Equities reversed shortly after opening higher, as oil prices slumped, bonds rallied and the dollar sank ahead of a few Fed speakers later today, but generally a quiet start to the week, month and quarter. The auto sector an early drag on markets after March sales data for GM, Ford, FCAU (and others), largely miss and disappoint (weighing on auto suppliers LEA/AXL, while auto retailers ORLY/AZO decline on analyst downgrades). Transports in general are trading lower after a rebound in the index late last week. Managed care stocks outperform – AET, UNH, CI, HUM, while some biotech names active after lots of data released over the weekend. Economic data was mixed, though manufacturing data remains strong. There still remains a “wait-and-see” mentality for U.S. stocks ahead of jobs data Friday, expected policy moves out of Washington, and FOMC commentary regarding pace of rate hikes. In macro news, an explosion has taken place in a St Petersburg metro station that has caused casualties, according to Russian media reports cited by the BBC. Eyewitnesses reported an explosion and images showed a metro door blown off and injured passengers on the platform, the reports said.
Treasuries, Currencies and Commodities
- In currency markets, the dollar opened higher, only to slide after mixed economic data, but holding steady (DXY) after solid weekly returns last week, and ahead of payroll data Friday; the euro higher around 1.0670, but well off last week highs above 1.09, while the dollar slips slightly against the yen at around 111.20 (off lows last week just above 110)
- Precious metals are little changed, rebounding from earlier losses as stocks slide off highs and investors rotate into defensive/safe haven assets
- Energy futures slip early after Libyan oil output resumed over the weekend. Recall oil prices logged their strongest weekly gains of the year last week after local militia in Libya cut oil output by around one-third, but officials said production had restarted on Monday.
- Treasury market’s rise as yields slip; 2-yr yield hits 1-week low of 1.242%, while the 3-yr hit 1-month low of 1.462%; 10-yr yield slipping back near last week lows of around 2.34% (trades to around 2.35% today) as investors look to safe haven trades early
- Construction Spending for February rose 0.8%, slightly below est. for a 1.0% rise while January was revised to (-0.4%) from (-1.0%); Private construction rose 0.8% in Feb and Private residential construction rose 1.8% while Feb. private residential construction outlays of $484.7 billion most since July 2007
- ISM Manufacturing for March falls to 57.2 (from 57.7 prior), but came in slightly above est. of 57.2; new orders fell to 64.5 from 65.1 in the prior month while employment rose to 58.9 vs 54.2; inventories fell to 49.0 vs 51.5 and customer inventories fell to 47.0 vs 47.5
- U.S. Markit March Manufacturing PMI 53.3, mostly in line with flash reading 53.4 and below 54.2 reading in February (year ago was 51.5); marks the lowest reading since Feb. 2015 and the third consecutive month of contraction
Sector Movers Today
- Monthly auto sales for March were released today: 1) GM March auto sales rose 1.6% vs. est. 7.0%; 2) Ford (F) U.S. light-vehicle sales down (-7.2%) vs. est. down (-5.9%), saying fleet sales down 16.9%, reflecting a strong year-ago comparison; 3) FCAU U.S. March sales fell (-5%) vs. est. up 0.4%; 4) HMC U.S. March sales down (-0.7%) vs. est. up 4.9% (said Acura division sales -21.2%); 5) NSANY March U.S. auto sales rose 3% vs. est. 2.8%
- Other auto news; TSLA shares rallied early after saying over the weekend it shipped 25,000 cars in Q1 (vs. Bloomberg est. 24,200)/deliveries/production for Q1 were both records; auto suppliers and retails active following weaker GM and Ford March sales data. Suppliers MGA, LEA, AXL, DLPH and auto customers include ABG, PAG, SAH, GPI, LAD, AN; KMXmentioned cautiously in Barron’s saying shares are vulnerable to a potential 20% fall as risky loans at the company grow; ORLY & AZO both downgraded to Neutral from Buy at Cleveland Research
- Gaming stocks (WYNN, MPEL, LVS) among names active on positive Macau gaming data as Macau government data showed March gross gaming revenue (GGR) rose 18.1% compared to last year, beating the median estimate of 15% growth
- ELOS +4%; to be acquired by Apax Partners for $11 per share/$400M deal https://goo.gl/CHqHXg
- FMC +1%; adds to gains from Friday (rose 13%) after acquiring DuPont assets, lithium unit spinoff plans (two analysts upgraded shares of FMC today on news)
- INCY +4%; on announcement epacadostat and nivolumab combo moving into Phase 3 studies in first-line non-small cell lung cancer as well as first-line head and neck cancer in 2017
- NVCR +45%; as Optune improves survival in brain cancer
- TSLA +4%; trades record highs; said it shipped 25,000 cars in Q1 (vs. Bloomberg est. 24,200) says deliveries/production for Q1 were both records
- DRYS -18%; announced a private offering of up to $226.4M of its shares/deal to buy six vessels
- FWP -3%; after analyst downgrades following last week’s patent loss against BIIB
- HPE -1%; lowers outlook after completed merger/spin off of ES business to CSC to create DXC Technology
- KMX -4%; Barron’s cautious over weekend/also weaker auto sales data from majors (GM, F)
- UTHR -6%; as launch of Remodulin implantable infusion pump delayed until next year
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.