Morning Preview: April 20th, 2017

eOptionDaily Market Report

After posting triple digit losses for the Dow Industrials yesterday, following a sharp decline in energy prices, U.S. stocks are on track to open the morning higher by about 0.3% across the board. Stocks declined on Wednesday as an early rally in financial companies “petered-out” and as plunging crude oil prices sent energy shares lower. Dow component IBM posted disappointing quarterly revenue, weighing on the index a day after JNJ and GS earnings sunk the index as well. Utilities, real estate and staples weakened as the 10-year Treasury yield jumped to 2.21% from 2.17% (but defensive assets have had a good run over the last few weeks on the stock pullback/geopolitical concerns). Investors will now focus on a fresh batch of corporate results and economic data such as weekly jobless claims.

Oil prices are moving higher, a day after a decline in oil (fell 4% on inventory data) sank the market and energy stocks, as OPEC leader Saudi Arabia said the cartel is likely to reach an agreement next month to extend its production cuts. Saudi energy minister Khalid al-Falih on Thursday said a preliminary agreement to continue cuts for another three or six months is within reach and could be approved at OPEC’s next meeting on May 25.

In Asian markets, The Nikkei Index ended lower by only -1 point to settle at 18,430, the Shanghai Index inched higher 1 point to finish at 3,172 and the Hang Seng Index jumped 231 points to finish at 24,056. In Europe, the German DAX is higher by around 20 points at 12,035 and the FTSE 100 is lower by only a few points above 7,100. France’s CAC 40 extends gain to 1% as poll signals Macron win

Market Closing Prices Yesterday

  • The S&P 500 Index slipped -4.02 points, or 0.17%, to 2,338.17
  • The Dow Jones Industrial Average fell -118.79 points, or 0.58%, to 20,404.49
  • The Nasdaq Composite gained 13.56 points, or 0.23%, to 5,863.03
  • The Russell 2000 Index advanced 5.24 points, or 0.38% to 1,367.13

Events Calendar for Today

  • 8:30 AM ET          Weekly Jobless Claims…est. 240K
  • 8:30 AM ET          Continuing Claims…est. 2.042M
  • 8:30 AM ET          Philly Fed Survey for April…est. 25.5
  • 9:45 AM ET          Bloomberg Consumer Comfort Index…prior 51.0
  • 10:00 AM ET       Leading Index for March…est. 0.2%
  • 10:30 AM ET       Weekly EIA Natural Gas Inventory Data

Earnings Calendar:

  • Earnings Before the Open: ADS, BBT, BK, BX, CFG, DGX, DHI, DHR, DOV, KEY, NUE, PBCT, PM, PPG, SHW, SON, TRV, VZ
  • Earnings After the Close: ASB, BMI, MAT, MXIM, NCR, PFPT

World News

  • Fed Reserve Vice Chairman Stanley Fischer said Brexit hasn’t resulted in significant financial disruption so far, China’s economy appears to be on more solid footing, and unemployment has fallen steadily in Europe. “I expect that the Fed’s removal of accommodation will be driven by a continued expansion of the U.S. economy; thus, foreign economies are likely to benefit from the developments that induce the FOMC to tighten”
  • Japanese exports rose more sharply than expected in March, as overseas demand continues to make up for lackluster domestic consumption to fuel the economy’s recovery. Merchandise exports jumped 12% from a year earlier to 7.229 trillion yen in March
  • The EuroZone output in the construction sector jumped 6.9% from January, the largest month-to-month rise since March 2012. Eurostat said output was 7.1% higher than in February 2016, the largest year-to-year gain since April 2014
Sector News Breakdown

Consumer

  • Select Comfort (SCSS) Q1 EPS 56c/$393.9M vs. est. 44c/$370.2M; reports a 3% comparable sales increase vs. est. (-1.9%); raises 2017 EPS outlook to $1.25-$1.50 from $1.20-$1.40 vs. est. $1.31; anticipates 2017 capital expenditures to be approximately $55M
  • HNI Corporation (HNI) Q1 EPS 26c/$471.9 vs. est. 22c/$470.07M
  • Snap-On reports (SNA) Q1 EPS $2.39/$887.1M vs. est. $2.36/$878.85M
  • Gap (GPS) upgraded to Neutral from Underweight at JPMorgan

Energy

  • OPEC kingpin Saudi Arabia said the cartel is likely to reach an agreement next month to extend its production cuts, helping lift prices.
  • Kinder Morgan (KMI) Q1 EPS 17/$3.42B vs. est. 18c/$3.35B; said remains on target for year
  • Core Laboratories (CLB) Q1 EPS 42c/$158M vs. est. 39c/$150.57M; sees 2Q EPS 48c-52c on revs $165M-$170M vs. est. 48c/$160.6M

Financials

  • American Express (AXP) Q1 EPS $1.34/$7.9B vs. est. $1.28/$7.74B; reiterated 2017 EPS forecast of $5.60-$5.80; 1Q card member spending grew 8%, adjusted for changes in FX rates and Costco-related business that was included in prior year; 1Q loans grew 11%
  • BNY Mellon (BK) Q1 EPS 80c (in-line); 1Q net interest margin 1.13%, 1Q non-interest expenses $2.6B, 1Q provision for credit losses $5M
  • Uniti Group (UNIT)9M share Secondary priced at $26.50
  • Cohen & Steers (CNS) Q1 EPS 47c/$89.69M vs. est. 47c/$88.91M; Q1 end AUM $58.5B, an increase of 6.3% from March 31, 2016 and an increase of 2.3% from December 31, 2016
  • Texas Capital (TCBI) Q1 EPS 80c, below est. 89c; said Q1 net interest income $163.4M and Q1 provision for credit losses $9M
  • Cathay General (CATY) Q1 EPS 61c vs. est. 60c; 1Q return on avg. assets 1.42%, return on avg. equity 10.7% and 1Q net interest margin 3.49%
  • Sallie Mae (SLM) Q1 core EPS 21c vs. est. 15c; sees FY core EPS 70c-72c vs. est. 69c; Q1 net interest margin 5.96%, net interest income $268.1M and provision for credit losses $25.3M
  • RLI Corp. (RLI) Q1 EPS 44c vs. est. 50c; Q1 net premiums earned $183.3M and Q1 net premiums written $165.7M; Q1 book value/share $19.28
  • CYS Investments (CYS) Q1 EPS 28c vs. est. 25c; company’s book value per common share on March 31, 2017 was $8.26, compared to $8.33 at December 31, 2016
  • Brandywine Realty (BDN) Q1 FFO 32c/$130.9M vs. est. 32c/$132M; sees FY FFO $1.33-$1.40 down from prior view $1.35-$1.42 and vs. est. $1.39
  • Torchmark (TMK) Q1 EPS $1.15 vs. est. $1.14; sees FY operating EPS $4.63-$4.77, vs. est. $4.69
  • AIG expects a $2.6B pre-tax gain in connection with its reinsurance deal with Berkshire Hathaway
  • BancorpSouth (BXS) Q1 EPS 41c vs. est. 38c; net interest margin remained stable at 3.46%.
  • LaSalle Hotel (LHO) Q1 FFO 45c/$254.4M vs. est. $254.45M
  • SEI Investments (SEIC) Q1 EPS 55c/$359.98M vs. est. 52c/$363.29M
  • Guaranty Bancorp (GBNK) Q1 EPS 35c vs. est. 33c
  • First Bancorp (FNLC) Q1 EPS 43c vs. est. 46c

Healthcare

  • NuVasive (NUVA) announced the launch the new RELINE Trauma portfolio, which will serve as the company’s foundation to address the estimated $100M U.S. spine trauma fixation market, currently growing 5.6% annually
  • Tesaro (TSRO) announced that Zejula, an oral, once-daily poly polymerase inhibitor, is now available by prescription in the United States

Industrials & Materials

  • CSX Corp. (CSX) Q1 EPS 51c/$2.87B vs. est. 43c/$2.76B; $173M restructuring charge drove a 13% year-over-year increase in expenses for the first quarter
  • Hexcel (HXL) Q1 EPS 60c/$478.8M vs. est. 63c/$522.8M; backs FY17 EPS view $2.64-$2.76 vs. est. $2.72, but lowers FY17 revenue view $2B-$2.08B vs. est. $2.1B
  • Canadian Pacific (CP) Q1 EPS C$2.50/C$1.6B vs. est. C$2.48/C$1.59B; reported operating ratio decreased by 80 bps to 58.1% from 58.9%
  • Steel Dynamics (STLD) Q1 EPS 82c/$2.37B vs. est. 76c/$2.21B
  • United Rentals (URI) Q1 EPS $1.63/$1.356B vs. est. $1.51/$1.33B; reports Q1 rental revenue $1.166B; raises year view on Nes Rentals purchase; sees year revs $6.05B-$6.25B from prior view of $5.75B-$5.95B and Ebitda $2.835B-$2.985B vs. prior $2.7B-$2.85B; shares dipped overnight after saying rental rates “remained under some pressure.”
  • IDEX (IEX) Q1 EPS $1.03/$553.6M vs. est. 93c/$533.14M; raises FY17 adjusted EPS view to $4.00-$4.10 from $3.87-$3.95 and raises FY17 organic revenue growth view to 3%-4%
  • Kaiser Aluminum (KALU) Q1 EPS $1.52/$355.3M vs. est. $1.13/$353.3M; sees 2017 outlook largely unchanged
  • Woodward (WWD) Q2 EPS 60c/$500.38M vs. est. 66c/$499.21M; sees FY EPS $2.95-$3.25 vs. est. $3.18
  • Badger Meter (BMI) Q1 EPS 30c/$101.61M vs. est. 27c/$104.25M

Technology, Media & Telecom

  • eBay (EBAY) Q1 EPS 49c/$2.22B vs. est. 48c/$2.21B; backs FY17 EPS view of $1.98 $2.03 on revs of $9.3B-$9.5B vs. es.t $2.01/$9.41B; sees 2Q EPS 43c-45con revs $2.28B-$2.32B vs. 47c/$2.32B
  • Qualcomm (QCOM) Q2 EPS $1.34/$5.99B vs. est. $1.19/$5.9B; Q2 estimated reported 3G/4G device shipments 398M-402M, up 19% YoY; Estimated Q2 reported 3G/4G average selling price $204-$210, up 10%, sequentially; sees Q3 EPS 90c-$1.15 on revs $5.3B-$6.1B vs. $1.10/$5.95B
  • Benchmark Electronics (BHE) Q1 EPS 34c/$567M vs. est. 26c/$540.3M; sees Q2 EPS 31c-35c on revs $565M-$585M vs. est. 36c/$576M
  • PTC Inc. (PTC) Q2 EPS 30c/$281M vs. est. 28c/$283.59M; said Q2 bookings of $95M and subscription mix of 71% both exceeded the high end of their guidance for the quarter; bookings growth of 11% YoY was driven by another strong quarter in IoT; sees Q3 EPS 24c-29c on revs $288M-$293M vs. est. 33c/$296.62M; sees subscription revenue $74M-$75M
  • Plexus (PLXS) Q2 EPS 84c/$604.35M vs. est. 76c/$633.83M; sees Q3 EPS 68c-76c on revs $595M-$625M vs. est. 84c/$688.29M

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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