Morning Preview: April 5th, 2017

eOptionDaily Market Report

Stocks continue to trade in a tight range in overnight sessions, little changed again ahead of potential market catalysts scheduled for later this week. Traders await the Federal Reserve meeting minutes and President Donald Trump’s meeting with his Chinese counterpart starting tomorrow, as well as monthly jobs data to be released on Friday (though private payroll data to be reported later this morning). Treasury yields are slightly higher after nearing lows of 2.3% for 10-year early yesterday. Investors continue to weigh economic data and the likelihood of fiscal stimulus from the Trump administration. Energy shares rallied with oil after a weekly inventory draw was reported by API overnight, while Asian markets got a boost on higher commodity prices. The minutes from the March Federal Open Market Committee meeting are due to be published at 2 p.m. Eastern Time today, with investors likely to focus on any discussion about the bank’s plans to unwind its $4.5 trillion balance sheet

In Asian markets, The Nikkei Index rose 51 points to close at 18,861, the Shanghai Index jumped 47 points (1,48%) to settle at 3,270 and the Hang Seng Index gained 139 points to settle at 24,400. In Europe, the German DAX is lower by about 30 points, while the FTSE 100 is higher by about 10 points at 7,330. Centrist Emmanuel Macron kept his position as favorite to win France’s presidential election after a televised debate on Tuesday night in which he clashed sharply with his main rival, Marine Le Pen, over Europe, just 19 days before the election.

Market Closing Prices Yesterday

  • The S&P 500 Index inched higher 1.32 points, or 0.06%, to 2,360.16
  • The Dow Jones Industrial Average rose 39.03 points, or 0.19%, to 20,689.24
  • The Nasdaq Composite gained 3.93 points, or 0.07%, to 5,898.61
  • The Russell 2000 Index slipped -1.49 points, or 0.11% to 1,368.18

Events Calendar for Today

  • 7:00 AM ET          MBA Mortgage Applications Data
  • 8:15 AM ET          ADP Employment Change for March…est. 185K
  • 9:45 AM ET          Markit US Services PMI, March-F…est. 53.1
  • 10:00 AM ET       ISM Non-Manufacturing Comp for March…est. 57.0
  • 10:30 AM ET       Weekly DOE Inventory Data
  • 2:00 PM ET          FOMC Meeting Minutes

World News

  • North Korea launched a medium-range ballistic missile off the east coast of the Korean Peninsula on Wednesday morning just ahead of President Donald Trump meeting with Chinese President Xi
  • President Donald Trump told chief executives of major companies on Tuesday that his administration is working on an infrastructure plan worth $1 trillion or maybe more
  • Data firm IHS Markit said its composite Purchasing Managers Index for the EuroZone, based on a survey of 5,000 companies, rose to 56.4 in March from 56.0 in February, reaching its highest level in almost six years
  • Investor Intelligence Poll shows newsletter writers classified as bulls by Investors Intelligence rise to 55.8% from last week’s 49.5%, which was the lowest since Nov. 9; Bearish sentiment rose to 18.3% from 18.1%, and those expecting a correction falls to 25.9% from last week’s 32.4%
  • K. services PMI at 55 in March vs. 53.5 estimate
  • Germany final March services PMI comes in at 55.6, same as flash reading
  • France final March services PMI comes in at 57.5, misses forecast of 58.5

 

Sector News Breakdown

Consumer

  • Panera Bread Co. (PNRA) has reached a deal to be acquired by privately held JAB for $7.5 billion, the companies said. JAB will buy the restaurant chain for $315 a share in cash. The transaction will include the assumption of $340 million of net debt. https://goo.gl/bwmLhg
  • Private equity firm CI Capital Partners has been trying to sell the country’s Ply Gem (PGEM) for a few months — but there is little interest from suitors in paying any real premium over the current stock price – NY Post https://goo.gl/1xG4N3
  • McCormick (MKC) upgraded to Neutral from Underweight at JPMorgan

Energy

  • The American Petroleum Institute (API) said U.S. crude oil inventories fell by 1.8 million barrels last week
  • Hess Midstream Partners (HESM)78M share IPO priced at $23.00
  • Patterson-UTI (PTEN) reported that for the month of March 2017, the company had an average of 88 drilling rigs operating in the United States and two rigs in Canada

Financials

  • Banco Popular Espanol SA is proceeding with plans to sell credit card unit WiZink to shore up capital, Bloomberg reported; sale could value all of WiZink at about 2.5 billion euros
  • MarketAxess (MKTX) volume last month consisted of $87.2b in U.S. high-grade, $61.7b in other credit, $6.3b in liquid products

Healthcare

  • Bristol-Myers Squibb (BMY) was granted priority review by the FDA for its sBLA seeking to extend Opdivo use to patients with mismatch repair deficient (dMMR) or microsatellite instability high metastatic (MSI-H) colorectal cancer (CRC) after prior chemotherapy.
  • Amgen (AMGN) downgraded to hold at Jefferies
  • Novartis (NVS) downgraded to Market Perform at Cowen
  • Roche (RHHBY) upgraded to Outperform from Market Perform at Cowen
  • Acorda Therapeutics (ACOR) said it will eliminate approximately 119 jobs after a federal judge invalidated certain patents protecting Ampyra, its biggest drug with sales representing 95% of its total revenue last year.
  • Aralez Pharmaceuticals (ARLZ) announced that it has begun implementing a program of cost savings initiatives with the immediate aim of providing additional financial flexibility while maximizing the value of its assets. The plan includes a 32% reduction in the U.S. sales force and realignment of certain financial resources
  • Quotient (QTNT) files to sell common stock, no amount given

Industrials & Materials

  • Landec (LNDC) Q3 EPS 13c/$136.6M vs. est. 18c/$136.2M; cuts forecast for the year citing heavy rains in California, but reaffirms Q4
  • Shulman (SHLM) Q2 EPS 13c/$568.7M vs. est. 30c/$574.3M; sees year EPS $2.08-$2.18 vs. est. $2.11; sees FY17 revenue $2.5B-$2.6B vs. est. $2.45B and sees adjusted EBITDA of $225M-$230M, and a return on invested capital of 11%-12.5%
  • Greenbrier (GBX) Q2 EPS $1.09/$566.3M vs. est. 84c/$521.49M; reports Q2 new railcar backlog as of February 28, was 22,600 units with an estimated value of $2.44B; sees FY17 EPS $3.25-$3.75 on revs $2B-$2.4B vs. est. $3.46/$2.13B
  • China National Chemical Corp. won EU approval for its roughly $43 billion takeover of Swiss seed and pesticide maker Syngenta AG (SYT) on condition ChemChina divest large parts of its European businesses for pesticides and products that regulate crop growth.

Technology, Media & Telecom

  • The NFL has reached a deal to stream 10 Thursday night games with com Inc. (AMZN) which is aggressively trying to position itself as a premier source of entertainment content. The one-year agreement is valued at around $50 million and represents a fivefold increase over the NFL’s agreement with Twitter Inc. (TWTR) for the same number of games last season.
  • Sprint Corp. (S) is dropping one of its most aggressive promotions: a long-running offer to charge half the price of certain rival plans to get customers to switch. The company, which sold monthly subscriptions at 50% off those of rivals, will stop offering the discount as soon as this week
  • Spotify said it had signed a deal with Universal Music Group that lets artists release new albums exclusively on its paying premium service for two weeks.
  • New Relic (NEWR) guides Q4 revenue $73M-$73.1M vs. est. $71.1M; sees Q4 prelim loss in-line or better than guidance
  • TeleTech Holdings, Inc. (TTEC) announced that it has acquired Connextions, Inc. for $80 million from OptumHealth Holdings, LLC

 

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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