Morning Preview: April 13th, 2017

eOptionDaily Market Report

Stock futures were down overnight, extending losses from Thursday, as markets are on track for a third day of losses. However, futures have pared those losses over the last few minutes after JP Morgan reported better than expected quarterly results, the first of several large cap banks to report this morning. Today marks the final day of the trading week, with markets closed tomorrow in observance of the Easter Holiday, so volumes may be lighter than normal today.  Defensive assets are gaining again this morning, as bonds extend recent gains and gold jumps another 1%.

U.S. stocks dropped yesterday as the geopolitical developments from France (elections) to Russia and Korea, as well as late day comments from President Trump on the future of Fed Chair Janet Yellen and his stance that the dollar was “too strong” all weighed on market sentiment. It was a broad sector decline, with Transports, semiconductors, metals, industrials leading the declines, while defensive sectors such as utilities, staples and telecom stocks gaining as bonds strengthened. With yesterday’s losses, the S&P 500 index closed below its 50-day moving average for the first time since November 8th after longest streak above since 2011.

In Asian markets, The Nikkei Index fell -125 points to close at 18,426, the Shanghai Index inched higher 2 points to settle at 3,275 and the Hang Seng Index slipped -51 points to finish at 24,261. Chinese stocks gained after the People’s Bank of China resumed adding liquidity to the financial system after suspending the so-called open-market operations for 13 consecutive trading days. The PBOC added a net 70 billion yuan ($10.18 billion) Thursday. In Europe, the German DAX is down around -40 points at 12,114, while the FTSE 100 is down over -0.5%, trading just above 7,300. European stocks drop the most in a week as banks fall with bond yields after U.S. President Donald Trump said the dollar was getting too strong.

Market Closing Prices Yesterday

  • The S&P 500 Index dropped -8.85 points, or 0.38%, to 2,344.93
  • The Dow Jones Industrial Average fell -59.44 points, or 0.29%, to 20,591.86
  • The Nasdaq Composite slipped -30.61 points, or 0.52%, to 5,836.16
  • The Russell 2000 Index declined -17.75 points, or 1.29% to 1,359.20

Events Calendar for Today

  • 8:30 AM ET          Weekly Jobless Claims…est. 245K
  • 8:30 AM ET          Continuing Claims…est. 2.024M
  • 8:30 AM ET          Producer Price Index (PPI) MoM for March…est. 0.0%
  • 8:30 AM ET          PPI Ex: Food & Energy MoM (core) for March…est. 0.2%
  • 9:45 AM ET          Bloomberg Consumer Comfort Index…prior 50.2
  • 10:00 AM ET       University of Michigan Sentiment, April-F…est. 96.5
  • 10:30 AM ET       Weekly EIA Natural Gas Inventory Data

Earnings Calendar:

  • Earnings Before the Open: APOG, C, CBSH, FHN, FRC, INFY, JPM, PNC, WFC

World News

  • Germany’s inflation rate dropped notably in March, as the annual inflation rate, measured by harmonized European Union standards, fell to 1.5% after hitting a 4 1/2-year high of 2.2% in February
  • Bulls in American Association of Individual Investors (AAII) weekly survey inch up to 29%, just above a 5-month low of 28% hit last week; bears fall to 37% vs 40% last week; neutrals rise 34% vs 32%
Sector News Breakdown

Consumer

  • Pier 1 Imports (PIR) Q4 EPS 34c/$528.4M vs. est. 33c/$529.83M; reports Q4 company comparable sales up 0.2% from the prior year; E-Commerce sales totaled $103.1M, representing YoY growth of approximately 28%; sees Q1 EPS loss (7c)-(3c) vs. est. loss (2c) and comp sales up 1% to 2%
  • Hanesbrands (HBI) sees prelim Q1 EPS 28c-29c/$1.38B vs. est. 28c/$1.39B; backs FY17 adjusted EPS view $1.93-$2.03 and revs $6.45B-$6.55B vs. est. $1.96/$6.46B; CFO Richard Moss to retire at end of 2017
  • Armstrong Flooring (AFI) backs FY17 Capex view $45M-$50M; backs FY17 adjusted EBITDA view $75M-$85M
  • Hostess Brands (TWNK)1M share Secondary priced at $15.25
  • Yum (YUM) to restate results due to change in its fiscal year end to Dec. 31 from last Saturday of Dec., which was effective with this year

Energy

  • The International Energy Agency in its monthly report said global oil supply fell in March. The IEA showed the cartel’s combined production fell an average 153,000 barrels a day last month to 31.9 million
  • Texas PUC staff files draft order to reject NextEra (NEE)-Oncor deal
  • Warrior Met Coal (HCC)666M share IPO priced at $19.00 (high end of range)
  • Weatherford (WFT) downgraded to Neutral from Buy at Goldman Sachs
  • Yuma Energy Inc. (YUMA) said it had entered an agreement with two privately held companies to develop more than 33,000 acres in West Texas’s Permian Basin

Financials

  • JP Morgan (JPM) Q1 EPS $1.65 vs. est. $1.52; Q1 investment banking revs $1.65B, FICC trading revs $4.22B, equity & sales trading revs $1.61B; sees Q2 net interest income up about $400M vs. Q1; provision for credit losses $1.32B
  • PNC Bank (PNC) Q1 EPS $1.96 vs. est. $1.83; net charge-offs $118M, provision for credit losses $118M
  • First Horizon (FHN) Q1 EPS 23c (in-line with estimates); net interest margin (NIM) 2.92%
  • Berkshire Hathaway Inc. (BRK.A) said it sold more than 7M shares of Wells Fargo & Co. (WFC) between April 10 and April 12, and it intended to file a report with the SEC to reflect that sale. Berkshire plans to sell nearly 2 million shares of Wells Fargo in the “near future,” solely motivated by the desire to return to a percentage ownership below the 10% notification threshold
  • AllianceBernstein (AB) reports preliminary AUM $498B as of March 31, (same as end of Feb) saying market appreciation offset total firm wide net outflows, driven entirely by one large redemption in the Institutions channel
  • Manning & Napier (MN) said prelim AUM $31.6B as of March 31, vs. $32.1B end of Feb; AUM as of March 31, included ~$18.8B in separately managed accounts and ~$12.9B in mutual funds and collective investment trusts
  • Cadence Bancorporation (CADE)5M share IPO priced at $20.00

Healthcare

  • Ocera Gains (OCRX) shares gained overnight after saying data from investigator-sponsored preclinical study of ornithine phenylacetate (OCR-002) will be presented in poster session at EASL meeting on April 20
  • Aerie Pharmaceuticals (AERI) reported the successful six-month topline safety and efficacy results of its Rocket 4 Phase 3 clinical trial for product candidate Rhopressa, a novel once-daily eye drop being tested for its ability to lower intraocular pressure in patients with glaucoma or ocular hypertension

Industrials & Materials

  • Rio Tinto Group (RIO) is closer to an exit from thermal coal after winning approval from Australia’s foreign investment regulator to sell the bulk of its mines to a company controlled by China’s Yanzhou Coal Mining Co. for $2.45 billion.
  • Genesee & Wyoming (GWR) March traffic was 290,752 carloads, an increase of 52,455 carloads, or 22.0%, compared with March 2016. G&W’s same-railroad traffic in March 2017 was 251,490 carloads, an increase of 13,193 carloads, or 5.5%, compared with March 2016. G&W’s traffic in the first quarter of 2017 was 821,248 carloads, an increase of 139,864 carloads, or 20.5%, compared with the first quarter of 2016.
  • Apogee Enterprises (APOG) Q4 EPS 80c/$314.1M vs. est. 72c/$291.79M; sees FY18 EPS $3.35-$3.55 vs. est. $3.48 and sees FY18 revenue up 10%
  • Boeing (BA) may start delivering the 737 MAX 10X aircraft in 2020 if airlines begin ordering the largest version of its 737 MAX family this year, Reuters reports
  • General Moly (GMO) files $500M mixed securities shelf

Technology, Media & Telecom

  • Applied Optoelectronics (AAOI) guides higher as sees Q1 EPS $1.00-$1.02, above prior view of 80c-88c and est. 83c; guides prelim Q1 revenue approximately $96.2M, above consensus $89.77M; Q1 adj. gross margin 42.5%-42.9%, saw 38%-40% vs est. 39.0% (watch shares of other optical names OCLR, ACIA, NPTN, LITE, FNSR)
  • Infosys Ltd. (INFY) said revenue growth for the current fiscal year would likely slow; INFY said Q4 profit stood at 36.03 billion rupees ($559 million), up 0.2% from 35.97 billion rupees a year ago, which was in-line with the consensus estimate while revenue grew 3.4% to 171.2 billion rupees; projected revenue growth of 6.5% to 8.5% for the fiscal year
  • MoSys (MOSY) said it didn’t get proposals during strategic alternatives review that the board considered to be in best interests of shareholders; to cut up to 35 jobs, or ~60% of headcount
  • Yext (YEXT) 10.5M share IPO priced at $11.00 (high end of range)

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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