Mid-Day Outlook: April 26th, 2017

eOptionDaily Market Report

Equities are modestly higher after the S&P posted its biggest two day rally in nearly 6-months yesterday, as major averages are holding early gains, and the Nasdaq Comp touches another all-time high for a second straight day. Earnings and policy leading markets higher (no talk of FOMC in over a week), as Treasury Secretary Steven Mnuchin confirmed on Wednesday that the White House tax plan will include a 15% corporate tax rate. That is down from the current 35%. Mnuchin also indicated the administration has shelved the so-called border adjustment tax for now. He said there will be more details on the plan later Wednesday, and that it would be the biggest tax cut in history. All-time highs today for FB, MSFT, GOOGL, ADBE, PYPL, CMCSA, EA as tech continues to surge into earnings season/market optimism as well as UNH, MMM and UTX. Earnings continue to come in strong this quarter, coupled with help from President Trump and his tax reform policy and major averages remain near all-time highs.

Treasuries, Currencies and Commodities

  • In currency markets, the dollar index (DXY) rebounds after mixed showing yesterday (when topped yen/Loonie, but fell vs. euro/pound), ahead of Trump administration plan on taxes; dollar up vs. most rival currencies early on
  • Precious metals slip to around the lowest level in just over two weeks, falling for a third straight session as the dollar firms ahead of tax-plan for Trump administration, bond yields rise and stocks look to cautiously climb above record
  • Energy futures bounce off lows and turn higher after inventory data (which was mixed); overnight oil slipped as the API reported weekly rise of 897K crude barrels and climb of about 4.4M barrels in gasoline…this morning DOE posted larger crude draw of -3.6M barrels (vs. est. -1.75M), though gasoline build was greater at 3.3M build (vs. est. 500K build)
  • Treasury markets little changed with the yield on the 10-year holding around 2.32% as investors look ahead to President Donald Trump’s plans for a corporate tax cut which could give a further boost to stocks and other assets perceived as risky and, in turn, curtailing appetite for havens
Sector Movers Today
  • Credit cards/payment services; sector weak after DFS and COF results; COF with big miss as total revs soft driven by a higher provision (-26c), lower non-interest revenues (-19c), higher expenses, while DFS EPS misses by 6c driven by higher provisions, partially offset by higher total revenues, lower non-interest expenses; TSS rises early as Q1 earnings beat on higher outlook
  • Aerospace & Defense movers; Dow component BA mixed Q1 as EPS beat by 10c, while revs just below consensus and raises year forecast by 10c top/bottom line (but in-line with ests.); GD Q1 earnings top consensus, while revs missed and backlog $60.4B; NOC Q1 sales topped consensus and lifts full-year earnings outlook, aerospace helps boost sales (group slipped yesterday after LMT results missed)
  • Consumer Staples; PG mixed Q3 as EPS beat/sales miss and reaffirms year view; HSY mixed as EPS beat by 6c as revs miss while mid-point of year EPS view misses est.; in beverages; DPS shares slump after Q1 EPS beat by 5c but sales missed ($1.51B vs. $1.55B), while PEP Q1 core EPS beat by 1c, but reaffirms below consensus year EPS view and organic revs of at least 3%
  • Optical stocks with China exposure are falling amid a New York Times report that the U.S. is widening its existing investigation into Chinese telecom equipment maker Huawei Technologies (shares of OCLR, LITE, FNSR, NPTN, and ACIA lower). The U.S. Treasury’s Office of Foreign Assets Control issued the subpoena in December, according to the NYT 


  • AKBA +37%; expanded collaboration with Otsuka to include Europe and other regions, receiving $73M upfront, $135M in development funding, milestones up to $657M, royalties up to 30%.
  • CMG +3%; Q1 EPS beat by over 30c on better revs and comp sales
  • COST +2%; raises quarterly dividend and announces special dividend of $7 per share
  • DECK +4%; announces review of strategic alternatives/Susquehanna says unlikely to see strategic interest given state of the Ugg brand, may see a PE buyer/takeout may be worth $62 per share
  • EW +9%; posted a big 1Q beat and raise
  • MNOV +12%; as ibudilast shows treatment effect in ALS patients
  • OCN +5%; after the company asks Federal Court to decide CFPB Is unconstitutional
  • PRGO +7%; following preliminary Q1 earnings announced last night
  • TWTR +10%; Q1 EPS beat by 10c on higher revs as active users rise, but Q2 guidance weak
  • WYNN +6%; as earnings beat, helped by strong results coming from Macau – 52-week highs


  • ALGT -8%; issued Q2 unit cost guidance of +13-15% y/y, far above Citi +9% estimate
  • BOFI -8%; as EPS in-line, misses on net interest income, analysts cut estimates
  • CHRW -5%; on earnings/as results saw weaker pricing
  • CREE -14%; downgraded to neutral at JPM after Q3 results and Q4 guidance below expectations
  • DPS -4%; after Q1 EPS beat by 5c but sales missed ($1.51B vs. $1.55B)
  • NEO -12%; cuts FY17 revenue view to $255M-$265M from prior $260M-$275M
  • STX -16%; Q3 sales missed consensus and guided next quarter $2.5B-$2.6B below est. $2.68B
  • SUP -8%; Q1 EPS missed  lowest Street estimate
  • TXN -1%; reported 1Q17 results above guidance but guided 2Q17 sales slightly below seasonal due we believe to a slowdown from the auto end market
  • VNTV -4%; 2Q revs view trailed estimates/Q1 merchant services revenue growth disappoint
  • X -24%; big earnings miss driven by operating challenges in its flat-rolled business/lower guide


  • Catasys (CATS) 3.125M share Spot Secondary priced at $4.80
  • Crown Castle (CCI) 4.75M share Spot Secondary priced at $94.00
  • Medical Properties Trust (MPW) 37.5M share Spot Secondary priced at $13.25
  • SiteOne Landscape (SITE) 10M share Secondary priced at $47.50

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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