Morning Preview: April, 2, 2018

Scott GreenDaily Market Report

Early Look
Monday, April 2, 18
  
Stock futures point to a lower open after ending last week with solid gains, though technology shares are selling off early. However, despite the stock gains on Friday and for the week (Dow ends up 2.7%, S&P 500 rises 2.1% and Nasdaq rises 1%), results were mixed for the quarter as the Dow Industrial ends -2.3% and the S&P 500 closes off down -2.7%, both snapping nine-quarter consecutive winning streak, though the Nasdaq books a quarterly gain of 2.3%. In Asian markets, The Nikkei Index fell -65 points to settle at 21,388, and the Shanghai Index slipped -5 points to settle at3,163 while the Hang Seng Index was closed. In Europe, all major averages remain closed for holiday. Investors return from the long Easter weekend amid fresh developments on the trade-war front after China announced tariffs on about 130 U.S. goods, including a 25% penalty slapped on U.S. pork and 15% on fruit (a retaliation against the Trump administration’s tariffs on Chinese steel and aluminum imports). There are a few economic data points today, but earnings are light the next two weeks while markets may be quiet today given that Europe remains closed for holiday.
 
Market Closing Prices Yesterday
·      The S&P 500 Index jumped 35.87 points, or 1.38%, to 2,640.87
·      The Dow Jones Industrial Average rose 254.69 points, or 1.07%, to 24,103.11
·      The Nasdaq Composite spiked 114.22 points, or 1.64%, to 7,063.44
·      The Russell 2000 Index advanced 16.40 points, or 1.08% to 1,529.43
 
Events Calendar for Today
·      9:45 AM EST       Markit US Manufacturing PMI, Mar-F…est. 55.7
·      10:00 AM EST     Construction Spending for February…est. 0.4%
·      10:00 AM EST     ISM Manufacturing Index, for March…est. 60.0
·      10:00 AM EST     ISM Prices Paid for March…est. 72.5
   
World News
·      China’s manufacturing sector picked up more than expected in March, as the official Purchasing Managers’ Index (PMI) released on Saturday rose to 51.5 in March, from 50.3 in February and came in above the 50.5 estimate by economists. The sub-index for output jumped to 53.1 from 50.3 in February, while total new orders rose to 53.3 from 51.0 and export orders climbed to 51.3
·      Japanese business sentiment worsened for the first time in two years in the three months to March, as an index measuring big manufacturers’ confidence fell by 2 points to plus 24 in March, the Bank of Japan’s quarterly “tankan” survey showed
·      President Donald Trump said that there will be no deal to legalize the status of young adult immigrants called Dreamers and he said the U.S.-Mexico border is becoming more dangerous.
 
Sector News Breakdown
Consumer
·      Tesla’s (TSLA) mentioned positively in Barron’s saying the stock got hammered by a recall, a recent accident, production concerns and anxiety over debt due this year, but Elon Musk’s problems are probably short-lived, and shares could rally later this year.
·      Tesla Inc. (TSLA) said in moments before fatal crash involving Model X at 9:27 a.m. March 23, Autopilot was engaged with the adaptive cruise control follow-distance set to minimum, according to a Tesla blog post. Tesla says it has more information after the logs from the computer inside the vehicle were recovered
·      U.S. President Donald Trump launched his second attack in a week on Amazon.com Inc (AMZN) on Saturday, accusing the world’s biggest online retailer of getting unfairly cheap rates from the U.S. Postal Service and not paying enough tax.
·      Retailer Hudson’s Bay Co on Sunday disclosed that it was the victim of a security breach that compromised data on payment cards used at Saks and Lord & Taylor stores in North America
·      Cal-Maine Foods (CALM) Q3 EPS $1.99/$435.8M vs. est. $1.39/$432.65M; said Q3 results were favorably affected by a $35M, or 72c per basic and diluted share, discrete tax benefit related to the Tax Cuts and Jobs Act tax reform; said sees favorable consumer demand trends’ in specialty egg unit
 
Energy
·      The Trump administration’s commitment to coal is under its stiffest test yet after Ohio energy company First Energy (FE) made a plea to favor that power source over its many rivals, including oil and natural gas. FirstEnergy Corp.’s fleet of coal- and nuclear-power plants filed for bankruptcy over the weekend, just days after the company asked the federal government for an emergency declaration that would keep many of them open
 
Financials
·      Intercontinental Exchange Inc’s (ICE) New York Stock Exchange is in talks to buy the Chicago Stock Exchange, the Wall Street Journal reported on Friday, a month-and-a-half after U.S. regulators blocked the sale of CHX to China-based investors. https://www.reuters.com/article/us-chicagostockexchange-m-a-nyse/nyse-in-talks-to-acquire-chicago-stock-exchange-wall-street-journal-idUSKBN1H60X3
·      Northern Trust (NTRS) upgraded to Buy from Neutral at Goldman Sachs
 
Healthcare
·      Walmart Inc (WMT) is in early-stage talks with health insurer Humana Inc (HUM) about developing closer ties, with the acquisition of Humana being discussed as one possibility, people familiar with the matter said https://www.reuters.com/article/us-humana-m-a-walmart/walmart-talking-with-humana-on-closer-ties-acquisition-possible-sources-idUSKBN1H53CQ
·      MediciNova (MNOV) announced that it will terminate the Phase 2 clinical trial of MN-001 – tipelukast – in NASH and NAFLD with hypertriglyceridemia early based on the significant positive results from an interim analysis
·      Canadian cannabis-related stocks are riding high as the country seeks to become the Silicon Valley of marijuana, but shares face risks “as legal weed finds a balance between supply and demand,” Barron’s said on cover story
 
Industrials & Materials
·      China has slapped extra tariffs of up to 25% on 128 U.S. products including frozen pork, as well as wine and certain fruits and nuts, in response to U.S. duties on imports of aluminum and steel, according to Reuters, citing the country’s finance ministry
·      Boeing Co. (BA) is being awarded an undefinitized contract action by the U.S. Navy, with a not-to-exceed value of $1.17b for development of a baseline configuration for the production and delivery of 22 F/A-18E and 6 F/A-18F Super Hornets
·      Union Pacific (UNP) upgraded to Buy from Hold at Deutsche Bank, while the firm upgraded truckers JB Hunt (JBHT) and Werner (WERN)
·      Pentair (PNR) upgraded to Neutral from Sell at UBS
 
Technology, Media & Telecom
·      Google (GOOGL) has announced it is winding down its URL shortener named goo.gl starting April 13 and asked users to consider using app-centric Firebase Dynamic Links (FDL) or similar popular services like Bitly and Ow.ly as an alternative. FDLs are smart URLs that allow one to send existing and potential users to any location within an iOS, Android or web platform
·      SYNNEX (SNX) Q1 EPS $2.14/$4.55B vs. est. $2.11/$4.47B; sees Q2 adjusted EPS $2.25-$2.35 on revenue $4.58B-$4.78B vs. est. $2.41/$4.75B
·      Comcast (CMCSA) shares have fallen from favor with investors following its the proposal to buy SKY Plc as they fear it will get into a bidding war with Fox (FOXA) and overpay for Sky, Barron’s reported and said now trades at a discount to rival Charter (CHTR) and yields 2.2%
·      Toshiba Corp said on Friday it would not be able to complete an $18 billion deal to sell its prized chip unit by an agreed deadline at the end of March, as it had not received anti-monopoly approval from China
·      Warner Bros. (TWX) “Ready Player One” won the box-office Easter egg hunt, grossing $41.2M from 4,234 theaters. This brings the sci-fi adventure’s four-day bow to $53.2M after launching a day early on Thursday

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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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