Morning Preview: October 23, 2017

Regal HelpdeskDaily Market Report

Early Look
Monday, October 23, 17
 U.S. stock futures inch higher, setting Wall Street on track for a round of fresh records ahead of a busy week of corporate earnings. Wall Street closed at record highs last Friday, with its weekly gains powered by a rally in financials and healthcare stocks and buoyed by optimism on President Donald Trump’s tax reform plans after the Senate passed a budget blueprint for the next fiscal year. It is a quiet day of economic data with only one small data point expected along with no Federal Reserve speakers on deck this week as the central bank has entered its “blackout” period ahead of its Oct. 31-Nov. 1 policy setting meeting. Asia active as the Nikkei 225 equity index closed higher for the fifteenth straight day on Monday, marking its longest winning streak on record. Note Friday marked the 24th time in 2017 that all three main benchmarks simultaneously closed at records. For the week, the Dow and the S&P 500 logged their sixth straight weekly gain, while the Nasdaq finished higher for a fourth week in a row. The Dow Jones Industrial Average posted a weekly gain of 2%, the S&P 500 rising 0.9% for the week and the Nasdaq Composite added 0.4% on the week.
 
In Asian markets, The Nikkei Index rose 239 points to settle at 21,696, the Shanghai Index inched higher 2 points to 3,380 and the Hang Seng Index fell -181 points to settle at 28,305. In Europe, the German DAX is up over 60 points at 13,050, while the FTSE 100 rose about 10 points at 7,530. The dollar edged up to a three-month high against the yen on Monday, with an emphatic election victory for Japan’s ruling party. Abe’s win raises the prospect for continued accommodative monetary policy, which tends to weaken the yen and boost stocks in the country.
Market Closing Prices Yesterday
·      The S&P 500 Index jumped 13.11 points, or 0.51%, to 2,575.21
·      The Dow Jones Industrial Average rose 165.59 points, or 0.71%, to 23,328.63
·      The Nasdaq Composite climbed 23.99 points, or 0.36%, to 6,629.05
·      The Russell 2000 Index advanced 7.20 points, or 0.48% to 1,509.25
 
Events Calendar for Today
·      8:30 AM EST               Chicago Fed Nat Activity Index for September
 
Earnings Calendar:
·      Earnings Before the Open: HAL, HAS, ITW, KMB, LII, STT, STX, VFC
·      Earnings After the Close: ARNC, CR, JBT, OI, WHR, ZION
Sector News Breakdown
Consumer
·      Tesla (TSLA) has reached an agreement with Shanghai government to set up a manufacturing facility in the city, according to The Wall Street Journal. The arrangement could enable the electric carmaker to slash production costs, but without a local partner likely will not negate China’s 25% import tax
·      Hasbro (HAS) Q3 EPS $2.09/$1.79B vs. est. $1.94/$1.77B
·      Target (TGT) unveiled its plans for the holidays, including new brands, thousands of exclusive gifts under $15, easy and convenient ways to shop and save, and festive in-store experiences
·      Caesars Entertainment (CZR) mentioned positively in Barron’s saying shares may surge 50% in the next 18 months after its main operating unit emerged from bankruptcy
·      Coach (COH) with a positive mention in Barron’s saying shares could rise more than 25% amid chance to grow newly acquired Kate Spade brand, citing Bernstein analyst; said recent acquisitions and brand-loyalty initiatives should help the company maintain its market share
·      Deutsche Lufthansa (DLKAY) favorable mention in Barron’s saying shares can rally 20% to 30 euros ($35) after having bought a chunk of recently bankrupt low-cost rival Air Berlin; notes the deal eliminates the threat of another rival taking Air Berlin’s place, and cements Lufthansa as the go-to carrier in its home market
 
Energy
·      Noble Group agreed to sell its Americas-focused oil liquids business to Vitol for about $580 million, as part of its strategy to shrink its businesses to cut debt. https://goo.gl/kLqVfD
·      Helix Energy (HLX) Q3 EPS 2c/$163.3M vs. est. 2c/$169.6M; now sees FY17 revenue about $570M-$590M vs. prior $590M view and sees FY17 EBITDA about $105M-$115M vs. previous $105M-$125M view
·      Sanchez Energy (SN) sees 4Q production to be near the lower end of 80,000 to 84,000 Boe/d range citing completion delays in Sept. and Oct. as a result of storm activity
 
Financials
·      Morgan Stanley’s (MS) favorable mention in Barron’s saying the strategic response to the financial crisis proves more resilient than others and could add another 20% in gains; notes Wall Street seems to have warmed to Caesars story this year in a strong market for casino operators
·      Social Finance Inc discussed a potential sale earlier this year, including with financial services company Charles Schwab Corp., but the talks fell apart over the $8 billion price the online lender sought, the Financial Times reported on Sunday https://goo.gl/GJoQkN
 
Healthcare
·      Republican Senate Leader Mitch McConnell has said he was willing to bring a healthcare bill up to vote, but was waiting to see what President Donald Trump wants to do, after he sent mixed signals regarding the bipartisan effort – Reuters
·      DBV Technologies (DBVT) shares fell more than 60% late Friday after the primary endpoint in Pepites Phase III trial was not reached (shares of rival AIMT advanced on the news)
·      Antares Pharma (ATRS) announced that it has received a complete response letter, or CRL from the FDA regarding the new drug application, or NDA, for Xyosted injection. The CRL indicates that the FDA cannot approve the NDA in its present form
 
Industrials & Materials
·      Potlatch (PCH) is close to an all-stock deal to combine with Deltic Timber (DEL), The Wall Street Journal reports, citing people familiar with the matter. According to the people, Deltic shareholders will receive 1.8 common shares of Potlach for each share of Deltic that they own, a roughly 7% premium for Deltic investors https://goo.gl/b36oUm
·      Linde lowered minimum acceptance ratio for exchange offer to 60% from 75% to buy all ordinary bearer shares without par value of Linde AG in Praxair deal
·      DowDuPont (DWDP) with a positive mention in Barron’s saying shares could return between 15%- 30% over the next year as the company moves toward splitting into three separate entities, which will boost cash flow, according to JP Morgan analyst
·      Gold miners Newmont Mining (NEM) and Gold Fields (GFI) along with others could rise 25%-50% even if gold doesn’t gain because they have underperformed the metal’s price, Barron’s said
 
Technology, Media & Telecom
·      Cisco Systems Inc. (CSCO) is nearing a deal to acquire telecommunications-focused software company Broadsoft Inc. (BSFT),according to Bloomberg in a deal could be announced as early as Monday. Bloomberg did not report a projected price taghttps://goo.gl/jr5LNR
·      Twenty-First Century Fox (FOXA) said it was aware of complaints against former Fox News host Bill O’Reilly before renewing his contract in February, but says in statement it wasn’t privy to amount of January settlement, NYT reports.
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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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