Morning Preview: June 5th, 2017

eOptionDaily Market Report

Stock futures are down only a few points in the U.S., despite several Macro factors over the weekend. News was dominated by another terror attack in the UK over the weekend where three assailants in a van mowed down pedestrians, then went on a knife rampage in Borough Market. Seven people died and dozens were injured, 21 critically. Also in macro news, tension in the Mideast as Saudi Arabia, Egypt, Bahrain, and the United Arab Emirates all cut ties with Qatar on Monday (oil prices jumped overnight on the news but have since reversed lower). On the corporate level, the annual meeting of the American Society of Clinical Oncology, or ASCO, kicked off Friday and will continue through Tuesday, moving some names already such as AZN, LOXO, INCY, NLNK, PBYI and DVAX to name a few. There are also several potential market moving catalysts this week with testimony by former Federal Bureau of Investigation Director James Comey expected, as well as the U.K. general election and a European Central Bank meeting all later this week (all are expected on Thursday 6/8).
 
In Asian markets, The Nikkei Index slipped -6 points to close at 20,170, the Shanghai Index fell -13 points to settle at 3,091 and the Hang Seng Index fell -61 points to close at 25,862. In Europe, the German DAX was closed, while the FTSE 100 is down over -25 points at 7,520. Britain’s Conservative and Labor parties temporarily suspended campaigning for the nation’s general election on Thursday. Prime Minister Theresa May also called an emergency meeting on Sunday with senior officials following a terror attack on London Bridge Saturday night. News in the oil sector after a political rift in the Middle East escalated when Saudi Arabia and three other countries severed diplomatic ties with Qatar. Saudi Arabia, Egypt, Bahrain, and the United Arab Emirates all cut ties with Qatar on Monday, accusing it of meddling in their internal affairs and backing terrorism.
 
On Friday, the three major indexes closed at records for a second straight session, as investors brushed aside a weaker-than-expected May jobs report. The S&P 500 rose 1% for the week, the DJIA gained 0.6%, and the Nasdaq Composite Index surged 1.5%.
Market Closing Prices Yesterday
·      The S&P 500 Index gained 9.01 points, or 0.37%, to 2,439.07
·      The Dow Jones Industrial Average rose 62.11 points, or 0.29%, to 21,206.29
·      The Nasdaq Composite spiked 58.97 points, or 0.94%, to 6,305.80
·      The Russell 2000 Index advanced 9.33 points, or 0.67% to 1,405.39
 
Events Calendar for Today
·      8:30 AM ET          Nonfarm Productivity for Q1-F…est. (-0.2%)
·      8:30 AM ET          Unit Labor Costs for Q1…est. 2.4%
·      9:45 AM ET          Markit US Services PMI, May-F…prior 54.0
·      9:45 AM ET          Markit UC Composite PMO, May-F…prior 53.9
·      10:00 AM ET       ISM Non-Manufacturing Composite for May…est. 57.1
·      10:00 AM ET       Factory Orders for April…est. (-0.2%)
·      10:00 AM ET       Durable Goods Orders, Apr-F… (-0.5%)
 
   
World News
·      Terrorism struck Britain anew on Saturday night as three knife-wielding men led a deadly rampage through the capital, plowing a van into pedestrians on London Bridge and stabbing multiple people nearby, before being shot dead by police. Seven people were killed and at least 48 were hospitalized, some in critical condition, in what authorities quickly called terrorism—marking the third attack in the U.K. this year. No group claimed responsibility.
·      President Donald Trump’s administration is considering imposing sanctions against Venezuela’s energy sector, including on state oil company PDVSA, Reuters reports, citing White House officials it didn’t identify.
·      Russian President Vladimir Putin hardly spoke at all with former U.S. National Security Adviser Michael Flynn when they sat together at a Moscow dinner in 2015, NBC News quoted the Kremlin leader as saying on Sunday.
 
Sector News Breakdown
Consumer
·      Goodyear Tire (GT) mentioned positively in Barron’s saying it has an opportunity to transform into an asset-light tire supplier to autonomous car fleets. The potential rise of self-driving cars will increase mileage per car, likely increasing tire replacements
·      Herbalife (HLF) guides Q2 EPS 95c-$1.15 vs. consensus $1.11 and sees Q2 revenue down 6%-2%; said as a result of current sales trends during the transition in the U.S., combined with softer trends in Mexico, the company is updating its volume, net sales and EPS guidance for Q2 and the full year 2017. 
·      Gap Stores (GPS) upgraded to Outperform from Perform at Oppenheimer
 
Energy
·      Saudi Arabia, Egypt, Bahrain, and the United Arab Emirates all cut ties with Qatar on Monday, accusing it of meddling in their internal affairs and backing terrorism.
·      Saudi Arabia has raised its official selling prices (OSPs) for all its crude oil grades sold to Asia in July, in line with market expectations, after OPEC and non-OPEC producers agreed to extend supply cuts last month. State oil giant Saudi Aramco said it raised the July price for its Arab Light grade for Asian customers by 60c a barrel vs. June to a discount of25c to the Oman/Dubai avg.
·      JinkoSolar (JKS) Q1 ADS 36c vs. est. 41c; Q1 revenue 5.78b yuan
 
Healthcare
·      AstraZeneca Plc (AZN) showed that its drug Lynparza slowed progression of a breast cancer that typically strikes younger women. A study of 302 women, dubbed OlympiAD, found that those getting the drug were 42% less likely to see their cancer spread than those given conventional chemotherapy, according to results presented at the American Society of Clinical Oncology
·      NewLink Genetics (NLNK) said a combination of indoximod with chemotherapy failed to show a statistically significant difference in progression-free survival for patients with metastatic breast cancer; also, didn’t meet goals in overall survival or objective response rate
·      Insys (INSY) shares down -10%; Bloomberg reports that NBC News featured a segment June 4 on new show “Sunday Night with Megyn Kelly” on allegations about Insys Therapeutics Subsys fentanyl-based painkiller. Whistleblower claimed she was part of a scheme to get Subsys to patients who never should have had it
·      TG Therapeutics (TGTX) said phase 3 trial of TG-1101 in combination with Ibrutinib in patients with high risk chronic lymphocytic leukemia met primary endpoint
·      Incyte (INCY) and Merck (MRK) announced updated data from the advanced non-small cell lung cancer patient cohort of the ongoing Phase 1/2 ECHO-202 trial, evaluating epacadostat, Incyte’s selective IDO1 enzyme inhibitor, in combination with KEYTRUDA, Merck’s anti-PD-1 therapy
·      Dynavax Technologies Corp. (DVAX) announced the presentation of findings in patients with metastatic melanoma in the dose escalation phase of an ongoing Phase 1b/2 study investigating SD-101, in combination with KEYTRUDA(R) (pembrolizumab), an anti-PD-1 therapy developed by Merck, known as MSD outside the United States and Canada
·      Tesaro’s (TSRO) “Topacio” trial combining its PARP-inhibitor, Zejula with Merck’s (MRK) immunotherapy, Keytruda in patients with platinum-resistant ovarian cancer controlled disease control in 69%, or 9 of 13 patients.
·      Clovis Oncology (CLVS) plans to test its PARP-inhibitor, Rubraca, in combination with a PDL1 in triple-negative breast cancer and is hopeful that a deal will be announced before the end of this year, CEO Patrick J Mahaffy says in an interview at the American Society for Clinical Oncology.
·      Eli Lilly (LLY) is starting another Phase 3 study of its experimental therapy abemaciclib, this time as an adjuvant in high-risk early breast cancer, despite investor scrutiny over how its side-effect profile measures up to peers.
·      Loxo Oncology (LOXO) says 76% of patients with tumors harboring tropomyosin receptor kinase (TRK) fusions had a confirmed response to treatment with larotrectinib across multiple tumor types in data from three clinical studies
·      Express Scripts (ESRX) mentioned cautiously in Barron’s saying there’s “no quick cure” for the political, legal, and business risks mounting against pharmacy benefit manager. Drugmakers’ lobbying armies are engaged in blaming PBMs for high prices, and Express Scripts recently disclosed that it expects to eventually lose its contract with Anthem (ANTM), the report notes
 
Industrials & Materials
·      United Airlines Inc. (UAL) will suspend flights to Venezuela next month, a move that further cuts off access to the Latin American nation engulfed in violent political protests and economic chaos.
·      Bunge (BG) has retained JPMorgan and law firm Shearman & Sterling as it seeks to fend off takeover interest from Glencore (GLNCY), reports the Financial Times
 
Technology, Media & Telecom
·      Apple Inc. (AAPL) is holding its Worldwide Developers forum this week; is expected to announce plans next week to make its Siri voice assistant work with a larger variety of apps; some have also predicted Apple will announce hardware similar to Amazon’s Echo device for the home
·      Sohu.com (SOHU) raises Q2 EPS view to ($1.47)-($1.21) from ($2.05)-($1.80) and boosts Q2 revenue guidance to $420M-$450M from $390M-$420M (est. $420.15M)
·      Accenture (ACN) mentioned positively in Barron’s saying shares could gain 60% over three years, as the technology consultant has underperformed the market this year, but Barron’s says investors may be “misreading the changing nature of Accenture’s opportunities”
·      Artificial intelligence, though perhaps overhyped in terms of its ability to replace “genuine” thought and creativity, will provide opportunities for chipmakers and technology firms includingNvidia (NVDA), AMD (AMD), Intel (INTC), CEVA (CEVA), Cadence Design (CDNS) and Xilinx (XLNX), Barron’s reported
·      Tech Data (TECD) files automatic common stock shelf
·      Time Warner’s (TWX) “Wonder Woman” earned $100.5M in its U.S. debut over the June 4 weekend, matching expectations for at least $100M

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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