Morning Preview: October 12, 2017

Regal HelpdeskDaily Market Report

Early Look
Thursday, October 12, 17
Stock futures are slipping early ahead of bank earnings results and a couple of key economic data points (jobless claims and PPI). U.S. stocks closed at all-time highs again on Wednesday, with the S&P 500, Nasdaq Composite and Dow Industrials all finishing at their best levels of the day. Stocks got a little pop late after minutes from the Federal Reserve’s meeting in September indicated a desire to increase rates one additional time despite stubbornly low inflation. Some Fed policy members expressed concerns about inflation running below its annual 2% target, while others worried that waiting for inflation to normalize policy could lead to an overheated market. With the Fed minutes behind us, attention now turns to earnings, with several big banks expected to report today and tomorrow (JPM, C, WFC, BAC, PNC). The Dow has gained nearly 16% for the year, the S&P is up 14%, and the Nasdaq has risen 23%. There were also several companies issuing profit warnings overnight, with come citing the impact of the hurricanes, including AT&T, JNPR, ETH, SAH and JILL.
 
Oil prices fell Thursday following a report (API) showing an increase in U.S. crude stockpiles last week — another sign that the market’s recovery will be slower than expected. Also Thursday, the International Energy Agency said global oil supply rose in September, while demand growth slowed. In crypto currencies, Bitcoin topped the $5,000 level for the first time ever, trading above $5,100 currently, meanwhile the dollar is trading mixed vs. the yen and euro, while the Pound rises.
 
In Asian markets, The Nikkei Index rose 73 points to end at 20,954 (fresh 21-year highs), the Shanghai Index slipped -2 points to end at 3,386 and the Hang Seng Index gained 69 points to settle at 28,459. In Europe, the German DAX is slightly higher around 12,970, while the FTSE 100 is up a few points at 7,540. In cryptocurrencies, Bitcoin topped the $5,000 level for the first time ever, trading above $5,100 currently.
Market Closing Prices Yesterday
·      The S&P 500 Index gained 4.60 points, or 0.18%, to 2,555.24
·      The Dow Jones Industrial Average rose 42.21 points, or 0.18%, to 22,872.89
·      The Nasdaq Composite climbed 16.30 points, or 0.25%, to 6,603.55
·      The Russell 2000 Index slipped -1.08 points, or 0.07% to 1,506.92
 
Events Calendar for Today
·      8:30 AM EST       Weekly Jobless Claims…est. 250K
·      8:30 AM EST       Continuing Claims…est. 1.93M
·      8:30 AM EST       Producer Price Index (PPI) MoM for Sept…est. 0.4%
·      8:30 AM EST       PPI Ex: Food & Energy MoM for Sept…est. 0.2%
·      9:45 AM EST       Bloomberg Consumer Comfort Index…prior 49.9
·      10:30 AM EST     Weekly EIA Natural Gas Inventory Data
World News
·      UK Industrial output increased by 1.4% in August from July, and was up 3.8% from a year earlier, the European Union’s statistics agency said and was much stronger than expected 0.5% rise
 
Sector News Breakdown
Consumer
·      Sonic Automotive (SAH) guides Q3 EPS 39c-42c, below consensus of 52c citing the effect of hurricanes
·      J. Jill (JILL) falls over 20% as cuts Q3 adjusted EPS view to 8c-10c from 18c-20c and cuts Q3 comp sales view to (5%)-(3%) from up in the high single digits
·      Ethan Allen (ETH) sees Q1 EPS 27c-28c on sales $181.3M below estimates 45c/$198.4M
·      Foundation Building Materials (FBM) sees Q3 net sales $530M-$540M vs. est. $561.09M saying the unprecedented occurrence of two back-to-back major hurricanes affected the company’s branch operations in some states; sees FY17 revenue $2.03B-$2.07B vs. est. $2.09B
·      Kandi Technologies (KNDI) files $300M mixed securities shelf
·      CarGurus (CARG) 9.4M share IPO priced at $16.00
 
Energy
·      The American Petroleum Institute (API) reported U.S. crude supplies rose by 3.1M barrels for the week ended Oct. 6, while gasoline stockpiles declined by -1.6M barrels, but inventories of distillates rose by 2M barrels
·      In its closely watched monthly report, the IEA said global oil supply had risen by 90,000 barrels a day last month from August, to 97.5 million barrels a day. That level was 620,000 barrels a day higher than during the same period a year prior.
·      Antero Midstream Partners GP (AM) raises quarterly distribution 28% to 34c per unit
·      Tullow Oil PLC said that it has acquired a 90% stake in four onshore blocks in Ivory Coast, with the remaining 10% held by the country’s oil-and-gas company, Petroci.
 
Financials
·      Bank earnings later this morning from Citigroup (C) and JP Morgan (JPM)
·      Blackhawk (HAWK) Q3 EPS 18c/$419.3M vs. est. 11c/$434.6M; sees FY adjusted EPS $1.56-$1.70 vs. estimate $1.68
·      XL Group (XL) announced its preliminary estimate of net losses of approximately $1.33B relating to Hurricanes Harvey, Irma and Maria. For the third quarter of 2017, total catastrophe losses including smaller loss events are preliminarily estimated at approximately $1.48B
·      Waddell & Reed (WDR) reports preliminary September AUM $80.9B compared to $80.3B on August 31, 2017
·      Saratoga Investment (SAR) Q2 adjusted NII 62c vs. est. 51c; as of August 31, 2017, increased its assets under management to $333.0M
·      NMI Holdings (NMIH) will replace SciClone Pharmaceuticals (SCLN) effective prior to the open of trading on Monday, October 16
 
Healthcare
·      Ardelyx (ARDX) jumps over 60%; said second phase III study of tenapanor for irritable bowel syndrome with constipation meets statistical significance for primary endpoint and all secondary endpoints; on track to submit NDA to FDA for tenapanor for treatment of IBS-C in 1H 2018
·      Flexion (FLXN) 4.8M share Secondary priced at $25.50
·      OrthoPediatrics (KIDS) 4M share IPO priced at $13.00
·      Restoration Robotics (HAIR) 3.575 share IPO priced at $7.00
·      NanoString (NSTG) reports Q3 preliminary revenue $25.9M-$26.9M vs. est. $27.68M
·      Trevena (TRVN) announced an update to its strategy to focus its resources on the potential approval and commercialization of OLINVO in the United States. With this strategic re-positioning, the company is halting its investment in early stage research; cutting 30% of workforce
 
Technology, Media & Telecom
·      Juniper Networks (JNPR) cuts Q3 adjusted EPS view to 54c-56c from 55c-61c (est. 58c) and cuts Q3 revenue view to $1.25B-$1.26B from $1.29B-$1.35B (est. $1.33B) saying guidance change primarily due to lower than expected revenue in cloud vertical (watch shares of CSCO, FFIV, NTGR)
·      AT&T Inc. (T) warned that Q3 of lower revenue and profit after several “devastating hurricanes, as well as earthquakes in Mexico, significantly impacted certain regions of our service area during the third quarter; said the damage will decrease Q3 revenue nearly $90M and pre-tax earnings about $210M or 2c per share
·      Fox (FOXA) said it expects to lose $20M in ad sales due to the U.S. men’s soccer team not making the World Cup
·      Sigma Designs (SIGM) announced restructuring activities intended to refocus its operating expenses and accelerate the return to profitability
·      Axcelis Technologies (ACLS) will replace Landauer (LDR) effective prior to the open of trading on Thursday, October 19
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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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