Morning Preview: April 3rd, 2017

eOptionDaily Market Report

Stock futures are again little changed to start the week, month and new quarter ahead of several economic indicators and Federal Reserve speakers lined up to potentially move markets. Stocks ended the quarter strong as the Dow Industrials gained 4.6%, S&P 500 up 5.5%, and Nasdaq up 9.8%. Results however were mixed for March as a lack of clarity on the timing of tax reform in the U.S. and as the so-called reflation trade (certain stocks rising in hopes of stimulative policies from U.S. President Donald Trump), lost its momentum. For March, the Dow Industrials fell (-0.7%), the S&P 500 was flat, and the Nasdaq was up 1.5%. For the week, the Dow was up 0.3%, S&P 500 up 0.8%, Nasdaq up 1.4%. As the start of the next earnings season is still a few weeks away, economic data will carry some weight this week, with Friday’s jobs numbers likely the biggest focus of the week. Markets will also pay close attention to Fed speaker commentary (few speakers today) as well as look for direction regarding policy out of Washington. In Asian markets, The Nikkei Index gained 73 points to 18,983, the Shanghai Index rose 12 points to 3,222 and the Hang Seng Index rose 149 points to 24,261. In Europe, the German DAX is up over 40 points, trading above 12,350, while the FTSE 100 is flat around 7,320. On Monday, Germany’s DAX 30 index rose 0.3% to 12,350.63, not far from its record close of 12,374.73 hit on April 10, 2015.

Market Closing Prices Yesterday

  • The S&P 500 Index slipped -5.34 points, or 0.23%, to 2,362.72
  • The Dow Jones Industrial Average fell -65.27 points, or 0.31%, to 20,663.22
  • The Nasdaq Composite slid -2.61 points, or 0.04%, to 5,911.74
  • The Russell 2000 Index advanced 3.57 points, or 0.26% to 1,385.92

Events Calendar for Today

  • 9:45 AM ET Markit US Manufacturing PMI, March-F…est. 53.5
  • 10:00 AM ET ISM Manufacturing for March…est. 57.2
  • 10:00 AM ET ISM New Orders Index…
  • 10:00 AM ET Construction Spending MoM for February…est. 1.0%
  • 3:00 PM ET Fed’s Harker speaks in Philadelphia on Fintech
  • 5:00 PM ET Fed’s Lacker speaks in Lexington, VA
  • N/A                        Monthly Auto sales data

World News

  • German final March manufacturing PMI for Europe’s largest economy was confirmed at a 71-month high at 58.3.
  • EuroZone final March manufacturing PMI was also confirmed at a 71-month high, at 56.2.
  • U.K. manufacturing PMI at 54.2 in March vs. 54.5 in February
  • The European Union’s statistics agency Monday said the unemployment rate across the 19 countries that use the euro fell to 9.5% from 9.6% in January, reaching its lowest level since May 2009. The number of people without work fell by 140,000 from January,
Sector News Breakdown

Consumer

  • Tesla (TSLA) said it shipped 25,000 cars in Q1 (vs. Bloomberg est. 24,200) as production totaled 25,418 vehicles; says about 4,650 vehicles in transit to customers; says deliveries/production for Q1 were both records
  • Monthly auto sales data to be released throughout the day (GM, F, FCAU, etc.)
  • Under Armour (UA) mentioned positively in Barron’s saying shares could rise 30% or more in a year, saying the brand “has never been more closely attached to high-profile sports” and shoppers remain big fans. Barron’s also said its new deal with Kohl’s (KSS) could expand the brand beyond sports fanatics, and that the company has “plenty of room to grow” in footwear, international and other untapped market
  • CarMax (KMX) mentioned cautiously in Barron’s saying shares are vulnerable to a potential 20% fall as risky loans at the company grow, noting defaults and delinquencies are up and the residual values of used cars are down
  • Lowe’s (LOW) shares could gain 20% or more according to Barron’s saying building-supplies retailers are “virtually Amazon (AMZN)-proof,” but Lowe’s is a better choice than Home Depot (HD) given its cheaper multiple, better projected profit growth, and bigger runway for margin improvement
  • Burberry Group PLC (BRBY.LN) said it had entered an exclusive partnership with Coty Inc. (COTY) to grow its beauty business, adding that the deal would be adjusted-pretax-profit-neutral during the transition year
  • Reckitt Benckiser Group PLC, the owner of French’s mustard and several cleaning and health brands, said Monday it is starting a strategic review of its food business.
  • A European Union investigation into McDonald’s (MCD) is entering its final stages after officials gathered information on whether the company unfairly benefited from a hefty tax break in Luxembourg, Bloomberg reports

Energy

  • Iraq’s oil minister said on Sunday that his country plans to increase daily crude oil production to 5 million barrels by the end of this year, up from the current rate of about 4.4 million barrels per day, to secure sorely needed cash for its ailing economy
  • Tallgrass Energy Partners (TEGP) acquires added 24.99% membership interest in Rockies Express Pipeline LLC from Tallgrass Development, LP for cash consideration $400M
  • Helmerich & Payne (HP) upgraded to Buy from Neutral at Guggenheim

Financials

  • Banco Popular Español SA (POP.SM) said there’s a need to make adjustments in accounts for previous years, with that determination coming after an internal audit.
  • Deutsche Bank AG (DB) is reshuffling more executives while it searches for a new chief financial officer and reshapes global businesses for the second time in 18 months

Healthcare

  • Novocure (NVCR) says combination of tumor treating fields (TTFields) with nab-paclitaxel and gemcitabine improved survival of patients with advanced pancreatic cancer in phase 2 pilot study
  • Puma’s (PBYI) Neratinib showed that interim data from 141 patients with 21 different types of cancer that had HER2, HER3 mutations getting Puma Biotech’s neratinib showed that neratinib generated the best response rate in breast cancer
  • Bristol-Myers (BMY) and Incyte (INCY) to do studies on Opdivo/Epacadostat combo in both first-line treatment of non-small cell lung cancer expressing PD-L1 and head and neck cancer planned
  • Mylan NV (MYL) said it was expanding a recall of its EpiPen allergy injection to some lots of the device that have been distributed in the U.S., after defects were found that could keep the injectors from working in an emergency
  • Ampio Pharmaceuticals (AMPE) files $100M mixed securities shelf
  • Tonix Pharmaceuticals (TNXP) said it was unable to complete its Annual Report on Form 10-K for the fiscal year ended December 31, 2016 prior to the filing deadline
  • QIAGEN (QGEN) announced it is commercializing the Research use only AdnaTest Prostate Cancer Panel AR-V7 to detect the androgen receptor splice variant 7 from liquid biopsies to investigate resistance to potential drugs for advanced prostate cancer
  • Calix (CALX) CFO Atkins resigns effective May 19 to pursue another opportunity in the industry.
  • Microbot Medical (MBOT) files $75M mixed securities shelf

Industrials & Materials

  • FedEx (FDX) with positive mention in Barron’s saying the growth trajectory is “tracking just fine” and the stock could gain almost 20%. FedEx remains discounted to the S&P 500 and can still grow profits at a mid-teens rate

Technology, Media & Telecom

  • Oracle (ORCL) spokeswoman Deborah Hellinger tells Business Insider: “TheAccenture (ACN) rumor is completely untrue. Never even considered it. Completely made up.” – Business Insider reports https://goo.gl/ZpcL45
  • Shares of Imagination Technologies Group (IMG.LN) tumbled after the semiconductor designer said Apple Inc. (AAPL) won’t be using its technology in two years

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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