Morning Preview: January 2, 2018

Scott GreenDaily Market Report

Early Look
Tuesday, January 2, 18
  
U.S. futures are trading higher, rebounding after Friday’s late day pullback, as stocks look to start the year on a strong note after posting solid gains in 2017. The indexes scored strong returns for the year, with the S&P 500 ending 2017 19.4% higher, the Dow average rising 25.1% and the Nasdaq Composite climbing 28.2%, with all three benchmarks posting their best year since 2013. There are few catalysts to steer the stock markets with extended weakness in the U.S. dollar highlighting the early action. The dollar is on track for its 5th straight decline, trading to its lowest levels since September after posting a 10% decline in 2017. Outside the U.S., Iran was in focus after nine people were reported dead after overnight clashes between protesters and security forces. In North Korea, leader Kim Jong Un said in a speech on Monday that Pyongyang had completed its nuclear weapons program, which could reach any point in the continental U.S. Kim, however, also suggested he is willing to engage in talks with South Korea. In Asian markets, The Nikkei Index was closed the Shanghai Index gained 41 points to settle at 3,348 and the Hang Seng Index surged 596 points to settle at 30,515. In Europe, the German DAX is down roughly -100 points at 12,820, while the FTSE 100 is lower by over -30 points at 7,650.
 
Market Closing Prices Yesterday
·      The S&P 500 Index slumped -13.93 12.58 points, or 0.52%, to 2,673.61
·      The Dow Jones Industrial Average fell -118.29 points, or 0.48%, to 24,719.22
·      The Nasdaq Composite dropped -46.77 points, or 0.67%, to 6,903.39
·      The Russell 2000 Index declined -13.41 points, or 0.87% to 1,535.51
 
Events Calendar for Today
·      7:45 AM EST       ICSC Weekly Retail Sales
·      8:55 AM EST       Johnson/Redbook Weekly Sales
·      9:45 AM EST       Markit US Manufacturing PMI, Dec-F…est. 55.0
   
World News
·      Growth in China’s manufacturing sector unexpectedly picked up to a four-month high in December as the Caixin/Markit Manufacturing Purchasing Manager’s Index (PMI) rose to 51.5 last month, from 50.8 in November, and far outpacing economists’ expectations for a slight dip to 50.6.
·      IHS Markit Ltd. said its UK purchasing managers index for the manufacturing industry fell to 56.3 in December, down from 58.2 a month earlier. The December figure was below the expectations of a forecast a reading of 57.9.
 
Sector News Breakdown
Consumer
·      Retailers mentioned cautiously in Barron’s saying investors should assume that the recent burst of sunshine will give way to more rainy days for retail.Macy’s (M) may look inexpensive but its EPS are expected to tumble in each of the next two years, J.C. Penney (JCP) is in a long-term fight for its existence,Sears Holdings (SHLD) makes JCP look like Amazon (AMZN), and Abercrombie & Fitch (ANF) sells a deflationary good at a dying venue against a fashion headwind. Article was positive on that Wal-Mart’s (WMT), Home Depot (HD), TJX (TJX) & Five Below (FIVE)
·      Wynn Macau Ltd. leads losses among Macau casinos after gaming revenue rose 14.6% in December to 22.7 billion patacas, missing the median estimate of 20% increase in a Bloomberg survey
·      Sears Holdings (SHLD) has not run paid national television commercials since late November, according to The Wall Street Journal, citing ad research firm iSpot
·      Marks & Spencer Group PLC (MKS.LN) said it has sold its retail business in Hong Kong and Macau to its long-established franchise partner Al-Futtaim Group ALFUTG for an undisclosed sum.
 
Energy
·      Chevron (CVX) mentioned positively in Barron’s saying shares are positioned to benefit in 2018 noting it would spend about $18B next year while it starts to reap the benefits from the big projects that had been consuming cash since 2011
·      BP PLC (BP) has become the latest large company to warn that it will experience a one-time hit to its fourth quarter earnings due to the new US tax regime that was signed into law last month
 
Healthcare
·      GlaxoSmithKline’s (GSK) earnings estimates have been sliding and shares have tumbled since the summer, but now looks like a good time to buy the stock said Barron’s
·      Cascadian Therapeutics (CASC) files $250M mixed securities shelf
·      CymaBay (CBAY) files $200M mixed securities shelf
·      Kadmon (KDMN) files $150M mixed securities shelf
·      Novavax (NVAX) files $200M mixed securities shelf
·      A 2.3% tax on the sale of medical devices went back into effect today after a two-year suspension, despite opposition by U.S. lawmakers and the medical manufacturing industry. The excise tax on catheters, pacemakers and other healthcare products was among several fees and taxes imposed in January 2013 to help fund the Affordable Care Act, also known as Obamacare
 
Industrials & Materials
·      China’s national railway operator said on Tuesday that the country plans to invest 732 billion yuan ($113 billion) in rail fixed assets in 2018, its lowest target since 2013
·      Glencore PLC (GLNCY) has agreed to sell an underground coal mine in eastern Australia to GFG Alliance
 
Technology, Media & Telecom
·      Barron’s said none of the fast-growing giants, namely Facebook (FB), Amazon (AMZN), Netflix (NFLX) and Alphabet (GOOGL), pay a cash dividend, but that may change before long
·      Glass and optical fiber maker Corning (GLW) shares could rise 26% in the next two years to $41, according to Barron’s, citing the chief investment strategist at CapWealth Advisors; said that optical communications and Gorilla Glass used in mobile phones could generate as much as $3 billion in annual sales over the next few years
·      Dropbox Inc. is preparing for an IPO that could come in either March or April and is expected to value the company around or above its latest round of private financing – WSJ
·      “Star Wars: The Last Jedi” crossed the $1 billion mark (estimated $1.040b as of Dec. 31), Disney (DIS) said

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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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