S&P futures vs fair value: -9.00. Nasdaq futures vs fair value: -28.00.
The S&P 500 futures are down 9 points, trading 0.2{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} below fair value. The Nasdaq 100 futures are down 28 points, trading 0.1{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} below fair value. The Dow Jones Industrial Average futures are down 43 points, trading 0.1{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} below fair value.
Early trading shows a slight negative bias, but stock futures are mostly flat. Major indices have solid gains for the week heading into today’s session.
Today’s market-moving data includes July Housing Starts and Building Permits at 8:30 ET, followed by the preliminary August University of Michigan Consumer Sentiment survey at 10:00 ET.
Treasury yields are lower ahead of these reports. The 10-year note yield is down six basis points to 3.87{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38}, and the 2-year note yield is down six basis points to 4.04{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38}.
Commodity futures are also trading lower. WTI crude oil futures are down 2.7{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} to $74.90 per barrel, natural gas futures are down 1.3{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} to $2.17 per mmbtu, and copper futures are down 0.9{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} to $4.11 per pound.
In corporate news:
- Applied Materials (AMAT) is down 2.2{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} after beating earnings and revenue estimates but providing in-line Q4 guidance.
- Estee Lauder (EL) is down 1.6{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} after being downgraded to Neutral from Buy at Bank of America.
- Amcor (AMCR) is down 3.5{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} after beating earnings estimates but missing on revenue; FY25 EPS guidance is in-line.
- Coherent (COHR) is up 3.1{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} after beating earnings and revenue estimates; Q1 EPS and revenue guidance are in-line.
- Microchip Technology (MCHP) is up 2.6{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} after being upgraded to Overweight from Neutral at Piper Sandler.
Reviewing overnight developments:
Today’s News
The National Association of Realtors is set to drop its standard commissions to agents as part of a settlement to end antitrust lawsuits. This move is expected to provide American home sellers with more negotiating power over the fee structure when listing their properties. Traditionally, sellers paid a 6{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} commission, split between the buyer’s and seller’s agents. The changes, effective this Saturday, follow a court ruling that found commission requirements reduced competition and kept rates artificially high.
Rivian Automotive (RIVN, Financial) has paused production of its electric commercial van for Amazon (AMZN, Financial) due to a parts shortage. The temporary halt began earlier in August at Rivian’s Illinois plant. Despite this, production of Rivian’s R1 electric pickup and SUV models remains unaffected. The company expects to recover all missed production and noted that the parts shortage should not impact Amazon’s vehicle deliveries significantly.
Stock index futures fell sharply on Friday after July housing starts and building permits came in lower than expected. Despite this dip, retail giant Walmart (WMT, Financial) provided some optimism with positive economic data and upbeat comments, helping to ease recession fears. Retail sales bounced back in July, and initial jobless claims decreased, indicating that the U.S. middle-income consumer is still spending.
Nike (NKE, Financial) continues its rally as Wall Street analysts suggest a turnaround is on the horizon. Williams Trading upgraded Nike from a bearish to a bullish stance, citing the rehire of Tom Peddie as VP of Marketplace Partners. Peddie’s return is seen as a positive move for Nike’s U.S. wholesale business, with partners expressing satisfaction with the renewed focus on their accounts. Evercore ISI also added Nike to its top five softlines list, indicating potential growth.
This week’s dividend activity saw increased payouts from Warner Music (WMG, Financial) and Winnebago (WGO, Financial), along with declarations from companies like Walmart (WMT, Financial) and Home Depot (HD). Warner Music raised its dividend by 5.9{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} to $0.18, while Winnebago’s dividend increased by 9.7{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} to $0.34. Virtus Investment (VRTS) also announced an 18.4{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} dividend increase to $2.25.
H&R Block (HRB, Financial) shares surged over 10{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} following an impressive FQ4 earnings report. The company exceeded analyst expectations and announced a 17{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} dividend increase and a new $1.5 billion share buyback program. Looking ahead, H&R Block provided optimistic guidance for FY2025, projecting revenue between $3.69 billion and $3.75 billion, surpassing the consensus estimate of $3.67 billion.
Ginkgo Bioworks (DNA, Financial) saw its shares trend lower after its board approved a one-for-forty reverse stock split. The company’s Class A common stock will begin trading on a split-adjusted basis on August 20, 2024. The decision followed a shareholder vote, with more than 4.7 billion votes in favor of the plan.
Texas Instruments (TXN, Financial) signed a tentative agreement with the U.S. Department of Commerce to receive up to $1.6 billion in funding for its 300mm wafer fabs in Texas and Utah. This funding is part of the U.S. CHIPS and Science Act, and Texas Instruments expects to receive an estimated $6 billion to $8 billion from the U.S. Department of Treasury’s Investment Tax Credit for qualified U.S. manufacturing investments.
Lumen Technologies (LUMN, Financial) was downgraded by Wells Fargo from Equal Weight to Underweight, with the price target revised to $4. Analysts cited concerns over the company’s ability to grow EBITDA and free cash flow sustainably without an inflection in revenue. Lumen’s longer-term $19 billion debt also remains a concern.
Pfizer (PFE, Financial) and BioNTech (BNTX, Financial) announced that their Phase 3 clinical trial for a combined mRNA vaccine against influenza and COVID-19 met only one of its two primary objectives. The trial showed higher influenza A responses and comparable COVID-19 responses but did not meet the primary immunogenicity objective related to the influenza B strain. An ongoing safety analysis indicated no safety signals for the combined shot.
Bank of America (BAC) announced plans to redeem all €1.5 billion outstanding of its floating rate senior notes a year early. Originally scheduled to mature on August 24, 2025, the notes will now be redeemed on August 24, 2024, at face value plus accrued interest. Citibank will act as the principal agent and registrar for the notes.
Wind turbines generated more electricity in the U.S. than coal-fired power plants in March and April, marking a significant milestone in the country’s energy transition. This is the first time wind generation exceeded coal-fired generation for two consecutive months. Wind and solar combined also surpassed coal generation during the first four months of 2024.
