Morning Preview: May 26th, 2017

eOptionDaily Market Report

Stock futures are trading flat to down slightly, coming off a day where the S&P 500 and Nasdaq Composite both posted record all-time closing highs. Major U.S. averages look to take their current 6-day winning streak into the final trading day of the week as momentum remains clearly to the upside. Markets shaking off another headline out of Washington after unnamed sources told NBC News and The Washington Post that Jared Kushner, President Donald Trump’s son-in-law and White House adviser, is a focus of investigators looking into Russian meddling in the 2016 election. It is a busy day of economic data where GDP data is set for release at 8:30 AM EST (est. +0.9%) and confidence data at 10:00 AM. Outside of that, expect volumes to dry up into the afternoon heading into the long three-day Memorial Day holiday weekend. Mixed economic data, Trump policies appear to be pushed out, a rising rate environment for the Fed (expectations for another rate hike in June) have all failed to dent the optimism in this market, so the question remains, what can derail this market? The CBOE Volatility index (VIX) closed just above the 10 level yesterday, but there appears to be no fear still at this point.
 
In Asian markets, The Nikkei Index fell -126 points to settle at 19,686, the Shanghai Index finished higher by 2 points to close at 3,110 and the Hang Seng Index rose 8 points to settle at 25,639. In Europe, the German DAX is down over -50 points at 12,570, while the FTSE 100 is higher by a few points around the 7,525 level. In Europe the British pound slides, dropping below $1.29 against the dollar after a poll showed a further narrowing of the Conservative Party’s lead before the U.K.’s general election.
Market Closing Prices Yesterday
·      The S&P 500 Index jumped 10.68 points, or 0.44%, to 2,415.07
·      The Dow Jones Industrial Average rose 70.53 points, or 0.34%, to 21,082.95
·      The Nasdaq Composite spiked 42.23 points, or 0.69%, to 6,205.26
·      The Russell 2000 Index inched higher 0.88 points, or 0.06% to 1,383.39
 
Events Calendar for Today
·      8:30 AM ET          Gross Domestic Product (GDP) Q1-S…est. 0.9%
·      8:30 AM ET          Personal Consumption for Q1-S…est. 0.4%
·      8:30 AM ET          GDP Price Index Q1-S…est. 2.3%
·      8:30 AM ET          Core PCE Q1-S…est. 2.0%
·      8:30 AM ET          Durable Goods Orders Apr-P…est. (-1.5%)
·      8:30 AM ET          Durable Goods Ex-Transportation, Apr-P…est. 0.4%
·      10:00 AM ET       University of Michigan Confidence, May-F…est. 97.5
·      1:00 PM ET          Baker Hughes Weekly Rig Count
   
World News
·      An attorney for senior White House aide Jared Kushner said Thursday that Kushner would cooperate with any investigations into meetings he had with Russians, amid a federal probe into Russian interference in the 2016 presidential election
·      A YouGov poll for The Times newspaper released Friday showed the lead for the ruling Conservative Party has been cut to 5 percentage points over the Labour Party ahead of the June 8 election – sending the British Pound lower
·      Japan’s core consumer price index, which excludes fresh food, rose 0.3% from a year earlier in April, a faster pace of increase compared to a 0.2% climb in March, marking the fourth straight month of rise
 
Sector News Breakdown
Consumer
·      Ulta Beauty (ULTA) +4%; reports Q1 EPS $2.05/$1.315B vs. est. $1.80/$1.27B; Q1 comp sales increased 14.3% vs. est. 11.1%, driven by 8.7% transaction growth and 5.6% growth in average ticket; retail comparable sales increased 10.9%, including salon comparable sales growth of 9.9%; e-commerce sales grew 70.9% to $104.3M; sees Q2 EPS $1.72-$1.77 on revs $1.257B-$1.278B vs. est. $1.77/$1.27B; raises FY17 EPS growth to mid-twenties from low twenties
·      Costco (COST) Q3 EPS $1.59/$28.22B vs. est. $1.31/$28.52B; Q3 total co comp sales w/gas/FX up +5% vs. est. +4%
·      Decker’s Brands (DECK) +12%; Q4 EPS 11c/$369.5M vs. est. loss (6c)/$357.59M; Q4 direct-to-Consumer comparable sales flat, UGG brand net sales decreased 1.1% to $243M; sees Q1 sales up low single digits vs. last year; sees year EPS $3.95-$4.15 vs. est. $3.78; targets total sales $2B for FY20
·      GameStop (GME) -4%; Q1 EPS 63c/$2.05B vs. est. 51c/$1.94B; reiterates FY17 EPS guidance of $3.10-$3.40 vs. est. $3.29 and reiterates FY17 comparable store sales range guidance of -5.0%-0.0%; says is no longer providing quarterly EPS or same store sales guidance
·      Big Lots (BIG) +5%; Q1 EPS $1.15/$1.3B vs. est. 99c/$1.31B; Q1 comp sales fell (-0.9%) vs. est. 0.7%; sees Q2 EPS 58c-63c vs. est. 58c and raises year to $4.05-$4.20 from prior $3.95-$4.10 view
·      Caleres (CAL) Q1 EPS 40c/$631.51M vs. est. 37c/$621.17M; Q1 Famous Footwear comp sales (-0.6%) vs. est. +0.5%; Q1 gross margin 42.9%; maintains year outlook
·      Zoe’s Kitchen (ZOES) -9%; Q1 EPS 1c/$90.6M vs. est. 1c/$92.55M; Q1 comp restaurant sales down (-3.3%); cuts FY17 revenue view to $314M-$322M from $325M-$327M (est. $324.11M) and cuts FY17 Comparable restaurant sales growth view to (3%)-0% from 1%-2%
·      Floor & Decor (FND) Q1 EPS up 85.7% to 13c on revs $307.3M and Q1 comparable sales up 12.8%
 
Energy & Industrials
·      Targa Resources (TRGP) 17M share Spot Secondary priced at $46.10
·      Neenah Paper (NP) renews annual $25M stock repurchase program
 
Financials
·      A federal judge rejected efforts by LendingClub (LC) and former CEO Renaud Laplanche to dismiss shareholder litigation accusing them of concealing material weaknesses in co.’s ability to monitor its ops, Reuters reported
 
Healthcare
·      Merrimack Pharmaceuticals (MACK) announced the resignation of Dr. Yasir Al-Wakeel as Chief Financial Officer and Head of Corporate Development, effective June 9, 2017
·      Cancer Genetics (CGIX) files $100M mixed securities shelf
 
Technology, Media & Telecom
·      Nutanix (NTNX) +15%; Q3 EPS loss (42c)/$191.8M vs. est. loss (45c)/$186.55M; Q3 billings $234.1M, growing 47% YoY and deferred revenue of $463M, up 102%; sees Q4 adjusted EPS loss (38c) on revs $215M-$220M vs. est. loss (39c)/$204.72M
·      Splunk (SPLK) -5%; Q1 EPS loss (1c)/$242.4M vs. est. loss (4c)/$233.86M; Q1 billings up 30% to $242.8M and said signed nearly 500 new enterprise customers; Q1 GAAP gross margin of 76% contracted from last quarter’s 81% & Q1 operating margin negative 1.2% vs positive 11.7% QoQ
·      Veeva (VEEV) +4%; Q1 EPS 20c/$157.9M vs. est. 18c/$151.9M; Veeva sees FY17 adjusted EPS 82c-84c on revs $665M-$669M vs. est. 80c/$658.7M
·      Lions Gate (LGF/A) Q4 EPS 28c/$1.26B vs. est. 21c/$1.19B; Q4 backlog $1.4B and Oibda $163M; projecting adjusted OIBDA growth in the low to mid-teens over the next few years, with similar or greater growth in adjusted EPS and free cash flow
·      Marvell (MRVL) Q1 EPS 24c/$579M vs. est. 21c/$570.69M; sees Q2 EPS 26c-30c on revs $585M-$615M vs. est. 25c/$591.67M
·      Brocade (BRCD) Q2 EPS 10c/$553M vs. est. 20c/$582.22M; said due to pending acquisition by AVGO, Brocade will not provide Q3 guidance 
·      DXC Technology (DXC) Q4 EPS $1.15/$1.89B vs. est. 83c/$1.94B; reported results on behalf of Computer Sciences for Q4
·      8×8 reports (EGHT) Q4 EPS 5c/$66.5M vs. est. 3c/$65.55M; sees FY18 revenue $296M-$300M vs. est. $294.38M

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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