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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Return to Sender who wrote (88744)

8/1/2022 4:30:30 PM

From: Return to Sender

2 Recommendations

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kckip
Sr K

Read Replies (2) | Respond to of 95358

Market Snapshot

briefing.com

Dow	32800.28	-46.73	(-0.14%)
Nasdaq	12368.94	-21.71	(-0.18%)
SP 500	4118.70	-11.66	(-0.28%)
10-yr Note

NYSE	Adv 1692	Dec 1447	Vol 870 mln
Nasdaq	Adv 1978	Dec 2225	Vol 4.3 bln

Industry Watch

Strong: Consumer Discretionary, Consumer Staples, Industrials, Utilities

Weak: Energy, Real Estate, Materials, Financials, Utilities

Moving the Market

-- Expectations that market is due for consolidation period after July rally

-- Falling oil prices

-- July ISM Manufacturing Index corroborated the market's thinking that the Fed can ease up on the pace of its rate hikes

-- Geopolitical skittishness on report House Speaker Pelosi to visit Taiwan despite China's warning against it

Closing Summary
01-Aug-22 16:25 ET

Dow -46.73 at 32800.28, Nasdaq -21.71 at 12368.94, S&P -11.66 at 4118.70
[BRIEFING.COM] The stock market opened on a softer note before finding resilience to the selling effort, which was mostly thanks to falling oil prices and leadership from the mega caps. The resilience couldn't stick and the market closed the first session in August with modest losses, but well off early intraday lows.

The trade today was marked by expectations that the market is due for a consolidation period after the July rally. Market participants were also weighing geopolitical concerns after CNN reported that House Speaker Nancy Pelosi would visit Taiwan despite China's warning against it.

Higher growth areas outpaced the broader market in the early going on the heels of the July ISM Manufacturing Index before losing their influence by the close.

The July ISM Manufacturing Index, which fell to 52.8% from 53.0%, highlights a slowdown in the pace of manufacturing expansion. The real attention grabber, however, was the prices index, which plunged to 60.0% from 78.5% in June.

The Treasury market reacted to this welcome indicator of weakening inflation pressures. The 2s10s inversion widened today with the 10-yr note yield falling four basis points to 2.61% while the 2-yr note yield rose one basis point to 2.91%.

The drop in long-term rates and the festering growth concerns contributed to the outperformance of growth stocks early on. The Vanguard Mega Cap Growth ETF (MGK), which was up 0.9% this morning, closed down 0.2% and just a hair in front of the S&P 500. The PHLX Semiconductor Index was up 1.3% at its high but closed with a modest gain of 0.4%.

S&P 500 sector performance was driven by constituents' news catalysts today. The defensive-oriented consumer staples sector (+1.2%) was at the top of the leaderboard with Colgate-Palmolive (CL 81.10, +2.36, +3.0%) being upgraded today to Equal Weight from Underweight at Wells Fargo. The consumer discretionary sector followed, up 0.5%.

The energy sector (-2.2%) was the top laggard in the face of falling oil prices. WTI crude oil futures fell 4.7% to $93.93/bbl. Natural gas futures fell 0.7% to $8.26/mmbtu. Unleaded gasoline futures fell 3.2% to $3.00/gal.

On an individual basis, Dow component Boeing (BA 169.07, +9.76, +6.1%) was a big winner today following reports that the FAA approved the company's plan that would allow for the resumption of 787 Dreamliner deliveries.

Arconic (ARNC), BP (BP), Caterpillar (CAT), DuPont (DD), Eaton (ETN), JetBlue (JBLU), Marriott (MAR), Molson Coors Brewing (TAP), and Uber (UBER) are all due to report earnings ahead of tomorrow's open.

Tuesday's economic data is limited to the June JOLTS Job Openings (prior 11.254 million).

Reviewing today's economic data:

July IHS Markit Manufacturing PMI - Final 52.2%; Prior 52.3%
July ISM Manufacturing Index 52.8% (Briefing.com consensus 52.5%); Prior 53.0%
- The key takeaway from the report is that it connotes a clear slowdown in manufacturing activity, highlighted by the contraction in new order activity, employment, and the biggest monthly drop in the prices index since June 2010 (and fourth steepest decline on record going back to 1948).
June Construction Spending -1.1% (Briefing.com consensus 0.2%); Prior was revised to 0.1% from -0.1%
- The key takeaway from the report is the downturn seen in residential spending, which featured a 3.1% decline in new single family construction. The latter is consistent with weak homebuilder sentiment, which has deteriorated on the back of higher mortgage rates crimping affordability for prospective buyers.

Dow Jones Industrial Average: -9.7% YTD
S&P 400: -11.6% YTD
S&P 500: -13.6% YTD
Russell 2000: -16.1% YTD
Nasdaq Composite: -20.9% YTD

Market moves sideways ahead of the close
01-Aug-22 15:30 ET

Dow -18.33 at 32828.68, Nasdaq -29.45 at 12361.20, S&P -12.07 at 4118.29
[BRIEFING.COM] The stock market saw some up and down price action in the last half hour, albeit in a narrow range.

After the close, Activision Blizzard (ATVI), Avis Budget (CAR), Pinterest (PINS), Sanmina (SANM), and Simon Properties (SPG) headline the quarterly reports.

Arconic (ARNC), BP (BP), Caterpillar (CAT), DuPont (DD), Eaton (ETN), JetBlue (JBLU), Marriott (MAR), Molson Coors Brewing (TAP), and Uber (UBER) are all due to report earnings ahead of tomorrow's open.

Tuesday's U.S. economic data is limited to the June JOLTS Job Openings report (prior 11.254 million).

Market trends somewhat higher
01-Aug-22 15:00 ET

Dow +16.28 at 32863.29, Nasdaq +14.77 at 12405.42, S&P -4.28 at 4126.08
[BRIEFING.COM] Each major index moved mostly sideways in recent trading before trending somewhat higher again.

Energy complex futures all settled lower. WTI crude oil futures fell 4.7% to $93.93/bbl. Natural gas futures fell 0.7% to $8.26/mmbtu. Unleaded gasoline futures fell 3.2% to $3.00/gal.

Meanwhile, the S&P 500 energy sector (-2.4%) remains the top laggard by a decent margin with every component trading in the red.

Separately, the Treasury market remains mixed with the 2-yr note yield unchanged at 2.91% while the 10-yr note yield is down three basis points to 2.61%.

Jacobs, Loews underperform in S&P 500 after earnings
01-Aug-22 14:25 ET

Dow -81.83 at 32765.18, Nasdaq -24.10 at 12366.55, S&P -16.24 at 4114.12
[BRIEFING.COM] The S&P 500 (-0.39%) is today's worst-performing index

S&P 500 constituents Cboe Global Markets (CBOE 116.05, -7.33, -5.94%), Jacobs Engineering (J 129.89, -7.41, -5.40%), and Loews Corp (L 55.61, -2.64, -4.53%) dot the bottom of today's standings. Jacobs and Loews both underperform following earnings.

Meanwhile, Massachusetts-based diagnostics firm PerkinElmer (PKI 162.60, +9.43, +6.16%) is one of today's better performers following earnings, news of business divestitures.

Gold higher as dollar, yields slip to start the week
01-Aug-22 14:00 ET

Dow -112.03 at 32734.98, Nasdaq -60.66 at 12329.99, S&P -23.18 at 4107.18
[BRIEFING.COM] The markets have fallen off their levels from the previous half hour, the tech-heavy Nasdaq Composite (-0.49%) now narrowly in second place.

Gold futures settled $5.90 higher (+0.3%) to $1,787.70/oz as the dollar and yields lagged.

Meanwhile, the U.S. Dollar Index is down about -0.4% to $105.46.

Builders FirstSource builds nice gains with strong Q2 report, bodes well for peers (BLDR)
Updated: 01-Aug-22 13:53 ET

Builders FirstSource (BLDR +8%) is building some big gains today after blowing away Q2 results with EPS and revenue well ahead of analyst expectations. As the nation's largest supplier of structural building products (roof/floor trusses, wall panels, stairs, windows, doors etc.), we were pretty surprised to see this much upside. In fairness, BLDR did make some cautious comments about 2H22, lowering its base business guide for revenue.

BLDR posted a record of nearly $7 bln in Q2 revenue and posted a record adjusted EBITDA margin of 21.8%. Results were driven by solid demand for housing, productivity improvements and pricing discipline. Although BLDR continues to face supply chain constraints, it is seeing signs that those constraints are loosening and lead times are starting to return to normal. This has been a persistent problem for BLDR in recent quarters, so it is great to hear there is improvement.
Despite the very strong Q2 results, BLDR was realistic about the macro headwinds. Given inflation, higher mortgage rates and cancellation rates in the mid-teens, management now expects full-year single-family starts to be down mid-single digits in its markets. As a result, it is lowering its base business guidance on sales to +8-12% from +10-14%. EBITDA guidance remains unchanged.
BLDR concedes that its industry is clearly experiencing pockets of deceleration. However, BLDR counters that narrative by noting that it is a much different company today than it was in 2007, during the last housing downturn. BLDR remains confident it can navigate in this persistently unpredictable environment.

Overall, we think this report bodes well for upcoming earnings reports from other homebuilder suppliers (AMWD, BECN, BXC, DOOR, TREX). However, we expect 2H22 cautious commentary from them as well. On a final note, we have to mention BLDR's massive share buyback activity as it really stood out to us. BLDR repurchased nearly $1 bln in shares in Q2. That is huge for a $12.7 bln market cap. Also, BLDR has now repurchased 25% of its shares outstanding in just the past 12 months, which is almost unheard of. Management is making a big statement that its shares look undervalued and that is can manage well even if the industry slows.

ON Semiconductor feels off as slowing demand in noncore end markets in Q2 spurs some uneasiness (ON)
Updated: 01-Aug-22 13:34 ET

ON Semiconductor (ON -5%) feels slightly off today despite toppling earnings and revenue expectations in Q2 while guiding Q3 numbers ahead of consensus. Like its peer Texas Instruments (TXN), ON benefited drastically from robust demand in its automotive and industrial markets.

Why, then, are shares sliding today? Although nothing glaring stands out, we think ON's comments regarding slowing demand within its noncore end markets are stirring some uneasiness today. Profit-taking may also be in the works as shares have soared roughly 40% from July 1 lows as of Friday's close. Meanwhile, after TXN's sizeable Q2 earnings beat last week, investors may have expected better numbers from ON in Q2. Lastly, the company expressed cautious optimism about the near future, stating that it remains sensitive to dynamic market conditions.

Despite these weak points, ON's Q2 report contained plenty of positives. Adjusted EPS surged 113% yr/yr to $1.34 as non-GAAP gross margin expanded 1,130 bps yr/yr to 49.7%.
Within automotive and industrial, which ignited ON's explosive earnings growth, high-growth, high-margin businesses such as vehicle electrification and industrial automation paved the way for solid Q2 numbers. Combined, these two industries grew 38% yr/yr, making up around two-thirds of ON's total revs in the quarter, which appreciated 24.9% yr/yr to $2.08 bln.
More specifically, ON's Intelligent Power segment, which contains sales to the electric vehicle (EV) market, jumped 31% yr/yr and 10% sequentially. Part of why ON is benefiting enormously from EVs is that they require up to $700 of incremental ON components for drivetrain and onboard charging compared to traditional internal combustion engine (ICE) vehicles. As a result, along with the transition from ICE vehicles to EVs, ON expects Intelligent Power to continue experiencing robust growth over the long term.
Supply chain constraints that continue to disrupt industries are also acting as a tailwind for ON, spurring accelerated factory automation growth. This is highlighted by 70% growth yr/yr in ON's scanning business within its industrial end market. Combining this with automotive manufacturers incorporating more image sensors into their vehicles for advanced driver assistance systems (ADAS), ON's Intelligent Sensing segment grew 39% yr/yr and 10% sequentially.
Looking ahead at Q3, ON guided adjusted EPS and revs above consensus, predicting 51% growth in earnings yr/yr and 22% growth in revs at the midpoint. ON stated that although demand is expected to continue slowing within its noncore businesses, parts of which it is exiting, strength within automotive and industrial end markets should persist.

Overall, ON's Q2 results were solid. However, weak demand within its noncore businesses and a higher bar following TXN's upbeat Q2 numbers are clouding many positive developments. Nevertheless, ON's exceptional growth within its high-margin, high-growth businesses proves that its move around a year and a half ago to shift focus toward margins and growth is paying off. With a forward P/E ratio of ~14x, a nice discount relative to TXN at ~20x, ON still has plenty of upside over the long run.

JELD-WEN tumbles on slashed FY22 guidance as conditions that plagued Q1 intensified in Q2 (JELD)
Updated: 01-Aug-22 11:07 ET

Window and door manufacturer JELD-WEN (JELD -17%) is being shown the door today after missing Q2 earnings estimates and slashing its FY22 revenue guidance. Perhaps most frustrating to investors is that after JELD missed the mark in Q1, the company still expressed confidence in hitting its FY22 targets due to a strong backlog and cost mitigation efforts. It also is not helping that JELD expects elevated input costs and softening demand to linger for the remainder of the year.

In Q2, adjusted earnings fell 3.4% yr/yr to $0.57 as cost inflation from raw materials, freight, labor, and energy took a 380 bp bite out of adjusted EBITDA margins. Meanwhile, revenue growth of 6.8% yr/yr to $1.33 bln met analyst expectations.
Demand softness was felt throughout all JELD's markets but was particularly problematic in North America and Europe (totaling 88% of FY21 revenue). In North America, sales climbed 13.4% yr/yr, driven by strong price realization but partially offset by flat volume/mix yr/yr. Meanwhile, in Europe, revenue dipped 2.8% yr/yr primarily due to the strengthening of the U.S. dollar. However, core revs did grow 9%, fueled by favorable pricing, but again, partially offset by negative contribution from volume/mix.
On the plus side, JELD offered a few positive comments, noting that in North America, order rates remain strong, with revs experiencing growth in channels that primarily serve the residential new construction market.
- JELD's comments echo the sentiments of homebuilders like D.R. Horton (DHI) and PulteGroup (PHM). Both companies may have noticed a moderation in demand in JunQ. However, they are still seeing qualified buyers remain in the market as household formations persist and inflationary pressures drive higher rents.
Furthermore, even though higher mortgage rates and economic uncertainty are likely to continue creating headwinds for JELD in the near term, long-term developments remain positive. For example, the repair and remodeling industry is expected to stay more resilient over the long term due to the level of homeowner equity accumulation, the increasing age of the existing stock of houses, and homeowners' increased focus on investing in their property.
- Also, it is worth noting that the multifamily housing industry saw solid demand in Q2, which is expected to help offset short-run negative pressures.
Nevertheless, these silver linings are doing little to douse the current sell-off, sparked by worsening profitability yr/yr in Q2 and intensified by JELD's FY22 revenue guidance of +4-6% growth yr/yr, coming in well below its prior forecast of +7-10%.

Overall, it was a challenging quarter for JELD. Investors already anticipated rising interest rates to disrupt JELD's financials, illustrated by the stock tumbling over 30% YTD as of Friday's close. However, the market did not foresee the situation crumbling as much as it did in Q2, which led to a meaningful reduction in JELD's FY22 revenue forecast. With multiple home builders also cutting their FY22 outlook recently, we think it is best to remain on the sidelines over the near future until macroeconomic conditions begin to brighten.

Global Payments buying EVO Payments; reports nice quarter (GPN)
Updated: 01-Aug-22 11:04 ET

Global Payments (GPN +6%) reported impressive Q2 results this morning with upside for both EPS and revenue. It also reaffirmed FY22 guidance, which was encouraging to see in this environment. Coming into this report, we had concerns that this payments technology company might report a miss or possibly guide down. Recall that several retailers have lowered EPS or comp guidance in recent weeks (WMT, TGT, BBY etc.) and GPN has high exposure to consumer spend, so it was reassuring to see the upside.

But its earnings report was not the only big news today. The company also announced a major acquisition. It will acquire EVO Payments (EVOP), a provider of payment technology integrations, in an all-cash deal at $34 per share, a 24% premium over Friday's closing price. The deal expands GPN's presence in new and existing faster growth geographies. Importantly, it also boosts GPN's offering in the B2B space with the addition of accounts receivable software with broad third-party acceptance.
As part of the deal, Silver Lake will make a strategic investment of $1.5 bln in Global Payments in the form of a convertible note. We would not overlook the importance of this aspect to the deal. Not only does it provides funding, but Silver Lake has a well known impressive track record of successful investments in tech companies. Clearly, they like the direction GPN is heading.
Speaking of which, we think the B2B element of the EVOP deal is important. Recall that, in February, GPN announced a strategic review of its Netspend consumer business so that it can focus on its core corporate clients. As such, GPN is announcing a deal today to sell Netspend's consumer assets to Searchlight Capital for $1 bln. GPN will retain Netspend's B2B assets, which will be included in its Issuer Solutions segment starting in Q3. Netspend's consumer portfolio is attractive, but there is limited overlap between its customer base and GPN's traditional corporate clients. Clearly, GPN wants to focus more on the B2B side of the business.
GPN sees the B2B market as substantially under-penetrated and it wants to take advantage of that opportunity. Last October, it acquired MineralTree, which provided GPN with a cloud Accounts Payable business and GPN has been on the lookout for an Accounts Receivable corollary business and with EVOP, it now has that. GPN believes that EVOP provides that missing link and allows GPN to offer an end-to-end platform.

GPN initially traded flat, but has started to move higher. We think that is because there are so many cross currents with all the news today. There is a good quarter and we have to think the Silver Lake investment is a stamp of approval from a well-respected tech investor. We also find the guidance to be reassuring, calming our nerves about consumer spending.

However, the convertible note does cause some dilution and perhaps investors are a little concerned about the rich premium being paid for EVOP. Overall, we like the deal as it fortifies GPN's already dominant position in existing markets and opens up new geographies. Also, we like GPN's increased focus on the B2B side, which we think is a more lucrative business and less volatile than the consumer side.

Last Updated: 29-Jul-22 15:00 ET | Archive
Shelter costs create difficult proving ground for policy pivot
From time to time, the market sees what it wants to see and hears what it wants to hear. This is one of those times.

The month of July has been a splendid month-- and we're not talking about the weather. It has been splendid for investors who, frankly, needed a splendid month given that the first six months of the year were anything but splendid.

Alas, we write this with the Nasdaq Composite up 12.2% in July and the S&P 500 up 9.0%. As we alluded to last week, the stock market has gotten better as the economic and earnings news has gotten relatively worse and sometimes just bad.

The stock market has rallied like it has partly because bearish sentiment hit extreme levels and partly because the market has allowed itself to believe that the Federal Reserve will become a friend again by cutting rates as soon as the first half of 2023.

Ironically, that thinking rests on a belief that the unfriendly rate hikes in 2022 will kill the economy or at least put the economy on its back. The connection, it seems, is that the market loves the idea of the Fed turning soft on rate hikes more than it fears the economy turning soft and/or falling into a recession.

It is not surprising considering a new generation of market participants has grown up on rock-bottom interest rates that were the foundation for a prolonged bull market. Who wouldn't want that back? Hence, this market loves to hear bad news at the moment, because what it sees in the bad news is a path back to a friendlier Fed.

Rate Hikes on the Chopping Block

The fed funds futures market is pricing in another 100 basis points of rate hikes for the remainder of 2022, with the target range for the fed funds rate topping out at 3.25-3.50% in December, according to the CME's FedWatch Tool. Then, the fed funds futures market thinks the Fed will cut rates two times in the first half of 2023, leaving the target range at 2.75-3.00% in June 2023.

Falling commodity prices, fading inflation expectations, improving supply chains, and the Fed's stated effort to drive growth below potential with frontloaded rate hikes that weaken demand (and the labor market as a result) are primary selling points for the rate-cut view.

The Fed and other central banks might stamp out growth with their rate hikes but stamping out inflation might not be such a cooperative endeavor.

Current indications point to Europe remaining stuck with an energy crisis this winter, a lot of companies have announced plans to raise prices further in coming months or at least see inflation pressures persisting, any weakening in the dollar would be a boon for dollar-denominated commodity prices, and shelter costs are expected to remain inflated.

In short, getting from here (tightening policy) to there (easing policy) involves a lot of proving ground to cross, including the Fed's own median projection that the target range for the fed funds rate will hit 3.80% in 2023.

One of the potentially sticky points on that proving ground -- for the Fed anyway -- will be shelter costs.

Landlords Land a Raise

The Personal Income and Spending Report for June was not good. It featured high inflation, weak real spending, a decline in real disposable personal income, and a drop in the personal savings rate as a percentage of disposable income to 5.1%, which is the lowest since August 2009.

Another thing that jumped off the pages of that report to us was the month-over-month increase in rental income of persons with capital consumption adjustment. That's a fanciful economic description for the income of landlords. That income increased 2.5% month-over-month on the heels of a 2.6% monthly increase in both April and May. The monthly gains from January to March ranged from 0.1-0.2%.

The more robust income gains of late for landlords stem from rising rental rates and/or occupancy rates. To be sure, the high prices for new and existing homes, combined with the spike in mortgage rates this year, has created a good deal of affordability pressure for prospective buyers.

Many have been "priced out of the market" from the economics alone while others have been driven out by the psychological view that they might be buying at the top of a housing cycle. In either case, it is necessary to fall back on a rental unit until the forces and economics align to allow for the purchase of a home.

That, however, creates more demand for rental units, which inevitably leads to higher rental costs.

The June CPI report showed shelter costs increasing 0.6% month-over-month and 5.6% year-over-year. That increase was driven by a 0.8% gain in the rent of primary residences (+5.8% year-over-year) and a 0.7% increase in owners' equivalent rent of residences (OER), which was up 5.5% year-over-year.

Those two components -- the rent of primary residence and OER -- make up nearly the entirety of the shelter cost, which accounts for 41.4% of core CPI. Accordingly, shelter costs have a disproportionate influence on the measurement of core CPI.

That matters greatly because Fed Chair Powell has conceded that the Fed's policy tools don't work on commodity price shocks (namely food and energy) that factor into total CPI. Hence, when making policy decisions, the Fed keeps a closer watch on core inflation, which wouldn't include commodity price shocks.

What It All Means

The Fed has stated that its preferred inflation gauge is the core-PCE Price Index, but that doesn't mean it won't take the core-CPI reading into account, especially when the general public's inflation expectations are influenced by the CPI data.

The problem the Fed is going to face, and which the market will need to get its mind around, is that shelter costs aren't expected to fall off sharply in the near term, regardless of further rate increases. That's because the manner in which the Consumer Price Index measures rent and OER lags home prices.

According to research done by Fannie Mae, house price gains on a year-over-year basis historically lead changes in the CPI shelter costs measures by about five quarters1. Home price gains have started to weaken, but the latest Case-Shiller Home 20-city Composite Price Index still showed prices up a hefty 20.5% year-over-year.

A moderation in house prices will work in favor of core CPI readings eventually, but there is still more catching up to do in terms of shelter costs that capture the home price appreciation. That is why core CPI levels could remain stuck at elevated levels that keep the Fed from turning friendly with its monetary policy as soon as the fed funds futures market thinks it might.

That understanding isn't a problem now because the market is only projecting preferred outcomes at the moment for the path of monetary policy. That path, however, still needs to cut through a difficult proving ground.

-- Patrick J. O'Hare, Briefing.com

1Brescia, Eric. (2021, June). Housing Insights: Housing Poised to Become Strong Driver of Inflation. Fannie Mae.

To: Return to Sender who wrote (88744)

8/3/2022 5:37:36 PM

From: Return to Sender

2 Recommendations

Recommended By
kckip
Sr K

Read Replies (1) | Respond to of 95358

Market Snapshot

briefing.com

Dow	32814.38	+416.33	(1.29%)
Nasdaq	12668.12	+319.40	(2.59%)
SP 500	4155.24	+63.98	(1.56%)
10-yr Note

NYSE	Adv 2170	Dec 935	Vol 865 mln
Nasdaq	Adv 2996	Dec 1334	Vol 5.5 bln

Industry Watch

Strong: Consumer Discretionary, Communication Services, Real Estate, Information Technology, Financials

Weak: Energy

Moving the Market

-- Leadership from the mega caps

-- Relief that China's response to Speaker Pelosi's Taiwan visit was not more consequential

-- Better-than-feared earnings results since yesterday's close

-- Sharp drop in oil prices

Closing Summary
03-Aug-22 16:25 ET

Dow +416.33 at 32814.38, Nasdaq +319.40 at 12668.12, S&P +63.98 at 4155.24
[BRIEFING.COM] The stock market had a distinctly strong showing today, recouping this week's earlier losses. The initial factors affecting sentiment were falling oil prices, better-than-expected earnings news and economic data, and a measure of relief that Speaker Pelosi's visit to Taiwan did not provoke a more consequential response from China. Once the session got going, mega cap leadership was an instrumental upside driver.

The S&P 500 tested last Friday's high (4,140) early on and found some resistance before breaking above that level. The intraday chart had the appearance of being supported by a relentless bid, as every little dip (emphasis on the word 'little') was quickly greeted with renewed buying interest. The resilient price action was its own supportive catalyst, as it drew in sidelined money presumably on the fear of missing out on further gains. Trading volume, however, wasn't particularly heavy, so the fear-of-missing-out trade hadn't necessarily kicked into high gear yet.

Market breadth showed the big bias towards advancing issues. Advancers led decliners by a roughly 11-to-5 margin at both the NYSE and Nasdaq.

The mega caps proved to be a big support to the market today. The Vanguard Mega Cap Growth ETF (MGK) closed up 2.7% versus a 1.6% gain in the S&P 500. The Invesco S&P 500 Equal Weight ETF (RSP), for its part, closed up 1.0%.

Another supporting factor was falling oil prices. The EIA reported a surprising build in weekly oil inventories that piqued worries about a demand slowdown driven by lower economic growth. This caused a stronger reversal in price action for WTI crude oil, which reached $96.00/bbl earlier on reports that OPEC+ agreed to a smaller production increase of 100,000 barrels per day for September, versus July and August when 600,000 barrels were added.

WTI crude oil futures fell 3.6% to $90.91/bbl. Unleaded gasoline futures fell 3.8% to $2.93/gal.

S&P 500 sector performance today was a clear reflection of these factors. Energy (-3.0%) was the lone sector in negative territory while mega cap components pushed information technology (+2.7%), consumer discretionary (+2.5%), and communication services (+2.5%) to the top of the leaderboard. Communication services was somewhat held back by one of the top laggards in the market, Match Group (MTCH 63.24, -13.47, -17.6%), after the company reported quarterly results.

The Treasury market had a different catalyst from the stock market today. It reacted to the stronger-than-expected data and to St. Louis Fed President Bullard (2022 FOMC voter) saying last night that he thinks the target range for the fed funds rate should be at 3.75-4.00% by the end of the year. The 2-yr note yield rose three basis points to settle at 3.10% while the 10-yr note yield rose one basis point to 2.75%.

Ahead of Thursday's open Alibaba (BABA), Arrow Electronics (ARW), Cigna (CI), ConocoPhillips (COP), Crocs (CROX), Duke Energy (DUK), Eli Lilly (LLY), Fiverr (FIVR), Johnson Controls (JCI), Kellogg (K), Lordstown Motors (RIDE), Papa John's (PZZA), Paramount Global (PARA), Parker-Hannifin (PH), Penn National Gaming (PENN), Restaurant Brands Intl. (QSR), SeaWorld Entertainment (SEAS), Shake Shack (SHAK), Wayfair (W), YETI Holdings (YETI), and Zoetis (ZTS) are all set to report earnings.

Tomorrow's economic data will include the June Trade Balance (Briefing.com consensus -81.7 billion; prior -85.5 billion) and weekly initial jobless claims (Briefing.com consensus 260,000; prior 256,000) and continuing claims (prior 1.359 million) at 8:30 a.m. ET. Also, weekly EIA Natural Gas Inventories (prior +15 bcf) at 10:30 a.m. ET.

Reviewing today's economic data:

Weekly MBA Mortgage Applications Index 1.2%; Prior -1.8%
July IHS Markit Services PMI - Final 47.3%; Prior 47.0%
June Factory Orders 2.0% (Briefing.com consensus 0.9%); Prior was revised to 1.8% from 1.6%
- The key takeaway from the report is that order activity gathered pace in June for both durable and nondurable goods, providing another challenge to the notion that the U.S. economy is in recession.
July ISM Non-Manufacturing Index 56.7% (Briefing.com consensus 53.8%); Prior 55.3%
- The key takeaway from the report is that business activity for the non-manufacturing sector accelerated in July at the same time there was a deceleration in the pace of price increases. The acceleration in overall activity, however, does not fit the idea that the Federal Reserve is going to be quick to pivot to a rate-cut cycle.
Crude oil inventories had a build of 4.47barrels
- Prior week showed a draw of 4.52 mln barrels
Gasoline inventories had a build of 163K barrels
- Prior week showed a draw of 3.30 mln barrels

Dow Jones Industrial Average: -9.7% YTD
S&P 400: -11.7% YTD
S&P 500: -12.8% YTD
Russell 2000: -14.9% YTD
Nasdaq Composite: -19.0% YTD

Market remains near highs of the day
03-Aug-22 15:30 ET

Dow +459.01 at 32857.06, Nasdaq +322.81 at 12671.53, S&P +67.88 at 4159.14
[BRIEFING.COM] Heading into the close, the stock market is little changed in the last half hour. The Nasdaq remains in first place, up 2.6%.

Earnings reports after the close will be headlined by APA Corp. (APA), Amdocs (DOX), Clorox (CLX), e.l.f. Beauty (ELF), eBay (EBAY), Fastly (FSLY), Fortinet (FTNT), Lucid Group (LCID), Marathon Oil (MRO), McKesson (MCK), MGM Resorts (MGM), Qorvo (QRVO), Rent-A-Center (RCII), Sunrun (RUN), Udemy (UDMY), Unisys (UIS), and Western Union (WU).

Ahead of Thursday's open Alibaba (BABA), Arrow Electronics (ARW), Cigna (CI), ConocoPhillips (COP), Crocs (CROX), Duke Energy (DUK), Eli Lilly (LLY), Fiverr (FIVR), Johnson Controls (JCI), Kellogg (K), Lordstown Motors (RIDE), Papa John's (PZZA), Paramount Global (PARA), Parker-Hannifin (PH), Penn National Gaming (PENN), Restaurant Brands Intl. (QSR), SeaWorld Entertainment (SEAS), Shake Shack (SHAK), Wayfair (W), YETI Holdings (YETI), and Zoetis (ZTS) are all set to report earnings.

Tomorrow's economic data will include the June Trade Balance (Briefing.com consensus -81.7 billion; prior -85.5 billion) and weekly initial jobless claims (Briefing.com consensus 260,000; prior 256,000) and continuing claims (prior 1.359 million) at 8:30 a.m. ET. Also, weekly EIA Natural Gas Inventories (prior +15 bcf) at 10:30 a.m. ET.

Grinding higher
03-Aug-22 15:00 ET

Dow +463.67 at 32861.72, Nasdaq +331.07 at 12679.79, S&P +69.51 at 4160.77
[BRIEFING.COM] A somewhat reserved start today has gotten more confident looking. The indices have been pressing higher in a steady, grinding fashion for most of the session. The intraday chart has the appearance of being supported by a relentless bid, as every little dip (emphasis on the word 'little') has been quickly greeted with renewed buying interest.

The resilient price action has been its own supportive catalyst, as it has drawn in sidelined money presumably on the fear of missing out on further gains. Trading volume, however, isn't particularly heavy, so the fear-of-missing-out trade hasn't necessarily kicked into high gear yet.

The Vanguard Mega-Cap Growth ETF (MGK) has extended today's gains. It is up 2.8%, leaving it up 15.8% since the start of July. The renewed strength of the mega-cap stocks has been instrumental in driving the renewed strength of the broader market.

Separately, after saying yesterday that the Fed is nowhere near being almost done fighting inflation, San Francisco Fed President Daly (not an FOMC voter until 2024) said today that she thinks 50 basis points in September is reasonable. She issued the caveat, according to Reuters, that a 75-basis point increase might be appropriate if the labor market isn't showing signs of slowing and inflation keeps "roaring ahead undauntedly."

Ms. Daly and the other Fed officials will have their latest marks soon enough. The July employment report is out this Friday and the July CPI report comes out August 10.

NortonLifeLock gains on UK clearance for Avast merger
03-Aug-22 14:30 ET

Dow +460.19 at 32858.24, Nasdaq +330.94 at 12679.66, S&P +69.69 at 4160.95
[BRIEFING.COM] The major averages have continued to push to session highs in the last half hour, the benchmark S&P 500 (+1.70%) still firmly installed in second place.

S&P 500 constituents Moderna (MRNA 188.09, +27.28, +16.96%), NortonLifeLock (NLOK 26.55, +1.77, +7.14%), and DISH Network (DISH 18.07, +0.94, +5.49%) pepper the top of today's standings. MRNA and DISH outperform following earnings, while NLOK moves higher in reaction to UK clearance for Avast (AVASF 8.25, +2.67, +47.85%) merger.

Meanwhile, solar name SolarEdge Technologies (SEDG 302.44, -62.97, -17.23%) is among today's worst laggards following earnings.

Gold slips on Wednesday
03-Aug-22 14:05 ET

Dow +413.42 at 32811.47, Nasdaq +310.11 at 12658.83, S&P +63.43 at 4154.69
[BRIEFING.COM] With about two hours to go on Wednesday the tech-heavy Nasdaq Composite (+2.51%) is handily outperforming its counterparts.

Gold futures settled $13.30 lower (-0.7%) to $1,776.40/oz, ending its longest winning streak since April, as the dollar and bond yields both rebound on Wednesday.

Meanwhile, the U.S. Dollar Index is up about +0.3% to $106.52.

CVS Health is looking lively after posting solid beat-and-raise report (CVS)
Updated: 03-Aug-22 14:03 ET

Sales from COVID-19 vaccinations and over-the-counter test kits may have slowed sharply in Q2, but CVS Health (CVS) still posted a solid beat-and-raise quarterly report, highlighting the diversification of its business model. Each of the company's core businesses generated healthy revenue growth, with the Pharmacy Services segment leading the way with a 12% increase. CVS's upside results are also a continuation of its outperformance versus rival Walgreens Boots Alliance (WBA), which has struggled under the weight of its AllianceRX investment. On a year-to-date basis, shares of CVS are about flat, while WBA has slid lower by around 25%.

Key components of CVS's strategy include expanding its all-payer primary care capabilities and optimizing its retail footprint. On the latter point, the company is aiming to close 900 underperforming locations by the end of 2024. These initiatives, combined with the retention of foot traffic gains made during the pandemic, are helping to drive CVS's impressive string of EPS beats, which now spans over five years.

Beyond this quarter's EPS beat, a few other items stand out from the earnings report.

While the Retail/LTC segment generated the slowest growth in Q2, at +6.3%, we view the results favorably since it lapped strong growth of 14.2% in the year-earlier period. On a same-store sales basis, sales were up by 8%, on top of last year's 12.3% increase, to easily surpass expectations.
- A prolonged cold and flu season helped to offset a deceleration in COVID-related products. In Q2, the company administered about six million COVID-19 vaccines, representing a 65% drop from a year-earlier.
- Excluding COVID-19 vaccines, prescriptions filled increased by nearly 5% on a 30-day equivalent basis.
- Higher pharmacy brand prices helped to mitigate the impact from decreased vaccinations and reimbursement pressures, but adjusted operating margin still contracted by 210 bps yr/yr to 7.1%.
Health Care Benefits is experiencing growth across all of its insurance product lines, leading to a healthy revenue increase of 11% to $22.8 bln. Medical membership continues to expand, increasing by 922,000 members for a total of 24.4 mln.
- The business was also more profitable in Q2 as membership benefit costs as a percentage of premium revenues dropped to 82.9% from 84.1% a year ago. As a result, operating income jumped by 38% to $1.75 bln.
With the company firing on all cylinders, it lifted its FY22 EPS guidance to $8.40-$8.60 from $8.20-$8.40. The amount of the increase is roughly in line with the amount of upside from Q2, but CVS has a track record of gradually boosting its outlook, and then exceeding it.

The main takeaway is that CVS continues to execute very well in a challenging business climate. COVID-related tailwinds may be abating, but the company's outperformance during the pandemic is providing it with a lasting edge over its main competitors WBA and Rite Aid (RAD).

Advanced Micro rebounds off its lows despite small beat and mediocre guidance (AMD)
Updated: 03-Aug-22 13:40 ET

Advanced Micro (AMD -2%) is heading lower today after reporting very modest upside with its Q2 report last night. Some mediocre guidance and cautious commentary on the call also seems to be weighing on the stock a bit, but it has rebounded nicely off its lows. AMD had rallied a bit following Intel's (INTC) big miss and guide down last week on the idea that Intel's poor execution was benefitting AMD. However, AMD is also facing some industry headwinds.

The headline numbers were not great. AMD reported a very small EPS beat following two huge beats the last two quarters. Revenue jumped 70% yr/yr, but a lot of what was because this was recent acquisition Xilinx's first full quarter in the fold. Revenue was just in-line. Also, the mid-point of Q3 revenue guidance was below analyst expectations. Overall this was a letdown from Q1's large beat-and-raise.
That is not to say there were not positives. Data Center revenue jumped 83% yr/yr to $1.5 bln, led by record server processor sales. Client segment (desktop, notebook PC processors and chipsets) revenue grew 25% to $2.2 bln, fueled by record mobile processor sales. Acer, Asus, Dell, HP, and Lenovo are significantly expanding their portfolio of AMD-based notebooks with almost 300 new designs coming to market this year powered by Ryzen processors.
Gaming was another bright spot with revs up 32% to $1.7 bln as Semi-Custom growth more than offset a decline in Gaming Graphics sales, which has been hurt by lower consumer discretionary spending.
We think AMD's take on the PC market is weighing on the stock today. During Q&A, AMD lowered its PC outlook from being down high-single digits to now expecting down mid-teens. And that is impacting Q3 guidance. Investors have rightly been concerned about a slowdown in the PC market. Many people bought new computers to set up home offices during the pandemic, but how sustainable is that in year three of the pandemic?
Perhaps more worrisome was AMD also making some cautious comments on the Data Center market. The Cloud business continues to be very strong and that should continue to ramp in 2H22. However, the trends on the Enterprise side are more mixed and perhaps more correlated to the macro backdrop. AMD sees a significant pipeline, although some deals are taking a little bit longer to close.
As a quick housekeeping matter, this was AMD's first quarter since changing its segment reporting. This decision was presumably in response to Xilinx being added. The new segments are: Data Center, Client, Gaming and Embedded. This made this report much easier to understand as its two segment format was a bit confusing.

After an initial drop lower, the stock has been recovering and is now down only modestly. We think investors were hoping for better guidance, but when compared to Intel's really bad result, AMD's numbers look pretty good. We also think the lowered PC outlook was pretty expected and likely priced in already given the pullback in recent months. A year ago, this report would have sent this stock 10% lower. We think it is a good sign in terms of sentiment shifting to see a stock hold up well despite a lackluster report.

PayPal finds a friend in Elliott Investment Management, raising hopes for improved returns (PYPL)
Updated: 03-Aug-22 11:10 ET

Fintech pioneer PayPal (PYPL) has had a rough year, diving lower by over 50%, but the stock is cruising higher today after making a series of significant announcements. PYPL's mixed Q2 earnings report, which included a modest EPS beat and a miss on total payment volume (TPV), is taking a back seat to news that Elliott Investment Management has taken a $2.0 bln stake in the company. In conjunction with this investment, PYPL also announced a new cost-cutting program that's targeting about $2.2 bln in savings through 2023, as well as a new $15.0 bln share repurchase authorization.

When business was booming in 2020 and early 2021 due to the pandemic-induced shift towards e-commerce, the focus centered on PYPL's robust growth and potential to expand its active user base. As mobility returned and PYPL's top-line growth trailed off to single-digit levels, investors' attention turned to its cost structure, margins, operating efficiency, and capital allocation strategy. Given Elliott's reputation for instigating productivity improvements through major corporate shake-ups, the enthusiasm for this development is understandable.

In addition to the cost-cutting initiatives, PYPL also appointed Blake Jorgensen as its new CFO, taking over for John Rainey who left to join Walmart (WMT) in April. Jorgensen has extensive experience in the CFO role, formerly holding that position at Electronic Arts (EA), Levi Strauss & Co. (LEVI), and Yahoo (YHOO).

Overall, PYPL's Q2 results and guidance show that the company is in need of spark.

TPV increased by a modest 13% on a FX-neutral basis to $339.8 bln, slightly missing analysts' estimates. TPV growth has steadily eroded, sliding from 24% in 3Q21, to 23% in 4Q21, and then to 15% last quarter.
Net New Accounts (NNAs) were underwhelming at 0.4 mln, slowing from last quarter's increase of 2.4 mln.
Operating expenses grew faster than revenue at 17% vs. 9%. Consequently, non-GAAP operating margin plummeted by 738 bps yr/yr to 19.1%.
PYPL lowered its FY22 revenue growth outlook to $27.85 bln from $28.2-$28.7 bln, reflecting a further slowdown in growth to about 11% on a FX-neutral basis.

It's evident that the macroeconomic headwinds that CEO Dan Schulman highlighted last quarter, causing him to withdraw PYPL's medium-term outlook, have intensified. Rising competition from buy now, pay later (BNPL) companies like Affirm (AFRM) and Block (SQ) have also taken a toll on PYPL. Rather than trying to fight an uphill battle to reignite its top-line growth, the company is wisely prioritizing profitability, margin, expansion, and shareholder returns. With Elliott Investment Management on board, there's a high level of confidence that the company's financial performance will improve, as reflected in its upwardly revised FY22 EPS guidance of $3.87-$3.97.

Airbnb slides despite posting record numbers in Q2 as its lofty valuation gets in its way (ABNB)
Updated: 03-Aug-22 10:48 ET

Even after posting record profitability in Q2, upbeat guidance, and authorizing $2.0 bln for share buybacks, Airbnb (ABNB -5%) finds its shares ticking lower today. The alternative accommodations hosting platform also continued to see travel recover strongly, with some metrics exceeding 2Q19 numbers.

So why are shares pulling back? At around 63x forward earnings, ABNB is prone to nitpicking by investors. As such, its revenue growth of 57.6% yr/yr to $2.1 bln meeting analyst expectations is proving insufficient. Shares also gained roughly 30% from June 30 lows as of yesterday's close, so profit-taking activity could be at play today. Also, ABNB saw some elevated cancellations toward the back half of Q2, which the company surmises was related to flight cancellations mainly in North America. After disappointing Q2 results from airlines like UAL and DAL, we noted yesterday that ABNB could see the adverse effects spill over into its Q2 results, which materialized to a slight degree.

Outside these minor weak points, ABNB's Q2 results shined.

ABNB delivered its most profitable Q2 yet, growing adjusted EPS to $0.56 from $(0.11) in the year-ago period. Another record stemmed from nights and experiences booked jumping 25% yr/yr to exceed 103 mln, the company's largest quarterly number ever.
Similar themes from last quarter played out in Q2. Guests continued returning to cities and crossing borders, now above pre-pandemic levels. Meanwhile, long-term stays of over 28 days, ABNB's fastest-growing category by trip nights compared to 2019, remained strong, increasing nearly 25% yr/yr and almost 90% on a two-year stack.
In a display of confidence in continued free cash flow and long-term growth, ABNB also announced a $2 bln share repurchase program. This authorization is also noteworthy because it has come less than two years since ABNB went public. Furthermore, with management already buying back shares of its high-growth company, it signals that it views the stock as currently undervalued.
ABNB also provided a mostly bullish outlook. The company guided Q3 revs mostly ahead of consensus, expecting $2.78-2.88 bln as growth in nights booked accelerated from June to July. ABNB's commentary was also upbeat, stating that it is in "the midst of [its] strongest peak travel season yet." However, management mentioned that to see a further sequential acceleration in Q3, it needs to see recovery continue in Europe and APAC, which both remain significantly depressed.

Bottom line, ABNB's lofty valuation is getting in the way of its excellent Q2 numbers, which showed that guests are itching to travel despite fierce macroeconomic pressures, such as inflation. ABNB's earnings report also bodes well for its competitors Booking Holdings (BKNG) and Expedia Group (EXPE), which report Q2 earnings after the close on August 3 and 4, respectively.

To: Return to Sender who wrote (88744)	8/8/2022 3:37:27 PM
From: Return to Sender	2 Recommendations Recommended By Robert O Sr K Respond to of 95358

Took profits in QRVO today. NVDA warning while the SMH/SOX was breaking out well beyond its downtrend range has resulted in profit taking in every stock on the SOX except QRVO. I don't expect that to last. In addition earnings report are winding down. The last meaningful report to me will be CSCO on August 17. Even when the market is in full bull market mode we get some selling whenever earnings reports are not assuaging fears for the future. finance.yahoo.com 6 Month Charts of the SOX Components:

To: Return to Sender who wrote (88744)	8/8/2022 7:10:36 PM
From: Return to Sender	3 Recommendations Recommended By Kirk © Sam Sr K Respond to of 95358

I wanted to share a weekly chart of the SOX showing where we are at now:

To: Return to Sender who wrote (88744)	8/17/2022 10:50:29 AM
From: Return to Sender	1 Recommendation Recommended By Sr K Respond to of 95358

DJ Analog Devices Beats On Earnings, But Stock Falls -- MarketWatch 7:29 AM ET 8/17/22 \| MarketWatch Shares of Analog Devices Inc. were down 2.8% in premarket trading Wednesday after the semiconductor company topped expectations with its latest results while citing strong demand but acknowledging that macroeconomic uncertainty had begun to affect bookings. The company posted net income of $749 million, or $1.44 a share, compared with $503 million, or $1.35 a share, in the year-prior period. After adjustments, Analog Devices earned $2.52 a share, up from $1.72 a year before, while analysts were expecting $2.43 a share. Revenue increased to $3.11 billion from $1.76 billion. The FactSet consensus was for $3.06 billion. "While economic uncertainty is beginning to impact bookings, demand continues to outpace supply, resulting in higher backlog, paving the way for a strong finish to a banner year," Chief Executive Vincent Roche said in a release. For the fiscal fourth quarter, Analog Devices anticipates $3.05 billion to $3.25 billion in revenue as well as $2.47 to $2.67 in adjusted earnings per share. Analysts were looking for $3.11 billion in fiscal fourth-quarter revenue, along with $2.50 in adjusted EPS. Shares have gained about 9% over the past three months as the S&P 500 has risen 5%. -Emily Bary For more from MarketWatch: marketwatch.com

To: Return to Sender who wrote (88744)	8/24/2022 10:48:40 AM
From: Return to Sender	1 Recommendation Recommended By Sr K Respond to of 95358

II-VI beats by $0.04, beats on revs; guides Q1 EPS in-line, revs above consensus 6:57 AM ET 8/24/22 \| Briefing.com Reports Q4 (Jun) earnings of $0.98 per share, excluding non-recurring items, $0.04 better than the S&P Capital IQ Consensus of $0.94; revenues rose 9.7% year/year to $887 mln vs the $858.96 mln S&P Capital IQ Consensus. Co issues guidance for Q1, sees EPS of $0.77-0.90, excluding non-recurring items, vs. $0.85 S&P Capital IQ Consensus; sees Q1 revs of $1.3-1.4 bln vs. $1.25 bln S&P Capital IQ Consensus."On September 8, 2022, we will transition to our new name, Coherent Corp., launch our new brand, and begin trading with a new ticker symbol (COHR), signaling an exciting new era for the Company and all our employees, investors, and other stakeholders."

To: Return to Sender who wrote (88744)	8/25/2022 4:23:45 PM
From: Return to Sender	Respond to of 95358

Marvell beats by $0.01, reports revs in-line; guides OctQ EPS in-line, revs in-line 4:10 PM ET 8/25/22 \| Briefing.com Reports Q2 (Jul) earnings of $0.57 per share, excluding non-recurring items, $0.01 better than the S&P Capital IQ Consensus of $0.56; revenues rose 41.0% year/year to $1.52 bln vs the $1.52 bln S&P Capital IQ Consensus. Co issues in-line guidance for Q3 (Oct), sees EPS of $0.56-0.62, excluding non-recurring items, vs. $0.61 S&P Capital IQ Consensus; sees Q3 revs of $1.51-1.61 bln vs. $1.58 bln S&P Capital IQ Consensus."Looking ahead, we expect sequential revenue growth to accelerate in the fourth quarter as supply constraints begin to ease. We believe we are well positioned to continue to benefit from our favorable end market exposure tied to strong secular growth trends and significant expected upcoming revenue contributions from a number of Marvell-specific product ramps."

To: Return to Sender who wrote (88744)	8/26/2022 12:48:23 PM
From: Return to Sender	3 Recommendations Recommended By bull_dozer oldbeachlvr Sr K Respond to of 95358

6 Month Charts of the SOX Components. There are 30 stocks in the SOX. Worth looking now after Chairman Powell's talk in Jackson Hole.

To: Return to Sender who wrote (88744)	8/27/2022 3:25:54 PM
From: Return to Sender	4 Recommendations Recommended By bull_dozer kckip Sr K Sun Tzu Respond to of 95358

SOX Weekly Chart Update. After a Head Fake Higher Still Within That Downward Trend Channel:

To: Return to Sender who wrote (88744)	8/30/2022 10:16:22 AM
From: Return to Sender	1 Recommendation Recommended By Sr K Respond to of 95358

Photronics Stock Plummets After Chip Gear Maker Guides Low finance.yahoo.com Semiconductor equipment supplier Photronics ( PLAB) on Tuesday beat Wall Street's targets for its fiscal third quarter. But its guidance for the current quarter came up short. PLAB stock plunged on the news. The Brookfield, Conn.-based company earned 51 cents a share on sales of $219.9 million in the quarter ended July 31. Analysts polled by FactSet expected Photronics earnings of 50 cents a share on sales of $210 million. On a year-over-year basis, Photronics earnings jumped 82% while sales increased 29%. For the current quarter, Photronics forecast earnings of 48 cents a share on sales of $210 million. That's based on the midpoint of its outlook. Wall Street had predicted Photronics earnings of 53 cents a share on sales of $214.5 million for the fiscal fourth quarter. "We achieved our sixth consecutive quarter of record revenue due to strong end market demand, favorable pricing dynamics, and outstanding performance by the entire organization," Chief Executive Frank Lee said in a news release. He added, "We are expanding capacity and growing volumes while controlling costs and capitalizing on operating leverage to deliver higher margins."

To: Return to Sender who wrote (88744)	8/30/2022 2:44:33 PM
From: Return to Sender	Respond to of 95358

Chip stocks could plunge another 25% as ‘we are entering the worst semiconductor downturn in a decade,’ analyst says finance.yahoo.com After a rough few months for semiconductor stocks, one Wall Street analyst expects the pain to continue and predicted Tuesday that "we are entering the worst semiconductor downturn in a decade." In a Tuesday note, Citi Research analyst Christopher Danley wrote that this earnings season marked the first since the pandemic began in which consensus estimates for the chip sector declined during earnings. While many analysts put blame on PC and smartphone sales cooling considerably amid the specter of a recession, they pointed toward continuing strength for the auto and industrial sectors as reasons for optimism. Danley did not see the same positives, however, saying he believes that the strong sectors showed signs of future weakness. “We also witnessed the first signs of a correction in the automotive and industrial end markets and we continue to believe we are entering the worst semiconductor downturn in a decade given the recession and inventory build,” said Citi Research analyst Christopher Danley in a note, citing cancellations of orders from auto and industrial companies that executives from Micron Technology Inc. MU, -1.79% and Analog Devices Inc. ADI, -1.91% disclosed in recent weeks. Read: Dell sees PC sales decline worse than estimates, stock logs second worst day since return to Wall Street “We expect more companies to announce cancellations from the auto/industrial end markets as capacity is added and demand weakens,” Danley said.

To: Return to Sender who wrote (88744)

8/30/2022 4:35:00 PM

From: Return to Sender

1 Recommendation

Recommended By
kckip

Read Replies (1) | Respond to of 95358

Market Snapshot

briefing.com

Dow	31744.70	-356.25	(-1.11%)
Nasdaq	11841.74	-175.89	(-1.46%)
SP 500	3978.70	-51.98	(-1.29%)
10-yr Note

NYSE	Adv 631	Dec 2418	Vol 819 mln
Nasdaq	Adv 1306	Dec 2754	Vol 4.5 bln

Industry Watch

Strong: --

Weak: Energy, Materials, Industrials, Utilities

Moving the Market

-- Building on downside momentum from recent sessions

-- Rising Treasury yields

-- Broad selling interest

Closing Summary
30-Aug-22 16:25 ET

Dow -308.12 at 31792.83, Nasdaq -134.53 at 11883.10, S&P -44.45 at 3986.23
[BRIEFING.COM] The stock market continued its selloff today with each of the major indices closing below their respective 50-day moving averages. The market opened flat before downside momentum picked up steam around midmorning. The major indices were stuck in a narrow trading range throughout the afternoon with the S&P 500 closing below the 4,000 level.

The selling effort was indiscriminate, leaving many stocks with losses. The S&P 500, the Vanguard Mega Cap Growth ETF (MGK), and the Invesco S&P 500 Equal Weight ETF (RSP) all closed with a 1.1% loss.

Growth and value stocks both suffered notable losses with the Russell 3000 Growth Index closing down 1.1% while the Russell 3000 Value Index closed down 1.2%.

Market breadth reflected the selling bias today. Decliners led advancers by a nearly 4-to-1 margin at the NYSE and a 2-to-1 margin at the Nasdaq.

Every S&P 500 sector closed in the red with losses ranging from 0.4% (financials) to 3.4% (energy).

The energy sector was in last place, by a wide margin, while energy complex futures sold off. WTI crude oil futures fell 5.5% to $91.60/bbl. Natural gas futures fell 2.6% to $9.06/mmbtu. Unleaded gasoline futures fell 7.0% to $2.53/gal. This comes after Bloomberg reported that the EU is set to meet its gas storage filling goal two months ahead of target. Also, European Commission President von der Leyen said that an emergency intervention is being planned to rein in energy prices.

On an individual basis, Big Lots (BIG 24.08, +2.53, +11.7%) made a big upside move on favorable quarterly results while Best Buy (BBY 74.89, +1.19, +1.6%) also had a sizable earnings-driven gain.

The 2-yr Treasury note yield rose four basis points to 3.46% while the 10-yr Treasury note yield was unchanged at 3.11%.

Ahead of Wednesday's open, Brown-Forman (BF.B) reports quarterly results.

Wednesday's economic data includes the weekly MBA Mortgage Applications Index (prior -1.2%) at 7:00 a.m. ET, August ADP Employment Change (Briefing.com consensus 315,000) at 8:15 a.m. ET, August Chicago PMI (Briefing.com consensus 53.1; prior 52.1) at 9:45 a.m. ET, and weekly EIA Crude Oil Inventories (prior -3.28 million) at 10:30 a.m. ET.

Reviewing overnight developments:

The Conference Board's Consumer Confidence Index rose to 103.2 in August (Briefing.com consensus 97.4) from a downwardly revised 95.3 (from 95.7) in July. This was the first increase in the index in four months. In the same period a year ago, the Consumer Confidence Index stood at 115.2.
- The key takeaway from the report is that even with the August improvement in confidence, the Expectations Index remains below 80.0, which suggests the continued presence of an elevated risk of recession.
July JOLTS Job Openings totaled 11.239 million after the prior revised total of 11.04 million (from 10.698).
June FHFA Housing Price Index rose 0.1% after the prior revised 1.3% increase (from 1.4%).
June S&P Case-Shiller Home Price Index rose 18.6% (Briefing.com consensus 19.0%) following a prior 20.5% increase.

Dow Jones Industrial Average: -12.5% YTD
S&P 400: -13.9% YTD
S&P 500: -16.4% YTD
Russell 2000: -17.4% YTD
Nasdaq Composite: -24.1% YTD

Market lifts somewhat heading into the close
30-Aug-22 15:30 ET

Dow -267.89 at 31833.06, Nasdaq -135.21 at 11882.42, S&P -41.18 at 3989.50
[BRIEFING.COM] The major indices lifted somewhat off the lows heading into the close.

The 2-yr note yield rose four basis points to 3.46% while the 10-yr note yield was unchanged at 3.11%.

After the close, HP Inc (HPQ), Hewlett Packard Enterprise (HPE), Chewy (CHWY), and CrowdStrike (CRWD) all report earnings.

Ahead of Wednesday's open, Brown-Forman (BF.B) reports quarterly results.

Wednesday's economic data includes the weekly MBA Mortgage Applications Index (prior -1.2%) at 7:00 a.m. ET, August ADP Employment Change (Briefing.com consensus 315,000) at 8:15 a.m. ET, August Chicago PMI (Briefing.com consensus 53.1; prior 52.1) at 9:45 a.m. ET, and weekly EIA Crude Oil Inventories (prior -3.28 million) at 10:30 a.m. ET.

Market little changed in the last half hour
30-Aug-22 15:00 ET

Dow -356.25 at 31744.70, Nasdaq -175.89 at 11841.74, S&P -51.98 at 3978.70
[BRIEFING.COM] The stock market is little changed in the last half hour.

Tesla (TSLA 273.87, -10.99, -3.8%) will have to face a lawsuit over its Autopilot’s phantom braking problem, according to Electrek. Weakness here is contributing to the consumer discretionary sector's losses (-1.7%) that sits just above energy (-3.7%) at the bottom of the pack.

Separately, WTI crude oil futures settled 5.5% lower at $91.60/bbl. Natural gas futures fell 2.6% to $9.06/mmbtu. Unleaded gasoline futures fell 7.0% to $2.53/gal.

Market continues lateral move
30-Aug-22 14:35 ET

Dow -321.54 at 31779.41, Nasdaq -167.89 at 11849.74, S&P -48.57 at 3982.11
[BRIEFING.COM] The major indices were confined to a narrow range in the last half hour.

Market breadth shows decliners leading advancers by a better than 4-to-1 margin at the NYSE and a better than 5-to-2 margin at the Nasdaq.

Reuters reported that Boeing (BA 161.32, -4.10, -2.5%) received a 787 Dreamliner order from China Airlines in Taiwan. The stock is lagging currently with the Dow Jones Industrial Average down 1.1%.

Separately, copper futures settled 1.5% lower at $3.55/lb.

Gold lower again on Tuesday
30-Aug-22 13:55 ET

Dow -339.67 at 31761.28, Nasdaq -176.84 at 11840.79, S&P -49.73 at 3980.95
[BRIEFING.COM] With about two hours to go on Tuesday the tech-heavy Nasdaq Composite (-1.47%) hosts the worst losses.

Gold futures settled $13.40 lower (-0.8%) to $1,736.30/oz, dipping slightly to cap off a third-straight loss on a modest rise in treasury yields and soft action in the dollar.

Meanwhile, the U.S. Dollar Index is up narrowly (+0.02%) at $108.86.

Baidu sinks despite beating on earnings and revs in Q2 as near-term concerns linger (BIDU)

Chinese internet giant Baidu (BIDU -6%), often dubbed the Google (GOOG) of China, is seeing its shares sink today despite posting beats on its top and bottom lines in Q2. With over half its revenue derived from online advertising, the weak economic picture in China dented BIDU's Q2 results to a degree. Specifically, COVID-19 continued to lead to a softening demand backdrop, adversely affecting advertising spending throughout the region. However, the situation started to improve in July, illustrated by a narrowing decline in ad revenue yr/yr from June.

So why are shares slipping? Management was cautious in its remarks on the back half of the year, noting that the company is still facing macro uncertainties. Furthermore, management mentioned that COVID-19 cases are experiencing a resurgence in some popular travel destinations during the peak summer season. Also, with BIDU's search app highly correlated with China's GDP growth and the performance of the country's small and medium-sized businesses (SMBs), the uncertainty regarding COVID-19 and possible further economic shutdowns are a concern and fueling some profit-taking today. As of yesterday's close, the stock jumped 15% from August 18 lows on reduced delisting fears after the SEC's agreement on governing inspections of audit firms based in China and Hong Kong.

In Q2, revs fell yr/yr for the first time since 2Q20, dropping 5.4% yr/yr to $4.43 bln. Ad revenue taking a 10% spill yr/yr to $2.55 bln weighed most heavily on overall revs in the quarter.
A positive standout was BIDU's non-ad revenue, consisting of its cloud and AI offerings, which jumped 22% yr/yr to $906 mln. Although this represented a deceleration from the +35% growth seen in Q1, it marked over eight-straight quarters of double-digit growth.
- One highlight from non-core revs was BIDU's autonomous driving business Apollo, which provided over 280K rides in Q2, a nearly 500% climb yr/yr. BIDU continues to make strides in Apollo, securing regulatory permits in additional cities, which helps generate more data to implement improvements within the autonomous driving system.
BIDU also has a stake in iQIYI (IQ), sometimes referred to as the Netflix (NFLX) of China. Revenue from IQ was $994 mln, a 13% dip yr/yr. Although IQ's membership business saw yr/yr growth in the quarter, this was more than offset by weak non-membership growth stemming from the souring macro environment.

Bottom line, we like seeing BIDU's non-ad business continue to perform nicely in Q2, especially given the headwinds currently plaguing China. However, BIDU's cautious commentary on the back half of FY22 is a concern and a leading cause of a sell-the-news reaction today.

Photronics down sharply as its JulQ report was more muted than recent robust quarters (PLAB)

Photronics (PLAB -23%) is a name we flagged yesterday as being noticeably weak ahead of its Q3 (Jul) earnings report this morning. This supplier of photomasks, which are used to make chips and flat panel displays (FPD), has been posting impressive earnings results of late. However, some retailers have been cautioning of a slowdown in consumer electronic sales, which made us a bit cautious heading into today's report and our concerns turned out to be valid.

The company did report upside with its Q3 results, but it was very modest upside and well below the large upside we have become accustomed to the last four quarters. But probably more troubling was the downside EPS guidance for Q4 (Oct). This was PLAB's first downside guidance in nearly two years, so it is a noticeable change. Also, the mid-point of the revenue guidance was below analyst expectations.
There were some positive aspects to the report. PLAB continues to maintain that demand for its photomasks remained strong for both its IC and FPD segments, including high end and mainstream applications. Also, this was PLAB's fifth consecutive quarter of record revenue. And higher selling prices helped push gross and operating margins to 25-year record highs of 38% and 29%, respectively.
Not surprisingly, management got a lot of questions on the guidance during the call. There is a bit of a language barrier, but it sounds like PLAB is seeing a little bit of pushout in the high end segment from some of its major customers. It sounds like demand remains strong, but some customers want to work down existing inventory before ordering more.
PLAB expects activity should start to recover by the end of September or in October. Other factors that appear to be impacting guidance are increased investments in building out capacity, FX headwinds, Q4 tends to be seasonally slower and general economic uncertainty.

The stock is down pretty severely today. We think the guidance is mostly responsible for the move. PLAB has been posting very robust results of late, so we think this report is catching some investors off guard. However, we do not find the guidance all that surprising given the consistent message from retailers that consumer electronic sales have slowed. We hope that PLAB is right, that it is mostly due to customers working down current inventory rather than a lack of end demand. But at the same time, these customers have a better view of the end market than PLAB, so their decision is a bit worrisome.

Best Buy avoids a worse sell-off after posting better-than-feared report, but sales still soft (BBY)

About one month ago, Best Buy (BBY) provided a bleak view on current business conditions, with CEO Corie Barry stating that demand within the consumer electronics industry softened further due to macroeconomic headwinds. Against that unfavorable backdrop, BBY reported Q2 results this morning that surpassed the downwardly revised outlook that was included in last month's update. Comparable sales declined by 12.1% compared to its guidance for a decrease of 13%, and revenue increased by 8.3% over the pre-pandemic quarter of 2Q20, versus its forecast for an increase of 7.5%.

Additionally, even though BBY's domestic gross margin rate slipped by 170 bps yr/yr to 22.0%, the company still comfortably beat analysts' EPS expectations. Remarkably, the Q2 upside EPS performance extends a winning streak that now spans almost five years. This quarter, the company leaned on cost-cutting actions to deliver the better-than-expected bottom-line performance. Selling, general, and administrative expenses were down by 6.3% yr/yr to $1.88 bln, primarily related to lower incentive compensation. The company continued to remove costs once the quarter ended, reportedly cutting hundreds of jobs in its stores this past month, according to the Wall Street Journal.

It's certainly a positive that BBY outperformed expectations. However, the financial results on an absolute basis were not strong and are reflective of an "uneven sales environment", as Barry describes it.

Adjusted EPS of $1.54 was nearly cut in half on a yr/yr basis as BBY contends with shrinking sales and margins. Like many other retailers, BBY is operating in an environment that is much more promotional. In the year-earlier period, consumers were still flush with cash from stimulus programs, enabling them to upgrade their PCs, phones, and electronics as the work-from-home shift continued.
- Now, consumers are tightening their budgets to help offset rising food and energy costs, while the work-from-home catalyst has mainly played out.
- Accordingly, BBY reported that sales declined in almost every product category. Similar to the last quarter, computing and home theater suffered the most severe declines.
Based on BBY's Q3 guidance, investors shouldn't expect demand to improve any time soon. In fact, the company expects that Q3 comparable sales will be slightly worse than the 12.1% decline it posted in Q2. That's a fairly dismal outlook considering that BBY is lapping an easy yr/yr comp of +1.6%, compared to the +19.6% comp it lapped this quarter.
A weak sales climate and the associated increase in promotional activity is weighing on BBY's non-GAAP operating income outlook for Q3. Specifically, the company anticipates that Q3 non-GAAP operating margin will drop at a similar rate, or slightly more than, the decline experienced in Q2.

The main takeaway is that BBY's results and outlook were better-than-feared and surpassed analysts' and investors' rock-bottom expectations. Beyond simply hurdling over a low bar, the company's ability to pull some levers on the expense side stands out, especially since profits have become a focal point lately. Overall, though, it's hard for us to get overly excited about BBY's results and outlook since spending on consumer electronics is likely to remain constrained.

Big Lots puts the exclamation point on its JulQ report as its repositioning efforts pay off (BIG)

Big Lots (BIG +5%) put the exclamation point on its Q2 (Jul) earnings report, delivering a double-digit earnings beat, a big turnaround from the triple-digit miss last quarter. Despite serving lower income levels, BIG has struggled during the inflationary environment as its inventory assortment was not well-positioned to capitalize on consumers trading down.

However, although headwinds from Q1 (Apr) trickled into Q2, BIG's efforts to reposition its business as the destination for individuals trading down started to pay dividends in Q2.

A significant component of BIG's repositioning efforts was shifting its assortment toward better bargains and displaying these more clearly. For example, while slightly under 40% of the company's end caps hosted bargains by the end of July, BIG expects nearly 90% of its end caps to feature deals by the end of Q3 (Oct).
- By highlighting its most valuable offerings more openly, BIG hopes to reduce the frequency of its customers looking elsewhere for good deals. This has already started to bear fruit, with customer reactivations through the company's loyalty program jumping 16% yr/yr in Q2.
Another major component of BIG's turnaround strategy is bolstering its private brands portfolio, which the company expects to play a vital role in increasing its appeal as a trade-down destination. Sales growth within two of its private labels, Broyhill and Real Living, reached around 20% in Q2 and represented 30% of BIG's total business, up meaningfully from the mid-20% last year.
These efforts helped BIG mostly achieve its prior three-year comp outlook of positive mid to high single-digits in Q2, posting comps of +3.6%, an acceleration from the +1.9% in Q1.
For Q3, BIG expects one-year comparable sales to decline by low double-digits, in-line with what the company experienced Q3-to-date, as inventories continue to be cleared through. However, by Q4 (Jan), BIG expects one-year comps to improve sequentially as its inventories move into a clean position, offering better deals and more unique offerings.

Although BIG's turnaround efforts are starting to pay off nicely, the company is not yet out of the woods. Its largest merchandise category, Furniture, which made up 27.4% of FY22 revenue, is experiencing softness as inflation deters consumers from purchasing more discretionary items. Furthermore, cost inflation is also elevated, illuminated by adjusted EPS falling to $(2.28) in Q2 from a positive $1.09 in the year-ago period, driven by a 10 pt drop yr/yr in adjusted operating margins. On the bright side, BIG has seen higher markdowns and soaring freight costs reverse and expects margins to be relatively in-line with the prior year period by Q4.

Bottom line, although it took a couple quarters of lackluster results, BIG's actions to reposition itself for the current inflationary environment are beginning to pan out, setting the company up for steady success as it moves through the back half of the year.

On a side note, BIG's JulQ numbers are a good sign for its major competitor Ollie's Bargain Outlet (OLLI), which reports JulQ earnings before the bell on September 1.