Today’s Big Picture
Equity indices in Asia closed mostly higher today following news Singapore approved a COVID vaccine for children 12-15. Equity indices in Europe were also predominantly higher by mid-day trading following favorable unemployment data out of the UK. On the back of blowout earnings from Home Depot (HD), U.S. equity futures point to a positive open later this morning. Before the opening bell, we’ll get more quarterly earnings, including those from Macy’s (M) and Walmart (WMT) as well as the April Housing Starts & Building permits report. Later today, Google (GOOGL) will kick off its three-day I/O conference, and given the changing landscape on privacy, we suspect there will be, at a minimum, an interesting keynote later today.
The Unemployment rate in the UK fell to 4.8%in March from 4.9% in February, a tick below the expected 4.9% reading for the month.
The preliminary take on Employment Change in European Union during Q1 fell 2.1% after falling 1.9% in Q4 2020. On a QoQ basis, employment fell 0.3% compared to an upwardly revised 0.4% in 4Q 2020. The second estimate for Q1 GDP in the union fell 1.8% YoY vs. 4.9% YoY in Q4 2020 and marked the fifth consecutive contraction amid renewed pandemic restrictions.
Yesterday’s New York Empire State Manufacturing Index dropped to 24.3 in May from a 3-year plus high of 26.3 in April, beating expectations for a steeper decline to 23.9. New Order rose to 28.6 from 26.9 as did shipments, to 29.7 form 25.0. Delivery times worsened significantly to 28.1 from 23.6 - which indicates supply chains remain messy. Input and selling prices rose at a record-setting pace - something to keep an eye on as if we continue to see this into the fall, it will be cause for concern.
With the national average on a 30-year fixed-rate mortgage little changed on the month at around 3.06%, the NAHB Housing Market Index was unchanged between April and May and in line with expectations. NAHB commentary added that the strong reading on homebuilder confidence is driven by low housing inventories, low rates, and strong demand, despite the headwinds of rising costs.
Later today we’ll get the April Housing Starts & Building Permits report, the usual weekly Redbook Retail Sales, and API Crude Oil Stocks.
Equity markets had another down day yesterday, with the Dow falling -0.2%, the S&P 500 -0.3%, and the Nasdaq-0.4%, but the Russell 2000 managed to be the lone gaining, rising 11 basis points.
Bitcoin dropped below $43,000 well below its high of over $63,000 while gold broke out of its downtrend, rising 1.6% and silver rose 3.5%.
Gold futures posted their strongest daily gain in more than a week to mark the highest settlement since January following weakness in the U.S. dollar and comments from Federal Reserve Vice Chairman Richard Clarida that the U.S. economy hasn't hit the benchmark of "substantial further progress" needed for the Federal Reserve to scale back asset purchases.
The gasoline shortages across the Southeast are easing now that Colonial’s pipeline is back in operation and the S&P 500 Energy sector broke out to close at a new 52-week high yesterday, with Occidental (OXY) and Baker Hughes (BKR) in the lead, gaining 5% and 4.9% respectively.
LIBRO hit a new record low yesterday, with submitting banks reporting inter-bank funding costs of 0.1496%, while longer-term rates remain in the middle of the range they’ve been in since peaking at the end of March.
Stocks to Watch
Before the U.S. equity markets open, we’ll get quarterly results from Dycom (DY), Macy’s, Walmart, and several other companies. Among those three, we’ll be looking to see check-in carrier plans for 5G and gigabit fiber deployments as well as to what extent, in what mode and what consumers are spending on as stimulus checks burn holes in some pockets, pandemic restrictions continue to ease and spring is in the air.
Home Depot reported April quarter ESP of $3.86, $0.93 ahead of the consensus forecast, while revenue for the quarter jumped 32.7% to $37.5 billion, crushing the consensus estimate. Comp sales for the increased 31.0% YoY with those in the US up 29.9%. The company is holding an earnings conference call at 9 AM ET to review the quarter and “related matters.”
Amazon (AMZN) is reportedly offering $9 billion to acquire MGM Studios and is "weeks into" negotiating with the media company. If the deal does go through, Amazon would gain access to over 4,000 film titles and 17,000 episodes of television programming in a move that would increase the depth of its Amazon Prime Video library.
Bank of America (BAC) reportedly joined Credit Suisse (CS) and Nomura Holdings (NMR) Instinet on the Paxos Settlement Service, a network created by Paxos Trust to settle stock trades in minutes rather than days by using blockchain.
The California Department of Motor Vehicles confirmed Tesla (TSLA) is under review to see if the company misleads customers by advertising its full self-driving capability option. Michael Burry (of The Big Short fame) revealed in regulatory filings that he was long puts against 800,100 shares of Tesla, worth $534 million at the end of March. So far in May, TSLA shares are down ~20% and last night closed below their 2-day simple moving average.
Volkswagen's (VWAGY) Lamborghini will spend ~$1.8 billion to electrify its portfolio of supercars. In 2023, Lamborghini will launch its first hybrid series production car and in 2024 the entire range is slated to have some form of electrification.
Shares of Canoo (GOEV) fell in the extended session Monday after the electric-vehicle startup reported a narrower-than-expected quarterly loss and disclosed it is being investigated by the Securities and Exchange Commission. Canoo went public in December after a reverse merger with a blank-check company.
Due to the parts and chip shortage, Toyota Motor (TM) announced it will suspend production for three production lines at two of its automotive plants. For context, the company has a total of 29 lines at 14 plants.
Shares of 3D printing company Desktop Metal (DM) fell in aftermarket trading last night following a mixed quarterly earnings report that beat on revenue but missed consensus EPS expectations by a wide margin. The company reiterated its expectation for over $100 million of revenue for 2021, exiting the year with an annualized revenue run rate of $160 million.
After AT&T (T) announced that it would merge WarnerMedia with Discovery (DISCB), the company’s Class B stock closed up 12.5% and AT&T shares closed down 4.8%. Rival Walt Disney (DIS) shares fell 2.3% and Netflix (NFLX) dropped 1.1%.
Google’s three-day I/O Conference kicks off with a keynote address.
Monday food delivery app DoorDash (DASH) posted 15 job openings for management, strategy, and recruitment position in Berlin, indicating the company is looking to launch in Germany.
Twilio (TWLO) entered into a definitive agreement to acquire Zipwhip for approximately $850 million in an equal blend of cash and stock. Zipwhip's business texting platform enables companies to reach their customers through SMS.
Solar Integrated Roofing (SIRC) announced it will acquire San Diego-based Future Home Power, a solar, roofing, and battery storage sales company; acquisition to be immediately accretive.
After today’s market close, Take-Two (TTWO) and Trip.com (TCOM) will be among the companies reporting their latest quarterly results. Those looking to get a jump on those and other quarterly earnings reports this week should visit Nasdaq’s earnings calendar page.
On the Horizon
- May 19: weekly MBA Mortgage Applications, weekly EIA energy stocks, FOMC Minutes
- May 20: weekly jobless claims, Philly Fed Manufacturing
- May 21: Markit Services, Manufacturing, and Composite PMIs; Existing Home Sales
- May 24: Chicago Fed National Activity Index
- May 25: S&P/Case-Shiller Home Prices, Conference Board Consumer Confidence, New Home Sales, Richmond Fed Manufacturing
- May 26: Mortgage Applications
- May 27: Durable Goods Orders, GDP Price Index, Corporate Profits, weekly Jobless Claims, PCE Prices, Pending Home Sales, Kansas Fed Manufacturing Index
- May 28: Personal Income & Spending, PCE Price Index, Goods Trade Balance, Wholesale Inventories, Chicago PMI, Michigan Consumer Sentiment
- March 31: US equity markets closed for the Memorial Day holiday
Thought for the Day
“Indecision is the thief of opportunity.” ~Marcus Tullius Cicero
- Dycom (DY) is a constituent of the Tematica BITA Digital Infrastructure and Connectivity Index.
- AT&T (T), Walmart (WMT) is a constituent of Tematica Research's Thematic Dividend All-Stars Index.
- Tesla (TSLA) is a constituent of Tematica Research’s Cleaner Living Index.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.