Morning Preview: April 18th, 2017

eOptionDaily Market Report

Stock futures are sliding early after major averages snapped their three-day losing streaks yesterday, in what was a generally strong day for stocks on Monday. However, with earnings out today (and next month) attention turns to fundamentals, though concerns over this weekend’s French election and the U.S.-North Korea tensions may keep a lid on U.S. stock futures. Bonds remain strong as yields slip, while commodity prices are sliding as the dollar rebounds from recent losses.

European stocks decline after return from Easter holidays, while London markets decline (pound rises) after U.K. Prime Minister Theresa May has announced plans for an early general election on June 8. Asian markets also slide as those markets re-open. It’s a busy day for earnings, led by Dow components JNJ, UNH, GS, and IBM after the close as well as several economic data points include March housing starts, and industrial production.

In Asian markets, The Nikkei Index rose 63 points to settle at 18,418, the Shanghai Index declined -25 points to finish at 3,196, and the Hang Seng Index dropped -337 points to close at 23,924. In Europe, the German DAX is down over -70 points around 12,030, while the FTSE 100 is lower by more than -90 points (over 1%) around 7,235. In London, U.K. Prime Minister Theresa May has announced plans for an early general election on June 8. In an unscheduled speech delivered Tuesday morning, May said an election is needed because other parties in parliament are opposed to the Conservative-led government’s Brexit plans.

Market Closing Prices Yesterday

  • The S&P 500 Index jumped 20.06 points, or 0.86%, to 2,349.01
  • The Dow Jones Industrial Average rose 183.367 points, or 0.90%, to 20,636.92
  • The Nasdaq Composite gained 51.64 points, or 0.89%, to 5,856.79
  • The Russell 2000 Index advanced 15.94 points, or 1.18% to 1,361.18

Events Calendar for Today

  • 7:45 AM ET          ICSC Weekly Retail Sales
  • 8:30 AM ET          Housing Starts for MoM for March…est. 1.25M
  • 8:30 AM ET          Building Permits MoM for March…est. 1.25M
  • 8:55 AM ET          Johnson/Redbook Weekly Sales
  • 9:00 AM ET          Fed’s George speaks at Bard College Conference
  • 9:15 AM ET          Industrial Production MoM for March…est. 0.4%
  • 9:15 AM ET          Capacity Utilization for March…est. 76.2%
  • 4:30 PM ET          API Weekly Inventory Data

Earnings Calendar:

  • Earnings Before the Open: BAC, CMA, GNC, GS, GWW, HAFC, HOG, JNJ, LECO, OMC, PGR, PLD, RF, SCHW, SNV, TTS, UNH
  • Earnings After the Close: ADTN, CAMP, EGBN, HBHC, FULT, IBKR, IBM, ISRG, LRCX, NAVI, RCI, UFPI

World News

  • S. Total Cross-Border Investment Inflow (TIC) $19.3B in Feb; U.S. net long-term portfolio securities inflows at $53.4B in Feb; China holds $1.06T of U.S. Treasuries, an increase of $8.6B from last month; Japan holds $1.12T, an increase of $12.6B from last month
Sector News Breakdown

Consumer

  • United Continental (UAL) Q1 EPS 41c/$8.42B vs. est. 38c/$8.38B; said Q1 PRASM unchanged and sees Q2 PRASM up 1% to 3%; Q1 operating cash flow $547M; sees Q2 total capacity up 3%-4% and year up 2.5%-3.5%
  • Spirit Airlines (SAVE) sees Q1 Trasm fell (-4.3%) YoY primarily due to shift of Easter, which accounted for est. 350 bps of decline; says booking trends for 2Q look strong, expects positive 2Q Trasm YoY, even without accounting for Easter holiday
  • Post Holdings (POST) agrees to buy Weetabix in $1.76 billion deal https://goo.gl/DI6dJA
  • Synovus Financial Corp. (SNV) said it had agreed to buy the banking assets of Cabela’s Inc. (CAB), allowing the outdoor retailer’s $4.2 billion sale to rival Bass Pro Shops to proceed after hitting regulatory snags.
  • Copa Holdings’ (CPA) system-wide passenger traffic increased 11.9% year over year, while capacity increased 5.9%

Energy

  • BP has repaired a damaged oil and natural gas well on Alaska’s North Slope that had been venting gas vapors since Friday
  • TransMontaigne (TLP) raises quarterly distribution 1.5c to 72.5c per share

Financials

  • Synovus (SNV) Q1 EPS 57c vs. est. 51c; Q1 net interest margin (NIM) 3.42% vs. est. 3.33%; 1Q provision for loan losses $8.67M
  • Capital One Financial Corp. (COF) will buy Cabela’s (CAB) credit-card portfolio, while Synovus (SNV) will acquire the bank’s $1.2 billion in deposits
  • Comerica (CMA) Q1 EPS $1.02 vs. est. 96c; Q1 provision for credit losses $16M vs. Bloomberg estimate $37.1M; Q1 net charge-offs $33M vs. est. $35.9M
  • Cincinnati Financial (CINF) said Cincinnati Insurance Companies’ property casualty group expects its Q1 results to include pretax catastrophe losses of approximately $106M, representing an impact on the Q1 combined ratio of approximately 9.2%, based on estimated property casualty earned premium
  • Equity LifeStyle (ELS) Q1 FFO $1.00 vs. est. 98c; sees FY normalized FFO $3.51-$3.61 vs. est. $3.55; sees 2Q normalized FFO 77c-83c, vs. est. 82c
  • ServisFirst (SFBS) Q1 EPS 42c vs. est. 39c; average loans for the first quarter of 2017 were $5B, an increase of $301.3M, or 6.4%, over average loans of $4.7B for Q4’16, and an increase of $763.9M, or 18.0%, over average loans of $4.24B for Q1’16
  • CBL & Associates Properties (CBL) will replace Air Methods (AIRM) in the S&P 600 SmallCap Index effective prior to the open on Monday, April 24
  • Pinnacle Financial (PNFP) Q1 EPS 82c/$119.1M vs. est. 77c/$122.19M
  • Brown & Brown (BRO) Q1 EPS 43c/$445.1M vs. est. 42c/$445.54M
  • BNC Bancorp (BNCN) Q1 operating EPS 44c vs. est. 43c

Healthcare

  • United Healthcare (UNH) Q1 EPS $2.37/$48.7B vs. est. $2.17/$48.27B; raises FY17 EPS view to $9.65-$9.85 vs. est. $9.51 and raises FY17 revenue guidance to $200B from prior $197B-$199B vs. est. $198.97B; expands in Medicare, Medicaid after Obamacare exits
  • Johnson & Johnson (JNJ) Q1 EPS $1.83/$17.8B vs. est. $1.77/$18.08B; sees year EPS $7.00-$7.15
  • Galapagos NV (GLPG) 75M share Spot Secondary priced at $90.00
  • Arena Pharmaceuticals (ARNA) 60M share Spot Secondary priced at $1.15
  • Agios Pharmaceuticals (AGIO) files to sell 4.5M shares of common stock
  • Audentes Therapeutics (BOLD) files to sell 4.75M shares of common stock
  • Aurinia Pharmaceuticals (AUPH) announced that it has signed a definitive agreement granting Merck Animal Health (MRK) worldwide rights to develop and commercialize Aurinia’s patented nanomicellar voclosporin ophthalmic solution for the treatment of dry eye syndrome in dogs
  • Cytokinetics (CYTK) will replace Cardinal Financial (CFNL) in the S&P SmallCap 600 Index effective prior to the open on Monday, April 24

Industrials & Materials

  • Celanese (CE) Q1 EPS $1.81/$1.47B vs. est. $1.72/$1.44B; reaffirms 2017 outlook; backs FY17 adjusted EPS up 8%-11%
  • Leidos (LDOS) awarded $29M contract by U.S. Department of Veterans Affairs

Technology, Media & Telecom

  • Netflix (NFLX) Q1 EPS 40c/$2.64B vs. est. 37c/$2.65B; 1Q international sub adds 3.53M vs. Bloomberg est. 3.9M and 1Q domestic net adds 1.42M vs. est. 1.59M; sees 2Q total new subscribers 3.2M vs. est. ~2.5M and Q2 international streaming net adds 2.6M vs. est. 2.1M and 2Q domestic net adds 600k vs est. 420.5k; sees 2Q GAAP EPS 15c/$2.75B vs. est. 23c/$2.76B
  • Barracuda Networks (CUDA) Q4 EPS 19c/$89.3M vs. est. 15c/$88.4M; 4Q gross billings $103.2M
  • Omnicom (OMC) Q1 EPS $1.02/$3.59B vs. est. 96c/$3.55B
  • Gigamon (GIMO) will replace Ixia (XXIA) in the S&P SmallCap 600 Index effective prior to the open on Thursday, April 20. S&P MidCap 400 constituent Keysight Technologies (KEYS) is acquiring Ixia in a deal expected to be completed on or about that date pending final conditions

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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