Market Snapshot
briefing.com
| Dow | 32369.13 | +215.46 | (0.67%) | | Nasdaq | 12246.53 | +134.25 | (1.11%) | | SP 500 | 4106.72 | +39.29 | (0.97%) | | 10-yr Note |
|
|
|
| | NYSE | Adv 2329 | Dec 741 | Vol 836 mln | | Nasdaq | Adv 2714 | Dec 1743 | Vol 4.1 bln |
Industry Watch
| Strong: Energy, Consumer Discretionary, Information Technology, Financials |
| | Weak: -- |
Moving the Market
-- Carryover momentum from recent rally
-- Hesitation ahead of August CPI report tomorrow at 8:30 a.m. ET
-- Weakening dollar
-- Strength in Apple
|
Closing Summary
12-Sep-22 16:25 ET
Dow +229.63 at 32383.30, Nasdaq +154.10 at 12266.38, S&P +43.05 at 4110.48
[BRIEFING.COM] The stock market had another strong showing today due to carryover upside momentum to build on recent gains. The major indices saw choppy action, but held onto decent gains for the entirety of today's session. There's a bit of trepidation in play ahead of the much-anticipated August CPI release tomorrow at 8:30 a.m. ET. Buying efforts were also supported by a weakening dollar.
The US Dollar Index was down 0.6% to 108.35 as the EUR/USD rose 0.7% to 1.0116.
Apple's (AAPL 163.43, +6.06, +3.9%) big upside move today was another support factor for the broader market after JP Morgan suggested the company is seeing strong demand for its new iPhone following last week's product announcements. The stock broke above its 200-day moving average on higher than average volume.
Mega caps had a slight performance edge over their peers as the Vanguard Mega Cap Growth ETF (MGK) (+1.4%) outpaced the broader market, but the general positive disposition left many stocks higher. The Invesco S&P 500 Equal Weight ETF (RSP) (+0.9%) and the S&P 500 (+1.1%) both closed with sizable gains.
Market breadth reflected the broad nature of today's rally. Advancers led decliners by a greater than 3-to-1 margin at the NYSE and a 3-to-2 margin at the Nasdaq.
All 11 S&P 500 sectors closed in the green with gains ranging from 0.4% (consumer staples) to 1.8% (energy).
Energy was boosted by rising energy complex prices. WTI crude oil futures rose 1.7% to $87.84/bbl and natural gas futures rose 3.5% to $8.31/mmbtu.
Semiconductors underperformed the market today following reports that the White House is expected to tighten restrictions on chip exports to China. The PHLX Semiconductor Index was up 0.3%.
Today's $32 billion 10-yr note auction was met with relatively weak demand. The high yield of 3.33% tailed the when-issued yield of 3.303%. Following the auction, selling pressure picked up in the Treasury market. The 10-yr note yield, which sat at 3.27% before today's open, settled the session at 3.36%. Despite the pickup in yield, stocks held their ground, tracking sideways, but holding the bulk of today's gains, after the auction.
The 2-yr note yield settled down one basis point to 3.56%.
There was no U.S. economic data of note, but a series of investment conferences started today involving the technology, health care, and financials sectors.
Looking ahead to Tuesday, market participants will receive the anticipated August CPI (Briefing.com consensus -0.1%; prior 0.0%) and core CPI (Briefing.com consensus +0.3%; prior +0.3%) at 8:30 a.m. ET. Other economic data includes the August NFIB Small Business Optimism (prior 89.9) at 6:00 a.m. ET and the August Treasury Budget (prior -$211.1 billion) at 2:00 p.m. ET.
Dow Jones Industrial Average: -10.9% YTD
S&P 400: -11.2% YTD
S&P 500: -13.8% YTD
Russell 2000: -15.1% YTD
Nasdaq Composite: -21.6% YTD
Market lifts higher into the close
12-Sep-22 15:25 ET
Dow +180.93 at 32334.60, Nasdaq +128.71 at 12240.99, S&P +35.23 at 4102.66
[BRIEFING.COM] The major indices extended their gains in recent trading.
Apple's (AAPL 163.34, +5.99, +3.8%) big upside move has been an important support factor for the broader market today. The stock broke above its 200-day moving average on high volume after JP Morgan suggested Apple is seeing strong demand for the iPhone following last week's product announcements.
After the close, Oracle (ORCL) will report quarterly results.
Several notable conferences continue tomorrow, including Barclays Global Financial Services Conference 2022, Morgan Stanley 20th Annual Global Healthcare Conference 2022, and Goldman Sachs Communacopia Technology Conference 2022.
Looking ahead to Tuesday, market participants will receive the anticipated August CPI (Briefing.com consensus -0.1%; prior 0.0%) and core CPI (Briefing.com consensus +0.3%; prior +0.3%) at 8:30 a.m. ET. Other economic data includes the August NFIB Small Business Optimism (prior 89.9) at 6:00 a.m. ET and the August Treasury Budget (prior -$211.1 billion) at 2:00 p.m. ET.
Market sticks to narrow trading range
12-Sep-22 15:00 ET
Dow +215.46 at 32369.13, Nasdaq +134.25 at 12246.53, S&P +39.29 at 4106.72
[BRIEFING.COM] The major indices have seen some up and down price action in the last half hour, albeit confined a narrow trading range.
Earlier, the Treasury's $32 billion 10-yr note auction was met with relatively weak demand, which led to an upward adjustment in the yield, now at 3.36%.
There hasn't been much reaction from the equity market as the major indices are little changed from levels seen before the auction. Stock market participants are in wait-and-see mode ahead of the more influential market mover tomorrow, the August CPI release at 8:30 a.m. ET.
Separately, WTI crude oil futures rose 1.7% on the day to $87.84/bbl. Natural gas futures rose 3.5% to $8.31/mmbtu.
APA Corp. outperforms on Citi upgrade; Mosaic, fert peers slip on Ukraine gains
12-Sep-22 14:30 ET
Dow +198.16 at 32351.83, Nasdaq +118.10 at 12230.38, S&P +35.95 at 4103.38
[BRIEFING.COM] Equities have slipped modestly from their perch half an hour ago, the S&P 500 (+0.88%) still in second place.
S&P 500 constituents APA Corp. (APA 39.90, +1.81, +4.75%), DXC Technology (DXC 27.88, +1.12, +4.19%), and Expedia Group (EXPE 112.71, +3.54, +3.24%) are among today's top gain-getters. APA was upgraded to Buy at Citigroup this morning, while DXC and EXPE benefit from technology and cons. discretionary-related market gains.
Meanwhile, Mosaic (MOS 52.72, -3.52, -6.26%) and fellow fertilizer stocks are weaker in the face of Ukraine's offensive gains over the weekend in its fight against Russia.
Gold higher as dollar slips to two-week lows
12-Sep-22 14:00 ET
Dow +245.16 at 32398.83, Nasdaq +149.11 at 12261.39, S&P +44.24 at 4111.67
[BRIEFING.COM] The broader market is still decently higher with about two hours remaining on Monday, the tech-heavy Nasdaq Composite (+1.23%) atop the standings.
Gold futures settled $12.00 higher (+0.7%) to $1,740.60/oz, aided in part by the dollar's retreat to a near two-week low.
Meanwhile, the U.S. Dollar Index is down about -0.8% to $108.14.
Whirlpool shares are holding up despite bearish comments from peer Electrolux (ELUXY) today (WHR)
Shares of Whirlpool (WHR) are holding up relatively well despite concerning comments made by competing home appliance manufacturer Electrolux (ELUXY) today. The Swedish-based and second-largest appliance manufacturer behind WHR plans to initiate a group-wide cost reduction program addressing variable and structural costs, primarily in Europe and North America, starting immediately. It expects these measures to result in a material positive earnings contribution in 2023.
The reasons behind Electrolux's cost reduction plan stem from an anticipated operating loss in Q3 exceeding that posted in Q2 due to weaker-than-expected demand in Europe and North America, driven by a challenging combination of high inflation and low consumer confidence, amplified by elevated retail inventory levels.
So why are shares of WHR not circling the drain on Electrolux's downbeat announcement?
- Electrolux's comments were similar to WHR's during its Q2 earnings call in late July. The company's Q2 results were dented by softening consumer sentiment, constrained supply, and reduced volumes. As a result, WHR trimmed its FY22 outlook for the second-straight quarter, expecting adjusted EPS of $22.00-24.00 and revenue growth of negative 6% yr/yr, down meaningfully from its initial forecast of earnings of $27.00-29.00 and revenue growth of +5-6% outlined in late January.
- WHR has also been amid ongoing cost reduction strategies since the beginning of 2020, exiting underperforming businesses, focusing on operating margins, and targeting cost-based pricing globally.
- Although WHR missed sales estimates in Q2, a positive standout was its massive earnings beat, highlighting the success the company is starting to have with these cost reduction initiatives.
- Furthermore, investors may be hopeful that good news will come from WHR's strategic review of its Europe, Middle East, and Africa (EMEA) business, which is expected to conclude in a few weeks. This region has consistently lagged on margins over the past couple of years, and removing it from the books should help boost overall margins for WHR going forward. Given that Electrolux is seeing part of this region continue to struggle, it may push management to find a buyer.
Overall, despite bearish news from competing appliance maker Electrolux today, WHR shares remain above water as the market has already priced in much of the negativity expressed by Electrolux. The Swedish company may also have been slightly late to the cost reduction game compared to WHR, which has been expecting elevated cost inflation to persist and a short-term slowdown in consumer demand for some time. Finally, even though WHR has trimmed its FY22 outlook twice, its long-term goals remain intact, helped by an expectation of healthy long-term demand bolstered by many secular trends, including an undersupplied housing market and a strong replacement cycle from more remote workers.
Walt Disney's growth plans for ESPN starting to come to light, which appease Dan Loeb (DIS)
After activist investor Dan Loeb proposed that Walt Disney (DIS) should consider spinning off ESPN last month, the entertainment giant's phone was reportedly ringing off the hook from interested suitors. According to DIS's CEO, Bob Chapek, this deluge of interest from prospective buyers validates ESPN's considerable value, illustrating why the company should hang onto its sports-themed asset. For Loeb, who amassed a $1 bln stake in DIS through his Third Point Capital hedge fund, the prospects of a bidding war erupting for ESPN would seemingly align with his interests. Instead of double-downing on his call to spin-off ESPN, though, Loeb has back-tracked a bit, commenting on Twitter (TWTR) that he has a "better understanding" now of DIS's plans for sports.
The apparent flip-flop came as Chapek spoke at the D23 Expo in Anaheim this past weekend. Chapek was coy about DIS's specific strategy, stating that the company has very ambitious goals, and that its investors are only aware of the plans that have been shared publicly. However, it's becoming clear that sports betting is a significant component of DIS's vision for ESPN.
- When Loeb suggested that DIS should spin-off ESPN, his argument centered on the idea that pursuing initiatives such as sports betting could be more difficult as part of DIS. It seems that Chapek doesn't necessarily agree with that premise because Bloomberg is reporting that DIS is "working very hard" on a sports betting app. Details are scarce at this point, but it's not difficult to imagine a scenario in which ESPN+ subscribers could view and bet on sports at the same time, similar to how fuboTV (FUBO) operates.
- Besides the uncertainty regarding sports betting, Loeb was unsure whether DIS's leadership, including its Board of Directors, had a clear strategy to fully capitalize on the ESPN brand. Although ESPN+ is growing rapidly, with subscribers growing by 53% yr/yr to 22.8 mln last quarter, the platform isn't really integrated into DIS's other businesses. This standalone characteristic restricts ESPN's revenue-generating capabilities, but Chapek disclosed that integrating ESPN more fully into the direct-to-consumer segment, and DIS's other brands, is a vital component of the company's growth strategy.
- These revelations have appeased Loeb, lessening the concern that he will apply more pressure on the company to shake up its Board of Directors. Additionally, Chapek is in agreement with Loeb on the idea of DIS repurchasing the 33% interest in Hulu that it doesn't already own from Comcast (CMCSA). In fact, Chapek disclosed that DIS has tried to resolve that issue numerous times, but CMCSA has been reluctant to make a deal.
The main takeaway is that ESPN is a major piece of DIS's future growth plans, which are gradually becoming clearer. It seems inevitable that sports betting, in some form, will play a key role in ESPN's evolution. The idea of more fully immersing ESPN into DIS's other content and platforms is also very appealing from a cross-selling perspective.
Carvana shares vend big gains today on a Piper Sandler upgrade (CVNA)
Carvana (CVNA +10%) shares are vending big gains today following an analyst upgrade at Piper Sandler, citing that the used car retailer known for its giant car vending machines is undervalued.
Briefing.com notes that today's upgrade is just the second upgrade from any firm since February. However, with shares trading over 80% down on the year and nearly 90% below record highs from August 2021, perhaps more upgrades will follow as analysts view significant negativity already priced in. Additionally, the stock has been in a consolidation pattern since mid-May, with the $20 mark acting as support over that period.
Short interest is also relatively high, at around 30% of the float, making the stock prone to violent swings, which could quickly move in CVNA's favor, as we witnessed post-Q2 earnings when shares were halted after surging over 40% shortly after the bell. As a result, given a few notable data points reported by some of CVNA's peers and some highlights from CVNA in Q2, another favorable swing could be in CVNA's future.
- Along with CVNA delivering a 9% increase in retail units sold yr/yr in Q2, auto dealers also see used car units sold either climbing yr/yr or falling at a much slower rate than new car volumes.
- For instance, even though AutoNation (AN) reported a 4% dip in used retail unit volumes in JunQ, new retail unit volumes fell 22%. Meanwhile, Group 1 Automotive (GPI) saw a 10% jump in used vehicle units sold yr/yr in JunQ, while new vehicle units dropped by 6%.
- Auto parts retailers like AutoZone (AZO), O'Reilly Automotive (ORLY), and Advance Auto Parts (AAP) have repeatedly mentioned that the average age of vehicles on the road is increasing. With inflationary and supply chain pressures causing new vehicle prices to soar, evidenced by Kelley Blue Book reporting non-luxury vehicle buyers paying an average of over $1,000 above MSRP in August -- an increase from July -- an aging fleet will likely continue over the near term.
These data points are encouraging for CVNA, given its exclusive offering of used vehicles, which carry a range of price levels for many different incomes. The company also made inroads on its goal of achieving gross profit per unit (GPU) of $4,500 last quarter, expanding the figure by 19% sequentially to $3,368. Also, improving new vehicle production will likely cause used prices to fall, spurring renewed demand from individuals who may have been putting off their used car purchase plans.
Still, the hawkish Federal Reserve and a potential worsening of economic conditions pose a significant risk for CVNA in the medium run. If financing becomes too costly and inflationary forces push used car prices higher, individuals may defer their potential car purchases, hindering CVNA's GPU goals and path to profitability.
Carpenter Tech flies higher on Cowen upgrade; aerospace suppliers seeing a rebound in orders (CRS)
Carpenter Tech (CRS +7%) is trading nicely higher after Cowen upgraded the stock this morning to Outperform from Market Perform, saying the recent pullback provides an attractive entry point.
- Briefing.com follows Boeing's (BA) calls closely and we have been getting more positive on the aerospace suppliers based on the comments being made by the airplane giant. Specifically, Carpenter is a supplier of high performance metals like titanium, nickel, and cobalt primarily for the aerospace industry although it also has exposure to the transportation, energy, industrial, medical, and consumer electronics markets as well.
- When air travel dropped during the pandemic, it was a rough time for aerospace suppliers like CRS. That led to eight consecutive quarters of losses for CRS before it broke even with its Q4 (Jun) report. Analysts are expecting a small loss in Q1 (Sep), but then consistently profitable quarters starting in Q2 (Dec) and beyond.
- On its last call in late July, CRS said that it was seeing strong and increasing demand in each of its end-use markets. Most notably, its sees aerospace & defense continuing to ramp to pre-COVID levels. CRS also said that demand for materials is increasing substantially as customers accelerate their activity to meet rising build rates. As a result, lead times across the industry have extended and CRS's A&D end-use market backlog is up 36% sequentially and 224% yr/yr.
- While aerospace is by far its largest market (42% of FY22 revenue), CRS was also notably bullish on Medical, its third largest market (12% of revs). The catalyst here is the huge backlog of surgeries that were delayed by COVID-19. Medical procedures are expected to rise to pre-pandemic levels in the second half of calendar year 2022.
Overall, Briefing.com has gotten more positive on the aerospace suppliers. This is a notoriously cyclical industry, but build rates are climbing quickly as air travel returns to normal. Also, Boeing's 737 MAX issues are now mostly behind it and it recently started delivering 787s again, which had been halted for more than a year, after finally satisfying FAA certification concerns. The industry strikes us as pointing nose-up, but the stocks have made only modest moves, which we think presents an opportunity. Upgrades like this from Cowen should help shine the spot light on CRS.
|
