Morning Preview: May 25th, 2017

eOptionDaily Market Report

Stock futures are higher, currently on track to open at record highs and on pace for a 6th straight day of gains, helped by a better than expected round of earnings. Oil prices slipped (back around $50.50 per barrel) after trading around 1-month highs prior after Saudi Arabia oil minister Khalid al-Falih ruled out deeper cuts to oil production in any extension to the OPEC output deal. The Saudi official also said a nine-month extension to the deal is “highly likely” to be agreed at Thursday’s meeting. Today is also a busy day of economic data and Fed speakers (details below), but markets watching headlines out of OPEC meeting as well as any comments from President Trump as he continues his overseas trip. The dollar is broadly higher while the volatility index (VIX) slides, as expect volumes to slowly dwindle into the long holiday weekend.
Stocks surged again on Wednesday as the S&P 500 posted a fifth consecutive session gain, closing at a new record high after minutes of the Federal Reserve’s latest policy meeting showed broad agreement on plans to begin shrinking the central bank’s balance sheet and also pointed to a likely rate increase next month, as widely expected. The Dow Jones Industrial Average also rose for a fifth straight day, gaining over 70 points to close just 0.5% below its record close set on March 1. Oil prices declined for the first time in six sessions Wednesday ahead of today’s OPEC meeting.
In Asian markets, The Nikkei Index gained 70 points to close at 19,813, the Shanghai Index jumped 43 points (1.43%) to close at 3,107, and the Hang Seng Index jumped 202 points to settle at 25,630. In Europe, the German DAX is higher by around 20 points at 12,660, while the FTSE 100 is higher by a few points around 7,525.
Market Closing Prices Yesterday
·      The S&P 500 Index climbed 5.97 points, or 0.25%, to 2,404.39
·      The Dow Jones Industrial Average rose 74.51 points, or 0.36%, to 21,012.42
·      The Nasdaq Composite gained 24.31 points, or 0.40%, to 6,163.02
·      The Russell 2000 Index advanced 1.53 points, or 0.11% to 1,382.51
Events Calendar for Today
·      8:30 AM ET          Weekly Jobless Claims…est. 238K
·      8:30 AM ET          Continuing Claims…est. 1.925M
·      8:30 AM ET          Advance Goods Trade Balance for April…est. (-$64.5B)
·      8:30 AM ET          Wholesale Inventories MoM April-P…est. 0.2%
·      9:45 AM ET          Bloomberg Consumer Comfort Index…prior 50.2
·      10:30 AM ET       Weekly EIA Natural Gas Inventory Data
·      11:00 AM ET       Kansas City Fed Manufacturing Activity for May…est. 10
·      10:00 PM ET        Fed’s Bullard speaks on U.S. economy in Tokyo
Earnings Calendar:
World News
·      The Congressional Budget Office (CBO) has released its financial “scoring” of the American Health Care Act, estimating that the bill “would reduce the cumulative federal deficit over the 2017-2026 period by $119B. That amount is $32B less than the estimated net savings for the version of H.R. 1628 that was posted on the website of the House Committee on Rules on 3/22
·      U.K. Q1 GDP growth revised down to 0.2% from flash estimate of 0.3%
Sector News Breakdown
·      PVH Corp. (PVH) Q1 EPS $1.65/$1.99B vs. est. $1.60/$1.95B; sees Q2 adjusted EPS $1.60-$1.63 vs. est. $1.56 and sees Q2 revenue growth roughly 5% vs. est. $1.95B; raises FY17 adjusted EPS view to $7.40-$7.50 from $7.30-$7.40 and sees FY17 revenue growth roughly 3%
·      Guess (GES) Q1 EPS loss (24c)/$459M vs. est. loss (32c)/$449.22M; sees 2Q EPS 8c-11c vs. est. 12c and 2Q revs up +3.5%-5.5%; raises FY18 adjusted EPS view to 34c-44c from 28c-40c (est. 33c) and raises FY18 consolidated net revenue growth view in U.S. dollars to 3.5%-5% from 2.0%-4.0%
·      Williams-Sonoma (WSM) up +8%; Q1 EPS 51c/$1.112B vs. est. 49c/$1.11B; sees Q2 EPS 55c-61c on revs $1.195B-$1.230B vs. est. 60c/$1.19B; sees comparable brand revenue growth 2%-5%
·      Hormel Foods (HRL) Q2 EPS 39c/$2.19B vs. est. 40c/$2.24B; reaffirms forecast
·      Shoe Carnival (SCVL) Q1 EPS 48c/$253.4M vs. est. 49c/$251.74M; Q1 comp sales fell (-3.9%) and inventory was down (-1.0%) on a per-store basis; backs FY17 EPS $1.30-$1.45 and revs $1.002B-$1.018B vs. est. $1.38/$1.01B
·      SpartanNash (SPTN) Q1 EPS 55c/$2.4B vs. est. 54c/$2.46B; backs FY17 EPS view $2.26-$2.35 vs. est. $2.32
·      J.C. Penney (JCP) and TIME (TIME) will replace Tuesday Morning Corp. (TUES) and Hornbeck Offshore Services Inc. (HOS) respectively in the S&P SmallCap 600 effective prior to the open on Friday, June 2
·      Modine Manufacturing (MOD) Q4 EPS 35c/$488.3M vs. est. 34c/$468.37M; sees FY18 adjusted EPS $1.20-$1.35 vs. est. $1.20 and sees FY18 revenue growth 25%-30%
·      Copart (CPRT) Q3 EPS 37c/$373.9M vs. est. 36c/$386.74M
·      JELD-WEN Holding (JELD) 14M share Secondary priced at $30.75
·      Camping World (CWH) 9.5M share Secondary priced at $27.75
Energy & Industrials
·      EP Energy (EPE) and Tesoro (TSO) form drilling joint venture through respective units to fund oil and nat gas development in EPE’s Altamont program in the Uinta Basin of Utah; also signed a multi-year pact for yellow and black waxy crude oil to supply TSO’s Salt Lake City refinery
·      Costamare (CMRE) files to sell 12.5M shares of common stock
·      Bank of the Ozarks (OZRK) files to sell 6.6M shares of common stock
·      Sun Communities (SUI) files to sell 3.5M shares of common stock
·      Raymond James (RJF) total securities commissions and fees of $332M increased 15% compared to April 2016 and were flat compared to March 2017; client assets under administration reached a record $649.2B, increasing 24% over April 2016 and 1% over March 2017; financial assets under management reached a record $87.2B, up 26% YoY and 2% MoM
·      Aerie Pharma (AERI) jumped over 10% after saying it expects to submit an NDA for Roclatan after it achieved primary efficacy endpoint in its Phase 3 “Mercury 2” study for treatment of patients with glaucoma and other diseases of the eye.
·      Radius Health (RDUS) announces positive top-line results from 24 month ActiveExtend study for Tymlos in postmenopausal women with osteoporosis
·      Bio-Rad Laboratories, Inc. (BIO) said it received 510(k) clearance from the FDA for enhanced capability with its IH-Com data management software to manage patient results with the company’s IH-1000 automated blood typing instrument
·      Quintiles IMS (Q) boosts buyback authorization by $1B
·      Syndax (SNDX) 3.75M share Secondary priced at $13.25
Technology, Media & Telecom
·      NetApp (NTAP) Q4 EPS 86c/$1.48B vs. est. 82c/$1.44B; sees Q1 EPS 49c-57c on revs $1.24B-$1.39B vs. est. 67c/$1.33B; Q4 adjusted gross margin 62.5%; raises dividend 5% to 20c from 19c
·      HP Inc. (HPQ) up 4%; Q2 EPS 40c/$12.4B vs. est. 39c/$11.88B; sees FY2017 EPS $1.59-$1.66, vs. prior $1.55-$1.65 (est. $1.62); sees Q3 EPS 40c-43c on revs $12.39B vs. est. 42c/$11.96B
·      Pure Storage (PSTG) up 13%; Q1 EPS loss (14c)/$182.6M vs. est. loss (22c)/$177.53M; sees FY17 revenue $214M-$222M vs. est. $215.36M and sees FY17 non-GAAP gross margin in the range of 63.5% to 66.5%, non-GAAP operating margin in the range of -16% to -12%
·      IHS Markit Ltd. (INFO) will replace TEGNA Inc. (TGNA) in the S&P 500, TEGNA and (CARS) will replace J.C. Penney Company Inc. (JCP) and Time Inc. (TIME) respectively in the S&P MidCap 400
· (WUBA) Q1 EPS 10c/$288.2M vs. est. loss (25c)/$260.9M; sees Q2 revenue up 15.7%-20.8% to RMB 2.25B-2.35B
·      Mindbody (MB) 4.4M share Secondary priced at $27.95
·      WideOpenWest (WOW) 18.2M share IPO priced at $17.00
·      TiVo Inc. (TIVO) CEO and President to retire/company considering both internal and external candidates to be successor
·      CSRA Inc. (CSRA) Q4 EPS 49c/$1.25B vs. est. 44c/$1.25B; Q4 bookings $1.3B; sees FY revenue $5.00B-$5.20B on EPS $1.88-$2.00 vs. est. $51.2B/$1.95; sees revenue growth in FY18 in line with long-term model; reports backlog of $15.2B at Q4-end
·      Exa Corp. (EXA) Q1 EPS loss (14c)/$16.6M vs. est. loss (18c)/$16.56M; sees FY18 revenue of $76M-$80M vs. est. $76.1M
·      Salesforce (CRM) announced a strategic technology agreement. Extending the long-standing relationship between the two companies, Dell Technologies will expand the use of Salesforce’s market-leading sales, service, and marketing applications and CRM platform

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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