Morning Preview: April 11th, 2017

eOptionDaily Market Report

Stock futures are again little changed in the overnight session despite the recent geopolitical tensions that have plagued the market over the last week (Syria, North Korea, French elections). U.S. stock futures are essentially flat across the board after the Dow ended little changed on Monday and both the S&P 500, and Nasdaq Composite finished with gains of less than 0.1%. Oil tallied its 5th gain in a row, buoyed by geopolitical worries. Volume was weak yesterday with only 794M shares changing hands at the NYSE floor vs. the 200-day average of 1.1B according to Bloomberg. Energy stocks topped yesterday’s leaderboard as WTI crude oil finished 1.6% higher at $53.06 per barrel. U.S. Treasury prices ticked higher, with the benchmark 10-year yield settling down 2 bps at 2.36% (but yields are down a few bps early around 2.34%). Note the S&P hasn’t closed up or down by 1% or more since March 1, when it scored an all-time closing high. The benchmark stands 1.6% below that March 1 peak, as of Monday’s close. In Asian markets, The Nikkei Index fell -50 points to settle at 18,747, the Shanghai Index gained 19 points to finish at 3,288 and the Hang Seng Index dropped -173 points to close at 24,088. In Europe, the German DAX is down slightly at 12,190, while the FTSE 100 is rallying, up around 50 points at 7,400. Note U.S. Secretary of State Tillerson is due to arrive in Moscow later today.

Market Closing Prices Yesterday

  • The S&P 500 Index jumped 12.58 points, or 0.65%, to 2,140.46
  • The Dow Jones Industrial Average rose 98.58 points, or 0.59%, to 18,836.10
  • The Nasdaq Composite spiked 44.58 points, or 0.05%, to 5,296.23
  • The Russell 2000 Index advanced 22.72 points, or 0.55% to 1,243.94

Events Calendar for Today

  • 6:00 AM ET NFIB Small Business Optimism for March…est. 104.7
  • 7:45 AM ET ICSC Weekly Retail Sales
  • 8:55 AM ET Johnson/Redbook Weekly Sales
  • 10:00 AM ET JOLTs Job Openings for February…est. 5663
  • 4:30 PM ET API Weekly Inventory Data

World News

  • Federal Reserve Chairwoman Janet Yellen suggested that the era of extremely stimulative monetary policy was coming to an end. Yellen, speaking at the University of Michigan, said the Fed was moving away from its efforts to revive a recession-scarred economy and focusing instead on maintaining the gains of the past few years. That will change the central bank’s policy-making stance, she said, noting that Fed officials plan to continue gradually raising interest rates unless the economy begins to deteriorate.
  • The National Federation of Independent Business (NFIB) said its monthly sentiment gauge fell 0.6 point to 104.7, a slightly larger decline than the 0.5-point dip forecast by economists
  • Annual inflation in the U.K. stood at 2.3% in March, unchanged from the previous month, said the Office for National Statistics, and the joint-fastest rate of inflation since September 2013 (first time inflation above 2% in over 3-years)
  • Output of the Eurozone’s factory, mines and utilities decreased by 0.3% from the month before, but rose by 1.2% from February last year
  • German April ZEW Eco Sentiment higher: 19.5 vs. 14 consensus
  • German April ZEW Current Conditions higher: 80.1 vs. 77.7 consensus
  • German ZEW: economic situation fairly robust in Q1, expect positive developments to continue
Sector News Breakdown

Consumer

  • United Continental (UAL) reports March consolidated traffic increased 3% and consolidated capacity increased 3.4% YoY. UAL’s March 2017 consolidated load factor decreased 0.3 points compared to March 2016.; now expects Q1’17 consolidated passenger unit revenue to be approximately flat vs. YoY
  • SkyWest (SKYW) March Available Seat Miles fell (-5.1%) YoY; SkyWest March revenue passenger miles fell 5.9% YoY and March load factor 81.0% vs 81.8% YoY
  • United Natural Foods (UNFI) and Hain Celestial (HAIN) shares slipped late yesterday after activist investor Jana Partners took a stake inWhole Foods (WFM) and urged the company to review its “suboptimal” grocery purchasing and distribution
  • Supervalu Inc. (SVU) to acquire grocery distributor Unified Grocers for $114M; will also assume and pay off $261M in United Grocer debt.
  • Allegiant Travel (ALGT) revises Q1 TRASM to (4.8%)-(4.4%) from (3.5%)-(1.5%) after reports Q1 revenue passenger miles up 7.5%
  • Azul SA (AZUL) 85.44M share IPO priced at $20.06

Energy

  • Saudi Arabia’s oil output said to fall to 9.9m b/d in March, down from 10m b/d in February, according to figures submitted to OPEC – Bloomberg
  • Russia oil output cut to reach 250K b/d by mid-April:
  • Franklin Electric (FELE) will acquire 2M Company Inc. of Billings, Montana; Western Hydro Holding Corporation of Hayward, California and Drillers Service, Inc. (DSI) of Hickory, North Carolina for approximately $89 million
  • Hess (HES) was added to the US 1 best ideas list at Bank America

Financials

  • Franklin Resources (BEN) reported preliminary month-end assets under management by the company’s subsidiaries of $740B at March 31, compared to $738.2B at February 28, and $742.6B at March 31, 2016
  • Cohen & Steers (CNS) reports preliminary AUM $58.5B as of March 31, (down $629M from February 28)

Healthcare

  • Axovant Sciences (AXON) files to sell $100M in common stock
  • Avinger (AVGR) to reduce workforce by 33% to a total of 131 full-time equivalent employees, under a plan expected to be substantially completed this week; says evaluating options to maximize shareholder value, including a potential sale or merger of the company
  • PTC Therapeutics (PTCT) said its CFO Shane Kovacs will be leaving the company in mid-May to return to the finance sector; joining RBC Capital to lead that company’s biotech investment banking team

Industrials & Materials

  • MTS Systems (MTSC) Q1 revs $199M vs. est. $207.53M; said Q1 EPS includes 46c negative impact from acquisition integration, acquisition inventory fair value adjustment and restructuring expenses and costs associated with the China investigation; sees FY17 GAAP EPS 80c-$1.20 on revs $760M-$790M
  • Fluor Corporation (FLR) selected by a division of Marathon Petroleum Corporation (Marathon) to execute the engineering and procurement scope for a major reconfiguration at Marathon’s Galveston Bay and Texas City, Texas refineries. Fluor will book the undisclosed contract value into backlog in the first quarter of 2017.
  • Hub Group (HUBG) said it sees Q1 EPS 30c-32c with 3c costs, below est. 46c and revs up 10%-12% vs. est. up 9.5% saying the primary factor affecting 1Q earnings lies within intermodal business line; experiencing soft pricing environment due to excess truck capacity, extraordinarily aggressive intermodal pricing; sees 2017 EPS $1.60 to $1.80, vs. est. $2.39

Technology, Media & Telecom

  • RetailMeNot (SALE) to be acquired for $11.60 per share in cash by Harland Clarke Holdings https://goo.gl/JAfJfK
  • Coupa Software (COUP) files to sell 3.7M shares of common stock for holders
  • SeaChange (SEAC) Q4 EPS loss (6c)/$23.8M vs. es.t loss (7c)/$23.2M; sees Q1 EPS loss (15c)-(11c) on revs $16M-$18M vs. est. loss (8c)/$21.18M; sees FY revs $80M-$90M vs. est. $89.1M
  • Western Digital (WDC) upgraded to Overweight from Neutral at JPMorgan

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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