The S&P 500 futures trade five points, or 0.1%, above fair value following three straight days of record highs for the S&P 500. Price action has been muted in the pre-market session amid an absence of new macro catalysts. The trend has been the market's friend ever since bottoming on March 23, largely due to the Fed's extremely dovish monetary policy and Congress' relief packages, so it shouldn't be surprising that buyers are still control. There are risks that could catalyze a pullback, such as the lack of another relief bill, but the path of least resistance right now appears to be up. Shares of Salesforce (CRM 247.20, +31.15, +14.3%) are up 14% ahead of the opening bell after the soon-to-be Dow component exceeded quarterly expectations and issued upside guidance. On the data front, investors will receive Durable Goods Orders for July (Briefing.com consensus 3.9%) at 8:30 a.m. ET. The weekly MBA Mortgage Applications Index, which was released earlier, declined 6.5% following a 3.3% decrease in the prior week. Longer-dated Treasuries continue to see an uptick in yields ahead of Fed Chair Powell's speech on Thursday. The 2-yr yield is flat at 0.16%, and the 10-yr yield is up three basis points to 0.71% after starting the week at 0.64%. The U.S. Dollar Index is up 0.1% to 93.14. WTI crude is down 0.4% to $43.18/bbl. In U.S. Corporate news: - Salesforce (CRM 247.20, +31.15): +14.3% after beating top and bottom-line estimates and issuing upside FY21 guidance. Quarterly guidance was mixed.
- Intuit (INTU 357.88, +21.46): +6.4% after beating top and bottom-line estimates.
- Hewlett Packard Enterprise (HPE 9.95, +0.62): +6.7% after beating top and bottom-line estimates and issuing upside EPS guidance for Q4 and FY20.
- Dick's Sporting Goods (DKS 52.35, +5.08): +10.9% after beating top and bottom-line estimates.
- Nordstrom (JWN 14.76, -0.78): -5.0% after missing top and bottom-line estimates.
Covid Vaccine liability protections The European pharmaceuticals vaccine lobby is pushing the EU for certain liability protections as drugmakers around the world rush to develop a coronavirus vaccine. It would give them a "comprehensive no-fault and non-adversarial compensation system, and an exemption from civil liability" if there are problems with the vaccines, "in order to compensate for such high risks taken by manufacturers." Several of the firms in Vaccines Europe are in advanced talks with the EU over vaccine supplies, while some have already reached deals with either the U.S. or the EU.
should the U.S. sell the F-35 to the UAE? With the ink barely dry on the peace agreement between Israel and the UAE, the two countries are sparring over the latter's long-standing request to buy Lockheed Martin's (NYSE:Lmt) F-35 from the U.S. Washington is firmly committed to selling advanced weaponry to the UAE, according to Secretary of State Mike Pompeo, adding that Israel would maintain its "qualitative military edge" as stipulated under American law. However, any U.S. decision to push ahead with an arms sale to the UAE will likely face pushback in Congress. It also brings up regional memories of the F-35 sale to Turkey, which backfired after Ankara acquired the S-400 missile defense system from Russia.
What else is happening... U.S. changes Teva (NYSE:Teva) in generic drugs price-fixing probe.
American Airlines (NASDAQ:AAL) to reduce work force by 19k in October.
Elon Musk teasesbig battery breakthrough.
GM (NYSE:GM and Ford (NYSE:F) near finish of CORONAVIRUS PRODUCTS
Carnival (NYSE:CCL ) Cancel Princess world cruises in early 2021.
Today's Economic Calendar 7:00 MBA Mortgage Applications
8:30 Durable Goods
10:00 Fed's Barkin Speech
10:00 State Street Investor Confidence Index
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
11:30 Results of $22B, 2-Year FRN Auction
1:00 PM Results of $51B, 5-Year Note Auction
Gapping up
In reaction to earnings/guidance:
- URBN +17.5%, CRM +14.7%, PLAN +13.4%, DKS +11.5%, INTU +7%, HPE +6.8%, TOL +2.4%, DY +2.3%, RY +1.3%, CHS +0.8%
Other news: - FLDM +22.1% (receives Emergency Use Authorization from the FDA for saliva-based Advanta Dx SARS-CoV-2 RT-PCR assay for COVID-19)
- BKU +10.7% (to join S&P SmallCap 600)
- TRUP +9.2% (to join S&P SmallCap 600)
- WDAY +2.9% (in sympathy with strong earnings report from CRM)
- OII +2.6% (announces contract with Dynetics)
- VNET +2.2% (prices follow-on offering of 17 mln ADSs at $20.75 per ADS)
- TRVN +1.9% (announced two publications of the respiratory safety data from the OLINVYK development program)
- BRO +1.7% (terminates previously-announced agreement to acquire the assets of HAUSER)
- RDFN +1.1% (publishes positive industry report on website)
- IMVT +0.9% (LGND says partner IMVT announced positive top-line results for Phase 2a trial of IMVT-1401)
Analyst comments: - NIO +6.4% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
- ROKU +3.4% (initiated with a Buy at Citigroup)
- NBLX +2.4% (upgraded to Overweight from Neutral at Piper Sandler)
- HAIN +1.8% (upgraded to Outperform from In-line at Evercore ISI)
- KDP +1.6% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
- POR +1.6% (upgraded to Buy from Hold at Siebert Williams Shank)
Gapping down
In reaction to earnings/guidance: - PSTG -9.9%, JWN -4.8%, ADSK -1.6%, HEI -1.3%
Other news: - GTX -16.4% (announces with the assistance of its financial and legal advisors, it is exploring alternatives for addressing its previously disclosed balance sheet concerns)
- IMBI -8.7% (priced an underwritten public offering of 2,400,000 shares of its common stock, at a public offering price of $6.25/share)
- LAD -5.1% (to join S&P MidCap 400)
- SMCI -3.4% (announces settlement with SEC fully resolving previously disclosed investigation)
- LRN -2.4% (convertible notes offering)
- TEVA -1.9% (US business has been indicted on price fixing charges, according to WSJ)
- SIBN -1.9% (Medica publishes iFuse coverage policy)
- CCL -1.9% (cancels two cruises)
- CDAY -1.5% (prices secondary offering)
- BBBY -1.1% (announces major realignment of organizational structure, includes 2,800 job cuts)
Analyst comments: - LSTR -6.2% (downgraded to Hold from Buy at Stifel)
- PINC -1.1% (downgraded to Hold from Buy at The Benchmark Company)
| Notable Research Calls For Wednesday, August 26 |
| - Morgan Stanley upgraded Keurig Dr Pepper (KDP) to Overweight from Equal Weight as they believe potential longer-term benefits in coffee with greater household penetration, and its strong near-term momentum with high topline and EPS visibility, are not priced into large valuation discounts to peer groups (KO/PEP, as well as US-centric/defensive names).
- Guggenheim upgraded J.M. Smucker (SJM) to Neutral from Sell following the company's 1Q "beat and raise" that benefited from higher rates of at-home consumption and lower SD&A spending. While firm maintains that the company's longer-term growth algorithm is not competitive with food peers and pet will remain challenged, they think the incremental EPS flexibility in 2Q and beyond presents a significant risk to being short the stock -- and allows for more rapid deleveraging.
- Barclays downgraded Royal Dutch Shell (RDS.A) to Underweight from Equal Weight citing valuation.
- Atlantic Equities started coverage on Shopify (SHOP) with an Overweight, $1150 tgt; firm highlighted that the company is gaining share in a fast growth market and its competitive advantages are only increasing as it scales. Shopify is also significantly under-monetized, with product extensions, such as fulfillment, providing a significant upside opportunity. The stock's valuation is the key hurdle but the TAM is vast, there are increasing benefits to scale, and eCommerce acceleration has sustained as economies reopened.
- Citigroup launched coverage on Roku (ROKU) with a Buy, $180 tgt; over the past few years, the market has valued an active account at ~$330, higher than the $130 the economic value per account. The disparity reflects the market's view of active account economics improving augmented by account growth. And, Roku should benefit on each dimension.
- Wedbush initiated coverage on Nikola Corporation (NKLA) with a Neutral, $45 tgt; starting off with a $3.3 billion valuation and now boasting $15 billion with essentially no revenue until the end of 2021 has fueled a major bull-bear debate for this young controversial EV player. To this point Nikola has made no revenue over the last 4 years, burns cash at a rapid rate, and has some stout competition already off and running in the electric trucking space. It is the company's investments into a hydrogen powered battery and the benefits of this type of electricity/battery vs. the traditional battery electric motors currently used in EV's globally that is a key part of driving the value proposition in the eyes of investors on this story stock.
- Jefferies raised their Tesla (TSLA) target to a Street-high $2500 from $1200; firm admits we are still early in the transformation of the auto industry. Tesla's competitive edge in cars may soon start to shrink but continues to widen in multiple other dimensions, from brand leverage and software to battery capacity and industrial efficiency. In their view, nothing matters more on "Battery Day" than understanding how the "Million mile" batteries could profoundly change the auto business model.
- Wedbush upped their target on Apple (AAPL) to a Street-high $600 from $515 as they see considerable strength from the China region over the last few months with positive trends heading into the Fall, an impressive trajectory firm expects to continue heading into the next 6 to 9 months. Additionally, firm still believes many on the Street are underestimating the massive pent-up demand around this supercycle for Apple, which remains the opportunity for the bulls heading into 2021 as this monetization engine heads into its next gear.
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