Morning Preview: April 5, 2018

Scott GreenDaily Market Report

**Please note this will be the last “Early Look” for the week – Content will resume on Monday.

Early Look

Thursday, April 5, 18
  
Stock futures are pointing to a higher open, looking to build on yesterday’s strong upward momentum in the second half of the trading session, as major averages settled just off their highs on Wednesday. U.S. stocks posted strong gains on Wednesday, reversing significant losses earlier in the session after China retaliated with tariff proposals of its own against the U.S. on over 100 products. The S&P 500 initially dropped back below a key technical level (200 day moving average), but stocks strengthened throughout the session, ultimately ending up more than 1% in a complete turnaround. With the strong closing highs, all three closed higher for a second straight session, and it was the first time the S&P had risen in back-to-back sessions since a two-day stretch ending March 9. Treasury yields erased their earlier decline on Wednesday after stocks rebounded in the volatile trading session. Attention turns to Friday’s nonfarm payroll report as investors look towards the Fed and the pace of their interest rates hikes for the remainder of 2018 after raising rates last month. In Asian markets, The Nikkei Index gained 325 points to settle at 21,645, the Shanghai Index dipped -5 points to settle at 3,131 and the Hang Seng Index was closed. In Europe, markets are attempting to rebound as the German DAX is up over 200 points trading around 12,175, while the FTSE 100 is up around 90 points at 7,125.
 
Market Closing Prices Yesterday
·      The S&P 500 Index soared 30.24 points, or 1.16%, to 2,644.69
·      The Dow Jones Industrial Average rose 230.94 points, or 0.96%, to 24,264.30
·      The Nasdaq Composite spiked 100.83 points, or 1.45%, to 7,042.11
·      The Russell 2000 Index advanced 19.51 points, or 1.29% to 1,531.66
 
Events Calendar for Today
·      7:30 AM EST       Challenger Job Cuts YoY for March
·      8:30 AM EST       Weekly Jobless Claims…est. 225K
·      8:30 AM EST       Continuing Claims…est. 1.84M
·      8:30 AM EST       Trade Balance for February…est. (-$56.8B)
·      9:45 AM EST       Bloomberg Consumer Comfort Index…prior 56.8
·      10:30 AM EST     Weekly EIA Natural Gas Inventory Data
   
World News
·      The AAII Poll shows the bull-bear spread falls to -4.7%, its lowest level since mid-November, and down from -3.4% last week as bullish sentiment remains unchanged this week at 32%, while bears rise to 37% from 35% and neutrals fall to 31% from 33% -Bloomberg
·      German industrial orders rose less than expected in February as contracts for goods made in Germany increased by 0.3% on the month in February after an upwardly revised drop of 3.5% in January. Economists had expected the orders to rebound by 1.5% on the month.
 
Sector News Breakdown
Consumer
·      J.M. Smucker (SJM) announced the signing of a definitive agreement to acquire Ainsworth Pet Nutrition in a transaction valued at approximately $1.7B, after an estimated tax benefit of $200M. The company also announce it will explore strategic options for its U.S. baking business, including a potential sale https://www.reuters.com/article/us-ainsworthpet-m-a-smucker/j-m-smucker-to-buy-ainsworth-pet-nutrition-for-1-9-billion-idUSKCN1HB2YG
·      Conn’s (CONN) shares down -3%; Q4 EPS 56c/$420.4M vs. est. 54c/$429.8M; sees 1Q comparable sales -3% to -5%, vs. estimate -0.37% after Q4 comp sales fell (-8%) vs. est. (-5.5%)
·      Fiat Chrysler Automobiles NV (FCAU) said that it plans to separate its components business, Magneti Marelli, and distribute resulting shares to Fiat shareholders
·      Ollie’s Bargain Outlet (OLLI) Q4 EPS 51c/$356.7M vs. est. 49c/$350.18M; Q4 comp sales up 4.4%; sees FY EPS view $1.65-$1.69 vs. est. $1.78
·      Resources Connection (RECN) Q3 EPS 18c/$172.4M vs. est. 15c/$170.5M; Q3 adjusted Ebitda $8.68M
·      Franklin Covey (FC) Q2 EPS loss (20c)/$46.5M vs. est. loss (30c)/$46.5M
·      Macy’s Inc. (M) CFO Karen Hoguet will retire within the next year, after more than 20 years there
·      LGI Homes (LGIH) announced 599 homes closed in March 2018, up from 365 home closings in March 2017, representing year-over-year growth of 64.1%
·      Delta Air Lines Inc. (DAL) and Sears Holding Corp., (SHLD) including its Kmart stores, confirmed late Wednesday that select customer payment information may have been exposed in a cybersecurity breach at a software service provider they both use, called [ 24]7.ai.
 
Energy
·      Northern Oil and Gas (NOG) files to sell $88M of common stock
·      Carl Icahn intends to nominate a full slate of candidates to the board of SandRidge Energy Inc. (SD), saying that the current board’s overseeing a strategic review “is likely to be value destructive.”
 
Financials
·      JPMorgan Chase & Co. (JPM) CEO Jamie Dimon, in an annual letter to shareholders, said he sees opportunities for his company to expand “almost everywhere” — including in businesses where it’s already dominant and one that’s been particularly tough across the industry in recent years
·      Banks: Citigroup (C) and Wells Fargo (WFC) both upgraded to buy from neutral at UBS
·      A state court judge has ruled that Massachusetts can proceed with a lawsuit accusing Equifax (EFX) of failing to safeguard its databases or provide prompt notice of a breach that exposed the personal data of 147M people (news broke late Wednesday on Reuters)
·      Washington REIT (WRE) files automatic mixed securities shelf
 
Healthcare
·      Conatus (CNAT) exploratory Phase 2b POLT-HCV-SVR proof-of-concept clinical trial in liver transplant patients with fibrosis or cirrhosis did not meet its primary endpoint in the heterogeneous overall trial population
·      Intercept (ICPT) announces $120M offering of common stock, $92M private placement; sees 1Q Ocaliva net sales “slightly lower” than 4Q and said also sees total gross-to-net deductions in Q1 to be towards the higher end of its previously announced 10% to 15% gross-to-net range
·      Paratek Pharmaceuticals (PRTK) said the FDA accepted the New Drug Applications, NDAs, and granted a priority review for omadacycline, an investigational once-daily oral and intravenous broad-spectrum antibiotic
·      Merck (MRK) upgraded to overweight from equal-weight at Barclays
·      Biogen (BIIB) downgraded to equal-weight from overweight at Barclays
·      Pfizer (PFE) downgraded to equal-weight from overweight at Barclays
 
Industrials & Materials
·      RPM International (RPM) Q4 EPS 30c/$1.1B vs. est. $1.09B; Q3 Ebitda $56.7M
·      Granite Construction (GVA) upgraded to buy from neutral at DA Davidson
 
Technology, Media & Telecom
·      Broadcom Inc (AVGO) said it had completed its move back to the United States from Singapore, weeks after President Donald Trump blocked its $117 billion offer to buyQualcomm Inc. (QCOM)
·      Cadence Design (CDNS) upgraded to buy from neutral at DA Davidson
·      Finisar (FNSR) upgraded to overweight from equal-weight at Morgan Stanley
·      AMD upgraded to buy from hold at Stifel with $13 tgt saying shares have become oversold based on alternative crypto-currency mining solutions coming to market and recommends owning AMD into a 2H revenue ramp from its Epyc server CPUs
·      Intel (INTC) downgraded to hold from buy at Stifel with $53 tgt noting shares have rallied since introducing Xeon server CPUs in July, but sees upgrade cycle possibly peaking in 2H
·      Pure Storage (PSTG) offers $450M of convertible senior notes

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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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