Mid-Day Outlook

eOptionDaily Market Report

Equities slide to start the day, as a pullback in energy stocks (on weaker oil prices), send the S&P 500 and Dow Industrial average lower. Crude prices turned south after a monthly update from OPEC showed production out of Saudi Arabia cresting back above 10 million barrels of oil per day. WTI crude turned to lows or $47.28, levels not seen since late November on the report (WTI crude comes in with a 6-day losing streak). But the news for today and tomorrow remains the FOMC meeting (started today – decision released tomorrow), with a rate hike expected as well as the updated rate projections for 2017 and beyond. The snowstorm in the Northeast is also causing havoc for companies and airlines which have cancelled thousands of flights over the last few days. Energy hurting industrial stocks early, while discretionary and defensive consumer staples and healthcare stocks are doing better. The tech heavy NASDAQ is actually underperforming major averages, down over -0.7%.

Treasuries, Currencies and Commodities

·      In currency markets, the dollar was mixed, rising against European counters on Brexit/elections, rose vs. the Canadian loonie (on oil), but slipped slightly vs. the Japanese yen. The U.K. pound slid to 10-week lows after U.K. lawmakers set the wheels in motion for Brexit talks to begin. The dollar also getting a boost ahead of the expected rate hike increase from the FOMC when it concludes its 2-day meeting tomorrow. The British pound dropped to $1.2127, from $1.2218 late Monday, lowest since mid-January, while the euro slips to lows of day vs dollar at 1.0628. The dollar to highs of 1.3484 against the Canadian dollar as oil slides further.
·      Commodity prices; precious metals look to finish in positive territory for a 2nd session, after snapping its 9-day losing streak yesterday ahead of the FOMC meeting. Energy futures extend losses, as oil prices slide following OPEC comments.  Monthly report from OPEC showed production out of Saudi Arabia cresting back above 10 million barrels of oil per day
·      Treasury markets bounce, with yields just off multi-year highs, ahead of the outcome of a Federal Reserve meeting that’s expected to deliver the third rate rise since December 2015; the yield on the 10-yr trades just under the 2.60% level, while the 2-yr is at 1.37%

Economic Data

·      Producer prices for February rose 0.3%, above estimates for a 0.1% increase, while core prices (ex: food and energy) rose 0.3% MoM, slightly above the 0.2% est.; final demand ex food, energy rose 1.5% YoY vs. est. up 1.5%; PPI increases 2.2% in past year, highest since early 2012

Sector Movers Today

·      Transports; airlines grabbing headlines as thousands of flights cancelled the last two days due to winter storm hitting the Northeast (DAL, AAL, UAL, LUV, JBLU); Wells Fargo initiated some names in the transport space asCSX, CP and FDX initiated Outperform; GWR Feb traffic was 252,228 carloads, an increase of 27,572 carloads, or 12.3% YoY
·      Retailers; shares of DSW and BONT advanced initially after earnings results in the retail space, while TLYS shares plunge on a wider than expected Q1 EPS loss; DKS was upgraded to outperform by one analyst (Wolfe);WMT was added to US 1 list at Bank America
·      Brokers and exchanges; ETFC Feb. Gross New Brokerage Accounts 45.7k vs. 42k MoM, net new brokerage assets $1.8b vs $0.8b MoM and net new brokerage accounts 25.97k vs 10.2k MoM; FXCM Feb. retail customer trading volume $201B, down 33% YoY; avg customer trading vol./day $10.1B, down 16% MoM; KCG Feb market making avg vol traded $28B vs. $28.1B MoM; SCHW February net new assets $6.6B/new brokerage accounts totaled 113,000 in February, up 35% YoY
·      Hardware & Equipment; GLW and the Consumer Hardware Sector downgraded at Goldman Sachs; cut GLW to neutral citing limited upside after recent outperformance, while full consumer hardware and mobility sector to neutral from attractive

Stock GAINERS

·      AIRM +3%; to be acquired by American Securities for $43 per share cash https://goo.gl/o5o49W
·      EDIT +6%; on $90 million AGN research and development deal
·      ETH +2%; upgraded to strong buy at Raymond James and $36 tgt
·      GDOT +10%; was upgraded to buy at SunTrust with $40 tgt
·      MGI +25%; to be acquired by EEFT for $15.20 per share in cash plus the assumption of ~$940M of debt outstanding; represents ~15% premium over Ant Financial’s offer https://goo.gl/bXarNC
·      RT +35%; announced it will explore strategic alternatives

Stock LAGGARDS

·      AMPH -11%; downgraded at Raymond James/reported earnings overnight
·      ENOC -5%; after quarterly results/guidance mixed/said to explore alternatives
·      PETX -21%; reported a wider-than-expected 4Q loss and revenue that fell below estimates
·      PN -27%; reports Q4 EPS loss (5c) vs. expected 13c gain on lower revs
·      VRX -11%; Pershing Square liquidates its entire stake, selling 27.23M shares at $11.10 per share
·      TLYS -9%; shares plunge on a wider than expected Q1 EPS loss
·      WAC -37%; reports subpoena in 10-K from HUD Inspector General for documents and information relating to origination and underwriting of certain specified loans

Syndicate

·      Anthera (ANTH) 30M share Spot Secondary priced at $0.50
·      Aurinia Pharmaceuticals (AUPH) 22.3M share Spot Secondary priced at $6.75
·      BMC Stock Holdings (BMCH) 5.68M share Spot Secondary priced at $21.25
·      Lantheus (LNTH) 3M share Spot Secondary priced at $12.50
·      Physicians Realty Trust (DOC) 15M share Spot Secondary priced at $18.20
·      Valeant (VRX) 27.23M share Block Trade priced at $11.10

Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P.  Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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