Mid-Day Outlook: May 15th, 2017

eOptionDaily Market Report

U.S. stocks gain to start the week after equities posted their first back-to-back drop in almost a month. Strength early in technology, energy and financials. 52-week highs ADSK, GLW, NVDA, ADBE, CTSH, SNPS, EA, ATVI, PYPL, GPN, AMAT, AVGO, AMZN, YHOO, CRM, NFLX, EXPE, and AAPL all in tech as NASDAQ new all-time highs of over 6,148 and the S&P 500 topped 2,400. WTI crude oil jumps on report that Saudi Arabia and Russia favor extending through March 2018 the oil-output cuts that OPEC and Russia agreed to in January, lifting energy stocks. Tech space buoyed by semis again, as well as Internet and security stocks (SYMC, etc.) after more than 200,000 computers in at least 150 countries were hit by global ransomware attacks over the weekend. Financials get a lift on rising rates. Lone piece of economic data today negative (Empire Fed) after strong reports last week. Retail remains under pressure ahead of a busy week of earnings (HD reports tomorrow morning), as department stores weaken further. All-in-all, stocks broadly higher as major averages again show no fear – markets at all-time highs.
Treasuries, Currencies and Commodities
·      In currency markets, the U.S. dollar slipped, losing ground against commodity based currencies such as the Canadian loonie and Russian Ruble as oil prices leapt on the prospects for an OPEC-led deal for continued production cuts. Mexico’s peso extends a 5-day winning streak, the longest since mid-February vs. the US dollar. The dollar higher vs. yen, down vs. others
·      Precious metals climb early, with gold up over $6 to $1234 an ounce on dollar weakness
·      Energy futures climb after energy ministers from Saudi Arabia and Russia said they back a nine-month extension to production cuts led by OPEC; WTI crude back above $49 per barrel
·      Treasury markets little changed, as yields edge higher; the 10-yr yield up less than 2 bps at around 2.34%, while the 20-yr yield just under 1.3%
Economic Data
·      Fed Empire Manufacturing Index for NY fell to (-1.0), below est for gain of 7.5 after general business conditions were 5.2 in the last month; component breakdown showed: prices paid fell to 20.9 from 32.8 and new orders fell to -4.4 vs 7.0; the number of employees fell to 11.9 vs 13.9 and the six-month general business conditions fell to 39.3 vs 39.9
·      Housing data better: The monthly confidence gauge from the National Association of Home Builders (NAHB) rose 2 points to 70, the second-highest level since the downturn and above estimates and the prior month reading of 68
Sector Movers Today
·      Internet security sector; shares of software based firms such as SYMC, CHKP, FEYE, PANW, FTNT, CUDA, QLYS, PFPT, CYBR were active after more than 200,000 computers in at least 150 countries were hit by global ransomware attacks over the weekend. Goldman says incident may be a catalyst for increased cyber-security spending in Europe and Asia
·      Oil stocks are broadly higher amid a jump in oil prices after energy ministers from Saudi Arabia and Russia said they back a nine-month extension to production cuts led by OPEC; shares of drillers (NE, DO, ESV), services (HAL, SLB, WFT), E&P (EOG, PXD, (WLL, OAS, SN), integrated (XOM, CVX, COP), among those outperforming today
·      Master trust credit card data; COF April Credit Net Card Charge-Offs (NCO’s) 5.33% vs. 5.44% MoM/April card delinquencies 3.51% vs. 3.71% MoM; SYF April Credit Card Charge-Offs 5.33% vs. 4.71% MoM/April delinquencies fell to 2.88% from 2.95% MoM; JPM April Credit Card Write-Offs 2.6% vs. 2.47% MoM/credit-card delinquencies 1.17% vs 1.21% MoM; DFS  April Net Credit Card Charge-Offs (NCO’s) 3.0% vs. 2.8% MoM, while delinquencies fell to 2.0% from 2.1% MoM
·      Metals are broadly higher, helped by a weaker dollar and on news of China’s “One Belt, One Road” infrastructure program. President Xi Jinping over the weekend said there will be more than $100 billion in fresh financing in support for the initiative (CLF, FCX, X, MT, AA higher)
·      ALNY +18%; after IONS said a patient died from an intracranial hemorrhage during its Phase 3 NEURO-TTR study of inotersen in patients with familial amyloid polyneuropathy (FAP).
·      EDIT +2%; after presenting animal data in gene-editing at the Annual Meeting of the American Society of Gene & Cell Therapy
·      JNJ  +1%; upgraded to overweight at JP Morgan with $140 tgt on stock underperformance
·      NERV +13%; said its schizophrenia drug is expected to start late-stage clinical trials in the 2H
·      PTHN +33%; to be acquired by TMO for $35 per share/$5.2B deal https://goo.gl/fkjn95
·      RXDX +11%; gets breakthrough therapy designation for Entrectinib
·      VJET +12%; upgraded to outperform at Cowen after recent pullback on earnings miss
·      WETF +5%; upgraded to buy at Citigroup citing favorable risk/reward
·      HOG -1%; cautious mention at Wedbush as believe the consensus retail estimate for 2Q is somewhat at risk
·      IONS -9%; results showed that inotersen met both primary endpoints, but three serious adverse events of thrombocytopenia occurred in inotersen-treated patients, with one patient dying
·      RCII ; as April core U.S. same-store sales fell (-13%) due to lower rental and fees revenues
·      SSYS -1%; downgraded at William Blair to underperform saying stock is overvalued
·      TSLA -1%; cut to equal-weight at Morgan Stanley on higher estimate of OP loss in 2017 and 2018

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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