Morning Preview: June 1st, 2017

eOptionDaily Market Report

Stock futures are little changed, on pace to open slightly higher after big gains in Asia and Europe overnight. We are seeing a little reversal of the prior day trades, as the dollar rebounds, oil bounces slightly and defensive gold and bond are down slightly. Markets managed a comeback in the final 30-minutes of trading yesterday to end only slightly lower, but slipped enough to bring the Dow a three-day losing streak after trading near record highs late last week, as investors debated the likelihood of an interest rate increase next month by the Federal Reserve. Losses in financial and energy stocks weighed on the S&P 500 and Dow, while the tech heavy NASDSQ recouped most of its earlier losses. Bank executives at Goldman Sachs, and JP Morgan signaled that second-quarter trading was slumping at a conference yesterday, suggesting weakened revenues, which rattle bank shares. Still on the horizon, political uncertainty as reports indicated former FBI head James Comey will testify next week. ADP’s May figures for private-sector employment are slated to hit at 8:15 AM, and jobless claims at 8:30 AM., which precedes the monthly nonfarm payrolls data report tomorrow morning. Reports on U.S. auto sales last month are also due out throughout the day.
 
In Asian markets, The Nikkei Index rose 209 points to close at 19.860, the Shanghai Index fell -14 points to close at 3,102, and the Hang Seng Index rose 148 points to close at 25,809. In Europe, the German DAX is up around 40 points at 12,650, while the FTSE 100 is higher by over 25 points near 7,550. European stocks on track to break 5-day losing run with oil, U.K. election in focus.
Market Closing Prices Yesterday
·      The S&P 500 Index slipped -1.11 points, or 0.05%, to 2,411.80
·      The Dow Jones Industrial Average fell -20.82 points, or 0.10%, to 21,008.65
·      The Nasdaq Composite dropped -4.67 points, or 0.08%, to 6,198.52
·      The Russell 2000 Index declined -0.99 points, or 0.07% to 1,370.21
 
Events Calendar for Today
·      7:30 AM ET          Challenger Job Cuts YoY for May
·      8:15 AM ET          ADP Employment Change for May…est. 180K
·      8:30 AM ET          Nonfarm Productivity for Q1-F…est. (-0.6%)
·      8:30 AM ET          Unit Labor Costs for Q1-F…est. 3.0%
·      8:30 AM ET          Weekly Jobless Claims…est. 238K
·      8:30 AM ET          Continuing Claims…est. 1.92M
·      9:45 AM ET          Bloomberg Consumer Comfort Index…prior 50.9
·      9:45 AM ET          Markit US Manufacturing PMI, May-F…est. 52.5
·      10:00 AM ET       ISM Manufacturing for May…est. 54.6
·      10:00 AM ET       Construction Spending…est. 0.5%
·      10:30 AM ET       Weekly EIA Natural Gas Inventory Data
·      11:00 AM ET       Deportment of Energy weekly inventory data
 
Earnings Calendar:
·      Earnings Before the Open: CIEN, DCI, DG, EXPR, GHM, TECD
·      Earnings After the Close: AGYS, AVGO, BOOT, COO, FICE, GWRE, LULU, VMW, WDAY, YEXT, ZUMZ
 
Other Key Events:
·      Monthly auto sales data released for May
·      KeyBanc Industrial, Auto, Transport Conference, 5/30-6/1, in Boston, MA
·      Bernstein 33rd Annual Strategic Decisions Conference, 5/31-6/2, in NY
·      Cowen and Company 46th Annual Technology, Media & Telecom Conference, 5/31-6/1, in NY
·      Keefe Bruyette Finance and Asset Management Conference,6/1 in NY
   
World News
·      China’s manufacturing activity unexpectedly contracted in May for the first time in 11 months and companies shed more jobs as demand weakened as the Caixin/Markit Manufacturing Purchasing Managers’ index (PMI) fell to 49.6 – less than economists’ forecast of 50.1 and April’s 50.3, extending a streak of declines to three months since a reading of 51.7 in February.
·      Japanese manufacturing activity grew at its fastest pace in three months in May as the final Markit/Nikkei Japan Manufacturing Purchasing Managers Index (PMI) rose to 53.1 in May on a seasonally adjusted basis, stronger than a preliminary reading of 52.0 and a final 52.7 in April.
·      Brazil’s central bank continued its cycle of rate cuts Wednesday as a political crisis threatens to cripple a budding economic recovery. The bank cut its benchmark Selic rate to 10.25% from 11.25%, continuing a reduction in borrowing costs
·      U.K. manufacturing PMI slips to 56.7 in May from 57.3 in April
 
Sector News Breakdown
Consumer
·      Pinnacle Foods Inc. (PF) shares jumped 8% following a Reuters report that Conagra Brands Inc. (CAG) had approached the company about a potential acquisition. https://goo.gl/9ANlcH
·      Ollie’s Bargain Outlet (OLLI) Q1 EPS 25c/$227.6M vs. est. 23c/$220.91M; Q1 comp sales 1.7% vs. est. 0.5%; sees FY EPS $1.14-$1.17 vs. est. $1.14 and sees FY comparable sales +1.0% to +2.0%
·      GMS Inc. (GMS) files to sell 5M shares of common stock
·      Regis (RGS) announced that it is considering strategic alternatives for its mall-based salons
 
Energy
·      The American Petroleum Institute (API) reported a drop of -8.7M barrels in U.S. crude supplies for the week ended May 26; also showed a fall of -1.7M barrels in gasoline supplies, while inventories of distillates were up 124,000 barrels
·      Marathon Petroleum (MPC) announces incremental $3B share repurchase authorization
·      Transocean Ltd. (RIG) announced today that it has completed the previously disclosed transaction to sell its jack up fleet to Borr Drilling Limited for $1.35B; the company received cash of approximately $320 million associated with the sale
 
Financials
·      Visa (V) block of 2.2M shares to be offered at $95.18, per Bloomberg
·      Sussex Bancorp (SBBX) files $75M mixed securities shelf
 
Healthcare
·      Tesaro (TSRO) has asked for initial offers in recent weeks, though interest has been “lukewarm,” WSJ said, citing people familiar; possible there will be no deal in “foreseeable” futurehttps://goo.gl/6mK8k1
·      Jazz Pharma (JAZZ) said the FDA has accepted its recently submitted NDA with priority review status for Vyxeos for the treatment of acute myeloid leukemia (AML).
·      NanoString (NSTG) files to sell 2.75M shares of common stock
 
Industrials & Materials
·      Paint giant PPG Industries Inc. (PPG) dropped its $27.6 billion takeover pursuit of Akzo Nobel NV (AKZOY) Thursday, saying it made the decision after the company’s last ditch effort late last week failed to bring management of its Dutch rival to the bargaining table https://goo.gl/72QF6C
·      Air Transport Services (ATSG) stockholder to sell 3.8M shares in secondary offering
 
Technology, Media & Telecom
·      Palo Alto Networks (PANW) Q3 EPS 61c/$431.8M vs. est. 55c/$411.92M; said added the second highest number of new customers in the company’s history; sees 4Q adjusted EPS 78c-80c on revs $481M-$491M vs. est. 74c/$484.97M
·      Box (BOX) shares up 6%; Q1 EPS loss (13c)/$117.2M vs. est. loss (14c)/$114.74M; Q1 billings up 31% to $100M; Q1 deferred revenue up 30% to $224.3M; said are well positioned to achieve our $1B revenue target; revises FY18 adjusted EPS to (48c)-(44c) from (49c)-(45c) and revs to $502M-$506M from $500M-$504M (est. $502.85M)
·      Cable giant Charter (CHTR) rejected a $100 billion buyout bid from Verizon (VZ), sources say; the offer — valued at between $350 and $400 a share was rejected https://goo.gl/qxd0oP
·      SoftBank Group Corp will let the $14 billion merger between its satellite startup OneWeb and peer Intelsat SA fall through, after failing to get enough of Intelsat creditors to back it, people familiar with the matter said – Reuters https://goo.gl/EMo5ym
·      Semtech (SMTC) Q1 EPS 44c/$143.8M vs. est. 41c/$146.17M; sees 2Q EPS 43c-49c on revs $147.0M-$157.0M vs. est. 44c/$152.5M
·      HP Enterprise (HPE) Q2 EPS 35c/$9.9BB vs. est. 35c/$9.64B (2Q Combined net revenue of $9.9B includes $7.4B from cont ops); sees Q3 EPS 24c-28c
·      Descartes Systems (DSGX) Q1 EPS 9c/$54.51M vs. est. 25c/$54.45M; Q1 adjusted Ebitda $19.0M

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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