Thursday, January 11, 18
Stock futures are steadily higher, looking to rebound after posting the first losses of the New Year yesterday after reports China was considering halting the purchase of U.S. debt, which weighed on bonds and the dollar. However, each has rebounded after Chinese regulators blasted a report that Beijing will scale back its U.S. bond purchases as “fake news.” Note all three major averages closed lower yesterday, off all-time highs ahead of the unofficial kickoff to earnings this Friday with big banks JP Morgan and Wells Fargo reporting. In cryptocurrencies, the bitcoin spot price dropped nearly 10% to $13,448.12, after a report South Korea would ban trading off all digital currencies. In Asian markets, The Nikkei Index fell -77 points to 23,710, the Shanghai Index gained 3 points to settle at 3,425 and the Hang Seng Index rose 46 points to end at 31,120. In Europe, the German DAX is down around -10 points at 13,265, while the FTSE 100 is up a few points at 7,750.
U.S. stock-market indexes closed slightly lower on Wednesday markets grow cautious following a temporary jump in the yield on the 10-year Treasury note, moving above 2.59% (topping the 2.57% 2017 high) before paring gains to 2.55%, prompted by a report that China is considering halting purchases of U.S. debt. Investors dumped defensive/safe haven assets, or stocks such as utilities, real estate and telecoms, while financials outperformed, as one of the few bright spots. In the end, the S&P 500 and Nasdaq logged their first decline in 2018, snapping 6-day winning streaks. A media report that Canada is expecting President Donald Trump to shortly announce an end to the North American Free Trade Agreement also weighed on sentiment.
Market Closing Prices Yesterday
· The S&P 500 Index slipped -3.06 points, or 0.11%, to 2,748.23
· The Dow Jones Industrial Average fell -16.67 points, or 0.07%, to 25,369.13
· The Nasdaq Composite dropped -10.01 points, or 0.14%, to 7,153.57
· The Russell 2000 Index slumped -0.30 points, or 0.02% to 1,559.80
Events Calendar for Today
· 8:30 AM EST Weekly Jobless Claims…est. 245K
· 8:30 AM EST Continuing Claims…est. 1.92M
· 8:30 AM EST Producer Price Index MoM for December…est. 0.2%
· 8:30 AM EST PPI Ex: Food & Energy (core) MoM for Dec…est. 0.2%
· 8:30 AM EST PPI Ex: Food & Energy YoY for Dec…est. 2.5%
· 9:45 AM EST Bloomberg Consumer Comfort Index
· 10:30 AM EST Weekly EIA Natural Gas Inventory Data
· 2:00 PM EST Monthly Budget Statement for December…est. (-$26.0B)
· 3:30 PM EST Fed’s Dudley Speaks on the U.S. Economic Outlook
· Chinese authorities have cast doubt on talk that the country could reduce its buying of US Treasuries, taking pressure off US sovereign bonds and helping the dollar recover.
· Chinese Premier Li Keqiang said the economy performed better than forecast in 2017 and expects annual gross domestic product growth of around 6.9%
· Germany’s economy expanded by 2.2% last year — the highest rate since 2011.
· Bitcoin slid as much as 10% overnight after South Korea’s justice minister said the government was working on a bill to ban cryptocurrency trading amid a clampdown on virtual currencies
· South Korea’s leading cryptocurrency exchanges have been raided by local tax authorities as the government steps up its crackdown on the world’s third-largest digital currency market
Sector News Breakdown
· KB Home (KBH) Q4 EPS 84c/$1.4B vs., est. 77c/$1.35B; deliveries grew 9% to 3,340 homes; average selling price rose 8% to $416,500; Q4 net orders 2,296, up 2%; said ended 2017 with both our return on equity and net debt to capital ratio within the target ranges for 2019 that we established more than a year ago
· Brink’s (BCO) sees operating profit at low end of prior guidance $280M -$290M
· Goldman Sachs upgraded the utilities sector to a neutral view after the group underperformed the broader market over the past six months. Goldman noted utilities have lagged the S&P 500 by 17% since Goldman reduced its rating on the sector to cautious in June and now prefers diversified utilities over regulated, as many emerge as tax reform winners (the firm upgraded NI and OGE to buy while downgrading SO to sell and DUK to neutral)
· Stone Energy (SGY) says completion operations on the Mt. Providence well will commence in the second quarter of 2018 with first production expected early in the third quarter of 2018; said initial output 3K-5K Boed
· Invesco Ltd. (IVZ) preliminary month-end assets under management (AUM) of $937.6 billion, reflecting no change month over month; preliminary average total AUM for the quarter through December 31 were $930.3 billion
· AllianceBernstein L.P. (AB) preliminary assets under management increased 0.9% to $554 billion during December 2017 from $549 billion at the end of November
· Artisan Partners (APAM) assets under management, or AUM as of December 31, totaled $115.5B. Separate accounts accounted for $58.1B of total firm AUM, while Artisan Funds and Artisan Global Funds accounted for $57.4B
· Lipocine (LPCN) fails to win FDA Panel’s backing on Testosterone Drug as the FDA advisory committee voted 13-6 that the overall benefit/risk profile of Tlando isn’t acceptable to support approval as a testosterone replacement therapy
· Boston Scientific (BSX) announced that the FDA has approved the Spectra WaveWriter Spinal Cord Stimulator, or SCS, System
· Aradigm (ARDM) shares are higher after a 43% drop over the last two trading days. An FDA panel will convene today to discuss Aradigm’s application for an inhaled form of the antibiotic ciprofloxacin in bronchiectasis
Technology, Media & Telecom
· SS&C Technologies (SSNC) and DST Systems (DST) announced that the companies have entered into a definitive agreement wherein SS&C will acquire DST. Under the terms of the agreement, SS&C will purchase DST in an all-cash transaction for $84 per share plus assumption of debt, equating to an enterprise value of approximately $5.4B
· Progress Software (PRGS) Q4 EPS 67c/$116.3M vs. est. 61c/$114.5M; sees Q1 adjusted EPS 46c-48c on revs $90M-$93M vs. est. 38c/$92.0M
· Coupa Software (COUP) to offer $200M convertible senior notes
· Expedia (EXPE) upgraded to Overweight at Morgan Stanley
· Zillow (Z) upgraded to Overweight at Morgan Stanley with a $50 tgt
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.