The S&P 500 futures are down 39 points and are trading 1.1% below fair value. The Nasdaq 100 futures are down 67 points and are trading 0.7% below fair value. The Dow Jones Industrial Average futures are down points and are trading 1.0% below fair value.
The downside bias continues on this quadruple witching options expiration day amid ongoing growth concerns. Stock prices are being undercut by worries about earnings estimates being too high. There is also likely an element of disappointment in play connected to the poor performance thus far during a historically strong period for the market.
The Treasury market trades in mixed fashion. The 2-yr note yield is down one basis point to 4.24% and the 10-yr note yield is up four basis points to 3.49%.
Energy complex futures are moving lower this morning. WTI crude oil futures are down 2.2% to $74.45/bbl and natural gas futures are down 5.8% to $6.57/mmbtu.
Economic data today will be limited to the preliminary December IHS Markit Manufacturing PMI (prior 47.7) and Services PMI (prior 46.2) at 9:45 a.m. ET.
In corporate news:
Darden Restaurants (DRI 144.75, +1.89, +1.3%): beats by $0.08, beats on revs; Q2 comps +7.3%; raises FY23 EPS, revenue, and comp guidance
Accenture (ACN 273.85, -7.27, -2.6%): beats by $0.15, reports revs in-line; guides Q2 revs in-line; raises FY23 EPS in-line, reaffirms FY23 revs guidance
Maxar Technologies (MAXR 51.50, +28.40, +122.9%): confirms it will be acquired by Advent Int'l for $6.4 bln, or $53/share in cash
Winnebago (WGO 57.08, +1.33, +2.4%): beats by $0.28, beats on revs
Novavax (NVAX 9.97, -1.35, -11.9%): priced public offering to sell 6,500,000 shares of its common stock at $10.00/share.
Adobe (ADBE 343.56, +14.85, +4.5%): beats by $0.10, reports revs in-line; guides FebQ EPS above consensus, revs in-line; reaffirms FY23 EPS guidance, revs guidance
Meta Platforms (META 118.28, +2.13, +1.8%): upgraded to Overweight from Neutral at JPMorgan
U.S. Steel (X 23.85, +0.21, +0.9%): guides Q4 EPS above consensus
Steel Dynamics (STLD 100.34, -1.58, -1.6%): guides Q4 adjusted EPS well above consensus; profitability from steel operations to be lower sequentially, metals recycling operations to moderately improve, steel fabrication operations to be steady
Reviewing overnight developments:
Equity indices in the Asia-Pacific region ended the week on a mostly lower note. Japan's Nikkei: -1.9% (-1.3% for the week), Hong Kong's Hang Seng: +0.4% (-2.3% for the week), China's Shanghai Composite: UNCH (-1.2% for the week), India's Sensex: -1.4% (-0.6% for the week), South Korea's Kospi: UNCH (-1.2% for the week), Australia's ASX All Ordinaries: -0.7% (-0.9% for the week).
In economic data:
Japan's flash December Manufacturing PMI 48.8 (expected 49.0; last 49.0) and flash Services PMI 51.7 (expected 51.1; last 50.3)
South Korea's November trade deficit $6.99 bln (last deficit of $7.01 bln). November Imports 2.7% yr/yr (last 2.7%) and Exports -14.0% yr/yr (last -14.0%)
Singapore's November trade surplus $3.047 bln (last surplus of $4.024 bln). November non-oil exports -9.2% m/m (expected -3.0%; last -4.2%); -14.6% yr/yr (expected -7.4%; last -6.1%)
Hong Kong's November Unemployment Rate 3.7% (last 3.8%)
Australia's flash December Manufacturing PMI 50.4 (last 51.3) and flash Services PMI 46.9 (last 47.6)
New Zealand's November Business NZ PMI 47.4 (last 49.3)
In news:
Japan's Manufacturing PMI remained in contraction for the second consecutive month in the flash reading for December.
South Korean consumers are facing higher electricity and gas prices next year.
China's National Development and Reform Commission noted that the Chinese economy is facing a "more complex and grim external environment," but remains on a positive long-term trend.
South China Morning Post reported that Chinese officials are eager to fully reopen the border with Hong Kong in January.
Major European indices trade in the red despite the release of better than expected, though still contractionary, flash Manufacturing and Services PMI readings for December. STOXX Europe 600: -1.2% (-3.2% week-to-date), Germany's DAX: -0.4% (-3.1% week-to-date), U.K.'s FTSE 100: -1.3% (-1.9% week-to-date), France's CAC 40: -1.2% (-3.5% week-to-date), Italy's FTSE MIB: -0.3% (-2.6% week-to-date), Spain's IBEX 35: -1.0% (-1.9% week-to-date).
In economic data:
Eurozone's November CPI -0.1% m/m, as expected (last 1.5%); 10.1% yr/yr (expected 10.0%; last 10.6%). November Core CPI 0.0% m/m (expected 0.6%; last 0.6%); 5.0% yr/yr, as expected (last 5.0%). October trade deficit EUR26.50 bln (expected deficit of EUR44.50 bln; last deficit of EUR34.50 bln). Flash December Manufacturing PMI 47.8 (expected 47.1; last 47.1) and flash Services PMI 49.1 (expected 48.5; last 48.5)
Germany's flash December Manufacturing PMI 47.4 (expected 46.3; last 46.2) and flash Services PMI 49.0 (expected 46.3; last 46.1)
U.K.'s November Retail Sales -0.4% m/m (expected 0.3%; last 0.9%); -5.9% yr/yr (expected -5.6%; last -5.9%). November Core Retail Sales -0.3% m/m (expected 0.3%; last 0.7%); -5.9% yr/yr (expected -5.8%; last -6.4%)
France's flash December Manufacturing PMI 48.9 (expected 48.2; last 48.3) and flash Services PMI 48.1 (expected 49.1; last 49.3)
Italy's October trade deficit EUR2.12 bln (last deficit of EUR6.51 bln). November CPI 0.5% m/m, as expected (last 0.5%); 11.8% yr/yr, as expected (last 11.8%)
In news:
Several European Central Bank policymakers have repeated that more rate hikes are on the way.
Germany's Bundesbank raised its 2023 CPI forecast for Germany to 7.2% from 4.5% while the GDP forecast was cut to -0.5% from +2.4%. The growth outlook for 2024 was trimmed to 1.7% from 1.8% while the CPI forecast was raised to 4.1% from 2.6%.
U.S. equity futures:
S&P 500 Futures: -36 @ 3,860
DJIA Futures: -318 @ 32,885
Nasdaq 100 Futures: -54 @ 11,291
Overseas:
Europe: DAX -0.4%, FTSE -1.3%, CAC -1.2%
Asia: Nikkei -1.9%, Hang Seng +0.4%, Shanghai Composite UNCH
Commodities:
Crude Oil -1.69 @ 74.42
Nat Gas -0.407 @ 6.563
Gold +6.00 @ 1793.80
Silver -0.218 @ 23.087
Copper -0.001 @ 3.766
Earnings/Guidance:
Accenture (ACN) beats by $0.15, reports revs in-line; guides Q2 revs in-line; raises FY23 EPS in-line, reaffirms FY23 revs guidance
Adobe (ADBE) beats by $0.10, reports revs in-line; guides FebQ EPS above consensus, revs in-line; reaffirms FY23 EPS guidance, revs guidance
Centene (CNC) reaffirms FY22 guidance; sees FY23 EPS in line; sees FY23 revs below consensus; authorizes $2 billion increase to stock repurchase program
Darden Restaurants (DRI) beats by $0.08, beats on revs; Q2 comps +7.3%; raises FY23 EPS, revenue, and comp guidance
Krispy Kreme, Inc. (KKD) reiterates FY22 guidance; provides FY23 guidance in constant currency; offers FY26 financial goals
Quanex (NX) beats by $0.15, beats on revs
Steel Dynamics (STLD) guides Q4 adjusted EPS well above consensus; profitability from steel operations to be lower sequentially, metals recycling operations to moderately improve, steel fabrication operations to be steady
U.S. Steel (X) guides Q4 EPS above consensus
Winnebago (WGO) beats by $0.28, beats on revs
News:
Senate passes bill to fund government through December 23to give Congress more time to work on full omnibus spending package; President Biden will sign it
Senate passes $858 billion defense bill which includes repeal of the military coronavirus vaccination mandate. President Biden will sign it
Senate fails to pass Senator Joe Manchin's (D-WV) energy permitting reform legislation by a vote of 47-47
Evidence of deaths from coronavirus in Beijing is increasing despite official counts, according to Financial Times
PCAOB secures complete access to inspect, investigate chinese firms for first time in history
EU issues statement by commissioner Gentiloni on the adoption of the directive on minimum effective taxation for multinationals
AAR Corp (AIR) expands its partnership with Ontic by signing a military customer support distribution contract extension and a new long-term global commercial distribution agreement
AbbVie (ABBV) submits sNDA for linaclotide (LINZESS) for treatment of functional constipation
Amazon (AMZN) aiming to bring fantasy game onto screens, according to Reuters
Apellis Pharmaceuticals (APLS) has submitted a Marketing Authorization Application to the European Medicines Agency for intravitreal pegcetacoplan
Apollo Medical (AMEH) announces share repurchase program of up to $50 mln
AST SpaceMobile (ASTS) and NASA signed an agreement that formalizes cooperation to protect assets in low Earth orbit
Bright Horizons (BFAM) discloses ransomware cyber-incident; does not believe that client, customer, family or employee data have been compromised
Cerevel Therapeutics (CERE) announces publication in The Lancet of emraclidine data from Phase 1b clinical trial in people living with schizophrenia
China Yuchai (CYD) subsidiary Guangxi Yuchai Machinery Company Limited ("GYMCL"), has been removed from the Unverified List by the U.S. Department of Commerce
Digital World Acquisition Corp (DWAC) received a letter of resignation from Luiz Philippe Braganza, resigning as Chief Financial Officer, effective on December 9, 2022
Energy Fuels (UUUU) awarded a contract to sell $18.5 mln of natural uranium concentrates to the U.S. government for the establishment of a strategic uranium reserve
Equinor (EQNR): Krafla to be developed using ground-breaking concept
General Electric (GE): French officials raid GE site on tax fraud allegations, according to Reuters
Guardant Health (GH) announces positive results from pivotal ECLIPSE study evaluating a blood test for the detection of colorectal cancer
Hersha Hospitality Trust (HT) announces special dividend of $0.50/share and continuation of quarterly cash dividend, both payable on Jan 18, 2023
JAKKS Pacific (JAKK) learned of a cybersecurity threat to its information technology system on Dec 8
LPL Financial (LPLA) releases monthly activity report for November 2022; total advisory and brokerage assets increased 4.5% to $1.14 trillion
Manchester United (MANU) reaches mutually-beneficial agreement with TeamViewer AG under which MANU shall have option to buy back the rights to the club's shirt front sponsorship
MDU Resources (MDU) submits confidential draft registration statement in connection with planned spinoff of Knife River Corporation
Melco Resorts & Entertainment (MLCO) announces final award of gaming concession
MGM Resorts (MGM): MGM Grand Paradise and Macao SAR government signed gaming concession contract
Nurix Therapeutics (NRIX) Announces Clearance of Investigational New Drug Application for NX-5948 Supporting Plans to Expand Enrollment to U.S. Clinical Sites
Ocugen (OCGN) Announces OCU400 Receives Orphan Drug Designations for Retinitis Pigmentosa and Leber Congenital Amaurosis
Oshkosh (OSK) awarded $543 mln U.S. Army contract modification
Pediatrix Medical Group (MD) appoints James D. Swift, M.D. as CEO, succeeding Mark S. Ordan, who has been named executive chair of the board of directors
PG&E (PCG) files application with CPUC requesting cost recovery of approximately $1.36 bln related to wildfire mitigation, certain catastrophic events, and a number of other activities
Raytheon Technologies (RTX) awarded $619 mln U.S. Navy contract modification
Regeneron Pharma (REGN) and Sanofi (SNY)'s Dupixent (dupilumab) recommended for EU approval by the CHMP for the treatment of eosinophilic esophagitis
ReNew Energy Global (RNW) signed a renewable energy agreement of 150 MW with Microsoft India, in one of the largest such deals in the country
Rithm Capital (RITM) authorizes a new stock repurchase program of up to $200 mln of common stock and up to $100 mln of preferred stock; replaces previous authorization for the same amounts
Sands China (SCHYY) signs 10-year gaming concession contract
Seacoast Banking (SBCF) announces renewal of share repurchase program
Shoe Carnival (SCVL) announces new share repurchase program for up to $50 mln of common stock
Synchrony Financial (SYF) Executive Chair Margaret Keane to retire, effective April 3, 2023; Jeffrey Naylor, a member of SYF's Board since 2014, will succeed Margaret Keane as Chair
Synovus (SNV) appoints CEO Kevin Blair to Chairman, effective January 1, 2023; succeeds Kessel D. Stelling, who is retiring as Chairman on December 31
TuSimple Holdings (TSP) appoints interim CFO Eric Tapia as Chief Financial Officer
uniQure (QURE) announces that its partner, CSL, has received a positive opinion recommending conditional marketing authorization for etranacogene dezaparvovec from the CHMP
Wynn Resorts Macau (WYNN) signs 10-year gaming concession agreement
Zai Lab (ZLAB) Presents Interim Overall Survival Data for ZEJULA (niraparib) from the NORA Phase 3 Study at the ESMO Virtual Plenary
M&A:
American Electric (AEP): The Federal Energy Regulatory Commission denies proposed transaction where Liberty Utilities Co. (AQN) sought to acquire AEP Kentucky Transmission Company
B&G Foods (BGS) to sell the Back to Nature brand to Barilla America; terms not disclosed
Chevron (CVX) announces that it has invested in Svante, a carbon capture and removal technology company
D.R. Horton (DHI) acquires Riggins Custom Homes, a homebuilder in Northwest Arkansas, for $107 mln in cash
Henry Schein (HSIC) makes investment to form strategic partnership with biotech Dental Group
Hormel Foods (HRL) announced it has acquired a minority stake in PT Garudafood Putra Putri Jaya Tbk
Instructure (INST) acquires LearnPlatform; financial details not disclosed
Maxar Technologies (MAXR) confirms it will be acquired by Advent Int'l for $6.4 bln, or $53/share in cash
Prenetics (PRE) is acquiring a majority stake in ACT Genomics Holdings Company Limited; Expects ACT to contribute $25-30 mln in revenues in 2023
Robert Half (RHI) subsidiary Protiviti acquires digital experience agency R2integrated to grow its digital transformation and customer experience offering to clients; financial details not disclosed
Syndicate:
Avidity Biosciences (RNA) prices underwritten public offering of 12 mln shares of its common stock at $17.25/share
Equitable Holdings (EQH) files for $600 mln mixed securities shelf offering
MasTec (MTZ) files mixed securities shelf offering
Novavax (NVAX) priced public offering to sell 6,500,000 shares of its common stock at $10.00/share
PennantPark Floating Rate Capital (PFLT) files for $500 mln mixed securities shelf offering
IPOs:
Expect to Price:
No IPOs expected.
Gapping Up/Down
Gapping up: EXAS +16.6%, OCGN +10.3%, OB +7.1%, ADBE +5%, ASTS +2.6%, X +2.6%, AMEH +2.1%, NX +1.9%, INST +1.7%, RITM +1.4%, SCVL +1.2%, VMEO +1.1%,
Gapping down: GH -33%, DHI -1.7%, CVX -1.2%,
Analyst Research (see Upgrades/Downgradescalendarfor full list):
Upgrades
Agilysys (AGYS) upgraded to Buy from Neutral at BTIG Research; tgt $83
Cadence Design (CDNS) upgraded to Buy from Neutral at BofA Securities
EPR Properties (EPR) upgraded to Neutral from Underweight at JP Morgan; tgt $52
First Industrial Realty (FR) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $56
Downgrades:
Acuity Brands (AYI) downgraded to Neutral from Outperform at Robert W. Baird; tgt lowered to $190
Agiliti (AGTI) downgraded to Neutral from Buy at BofA Securities; tgt $19
American Homes 4 Rent (AMH) downgraded to Neutral from Overweight at JP Morgan; tgt $36
Aris Water Solutions (ARIS) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $17
AXIS Capital (AXS) downgraded to Underweight from Equal Weight at Wells Fargo; tgt $55
AvalonBay (AVB) downgraded to Underweight from Neutral at JP Morgan; tgt lowered to $197
DBV Technologies (DBVT) downgraded to Sell from Neutral at Goldman
DT Midstream (DTM) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $62
Easterly Government Properties (DEA) downgraded to Underperform from Market Perform at BMO Capital Markets; tgt lowered to $14
Equitrans Midstream (ETRN) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $8
Equity Residential (EQR) downgraded to Underperform from Market Perform at BMO Capital Markets; tgt lowered to $61
Essex Property (ESS) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $267
Extra Space Storage (EXR) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $167
Others:
A-Mark Precious Metals (AMRK) initiated with a Buy at B. Riley Securities; tgt $50
Alaska Air (ALK) resumed with a Buy at Goldman; tgt $60
Allegiant Travel (ALGT) resumed with a Buy at Goldman; tgt $96
American Airlines (AAL) resumed with a Neutral at Goldman; tgt $13
atai Life Sciences N.V. (ATAI) initiated with a Buy at EF Hutton; tgt $23
COMPASS Pathways (CMPS) initiated with a Buy at EF Hutton; tgt $38
Compass Therapeutics (CMPX) initiated with a Buy at EF Hutton; tgt $10.30
CoStar Group (CSGP) initiated with an Overweight at JP Morgan; tgt $100
CyberArk (CYBR) initiated with a Buy at DA Davidson; tgt $175
Delta Air Lines (DAL) resumed with a Buy at Goldman; tgt $40
E2open (ETWO) initiated with a Buy at Redburn
Upcoming Events:
Econ Data:
09:45 ET: IHS Markit Manufacturing PMI - Prelim for Dec (Briefing.comConsensus NA; Prior 47.7)
09:45 ET: IHS Markit Services PMI - Prelim for Dec (Briefing.comConsensus NA; Prior 46.2)
Earnings:
Monday (Dec 12)
Afternoon: COUP FLNC ORCL
Tuesday (Dec 13)
Morning: CNM PLAB
Afternoon: ABM BRZE
Wednesday (Dec 14)
Morning: REVG WEBR
Afternoon: LEN NDSN TCOM
Thursday (Dec 15)
Morning: JBL
Friday (Dec 16)
Morning: ACN DRI WGO
Asia & Europe detail:
Asia: Nikkei -1.9%, Hang Seng +0.4%, Shanghai Composite UNCH
Equity indices in the Asia-Pacific region ended the week on a mostly lower note. Japan's Manufacturing PMI remained in contraction for the second consecutive month in the flash reading for December. South Korean consumers are facing higher electricity and gas prices next year. China's National Development and Reform Commission noted that the Chinese economy is facing a "more complex and grim external environment," but remains on a positive long-term trend. South China Morning Post reported that Chinese officials are eager to fully reopen the border with Hong Kong in January.
In economic data:
Japan's flash December Manufacturing PMI 48.8 (expected 49.0; last 49.0) and flash Services PMI 51.7 (expected 51.1; last 50.3)
South Korea's November trade deficit $6.99 bln (last deficit of $7.01 bln). November Imports 2.7% yr/yr (last 2.7%) and Exports -14.0% yr/yr (last -14.0%)
Singapore's November trade surplus $3.047 bln (last surplus of $4.024 bln). November non-oil exports -9.2% m/m (expected -3.0%; last -4.2%); -14.6% yr/yr (expected -7.4%; last -6.1%)
Hong Kong's November Unemployment Rate 3.7% (last 3.8%)
Australia's flash December Manufacturing PMI 50.4 (last 51.3) and flash Services PMI 46.9 (last 47.6)
New Zealand's November Business NZ PMI 47.4 (last 49.3)
---Equity Markets---
Japan's Nikkei: -1.9% (-1.3% for the week)
Hong Kong's Hang Seng: +0.4% (-2.3% for the week)
China's Shanghai Composite: UNCH (-1.2% for the week)
India's Sensex: -1.4% (-0.6% for the week)
South Korea's Kospi: UNCH (-1.2% for the week)
Australia's ASX All Ordinaries: -0.7% (-0.9% for the week)
---FX---
USD/JPY: -0.5% to 137.06
USD/CNH: -0.2% to 6.9766
USD/INR: -0.2% to 82.63
Europe: DAX -0.4%, FTSE -1.3%, CAC -1.2%
Major European indices trade in the red despite the release of better than expected, though still contractionary, flash Manufacturing and Services PMI readings for December. Several European Central Bank policymakers have repeated that more rate hikes are on the way. Germany's Bundesbank raised its 2023 CPI forecast for Germany to 7.2% from 4.5% while the GDP forecast was cut to -0.5% from +2.4%. The growth outlook for 2024 was trimmed to 1.7% from 1.8% while the CPI forecast was raised to 4.1% from 2.6%.
In economic data:
Eurozone's November CPI -0.1% m/m, as expected (last 1.5%); 10.1% yr/yr (expected 10.0%; last 10.6%). November Core CPI 0.0% m/m (expected 0.6%; last 0.6%); 5.0% yr/yr, as expected (last 5.0%). October trade deficit EUR26.50 bln (expected deficit of EUR44.50 bln; last deficit of EUR34.50 bln). Flash December Manufacturing PMI 47.8 (expected 47.1; last 47.1) and flash Services PMI 49.1 (expected 48.5; last 48.5)
Germany's flash December Manufacturing PMI 47.4 (expected 46.3; last 46.2) and flash Services PMI 49.0 (expected 46.3; last 46.1)
U.K.'s November Retail Sales -0.4% m/m (expected 0.3%; last 0.9%); -5.9% yr/yr (expected -5.6%; last -5.9%). November Core Retail Sales -0.3% m/m (expected 0.3%; last 0.7%); -5.9% yr/yr (expected -5.8%; last -6.4%)
France's flash December Manufacturing PMI 48.9 (expected 48.2; last 48.3) and flash Services PMI 48.1 (expected 49.1; last 49.3)
Italy's October trade deficit EUR2.12 bln (last deficit of EUR6.51 bln). November CPI 0.5% m/m, as expected (last 0.5%); 11.8% yr/yr, as expected (last 11.8%)
---Equity Markets---
STOXX Europe 600: -1.2% (-3.2% week-to-date)
Germany's DAX: -0.4% (-3.1% week-to-date)
U.K.'s FTSE 100: -1.3% (-1.9% week-to-date)
France's CAC 40: -1.2% (-3.5% week-to-date)
Italy's FTSE MIB: -0.3% (-2.6% week-to-date)
Spain's IBEX 35: -1.0% (-1.9% week-to-date)
---FX---
EUR/USD: +0.1% to 1.0633
GBP/USD: +0.1% to 1.2191
USD/CHF: +0.2% to 0.9297
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