Morning Preview: April 6th, 2017

eOptionDaily Market Report

Stock futures are modestly higher ahead of a meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping, trying to recover after posting the biggest one-day reversal for equities in more than a year late yesterday. Stocks tumbled in the last 90 minutes of trading, with the Dow Jones Industrial Average giving up a 198-point gain and closing 0.2% lower in part by the Federal Reserve’s admission that it will start unwinding its balance sheet sooner than expected. Banks and energy companies paced the late-session drop, while technology shares underperformed the most yesterday. House Speaker Paul Ryan also said in a Q&A event that tax reform could take longer than health care overhaul, according to Reuters, which weighed on sentiment while the Fed said in its Minutes from its March meeting that several participants now anticipate meaningful fiscal stimulus would likely not begin until 2018. All of the above factors created a pull-back, as stocks erased earlier gains after a strong ADP report lifted shares initially. Trump meeting today, monthly jobs report tomorrow!

In Asian markets, The Nikkei Index fell -264 points to 18,597, the Shanghai Index rose 10 points to 3,281 and the Hang Seng Index dropped -127 points to settle at 24,273. In Europe, the German DAX is down around -40 points at 12,175, while the FTSE 100 is lower by about -0.5% to trade under 7,300. The euro drops to a three-week low against the dollar after European Central Bank President Mario Draghi rules out any imminent rate hikes and said it’s too early to “declare success on inflation.

Market Closing Prices Yesterday

  • The S&P 500 Index slipped -7.21 points, or 0.31%, to 2,352.95
  • The Dow Jones Industrial Average fell -41.09 points, or 0.20%, to 20,648.15
  • The Nasdaq Composite dropped -34.13 points, or 0.58%, to 5,864.48
  • The Russell 2000 Index declined -16.03 points, or 1.17% to 1,352.14

Events Calendar for Today

  • 7:30 AM ET          Challenger Job Cuts YoY for March
  • 8:30 AM ET          Weekly Jobless Claims…est. 250K
  • 8:30 AM ET          Continuing Claims…est. 2.03M
  • 9:30 AM ET          Fed’s Williams speaks on a panel in Frankfurt, Germany
  • 9:45 AM ET          Bloomberg Consumer Comfort Index
  • 10:30 AM ET       Weekly EIA Natural Gas Inventory Data

Earnings Calendar:

  • Earnings Before the Open: FRED, HOFT, KMX, LW, MSM, RPM, SCHN, STZ
  • Earnings After the Close: PSMT, RT, WDFC
Sector News Breakdown

Consumer

  • Yum China (YUMC) Q1 EPS 44c/$1.28B vs. est. 38c/$1.27B; Q1 same-store sales grew 1% vs. est. (-0.7%), including growth of 1% at KFC and 2% at Pizza Hut Casual Dining. Total system sales grew 4%, including growth of 3% at KFC and 9% at Pizza Hut Casual Dining, excluding foreign currency translation
  • Bed Bath & Beyond (BBBY) Q4 EPS $1.84/$3.53B vs. est. $1.77/$3.50B; Q4 comp sales up 0.4% vs. est. 0.5%; is modeling a decline in EPS for FY17 as sees drop in low-single digits to 10%; boosts quarterly dividend to 15c from 12.5c
  • Unilever PLC (UN) announced plans to divest its spreads division, combine two of its main business units and boost shareholder returns with a higher dividend and share-buyback program.
  • Costco (COST) reports March SSS up 6%; reports March revenue up 9% to $11.64B vs. $10.71B last year; says this year’s total reflects one additional sales day due to the timing of Easter, which positively impacted net and comparable sales
  • Zumiez (ZUMZ) March comp sales up 1.1% vs. est. up 2.8%; total net sales for the five-week period ended April 1, 2017 increased 4.3% to $71.7M, compared to $68.8M for the five-week period ended April 2, 2016
  • Fred’s (FRED) Q4 EPS loss (11c)/$529.7M vs. est. loss (16c); Q4 comps fell (-0.5%) vs. est. (-3.5%)
  • Resources Connection (RECN) Q3 EPS 9c/$143.8M vs. est. 14c/$146M; 3Q adjusted Ebitda $8.38M; sees charge of about $2.0-2.5M in 4Q

Energy

  • First Solar (FSLR) announced that it, working together with its financial and legal advisors, is reviewing alternatives for the sale of its interests in 8point3 Energy Partners (CAFD). First Solar will coordinate this review with its partner SunPower (SPWR)
  • 8Point3 Energy Partners (CAFD) Q1 EPS 3c/$9.9M; sees Q2 revs $14M-$16M vs. est. $16.2m: backs FY17 revenue view $63.3M-$66.7M and FY17 net income of $27.0M-$32.6M; reiterates FY17 distribution growth of 12%
  • Japanese retail-store operator Seven & i Holdings Co. said it would acquire more than 1,000 U.S. convenience stores and gas stations from Sunoco LP (SUN) for $3.3 billion
  • Ring Energy (REI) issues Q1 update, reports production up 18% to 266K BOE; released its operations update for Q1
  • Mitcham Industries (MIND) Q4 EPS loss (83c)/$12.5M vs. est. loss (43c)/$12.62M

Healthcare

  • Karyopharm Therapeutics (KPTI) said the FDA has lifted the partial clinical hold on clinical trials of lead product candidate selinexor. The partial hold, which stops patient recruitment, was instituted on March 10th due to incomplete information in the existing version of the investigator’s brochure
  • Merrimack (MACK) declared a special cash dividend of $140M on the company’s common stock; paying about $1.06 per share
  • Galapagos NV (GLPG) announces dosing of the first patient with psoriatic arthritis in the EQUATOR Phase 2 study. This achievement triggers a $10 million milestone payment from Gilead to Galapagos
  • Achillion Pharmaceuticals (ACHN) started dosing patients in a Phase 2 study of ACH-4471 as treatment for paroxysmal nocturnal hemoglobinuria (PNH), on track with analyst expectations for study to start in 1H

Industrials & Materials

  • RPM International (RPM) Q3 EPS 9c/$1.0B vs. est. 11c/$1.04B; sees year EPS $2.57-$2.67 (down from prior $2.62-$2.72) vs. est. $2.66
  • MSC Industrial (MSM) Q2 EPS 90c/$703.8M vs. est. 90c/$696.7M
  • Schneider National (SNDR)947M share IPO priced at $19.00

Technology, Media & Telecom

  • Everbridge (EVBG)264M share Secondary priced at $19.85
  • T-Mobile (TMUS) downgraded to Hold from Buy at Deutsche Bank
  • Imax China Holding two lead private equity investors CMC Capital Partners (CMC) and FountainVest Partners have sold their collective 5.9% stake in Imax China to an investment bank for HK$39.72
  • An Australian regulator is suing Apple Inc. (AAPL) over software which disabled iPhones and iPads that had been serviced outside Apple stores after users downloaded updates

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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