Mid-Day Outlook: May 2nd, 2017

eOptionDaily Market Report

U.S. equities are trading mixed to start, in holding pattern ahead of FOMC meeting results tomorrow and jobs data later this week. No major economic data on the calendar today, as focus remains on corporate earnings and monthly auto sales. The Nasdaq Comp jumped above the 6,100 mark to high of 6,102 to start the day before slipping and losing gains ahead of Apple earnings after the close (also all-time highs AAPL). Semi’s mixed after AMD shares drop over 15% early after rev miss and margin concerns. Auto sales for April already off to a rocky start as GM, F and FCUA posted larger than expected sales declines for the month (follows dismal March), which is weighing on the supplier and auto retail sector as a whole. Bonds and gold are little changed after sliding yesterday, while oil continues is move lower. Volumes remain light ahead of key earnings tonight and remainder of week.

Treasuries, Currencies and Commodities

  • In currency markets, the dollar perks up today, trading near its best levels as the euro drops back below the 1.09 level, while the greenback rises to high of 112.31 against the yen (no major economic data today to influence currencies – but all eyes on FOMC meeting tomorrow)
  • Precious metals are little changed at $1,255 an ounce after falling around 1% yesterday amid a broad sell-off in defensive sectors/asset classes yesterday as stock surge further (FOMC meeting tomorrow will likely move needle for commodity prices)
  • Energy futures slip as WTI crude dips after earlier rebounding from lowest close in a month, as U.S gasoline inventories are forecast to grow. Brent also steady, with U.A.E. saying it would be “logical” to extend output cuts. Inventory data tonight (API) with OPEC meeting late in month
  • Treasury markets flat early, initially down as the yield on the 10-yr touched near highs of 2.34% a day after Treasury Secretary Steven Mnuchin reiterated the possibility of issuing ultra-long bonds. The Federal Reserve’s policy-making committee, meanwhile, is set to begin a two-day meeting later Tuesday.

Sector Movers Today

  • Auto’s; monthly April auto sales data out today and weak once again (after a dreadful March last month): 1) Ford (F) April U.S. light vehicle sales fell (-7.1%) vs. est. down (-4.7%); 2) GM April vehicle sales fell (-5.8%) vs. est. down (-2.0%), 3) TM April auto sales were down (-4.4%) vs. est. (-4.2%); 4) FCAU April U.S. auto sales fell (-7.0%) vs. est. (-5.9%), 5) NSANY April U.S. auto sales fell (-1.5%) vs. est. of up 1.5%; shares of auto suppliers (DLPH, BWA, AXL, LEA weaker in sympathy)
  • Industrial & Machinery; heavy duty truck maker CMI shares rise after it beat earnings forecasts for Q1 and raised its full-year outlook; ETN Q1 EPS and sales top consensus and guides year $4.45-$4.75, above consensus of $4.46; CMI strength was helped by stronger demand from construction and mining customers and higher sales from a distributor acquisition in 4Q (positive for construction and mining equipment names; CAT, MTW, OSK, TEX, ASTE, WCC as well as truck-parts making peers NAV, PCAR, ALSN, WNC, WBC); WCC also upgraded at Morgan Stanley today
  • Hospitals/facilities/services; CYH put up an in-line with consensus EBITDA quarter and CFFO that is below the trend it needs to make its full-year guide; THC outperforms in hospital space after selling its Houston Hospitals to HCA and sees $725M net proceeds (raises year Ebitda outlook after reporting mixed Q1 results); HCA also reported earnings; HLTH jumps on earnings
  • Housing & Building Products; TMHC 10M share Spot Secondary priced at $23.35; flooring company LL posted a Q1 loss wider than estimated and 1Q liquidity narrowed QoQ; building material names advanced after MLM Q1 top and bottom line results beat (VMC higher)

Stock GAINERS

  • ANGI +58%; to be acquired by IAC/deal valued at about $500M/$8.50 per share https://goo.gl/CZVOvO
  • CMI +6%; beat earnings forecasts for Q1 and raised its full-year outlook
  • COH +10%; as quarterly results top consensus and maintains guidance for year
  • LMNX +8%; 12c EPS beat/higher revs and upbeat year rev outlook guidance
  • MA +2%; new all-time highs as Q1 EPS beat by 6c on higher revs as profit up over 12%
  • THC +19%; outperforms after selling its Houston Hospitals to HCA and sees $725M net proceeds
  • TXRH +9%; posted a marked improvement in same-store sales trends YoY/revs beat
  • VRX +5%; as breaks back above the $10 level after providing debt update

Stock LAGGARDS

  • AMD -17%; after Q1 revs miss and guided gross margins to fall next quarter
  • CHTR -1%; Q1 revs miss consensus and posts wider loss of TV customers amid merger integration
  • HLIT -12%; as Q1 EPS loss and revs missed consensus and guided Q2 below views
  • LL -18%; posted a Q1 loss wider than estimated and 1Q liquidity narrowed QoQ
  • ITCI -4% (13.6k); downgraded by two analysts after FDA requested more info on drug
  • NRG -6%; as EPS misses by 11c and revenues also short of consensus

Syndicate

  • AGNC Investment (AGNC) 24.5M share Spot Secondary priced at $20.70
  • Kroger (KR) 11.1M share Block Trade priced at $28.50
  • LyondellBasell (LYB) 3.2M share Block Trade priced at $82.70
  • Taylor Morrison (TMHC) 10M share Spot Secondary priced at $23.35

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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