Closing Stock Market SummaryThe stock market closed out the first week of May on an upbeat note. The major indices were showing decent strength right out of the gate, held onto those gains and traded somewhat sideways until about 1:00 p.m. ET when the rally built up momentum. The late afternoon move higher brought the S&P 500 just shy of the 4,150 level before pulling back somewhat by the close.
Today's upside bias was driven by a nearly 5.0% gain in Apple (AAPL 173.57, +7.78, +4.7%) following its pleasing earnings report and capital return plan, along with a solid rebound effort in the regional bank stocks. Standouts in that regard included PacWest (PACW 5.76, +2.59, +81.7%) and Western Alliance (WAL 27.16, +8.96, +49.2%), which had been at the center of recent turmoil before logging outsized gains today, boosted by some short-covering activity.
The SPDR S&P Regional Bank ETF (KRE) jumped 6.3% and the S&P 500 financials sector closed near the top of the leaderboard among the 11 sectors with a 2.4% gain. Other top performing sectors included the energy (+2.8%) and information technology (+2.7%) sectors. The latter was boosted by Apple along with a nice gain in Microsoft (MSFT 310.65, +5.24, +1.7%), which hit a new 52-week high today.
Strength from the regional bank stocks and energy shares contributed to the outperformance of the Russell 2000 (+2.3%).
Market participants were also digesting the April employment report, which was good enough to engender some thoughts that a soft landing for the economy may still be possible despite the Fed's aggressive rate hikes.
Treasury yields rose sharply in response to the employment report and the improved price action in the bank stocks, which led to some unwinding of safety trades. The 2-yr note yield rose 18 basis points to 3.91% and the 10-yr note yield rose 10 basis points to 3.45%.
At the same time, the CBOE Volatility Index moved sharply lower, down 14.7% or 2.95 to 17.14.
- Nasdaq Composite: +16.9% YTD
- S&P 500: +7.7% YTD
- Dow Jones Industrial Average: +1.6% YTD
- S&P Midcap 400: +1.3% YTD
- Russell 2000: -0.1% YTD
Reviewing today's economic data:
- Nonfarm payrolls grew by 253,000 in April (consensus 180,000) following a revised increase of 165,000 in March (from 236,000). Nonfarm private payrolls grew by 230,000 in April (consensus 160,000) after a revised increase of 123,000 in March (from 189,000).
- The unemployment fell to 3.4% in April (consensus 3.6%) from 3.5% in March.
- The average work week was unchanged in April at 34.4 hours (consensus 3.6%). Average hourly earnings increased by 0.5% (Briefing.com consensus 0.3%) after an increase of 0.3%.
- The key takeaway from the report is that it substantiates why the Fed isn't inclined to cut rates soon, but at the same time the continued strength in the labor market after nine rate hikes (the 10th rate hike came after the data for April were collected) lends some hope to the idea that a soft landing for the economy is still possible.
Looking ahead to Monday, market participants will receive the Wholesale Inventories report for March (consensus 0.1%; prior 0.1%).
Tyson Foods (TSN), DISH Network (DISH), Viatris (VTRS), KKR (KKR), and BioNTech (BNTX) are among the more notable companies reporting earnings.
Asian shares rose alongside US futures as investors looked past further stress among regional American banks to the prospect of the Federal Reserve reversing its policy-tightening campaign. Stocks in Hong Kong opened higher while Australian equities erased a morning decline, tracking gains in US futures. Europe stock futures also rose. A gauge of Asian shares is set for its best week in three, led by a 1.1% increase in the financial sector, suggesting the region is relatively insulated from the US banking turmoil. Instead, markets in the region benefited from a weaker dollar, with swaps pointing to bets on a US rate cut by July. The Bloomberg dollar index fell for a fourth day and faces its worst week in more than a month. The policy-rate sensitive two-year Treasury yield has dropped 22 basis points this week, the most since early March. A small advance for oil placed the commodity on track for its first gain in five days after a decline on signs of weaker demand dragged the price more than 10% lower this week. Gold held gains of around 3% this week.
Bourses in Japan and South Korea were closed for a holiday. Australian and New Zealand yields were broadly flat Friday. Treasuries won’t trade in Asian hours given the holiday in Japan. Another unsettling round of trading halts hit US lenders including Western Alliance Bancorp, PacWest Bancorp and First Horizon Corp. in a deepening rout that boosted havens including the yen. Apple Inc. rose in late hours after reporting earnings. Nevertheless, Wall Street’s fear gauge, the Cboe Volatility Index (VIX), spiked to hit the key 20 mark. That’s a stark contrast with the calm that prevailed in markets for the most part in April and saw the measure dropping below 16 just last week. Traders are also gearing up for Friday’s key jobs report, following data that showed applications for US unemployment benefits rose by the most in six weeks while continuing claims fell. US After Hours Busy earnings night, led by AAPL +1.9%; CVNA +25.9%, YELP +9.9%, COIN +8.6%, DBX +7%, LYV +6.8%, DASH +3.6% also higher; TRUP -36%, LYFT -15.3%, TEAM -12.7%, MPWR -10.7% lower on earnings.
Nikkei +0.12% Hang Seng +0.54% CSI -0.41% Shanghai -0.57% Shenzen -0.95%
Eur$ 1.1042 CNH 6.9160 CNY 6.9105 JPY 133.95 GBP 1.2605 CHF 0.8840 RUB 78.0738 TRY 19.4967 WTI$ 69.20 +0.93% Gold 2,047 -0.17% BTC 29,265 +1.31% ETH 1,900 +1.12%
S&P +0.33% Nasdaq +0.42% EuroStoxx +0.33% FTSE +0.34% Dax +0.22% SMI +0.18%
Macro :
- The Real Oil Market Shows $20-a-Barrel Collapse Is Excessive
- BofA, Goldman Strategists See Muted 2023 Global Earnings Growth
Keep an eye on :
Keep an eye on :
- ADS GY : *ADIDAS 1Q OPERATING PROFIT BEATS ESTIMATES, FY OUTLOOK AFFIRMED
- AENA SM : *AENA SEEKS INTERIM DEAL WITH DUFRY ON DUTY FREE OPS: EXPANSIÓN
- AF FP : Air France-KLM Prepares for Busy Summer as Bookings Come Back
- AF FP : Air France-KLM 1Q Ebitda Misses Estimates
- AKER NO : Aker 1Q Net Asset Value per Share NOK803 Vs. NOK900 Q/Q
- AKE FP : Arkema 1Q Ebitda Beats Estimates
- AAPL US : Apple Rises as Strong Sales Defy Challenging Macro
- AAPL US : *APPLE AUTHORIZES INCREASE OF UP TO $90B TO BUYBACK; BOOSTS DIV
- BMW GY : BMW Warns Owners ‘Do Not Drive’ 90,000 Cars Recalled Over Airbag
- BPOST BB : Bpost 1Q Adjusted Ebit Misses Estimates
- IAG LN : Iberia CEO Sanchez-Prieto to Leave, Interim Head Appointed
- IAG LN : IAG 1Q Adjusted Operating Profit Beats Estimates
- BRNL NA : Brunel 1Q Ebit EU15.8M Vs. EU15.6M Y/y
- BCHN SW : Burckhardt Prelim FY Sales About CHF830M
- CABK SM : CaixaBank Sees FY Net Interest Income Above EU8.75B
- CAST SS : Castellum Offers 164.2m Shares at SEK62/Share
- CLN SW : Clariant 1Q Adj. Ebitda Misses Ests., FY Outlook Affirmed
- CLASB SS : Clas Ohlson April Sales +1%
- CCAP GY : Corestate Capital to Implement Alternative Restructuring Concept
- CSGN SW : UBS Weighs Options for Sale of Credit Suisse’s Swiss Unit: Rtrs
- CTT PL : CTT 1Q Net Income EU16.1M Vs. EU5.4M Y/y
- DUFN SW : Dufry Enlarges Revolving Credit Facility by €180M to €2.27B
- EDP PL : EDP 1Q Net Income Beats Estimates
- GALP PL : Galp 1Q Adjusted Net Income Misses Estimates
- GAM SW : Xavier Niel Investor Group May Not Accept Liontrust’s GAM Offer
- GLEN LN : Glencore’s Teck Bid Should Be Blocked by Canada, Mining Vet Says
- IBE SM : *IBERDROLA SEEKS PARTNER FOR US WIND FARM KITTY HAWK: ECONOMISTA
- ICOS IM : Intercos 1Q Adjusted Ebitda EU29.8M Vs. EU19.1M Y/y
- ICOS IM : Intercos 1Q Adjusted Ebitda EU29.8M Vs. EU19.1M Y/y
- INSTA NO : Instabank Offering of 44.6m Shares Prices at NOK1.57/Share
- KRN GY : Krones 1Q Ebitda Beats Estimates
- MONC IM : Moncler 1Q Revenue Beats Estimates
- NEX FP : Nexans Gets TenneT Order With Initial €1.7B Value
- PSPN SW : PSP Swiss Maintains FY Adjusted Ebitda Forecast
- RBI AV : Raiffeisen Boosts FY Net Interest Income View, Beats Est.
- RUI FP : Rubis 1Q Revenue Misses Estimates
- SFQ GY : SAF-Holland SE Sees FY Sales High End of EU1.80B to EU1.95B
- SES SS : Scandinavian Enviro Systems Offers SEK250 million Shares
- SCATC NO : Scatec 1Q Ebitda Beats Estimates
- SOW GY : Software AG Says Silver Lake Boosts Offer to €32.00/Shr
- SREN SW : Swiss Re Asia Appoints Deanna Ong as New Chairperson
- TIT IM : *KKR SAID TO BE AVAILABLE TO RAISE BID FOR TELECOM ITALIA GRID
- TIT IM : Telecom Italia Asks for Higher Bids for Its Landline Network
- TIT IM : Telecom Italia Deems Netco Offers ‘Not Yet Adequate’
- TKA AV : Telekom Austria Extends Board Mandate of Arnoldner, Plater
- TSLA US : Tesla Raises Prices of Premium S, X Models by $2,750 in China
- HO FP : Thales 1Q Sales Beats Estimates
- THG LN : THG Breakup Chatter Unlikely to Quiet Down Unless Shares Rerate
- WBD IM : Webuild Unit Gets Contracts Worth €408m in Saudi Arabia
>>> Up
* Dufry AG Raised to Overweight at Morgan Stanley
* Eurobank Raised to Buy at Deutsche Bank; PT 1.70 euros
* Kellogg Raised to Neutral at JPMorgan; PT $72
* Piraeus Bank Raised to Buy at Deutsche Bank; PT 2.95 euros
* Proximus Raised to Equal-Weight at Morgan Stanley; PT 8.80 euros
* Sats Raised to Buy at ABG; PT 13 kroner
* Sievi Capital Raised to Buy at Inderes; PT 1.20 euros
* Spire Healthcare Raised to Outperform at RBC; PT 270 pence
* Teleste Raised to Accumulate at Inderes; PT 4.10 euros
>>> Down
* AAK Cut to Hold at Handelsbanken
>>> Down
* AAK Cut to Hold at Handelsbanken
* Kahoot Cut to Hold at Pareto Securities; PT 25 kroner
* Kahoot Cut to Neutral at SpareBank; PT 22 kroner
>>> Initiation
>>> Initiation
* Barry Callebaut Assumed Outperform at Credit Suisse
* Bytes Technology Rated New Buy at Peel Hunt; PT 489 pence
* Deep Value Driller Rated New Buy at SpareBank; PT 32 kroner
* Deep Value Driller Rated New Buy at SpareBank; PT 32 kroner
* Seeing Machines Rated New Buy at Peel Hunt; PT 12 pence
>>> Call
>>> Call
* BofA, Goldman Strategists See Muted 2023 Global Earnings Growth
* Dufry Raised at MS on Underappreciated Travel Recovery Upside
* Spire Healthcare Raised at RBC on Signs of Market Improvements
* Spire Healthcare Raised at RBC on Signs of Market Improvements
After Hours Summary: Busy earnings night, led by AAPL +1.9%; CVNA +25.9%, YELP +9.9%, COIN +8.6%, DBX +7%, LYV +6.8%, DASH +3.6% also higher; TRUP -36%, LYFT -15.3%, TEAM -12.7%, MPWR -10.7% lower on earningsAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: CVNA +25.9%, BILL +13.9%, FIVN +12.8% (also expanding their partnership with BT), NCR +10.9%, YELP +9.9%, DKNG +9.2%, APLS +8.9%, COIN +8.6%, STEM +8.3%, BL +7.4%, SPXC +7.4%, DBX +7%, FNKO +7%, BMBL +6.9% (also authorizes new $150 mln share repurchase program), LYV +6.8%, ACCO +6.6%, OTEX +6.5%, XPOF +6.3%, LASR +6.2% (also awarded $86 mln DoD contract), SG +6.2%, BOOM +5.9%, FIGS +5.8%, AMN +5.7% (also to implement ASR program of approx $200 mln), INGN +5.6%, RMAX +5.6%, EXPE +5.4%, LOCO +4.9%, HASI +4.7%, PWSC +4.6%, MGRC +4.5%, HTGC +4.4%, QLYS +4.4%, RRR +4.4%, NOG +3.9%, DASH +3.6%, CYRX +3.5%, RGA +2.9%, CHUY +2.5%, TMST +2.5%, OEC +2.3%, BIGC +2.2%, OPEN +2.2%, MSI +2.1%, TDC +2.1%, COLL +2%, GT +2%, JAMF +2% (also names new CEO), ATEC +2%, AAPL +1.9% (also raises dividend; authorizes additional program to repurchase up to $90 bln), PODD +1.9%, DLB +1.7%, RYAN +1.5%, BBDC +1.3%, CTRA +1.3%, PRTA +1.2%, SQ +1.2%, EOG +1.1%, WW +0.9%, CABO +0.8%, AMH +0.7%, RKT +0.7%, RDFN +0.6%, BCC +0.5% (also declares special dividend of $3/sh), PBA +0.5%, SXI +0.3%, POST +0.2%, CWAN +0.1%, KWR +0.1%, ONTO +0.1%
Companies trading higher in after hours in reaction to news: IEP +10.3% (issues statement, disagrees with Hindenburg report), PNTG +2.8% (acquires the assets of Benefit Home Healthcare and Benefit By Your Side), WSC +1.7% (replenishes share repurchase auth back to $1 bln), FDMT +1.6% (commences $100 mln share offering), CRNT +1.1% (files $150 mln mixed shelf securities offering), RTX +0.1% (RTX and LMT Javelin joint venture awarded $1.024 bln US Army contract)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: TRUP -36%, CLFD -23.6%, CDLX -15.4%, LYFT -15.3%, TEAM -12.7%, MPWR -10.7%, FND -7.5%, MERC -7.5%, ATSG -6.1%, DH -6.1%, SDGR -6%, MCHP -5.8% (also increases dividend), VRRM -5.4%, AZEK -4.6%, CYTK -4.6%, ALTR -4.3%, BGS -4.1%, SIMO -4.1%, IRTC -4%, AVID -3.9%, TDS -3.6%, BKNG -3.4%, GDDY -3.1%, PCTY -3.1%, CRUS -2.8%, BIO -2.7%, CDXS -2.5%, ENV -2.5%, ED -2.4%, ABCL -2.3%, TXRH -2.3%, AES -2.1%, FOXF -2%, BECN -2%, RLAY -1.8%, AOSL -1.5%, CWK -1.5% (also CEO to retire, names new CEO), MTZ -1.4%, VCYT -1.4%, GDYN -1.3%, COHU -1%, LNT -1%, ZETA -1%, FTNT -0.6%, MP -0.5%, DRH -0.2%, WPM -0.2%, AJRD -0.2%, AIG -0.1% (also increases dividend), GDOT -0.1%, MTD -0.1%, RRX -0.1%, SEM -0.1% (also authorizes new $1 bln share repurchase program), TVTX -0.1%
Companies trading lower in after hours in reaction to news: SIBN -4.9% (commences public offering of 3,775,000 shares), BBIO -3.8% (files mixed shelf securities offering), CIFR -2.9% (stock offering by selling stockholder), ABCM -2.5% (provides business update), AMAM -1.4% (names new COO), NAPA -0.1% (to acquire a production winery and planted vineyards), EQNR -0.1% (files ADS offering)
Mercedes-Benz puts forward China pragmatist to chair supervisory board
Carmaker set to appoint BASF chief Martin Brudermüller who last year warned against ‘China bashing’
Mercedes-Benz has proposed the chief of chemical group BASF as the next chair of its supervisory board, choosing an executive widely regarded as a China pragmatist.
The German carmaker has put forward Martin Brudermüller, the former head of BASF’s China business who last year warned against “China bashing”. He is expected to start his new role when he steps down from the helm of the chemical group next year.
Brudermüller knows the car industry well with the chemical group being an important supplier of paints and plastics. He is set to succeed Bernd Pischetsrieder, who previously held the same post at Volkswagen, and who is not standing for another term.
Under the German system, there are two boards: the executive board that runs the company day-to-day and the supervisory board that oversees the work of the former and advises on strategy.
Brudermüller has been criticised by some investors for his decision to build a €10bn chemical factory in China amid increasing geopolitical tension. Mercedes’ decision to hire Brudermüller comes a few days after its chief executive Ola Källenius said it would be “unthinkable for almost all of German industry” to cut ties with China. The company sells more than a third of its cars in the country.
About a fifth of the company is owned by Chinese carmakers Geely and state-owned BAIC, which have acquired stakes in German carmakers in recent years.
“The appointment of Brudermüller might be a compromise, it might be a chair that [the Chinese shareholders] are supporting because he knows China very well,” said Daniel Schwarz, an analyst at Stifel.
He said that China was strategically important for the carmakers as the “transition towards electric and autonomous cars is clearly faster in China than other regions”, adding that US and European industry might very well find itself having to follow Chinese technological advancements.
The announcement comes as Berlin is increasingly concerned about German industry’s reliance on China, amid Beijing’s growing tensions with the west.
Germany is still reeling from having to cut its ties with Russia after the war in Ukraine, with companies writing off their investments linked to the country. BASF is among the companies to have suffered the most from big bets on Russia and reported a €6.5bn writedown of its Russian assets a few months ago.
Mercedes’ German rivals Volkswagen and BMW on Thursday announced results for the first quarter, beating analysts’ expectations with strong sales.
Schwarz said all three of the big German car companies had built up stock from when supply chain issues left many cars standing unfinished, which would leave them more vulnerable to price pressures in the second half of the year.
In China, prices have come under pressure as leaders in the electric segment, such as BYD and Tesla, have been lowering prices to boost market share.
Mercedes has since 2019 been betting on the premium end of the market, which Schwarz said had moved the German group further away from rivalry with Tesla and BYD. “That doesn’t make them immune [to price pressure] but leaves them at less risk,” he said.
Research Calls
- Upgrades:
- Blackbaud (BLKB) upgraded to Outperform from Neutral at Robert W. Baird; tgt raised to $84
- CEMEX S.A. (CX) upgraded to Buy from Neutral at Goldman; tgt raised to $9
- Cerevel Therapeutics (CERE) upgraded to Overweight from Equal Weight at Wells Fargo; tgt $30
- Design Therapeutics (DSGN) upgraded to Neutral from Sell at Goldman; tgt $6
- Deutsche Bank (DB) upgraded to Buy from Neutral at Citigroup
- Ionis Pharma (IONS) upgraded to Neutral from Sell at Citigroup; tgt raised to $36
- Neurocrine Biosciences (NBIX) upgraded to Buy from Neutral at Guggenheim; tgt $145
- Procore Technologies (PCOR) upgraded to Buy from Neutral at Goldman; tgt raised to $75
- Qorvo (QRVO) upgraded to Buy from Hold at Summit Insights
- Verisk Analytics (VRSK) upgraded to Buy from Underperform at BofA Securities; tgt raised to $243
- Weave Communications (WEAV) upgraded to Outperform from Mkt Perform at Raymond James; tgt $6
- Wix.com (WIX) upgraded to Outperform from Mkt Perform at Raymond James; tgt $96
- Downgrades:
- Builders FirstSource (BLDR) downgraded to Neutral from Outperform at Robert W. Baird; tgt $96
- DHT (DHT) downgraded to Hold from Buy at Jefferies; tgt lowered to $10
- Fulcrum Therapeutics (FULC) downgraded to Neutral from Buy at Goldman; tgt lowered to $3
- Incyte (INCY) downgraded to Neutral from Buy at BofA Securities; tgt $84
- QuinStreet (QNST) downgraded to Hold from Buy at Craig Hallum
- Revolve Group (RVLV) downgraded to Mkt Perform from Outperform at Raymond James
- Spirit Aerosystems (SPR) downgraded to Market Perform from Outperform at TD Cowen; tgt lowered to $28
- TriplePoint Venture Growth (TPVG) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $10
- Upwork (UPWK) downgraded to Neutral from Buy at BofA Securities; tgt $9
- Wingstop (WING) downgraded to Neutral from Buy at Citigroup; tgt raised to $224
- Others:
- HomeTrust Bank (HTBI) assumed with an Overweight at Piper Sandler; tgt $25
- Vertex Pharma (VRTX) assumed with an Overweight at Piper Sandler; tgt $385
- ZoomInfo (ZI) initiated with a Buy at DA Davidson; tgt $30