan's Nikkei: +0.6 %, Hong Kong's Hang Seng: UNCH, China's Shanghai Composite: +0.1%, India's Sensex: +0.2%, South Korea's Kospi: -0.7%, Australia's ASX All Ordinaries: -0.7%.
In economic data:
Australia's Q2 GDP 0.4% qtr/qtr (expected 0.3%; last 0.4%); 2.1% yr/yr (expected 1.8%; last 2.4%). August AIG Construction Index -9.9 (last -9.2) and Manufacturing Index -19.8 (last -25.6)
New Zealand's GDT Price Index 2.7% (last -7.4%)
In news:
Property names listed in Hong Kong rebounded amid ongoing speculation about more incoming support from the government.
Securities Times called on the Chinese government to lift "unnecessary" limits on home purchases.
Bank of Japan policymaker Takata said that there are early signs of the 2.0% inflation target being reached, but easy policy stance should be maintained at this time.
Australia's New South Wales will raise its coal mining royalties by 2.6% next year, representing the first increase in 15 years.
Major European indices trade in the red. STOXX Europe 600: -0.7%, Germany's DAX: -0.5%, U.K.'s FTSE 100: -0.7%, France's CAC 40: -0.8%, Italy's FTSE MIB: -1.0%, Spain's IBEX 35: -0.8%
In economic data:
Eurozone's July Retail Sales -0.2% m/m (expected -0.1%; last 0.2%); -1.0% yr/yr (expected -1.2%; last -1.0%)
Germany's July Factory Orders -11.7% m/m (expected -4.0%; last 7.6%)
U.K.'s August Construction PMI 50.8 (expected 50.5; last 51.7)
In news:
European Central Bank policymaker Knot said that markets may be underestimating the likelihood of a rate hike at the September meeting, adding that the decision could be a "close call."
Separately, policymaker Villeroy de Galhau said that while the economy is slowing down, there is still no recession on the horizon and lowering inflation should remain the priority.
German Chancellor Scholz said that his country's budget should return to "normality" in 2024.
U.S. equity futures:
S&P 500 Futures -10 @ 4,486
DJIA Futures: -76 @ 34,567
Nasdaq 100 Futures: - @ 15,466
Overseas:
Europe: DAX -0.5%, FTSE -0.7%, CAC -0.8%
Asia: Nikkei +0.6%, Hang Seng UNCH, Shanghai Composite +0.1%
Commodities:
Crude Oil -0.29 @ 86.40
Nat Gas -0.003 @ 2.579
Gold -0.80 @ 1951.80
Silver -0.05 @ 23.83
Copper -0.0342 @ 3.8143
Earnings/Guidance:
AeroVironment (AVAV) beats by $0.74, beats on revs; reaffirms FY24 EPS guidance, raises FY24 revenue guidance
Alaska Air (ALK) narrows FY23 revenue guidance
Alight (ALIT) reaffirms FY23 guidance in slide presentation
Asana (ASAN) beats by $0.07, beats on revs; guides Q3 EPS above consensus, revs above consensus; guides FY24 EPS above consensus, revs in-line
Ascendis Pharma (ASND) beats by 0.36, beats on revs; raises US SKYTROFA revenue outlook
Baker Hughes (BKR) sees Q3 and FY23 revs in-line with expectations
Bristow Group (VTOL) reaffirms FY23 and FY24 revs in investor presentation
Centene (CNC) reaffirms FY23 and FY24 outlooks at investor conference
Core & Main (CNM) misses by $0.01, reports revs in-line; guides FY23 revs in-line
General Mills (GIS) reaffirms FY24 guidance at Barclays Global Consumer Staples Conference
GitLab (GTLB) beats by $0.04, beats on revs; guides Q3 EPS above consensus, revs above consensus; guides FY24 EPS above consensus, revs above consensus
Hammerhead Energy (HHRS) raises FY23 production guidance
Hawaiian Holdings (HA) provides Q3 updates; expects capacity to be up approximately 4.0-5.5% compared to 3Q22, changed from 4.5-7.5%
HealthEquity (HQY) beats by $0.05, beats on revs; guides FY24 EPS above consensus, revs in-line
Hilton Grand Vacations (HGV) provides update on Maui Wildfires impact; estimates Q3 contract sales to be adversely affected by $20-25 mln and adjusted EBITDA by $12-15 mln
Honest Company (HNST) reaffirmed FY23 revenue guidance calling for low-single to mid-single digit increase; also reaffirms FY23 adjusted EBITDA of $(22) to $(26) million
Humana (HUM) reaffirms FY23 EPS of at least $28.25 vs. the $28.27 FactSet Consensus
MarketAxess (MKTX) reports August volume statistics; Total credit average daily volume was up 2.3%
Photronics (PLAB) misses by $0.01, misses on revs; guides Q4 EPS in-line, revs in-line
Roku (ROKU) sees Q3 revs above consensus
Southwest Air (LUV) updates Q3 guidance metrics
Tradeweb Markets (TW) reports August 2023 total trading volume of $33.0 trillion and average daily volume of $1.44 trillion
United Airlines (UAL) provides Q3 guidance update; all-in fuel price is now expected to be between $2.95 to $3.05 per gallon; reaffirms Q3 capacity, operating revenue, and CASM guidance
United Micro (UMC) reports August revs declined 25.2% yr/yr to NT$18.95 bln
Zscaler (ZS) beats by $0.15, beats on revs; guides Q1 EPS above consensus, revs above consensus; guides FY24 EPS above consensus, revs above consensus
News:
China premier Li Qiang will attend G-20 summit, according to Bloomberg
Senate votes 83-10 to begin debate on nomination of Philip Jefferson to be Fed Vice Chair
EU Commission designates six gatekeepers
Tropical Storm Lee is expected to become major hurricane in Atlantic
August Class 8 net orders were 19,000 units, down 9% yr/yr, Act Research
US suburbs have fastest growing rents, an indication that migration from cities is a long term trend, according to the Wall Street Journal
Apple (AAPL): China bans Apple iPhone use for government officials while working, according to the Wall Street Journal
Aramark's (ARMK) Board approves tax-free spin-off of Vestis, the company's uniforms and workplace supplies business; Vestis to trade on NYSE under ticker "VSTS" on Oct. 2, 2023
AstraZeneca (AZN) receives complete response letter for Ultomiris for NMOSD
Baidu (BIDU) artificial intelligence product might launch sooner than expected, according to Bloomberg
BridgeBio Pharma (BBIO) announces positive feedback from the FDA and EU EMA on the regulatory path for a pivotal phase 3 trial of infigratinib in children with achondroplasia
C4 Therapeutics (CCCC) appoints Kendra Adams as CFO, effective September 18; succeeds Lauren White
Carmell Therapeutics Corporation (CTCX) completes of post-merger integration with Axolotl Biologix and new organizational structure aligned with focus on aesthetics
Centrus Energy (LEU) expects to begin first-of-a-kind production of High-Assay Low-Enriched Uranium (HALEU) in October 2023, approximately two months ahead of schedule
Coinbase (COIN) aiming to introduce new lending platform, according to Reuters
COMPASS Pathways (CMPS) announces publication of first study evaluating potential of AI model to predict outcomes of COMP360 psilocybin treatment in treatment-resistant depression
FREYR Battery (FREY) provides operations update
Gevo (GEVO) and USDA sign agreement providing Gevo a grant to incentivize, track, and verify acreage of low-carbon corn to accelerate production of sustainable aviation fuel and other biofuels
Gogo (GOGO) approves a share repurchase program for up to $50 mln of common stock
Google (GOOG) reaches tentative settlement in Play store lawsuit, according to Reuters
Grupo Aeroportuario del Pacifico (PAC) releases preliminary passenger traffic figures for August; total terminal passengers increased 14.1% yr/yr
Honest Company (HNST) appoints Dave Loretta as CFO
Intercontinental Exchange (ICE) announced that Enterprise Products Partners (EPD) and Magellan Midstream Partners (MMP) extended fee waiver arrangement between the Enterprise Crude Houston and Magellan East Houston terminals
IperionX (IPX) signed an agreement to underpin a 100% recycled titanium supply chain using scrap titanium metal from the aerospace industry
Lockheed Martin (LMT) has updated its F-35 Technology Refresh 3 schedule projections - currently anticipate delivering the first TR-3 jet between April and June 2024
Mersana Therapeutics (MRSN): CEO Anna Protopapas will retire effective Sept. 10, 2023; Martin Huber, M.D., named as replacement effective Sept. 11, 2023
Novartis (NVS) CCO steps down
Paychex (PAYX) CFO Efrain Rivera to retire, effective October 12; succeeded by Robert L. Schrader, current VP of Finance and Investor Relations
Phibro Animal Health (PAHC) announces departure of CFO Damian Finio; Richard Johnson, who previously served as CFO until 2020, will assume role of interim CFO
RH (RH) announces proposal to reimagine and restore One Ocean Drive, Miami Beach
Roche Hldg (RHHBY) receives FDA acceptance of BLA for crovalimab
Roku (ROKU) to reduce workforce by 10%
Royalty Pharma (RPRX) and Ascendis Pharma (ASND) enter into $150 million royalty funding agreement
Saia (SAIA) is providing LTL shipment and tonnage data for July and August 2023
Schneider National (SNDR) names Darrell Campbell Executive Vice President and CFO
Siemens (SIEGY) and Alstom battling to supply Los Angeles to Las Vegas rail link, according to the Wall Street Journal
Southern Missouri Bancorp (SMBC) hired Stefan Chkautovich to serve as the Company's Executive Vice President, Chief Financial Officer and Principal Accounting Officer, effective September 18
Standard Lithium (SLI) announces results of definitive feasibility study for first commercial lithium extraction plant at LANXESS South Plant
Tango Therapeutics (TNGX): FDA clears IND for TNG348, a novel inhibitor of USP1 (ubiquitin-specific protease 1), for the treatment of BRCA1/2 mutant and other HRD+ (homologous recombination deficient) cancers
Tesla (TSLA) Shanghai factory hits 2 million production milestone, according to Reuters
Tesla (TSLA): Elon Musk borrowed $1 bln from SpaceX, according to the Wall Street Journal
Vitru (VTRU) announces proposed group restructuring and migration of listing
Warner Music (WMG) aiming to purchase stake in 10K projects, according to Financial Times
XPO, Inc. (XPO) provides North American LTL operating data for August 2023
M&A:
Abbott Labs (ABT) to acquire Bigfoot, a smart insulin management systems developer; financial details not disclosed
Desktop Metal (DM) in SEC filing: expects previously announced merger with Stratasys (SSYS) to close in Q4
Dominion Energy (D) executes three separate definitive agreements to sell three natural gas distribution companies to Enbridge (ENB) for aggregate transaction value of $14.0 bln
Dr. Reddy's (RDY) will not comment on story that it is exploring joint bid for the promoters of Cipla
Enbridge (ENB) acquires three U.S.-based utilities for an aggregate purchase price of $14.0 bln; to be accretive to adjusted EPS in first full-year of ownership
Magnolia Oil & Gas (MGY) to acquire certain oil and gas producing properties in Giddings for $300 mln
NextGen Healthcare (NXGN) enters into definitive agreement to be acquired by Thoma Bravo for $23.95/share in cash
Rockwell Automation (ROK) signs agreement to acquire Clearpath Robotics; financial terms were not disclosed
TreeHouse Foods (THS) to sell its Lakeville, MN manufacturing facility and snack bars business to John B. Sanfilippo & Son, Inc. (JBSS) for approximately $63 million in cash
Syndicate:
CSG Systems (CSGS) announces proposed offering of $350 mln convertible senior notes due 2028
Enbridge (ENB) files for CDN$4.0 bln bought-deal offering of common shares
Parker-Hannifin (PH) files mixed shelf securities offering
Patterson-UTI (PTEN) files mixed shelf securities offering
IPOs:
KKR (KKR) planning Tokyo IPO of Hitachi Kokusai Electric, according to Financial Times
Expected to Price:
No IPOs expected.
Gapping Up/Down
Gapping up:
SST +26.1%, AVAV +14.6%, MITK +12.7%, ROKU +8.4%, GTLB +7.5%, CTCX +6.2%, CCCC +3.4%, GOGO +3.3%, ASND +3.3%, GEVO +2.3%, CMPS +2%, ACRS +1.8%, HGV+1.5%, PTEN +1.2%, PAC +1%, GBX +0.9%
Gapping down:
PLAB -9.5%, ENB -8.6%, CSGS -6.3%, LUV-5.8%, VRNA -4.5%, ASAN -2.1%, UAL -2%, RPD -1.9%, VTRU -1.2%, ASR -1.2%, ARMK-1.1%, ALK -1.1%, NVS -0.8%, ZS -0.7%, DM-0.6%, AMZN -0.6%
Analyst Research (see Upgrades/Downgradescalendarfor full list):
Upgrades
Adecoagro S.A. (AGRO) upgraded to Neutral from Underperform at BofA Securities; tgt raised to $12.50
AeroVironment (AVAV) upgraded to Outperform from Neutral at Robert W. Baird; tgt raised to $128
American Airlines (AAL) upgraded to Outperform from Neutral at Exane BNP Paribas; tgt $20
CME Group (CME) upgraded to Neutral from Underperform at BofA Securities; tgt raised to $204
Constellation Brands (STZ) upgraded to Outperform from Market Perform at TD Cowen; tgt raised to $300
Downgrades:
Enbridge (ENB) downgraded to Equal Weight from Overweight at Wells Fargo
Olin (OLN) downgraded to Neutral from Buy at Goldman; tgt lowered to $57
Others:
Fair Isaac (FICO) initiated with an Outperform at Raymond James; tgt $1007
Fed Agricult Mortg (AGM) initiated with an Outperform at Keefe Bruyette; tgt $220
The Trade Desk (TTD) initiated with an Outperform at William Blair
Econ Data:
07:00 ET: MBA Mortgage Applications Index for September 2 (Briefing.comConsensus NA; Prior 2.3%)
08:30 ET: Trade Balance for July (Briefing.comConsensus -$68.0B; Prior -$655B)
09:45 ET: S&P Global US Services PMI - Final for August (Briefing.comConsensus NA; Prior 51.0)
10:00 ET: ISM Non-Manufacturing Index for August (Briefing.comConsensus 52.4%; Prior 52.7%)
14:00 ET: Fed's Beige Book for September
Earnings:
Tuesday (Sep 5)
Morning: BRC, CRMT
Afternoon: ASAN, ZS, GTLB, AVAV
Wednesday (Sep 6)
Morning: PLAB, CNM
Afternoon: INTA, AEO, PATH, SPWH, AI, DSGX, PHR, CHPT, CXM, BASE, CVGW, PLAY, YEXT, CURV, GME, VRNT
Thursday (Sep 7)
Morning: SAIC, ABM, GIII, TTC, DOOO
Afternoon: GWRE, ZUMZ, SMAR, SMTC, BRZE, DOCU, SWBI
Friday (Sep 8)
Morning: KR
Asia & Europe detail:
Asia: Nikkei +0.6%, Hang Seng UNCH, Shanghai Composite +0.1%
Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. Property names listed in Hong Kong rebounded amid ongoing speculation about more incoming support from the government. Securities Times called on the Chinese government to lift "unnecessary" limits on home purchases. Bank of Japan policymaker Takata said that there are early signs of the 2.0% inflation target being reached, but easy policy stance should be maintained at this time. Australia's New South Wales will raise its coal mining royalties by 2.6% next year, representing the first increase in 15 years.
In economic data:
Australia's Q2 GDP 0.4% qtr/qtr (expected 0.3%; last 0.4%); 2.1% yr/yr (expected 1.8%; last 2.4%). August AIG Construction Index -9.9 (last -9.2) and Manufacturing Index -19.8 (last -25.6)
New Zealand's GDT Price Index 2.7% (last -7.4%)
---Equity Markets---
Japan's Nikkei: +0.6 %
Hong Kong's Hang Seng: UNCH
China's Shanghai Composite: +0.1%
India's Sensex: +0.2%
South Korea's Kospi: -0.7%
Australia's ASX All Ordinaries: -0.7%
---FX---
USD/JPY: -0.2% to 147.34
USD/CNH: +0.1% to 7.3073
USD/INR: +0.1% to 83.10
Europe: DAX -0.5%, FTSE -0.7%, CAC -0.8%
Major European indices trade in the red. European Central Bank policymaker Knot said that markets may be underestimating the likelihood of a rate hike at the September meeting, adding that the decision could be a "close call." Separately, policymaker Villeroy de Galhau said that while the economy is slowing down, there is still no recession on the horizon and lowering inflation should remain the priority. German Chancellor Scholz said that his country's budget should return to "normality" in 2024.
In economic data:
Eurozone's July Retail Sales -0.2% m/m (expected -0.1%; last 0.2%); -1.0% yr/yr (expected -1.2%; last -1.0%)
Germany's July Factory Orders -11.7% m/m (expected -4.0%; last 7.6%)
U.K.'s August Construction PMI 50.8 (expected 50.5; last 51.7)
---Equity Markets---
STOXX Europe 600: -0.7%
Germany's DAX: -0.5%
U.K.'s FTSE 100: -0.7%
France's CAC 40: -0.8%
Italy's FTSE MIB: -1.0%
Spain's IBEX 35: -0.8%
---FX---
EUR/USD: +0.2% to 1.0746
GBP/USD: -0.1% to 1.2556
USD/CHF: +0.2% to 0.8899
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