Morning Preview: January 23, 2018

Scott GreenDaily Market Report

Early Look
Tuesday, January 23, 18
  
Stock futures are edging slightly lower after markets posted record highs yesterday, with optimism high ahead of this earnings season as investors and analyst count on the newly announced tax reform bill out of Washington to be a benefit for corporate earnings. Stocks surged yet again on Monday, extending a 3-week rally that has seen major averages rise between 5%-7% since the start of the year, as companies beat analyst estimates and the Senate moved to end a government shutdown. The S&P 500 index gained 0.8% to an all-time high, while the Nasdaq Composite closed above 7,400 for the first time ever though gains were led by telecom and energy shares. Emerging-market stocks advanced for a seventh day according to Bloomberg as optimism over corporate earnings lifted global equities.
 
After U.S. markets closed on Monday, Congress passed a three-week funding measure that brought a halt to the three-day shutdown, with the bill then signed by President Donald Trump. The agreement keeps the government running up to Feb. 8, though underlying disagreements between the Republicans and the Democrats on immigration and other topics remain.
 
In Asian markets, The Nikkei Index leapt 307 points to end at 24,124, the Shanghai Index gained 45 points (1.29%) to settle at 3,546 and the Hang Seng Index surged 537 points (1.66%) to close at 32,930. Japan’s Nikkei closed above 24,000 for the first time since November 1991, continuing to climb even after the Bank of Japan’s midday policy statement gave a fresh lift to the yen. In Europe, the German DAX is up over 70 points at 13,540 (new record highs), while the FTSE 100 is up a few points around 7,725.
 
Market Closing Prices Yesterday
·      The S&P 500 Index jumped 22.67 points, or 0.81%, to 2,832.97
·      The Dow Jones Industrial Average rose 142.88 points, or 0.55%, to 26,214.60
·      The Nasdaq Composite spiked 71.65 points, or 0.98%, to 7,408.03
·      The Russell 2000 Index advanced 7.54 points, or 0.47% to 1,605.17
 
Events Calendar for Today
·      7:45 AM EST       ICSC Weekly Retail Sales
·      8:55 AM EST       Johnson/Redbook Weekly Sales
·      10:00 AM EST     Richmond Fed Manufacturing Index for January…est. 19
·      4:30 PM EST        API Weekly Inventory Data
·      6:30 PM EST        Fed’s Evans speaks
 
Earnings Calendar
·      Earnings Before the Open: AMTD, ATI, BKU, FITB, HBAN, JNJ, KMB, PG, PLD, SNV, STT, TRV, UAL, VZ, WAT
·      Earnings After the Close: CNI, COF, TRMK, TSS, TXN, UMPQ
   
World News
·      Bank of Japan Gov. Haruhiko Kuroda said the central bank hasn’t reached the point at which it needs to consider how to exit monetary stimulus.
·      A magnitude 7.9 earthquake struck off the Gulf of Alaska early Tuesday, prompting tsunami watches for parts of the U.S. West Coast. The earthquake struck 174 miles southeast of Kodiak City, Alaska, at 1.31 a.m. Pacific time
·      German ZEW current conditions 95.2 in January vs 89.3 in December
·      Germany’s ZEW economic expectations 20.4 in January vs. 17.5 forecast
 
Sector News Breakdown
Consumer
·      Whirlpool (WHR) and other appliance makers likely active after the U.S.’s imposed steep tariffs on imports of washing machines and solar panels, aimed mainly at Asian producers—including South Korean washing-machine makers
·      Dicks Sporting Goods (DKS) upgraded to positive from neutral at Susquehanna with a street-high $41 tgt citing signs that comp. sales trends have improved
·      New Oriental Education (EDU) Q2 EPS 9c/$467.18M vs. est. 11c/$456.04M; said Q1 total student enrollments in academic subjects tutoring and test preparation courses increased by 43% year-over-year to approximately 1,877,100 for the second fiscal quarter of 2018
·      Foot Locker, Inc. (FL) said it has made a strategic investment in Carbon38, taking a minority stake in the world’s destination for women’s luxury activewear
 
Energy
·      Solar stocks First Solar (FSLR), SunPower (SPWR) rise after the Trump administration imposed 30% tariffs Monday on imported solar-energy cells and modules. The decision imposes a 30% tariff on imported solar cells and modules in the action’s first year, with levies slowly falling to 15% four years from now. The U.S. government will exempt the first 2.5 gigawatts of solar cells imported into America in each of the next four years
·      Plains All American Pipeline (PAA) said it received sufficient binding commitments on its initial open season to build a new pipeline system from the Permian Basin to the Corpus Christi/Ingleside area; will add up to 585K bpd of Permian Basin pipeline takeaway capacity
 
Financials
·      JPMorgan (JPM) makes investment to support job and local economic growth in U.S. including further boosts wages to $15-$18/hour for 22,000 employees and opening up to 400 new Chase branches; also hiring 4,000 employees in new U.S. markets
·      Synovus (SNV) Q4 adjusted EPS 72c/$339.1M vs. est. 67c/$338.68M; 4Q adjusted non-interest expense $201.1M, Q4 provision for loan losses $8.57M and Q4 net charge-offs $8.98M
·      Fifth Third (FITB) Q4 EPS 52c/ vs. est. 48c; 4Q net interest margin 3.02%, 4Q net charge-offs $76 million, and 4Q provision for loan losses $67 million
·      TD Ameritrade (AMTD) Q1 EPS 80c/$1.3B vs. est. 50c/$1.2B; firm said “off to an outstanding start in 2018, with powerful momentum and financial strength continuing across all core metrics;” raises FY18 adjusted EPS view to $2.55-$3.05 from $2.10-$2.50 (est. $2.62)
·      Zions Bancorp (ZION) Q4 EPS 80c vs. est. 73c; said the efficiency ratio improved materially to 59.8%, and the return on tangible common equity rose to 10.9%, up from 8.4% YoY
·      Brown & Brown (BRO) Q4 EPS 47c/$474.3M vs. est. 42c/$450.33M
·      Wintrust Financial (WTFC) Q4 EPS $1.17/$300.1M vs. est. $1.13/$299.5M; reports Q4 loan loss provision $7.8M vs. $7.4M a year ago
·      Fulton Financial (FULT) Q4 EPS 19c vs. est. 28c; Q4 net interest margin 3.29%
·      ServisFirst (SFBS) Q4 EPS 40c vs. est. 48c; Q4 non-interest income $4.9M down $1.1M or 18% YoY
·      Park National (PRK) Q4 EPS $1.48 vs. est. $1.50; 4Q loans $5.37 billion and NIM 3.40%
 
Healthcare
·      Johnson & Johnson (JNJ) Q4 EPS $1.74/$20.2B vs. est. $1.72/$20.08B; sees year EPS $8.00-$8.20 on sales $80.6B-$81.4B vs. est. $80.7B
·      ResMed (RMD) shares rose 9%; Q2 EPS $1.00/$601.3M vs. est. 76c/$581.7M; 2Q gross margin was 58.2% vs. 58.3% YoY mainly due to declines in average selling prices
·      Adamas Pharmaceuticals (ADMS) files to sell $85M in common stock
·      Insmed (INSM) files to sell $300M in convertible senior notes due 2025
·      Stemline (STML) files to sell 3.7M shares of common stock
·      Harvard Bioscience (HBIO) to buy Data Sciences Intl for about $70M; also completes sale of its wholly-owned subsidiary Denville Scientific to Thomas Scientific for ~$20M
·      Amgen (AMGN) announced positive results from the Phase 3b LIBERTY study assessing the efficacy and safety of Aimovig™ (erenumab) 140 mg in patients with episodic migraine who had experienced two to four previous preventive treatment failures, due to lack of efficacy or intolerable side effects; study met its primary endpoint
 
Industrials & Materials
·      Triumph Group (TGI) to provide major structural assemblies for 767 programs; Boeing (BA) and Triumph had signed memorandum of understanding last year to identify new business opportunities in support of Boeing’s businesses
·      Woodward (WWD) reports Q1 EPS 29c on revenue $470M; sees FY18 EPS $3.35-$3.60 on revenue $2.2B-$2.3B vs. est. $3.40/$2.23B
·      Steel Dynamics (STLD) Q4 EPS 54c/$2.34B vs. est. 52c/$2.22B; CEO said remain confident that current and anticipated macroeconomic and market conditions are in place to benefit domestic steel consumption in 2018
·      Graco (GGG) upgraded to Buy from Hold at Deutsche Bank
 
Technology, Media & Telecom
·      Netflix (NFLX) shares rose 9%; Q4 EPS 41c/$3.29B vs. est. 41c/$3.28B; 4Q domestic streaming net adds 1.98M vs.  est. 1.29M and 4Q international streaming net additions 6.36M well above the est. 5.05M; sees 1Q domestic streaming net additions 1.45M vs. est. 1.28M and 1Q int’l streaming net additions 4.9M vs. est. 3.90M; sees 1Q revs $3.68B vs. est.  $3.49B
·      Adobe (ADBE) raises 2018 adjusted EPS to $6.20 from $5.50 due to the new tax law and also reports it expects 1Q adjusted eps $1.43 and had previously forecast $1.27
·      ShiftPixy (PIXY) Q1 revenue up 14.6% to $6.5M YoY, gross billings grew 14.7% to $40.2M; sees 2Q gross billings $60M-$65M
·      Shaw Communications (SJR) files C$3B mixed securities shelf
·      Sprint (S) downgraded to Underperform from Neutral at Macquarie
 

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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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