Morning Preview: September 20, 2017

Regal HelpdeskDaily Market Report

Early Look
Wednesday, September 20, 17
Stock futures are in a holding pattern, with averages little changed throughout (3-point range for S&P futures overnight) as markets await the FOMC meeting policy results at 2:00 PM EST later this afternoon. The results will be followed by a press conference with Chairwoman Janet Yellen at 2:30 PM EST. Expectations are for the Federal Reserve to announce a start date for reducing its $4.5 trillion portfolio of government securities, but keep rates unchanged for the time being. Heading into this meeting the dollar index touched more than 2-year lows just two-weeks ago, bond yields have steadily fallen since the end of last year, and U.S. stock indexes continue to notch all-time highs. We will see if the comments from the meeting increases volatility in what has been stagnant trading this week. Oil prices are gaining early, as are metal prices with a slight gain in bonds and a mixed dollar. In corporate news, shares of ADBE, BBBY and FDX all slipped overnight after mixed earnings results. In Asian markets, The Nikkei Index rose 11 points to 20,310, the Shanghai Index gained 9 points to 3,366 and the Hang Seng Index rose 76 points to close at 28,127. In Europe, the German DAX is down a few points at 12,555, while the FTSE 100 is higher by a few points around 7,275.
Stocks ended slightly higher, though all three main U.S. stock indexes posted fresh all-time highs on Tuesday, as the Federal Reserve began its two-day policy meeting where they are expected to finalize the details on the unwinding of its $4.5 trillion balance sheet. The S&P 500 index inched higher, rising 0.1% to 2,506,63 while Bloomberg noted its intraday swing has averaged 0.27% in the past six days, the smallest since at least 1982. Meanwhile, the Dow Industrials added 0.2% for 8th straight day of gains and its 5th straight record closing higher. Small-cap stocks trailed with the Russell 2000 down -0.1%.
Market Closing Prices Yesterday
·      The S&P 500 Index gained 2.78 points, or 0.11%, to 2,506.65
·      The Dow Jones Industrial Average rose 39.45 points, or 0.18%, to 22,370.80
·      The Nasdaq Composite climbed 6.68 points, or 0.10%, to 6,461.32
·      The Russell 2000 Index slipped -0.68 points, or 0.05% to 1,440.40
Events Calendar for Today
·      7:00 AM EST       MBA Mortgage Applications Data
·      10:00 AM EST     Existing Home Sales for August
·      10:30 AM EST     Weekly DOE Inventory Data
·      2:00 PM EST        FOMC Rate Decision (no change in rates expected)
World News
·      Next week’s tax reform blueprint from top Congressional and White House leaders is likely to move away from the idea of allowing the immediate deduction of new capital investment, in favor of a limited period of accelerated capital investment deductions, Politico reported, citing people familiar with the matter. The report also said that the statement will scrap the idea of a 15% corporate tax rate
·      A major earthquake of magnitude 7.1 struck central Mexico on Tuesday, killing at least 240 people in several states and toppling buildings in the heavily populated capital
·      Japan’s exports rose 18.1% in August from a year earlier, Ministry of Finance data showed vs. the 14.7% increase expected by economists and followed a 13.4% rise in July. The results for August marked the ninth consecutive month that exports have risen.
·      Japan imports rose 15.2% in the year to August, vs. median estimate of an 11.8% increase
·      Investor Intelligence poll show newsletter writers classified as bulls rise to one-month high of 50.5% from last week’s 47.1%, which was lowest since the week of the presidential election. Bears slip to 19.0%, a 4-week low, versus 20.2% last week, which was the highest since Nov. 30 and those expecting a correction tumbles to 6-week low 30.5% from last week’s 32.7%
Sector News Breakdown
·      Bed Bath & Beyond (BBBY) shares fell -12%; Q2 EPS 67c with charges/$2.9B in sales vs. est. 95c/$3.01B; 2Q comparable sales +2.6% vs. estimate (-0.6%); says undertaking transformational initiatives; said comp sales from customer-facing digital channels continued to have strong growth in excess of 20% for the 13th consecutive quarter; sees over $150M in savings from transformational initiatives
·      Diageo PLC (DEO) said it expects 1H organic sales growth to be hit by the later timing of the Chinese New Year and the expected impact of a ban on selling alcohol along highways in India
·      Copart (CPRT) Q4 EPS 30c/$378.6M vs. est. 29c/$357.17M
·      The American Petroleum Institute (API) reported that U.S. crude supplies climbed by 1.4 million barrels for the week ended Sept. 15; also showed that gasoline stockpiles dropped 5.1 million barrels, and inventories of distillates fell by 6.1 million barrels
·      A.P. Moeller-Maersk A/S said it would sell it tankers unit to its controlling shareholder for $1.17 billion, the latest move by the Danish conglomerate to break up its sprawling operations.
·      Sabra (SBRA) has entered into definitive agreements to acquire a 49% equity interest in entities that collectively own 183 senior housing communities managed by Enlivant
·      Equity LifeStyle Properties (ELS) says it’s still in the process of estimating cleanup costs from Hurricane Irma in Florida, but doesn’t costs significantly hurting its results; reaffirms forecast
·      Gemphire Therapeutics (GEMP) shares gained 22%; announced plans to advance its product candidate gemcabene into Phase 3 development in 2018. Gemcabene successfully achieved the primary endpoint in two recently completed Phase 2b studies, COBALT-1 and ROYAL-1, and the Company is now preparing for end of Phase 2 meetings
·      Analogic (ALOG) Q4 EPS 0c/$111.6M vs. est. 49c/$115.5M; sees FY adjusted EPS $2.70-$2.90 on revs $445M-$460M vs. est. $2.80/$473M; sees FY adjusted operating margin 10% to 11%
·      Krystal Biotech Inc. (KRYS) boosted the number of shares available for its IPO to 3.96 million shares at $10 a share to raise up to $39.6 million
·      Acceleron Pharma (XLRN) to sell $150M in shares
·      Celcuity (CELC) 2.4M share IPO priced at $9.50
Industrials & Materials
·      Fed-Ex (FDX) Q1 EPS $2.51/$15.3B, below est. $3.00/$15.35B; cuts year EPS forecast to $12.00-$12.80, below prior view $13.20-$14.00 on TNT Cyber-attack (est. $13.10); 1Q adjusted operating margin 8.1% and 1Q Ground segment operating margin 13.5%; reaffirms 2020 target for operating income at FedEx Express; capital spending forecast for FY18 remains $5.9B
·      Best Inc. (BSTI) 45M share IPO priced at $10.00
·      Steel Dynamics (STLD) sees Q3 adjusted EPS 63c-67c vs. est. 71c as profitability from steel operations is expected to be similar to sequential second quarter results, based on somewhat higher shipments being offset by metal spread compression
·      AAR (AIR) Q1 EPS 31c/$439.2M vs. est. 31c/$412.0M
·      Thyssenkrupp AG and Tata Steel Ltd. said they have agreed to combine their European steel activities in a move that would create the region’s second-largest steel producer
Technology, Media & Telecom
·      Adobe (ADBE) Q3 EPS $1.10/$1.84B vs. est. $1.01/$1.82B; 3Q digital media revenue $1.27B, Q3 creative revenue $1.06B, Q3 digital media annualized recurring revenue $4.87B and Q3 experience cloud revenue $508M; sees Q4 EPS about $1.15/$1.95B vs. est. $1.10/$1.95B
·      Toshiba has selected a Bain Capital-led group, which includes SK HynixApple (AAPL), Dell, Kingston Technology and Seagate (STX), to purchase its semiconductor unit for $22B, Reuters reports
·      Microsoft Corp. (MSFT) boosted its quarterly dividend by 7.6% to 42c and added Pepsi (PEP) CFO to its board of directors
· (DESP) 12.7M share IPO priced at $26.00
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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