Mid-Day Outlook

eOptionDaily Market Report

Equities trading in a narrow range to start the day, failing to move in any one direction early. Coming into today, the S&P 500 was set for a 0.4% weekly advance, the Dow average on track to end 0.2% higher for the week, and the Nasdaq Composite on pace for a 0.7% gain, as of Thursday’s, close. Week has been interesting to say the least with the FOMC raising rates for the 2nd time in 3 months, economic data coming in strong, and lots of continued back-and-forth in Washington without much getting done thus far (tax reforms, deregulation, infrastructure spending) – but to this point, it hasn’t mattered to markets that are not far from record all-time highs. Biotech space under pressure early after a disappointing study for large-cap AMGN regarding its cholesterol drug Repatha. Watch for increased volatility into the close today as not only is it quadruple witching expiration, there’s also a rebalancing of the S&P 500 index today as well. Back to quadruple witching, today is the quarterly expiration of futures and options on indexes and individual stocks (Bloomberg notes the last time “quadruple witching” and S&P 500 rebalance took place on Dec. 16, 10.9B shares changed hands on U.S. exchanges, 50% above the 3-month average)

Treasuries, Currencies and Commodities

·      In currency markets, the U.S. dollar slides early, falling to lows vs. yen after ASO comments, dropping below the 113 level (overnight high 113.49), while the euro pares early losses; the dollar dropped after UoM inflation expectations dropped to record lows

·      Commodity prices; after posting one of its biggest daily returns in months, gold prices resume upward trajectory early, adding to gains as trade to 2-week highs above $1,230 an ounce. Energy futures are little changed ahead of weekly rig count data at 1:00 today

·      Treasury market’s rally, with yields falling after mixed economic data; earlier,  yields remained subdued in the wake of the flat industrial production reading, while stocks are mixed-to-flat heading into the open

Economic Data

·      Industrial Production for February was unchanged, below estimates for a 0.2% increase and after falling 0.1% in January. Industrial production was revised up to (-0.1%) from (-0.3%) last month. Capacity utilization fell to 75.4% from 75.5% in January, revised up from 75.3%

·      Preliminary March Michigan Sentiment rose to 97.6, above est. of 97 and above the 96.3 reading in the prior month; current economic conditions index rose to 114.5 vs. 111.5 last month (highest level since 2000) and the expectations index rose to 86.7 vs. 86.5 last month.

·      Leading Index for February rose 0.6% vs. est. up 0.5%

Sector Movers Today

·      Top story today was AMGN falling after key study disappoints; its new cholesterol-lowering drug Repatha reduced the risk of deaths, heart attacks and strokes by 20% compared with standard treatment with statin drugs, but…expectations were higher and may not be enough for health plans to ease the tight restrictions on use of the expensive drug ($14,500 yearly list price)

·      Other stocks fall on AMGN study data (new injectable cholesterol-fighting agents known as PCSK9s) – peers follow Amgen lower after the drug-maker’s highly anticipated cardiovascular outcomes data for its cardiovascular drug, Repatha; shares of SNY/REGN sell a similar therapy, Praluent; data was expected to bolster competitors like MDCO and ESPR which are developing therapies using a similar approach

·      Internet; NFLX initiated outperform and $178 target at Bernstein on positive video on demand, but M Science with cautious comments saying initial Q1 data leaves us cautious on the quarter, despite momentum carried from Q4; SNAP another analyst initiation, and another “non-buy” rating as Mizuho starts with neutral and $20 tgt (11 analyst with coverage – not one buy – 6 sell related ratings)

Stock GAINERS

·      ADBE +5%; on strong quarterly results/EPS increasing by 43% YoY on robust subscription growth of 29% YoY/subscription accounts for 82% of sales, up from 28% in 2013/higher guidance

·      AVXS +16%; reported compelling gene therapy AVXS-101 Ph1 final efficacy and safety data in spinal muscular atrophy (SMA) Type I for all patients >13.6 months of age

·      CLBS +22%; as sells stake in unit for $75M to Hitachi Chemical

·      GOOS +8%; extends gains from yesterday after IPO

·      STLD +4%; guided Q1 EPS to 77c-81c, above est. 62c and raised dividend to 15.5c

·      TIF +2%; trades to 52-week highs after Q4 results top views/though notes flagship stores sales down 11%in FY and 14% in Nov/Dec period

·      VRX +1%; after ValueAct disclosed its purchase of 3M shares in the company

·      VSLR +5%; after quarterly earnings results

Stock LAGGARDS

·      AFSI -17%; announced another 10-K filing delay, intended to allow KPMG to complete its YE16 financial & internal control audit

·      AMGN -6%; its cholesterol drug Repatha cuts heart attack by 27%, stroke risk by 21%, but benefit may not be enough to end value debate, according to some reports

·      ESPR -22%; casualty of AMGN cholesterol study

·      PTHN -1%; downgraded at Baird and KeyBanc after Q1 results miss

·      SEAS -3%; downgraded to sell at Citigroup as street estimates may be overlooking risks to Ebitda

·      STML -4%; after reporting that a patient died during its ongoing Phase 2 study testing SL-401 in high-risk myeloproliferative neoplasms

·      XONE -4%; after quarterly earnings results

Syndicate

·      Editas Medicine (EDIT) 4M share Secondary priced at $22.50

·      Investar Holding (ISTR) 1.412M share Secondary priced at $21.25

·      MidWestOne (MOFG) 2.5M share Spot Secondary priced at $34.25

·      MuleSoft (MULE) 13M share IPO priced at $17

·      Northwest Biotherapeutics (NWBO) sells 28.8M shares at 26c in direct offering

·      Penumbra (PEN) 1.3M share Secondary priced at $76.00

·      ProPetro Holding (PUMP) 25M share IPO priced at $14.00

·      Rayonier (RYN) 5M share Spot Secondary priced at $27.75

·      Tesla (TSLA) 1.34M stock offering priced at $262 per share

·      Veritiv (VRTV) 1.8M share Spot Secondary priced at $54.85

·      Viveve (VIVE) 7.5M share Secondary priced at $4.00

·      Zosano Pharma (ZSAN) 17M share Secondary priced at $1.50

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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