Clinging to gains: S&P 500 futures are currently trading up 0.4%, with Dow futures up 8% and Nasdaq futures 0.11% higher. That’s after the S&P 500 closed 2.6% higher on Tuesday following encouraging comments from Fed Chairman Jerome Powell.
“We remain committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy,” Powell said.
However, the flash IHS Markit Eurozone Composite PMI fell for a second successive month in September, dropping from 51.9 in August to 50.1, indicating only a very marginal increase in business activity.
“Having rebounded sharply in July and, to a lesser extent, August from COVID-19 lockdowns during the second quarter, the PMI has since indicated a near stalling of the economy at the end of the third quarter as rising infection rates and ongoing social distancing measures curbed demand, notably for consumer-facing services” IHS Markit stated.
Over-hyped: Shares in Tesla are down 5% in today’s pre-market trading after the hotly-anticipated battery day event failed to impress investors.
Key announcements included Tesla indicating that the $/kWh on lithium ion batteries is flattening out and not falling quickly enough to lead to higher adoption of electric vehicles. As a result, Tesla revealed plans to take battery production in-house. Tesla will continue to use cell suppliers including Panasonic and CATL, but aims to have 100 GWh capacity in 2022 and 3 TWh by 2030.
Following the event, RBC Capital’s Joseph Spak reiterated his TSLA sell rating with a $290 price target. “Overall, we believe Tesla’s long-awaited battery day disappointed elevated expectations, as it highlighted some near-term stagnation in the price reduction of current lithium ion batteries; while next-gen battery/ manufacturing technologies and products are ambitious, some are not unique and others could be further out than hoped” he summed up.
Also in the red this morning is Shopify which has just revealed that two rogue support team were part of a scheme to obtain customer transactional records. Customer data exposed included basic contact information, such as email, name, and address, as well as order details – but did not include complete payment card numbers or other sensitive personal or financial information.
Post-print KB Home is now trading down 3% after reporting 3Q earnings of $0.83 per share, crushing Street estimates of $0.54. Revenues of $995M topped analysts’ estimates of $893M (but fell 14% Y/Y) on robust housing demand, driven by historically low mortgage interest rates and a limited supply of resale inventory.
Meanwhile StitchFix is plunging 16% after printing a beat-and-lower FQ4, with Revenue 7% above Street and Gross Margin 1.5-pts above (although earnings fell short). FQ1 guide of mid to high single digit revenue growth was below Street’s 11%.
“While SFIX’s FQ1 revenue outlook is puzzling and somewhat discouraging, we believe its three key GCIs (Direct Buy, Kids, and UK expansion) offer a good fundamental story to look forward to, and if, in fact, SFIX is successful in achieving its guide of material H2:21 revenue growth accel, partly driven by these GCIs in a post-COVID environment, we think the stock could outperform nicely” commented RBC Capital’s Mark Mahaney following the earnings report.
Zogenix is also falling 10% after the global biopharma revealed its intention to offer $200M of convertible senior notes due 2027 in a private offering to institutional buyers.
However Nike is up 13% in pre-market trading as online demand drove better-than-expected 1Q results. The athletic apparel company reported 1Q earnings of $0.95 per share, which blew past Street estimates of $0.47, and revenue of $10.6B (vs consensus at $9.1B).
“We believe a premium and expanding multiple is justified for a company expanding its already dominant leadership position within a growing industry benefiting from secular tailwinds that are likely to become even greater in coming years” cheered Guggenheim’s Robert Drbul. He boosted his price target to $162 and called Nike a ‘Best Idea.’
Today is the day: Johnson & Johnson has announced today the launch of its large-scale, pivotal, multi-country Phase 3 trial (Ensemble) for its COVID-19 vaccine candidate, JNJ-78436735, following positive interim results from the Phase 1/2a clinical study. Ensemble will enroll up to 60,000 volunteers across three continents and will study the safety and efficacy of a single vaccine dose versus placebo in preventing COVID-19.
Also taking place today, Apple is launching the Apple Store online in India, offering its full range of products and support directly to customers across the country for the first time. “We’re proud to be expanding in India and want to do all we can to support our customers and their communities,” said Apple’s Deirdre O’Brien.
Last but not least, Bloomberg is reported that 3M is working with advisers on the sale of its food safety business, citing people with knowledge of the matter. According to one of the sources, the unit, which sells test kits and other products to help foodmakers monitor sanitation and allergens, could fetch about $3.5 billion.
