Stocks futures are steady, with the Dow Industrials inching higher, though the Nasdaq Composite is flat, as earnings season is finally upon us, with results from big banks JPMorgan, Wells Fargo and Citigroup expected this morning. Investors also continue to watch for developments in the U.S.-China trade dispute and around the potential for U.S. military action against Syria. Major indexes have trended to the upside recently, rising in six of the past eight sessions. As of Thursday, the Dow and S&P 500 were each headed for weekly gains of 2.3%, and the Nasdaq, for a rise of around 3.3%.
U.S. stocks finished sharply higher on Thursday, with major averages rising behind strength in technology, financials and industrials, helped as geopolitical concerns appeared to fade after President Donald Trump tweeted that a military strike on Syria may not be imminent. Financials advanced nearly 2% following strong results from BlackRock Inc. as well as rising bond yields and bullish expectations ahead of today’s earnings from JPMorgan Citi and Wells Fargo. The dollar snapped a 4-day losing streak, weighing on gold prices which fell over 1% and pulling back from 10-week highs the day prior.
In Asian markets, The Nikkei Index gained 118 points to finish at 21,778, the Shanghai Index dropped -21 points to settle at 3,159 and the Hang Seng Index slipped -22 points to settle at 30,808. In Europe, the German DAX is up around 90 points above 12,500, while the FTSE 100 is flat holding above 7,250. European stocks edged higher on Friday, setting the benchmark index on track for a third straight week of gains.
Market Closing Prices Yesterday
· The S&P 500 Index climbed 21.80 points, or 0.83%, to 2,663.99
· The Dow Jones Industrial Average rose 293.60 points, or 1.21%, to 24,483.05
· The Nasdaq Composite spiked 71.22 points, or 1.01%, to 7,140.25
· The Russell 2000 Index advanced 10.52 points, or 0.68% to 1,557.33
Events Calendar for Today
· 9:00 AM EST Fed’s Bullard speaks
· 10:00 AM EST JOLTs Job Openings for Feb…est. 6000
· 10:00 AM EST University of Michigan Sentiment, April-F…est. 100.5
· 1:00 PM EST Baker Hughes Weekly Rig Count
· China’s trade balance swung to a deficit of $4.98 billion in March from a $33.7 billion surplus in the previous month. Economists polled by The Wall Street Journal had expected a surplus of $19.6 billion
· Eurozone trade surplus widened as the European Union’s statistics agency when adjusted for seasonal variations, exports of goods from the currency area fell 2.3% from January, the second straight month of decline. However, imports of goods fell more rapidly–by 3.1%–leaving the eurozone with a surplus of 21.0 billion euros ($25.9 billion), up from EUR20.2 billion in January.
· The White House plans to step up pressure on China to make trade concessions, via a plan for fresh tariffs and a threat to block Chinese technology investments in the U.S., according to a report. Details of which Chinese products are on the hit-list of $100 billion in tariffs could be revealed as soon as next week.
Sector News Breakdown
- Tesla’s (TSLA) CEO Elon Musk says “Tesla will be profitable & cash flow+ in Q3 & Q4, so obv no need to raise money” in a Twitter post
- Starbucks (SBUX) downgraded to Market Perform from Outperform at Cowen
- Zillow Group (ZG) predicts Q1 prelim net loss in range of $18M-$20M while guides Q1 revs $299M-$301M vs. est. $295M; sees year revs $1.43B-$1.58B vs. est. $1.31B; said to test buying and selling homes directly
- SeaWorld Entertainment Inc. (SEAS) disclosed it expects a civil action from the SEC after saying in a SEC filing late Thursday, it received a Wells notice from the SEC on April 6
- Volkswagen AG’s (VLKAY) board ousted Chief Executive Matthias Müller and replaced him with Herbert Diess
- In its closely watched monthly oil market report, the IEA said it continued to expect global oil demand to grow by 1.5 million barrels a day in 2018 but cautioned that potential U.S. and Chinese trade tariffs posed a “downward risk” to the forecast.
- PNC Financial (PNC) Q1 EPS $2.43 (in-line with estimates); said Q1 provision for credit losses $92M vs. Bloomberg est. $133.8M
- Big morning of earnings for banks as earnings season officially gets underway: JPMorgan (JPM), Wells Fargo (WFC), Citigroup (C) all expected today
- First Horizon (FHN) Q1 EPS 34c vs. est. 30c; net interest margin 3.43%
- Valeant Pharma (VRX) to redeem $150M of senior debt
- Galapagos NV (GLPG) announces the design of a worldwide Phase 3 program, based on feedback from the FDA and EMA, to evaluate GLPG1690 in patients with idiopathic pulmonary fibrosis
- QIAGEN N.V. (QGEN) launched two novel liquid biopsy panels to evaluate circulating tumor cells in the growing field of research into molecular mechanisms in prostate and lung cancers
- Eli Lilly (LLY) upgraded to Market Perform from Underperform at BMO Capital
Industrials & Materials
- Prices for lithium used in the batteries that power anything from mobile phones to Teslas more than doubled to $21,000 a ton in the past two years. Analysts expect the lithium-ion battery market to surpass $90 billion by 2025 as electric vehicles become commonplace – Marketwatch.com (shares of ALB leveraged to lithium)
- Albemarle (ALB) upgraded to buy at Citigroup with $106 tgt and a potential downside case of ~$85. This is a tactical call as shares are -30% YTD and we do not see a collapse in Li carbonate/hydroxide contract prices as predicted by the bears. We model a flat to down contract pricing scenario after 2018
- Rolls-Royce (RYCEY) shares dropped after the aircraft engine maker said it needs to carry out additional inspections on some versions of its Trent 1000 engines
Technology, Media & Telecom
- Qualcomm Inc. (QCOM) shares rose after-hours following a CNBC report that former chairman and chief executive Paul Jacobs is leading a fund-raising effort to buy the chipmaker and take it private https://on.mktw.net/2JHWPsW
- Broadcom (AVGO) announces $12B share repurchase authorization
- Amazon.com (AMZN) could swing back in focus after President Trump issued a surprise executive order Thursday night calling for look at the U.S. Postal Service’s finances and operations, along with its position in the package delivery industry
- UK software company Sage cut its full-year forecast for revenue growth after a disappointing first half to fiscal 2018
- Twelve U.S. senators asked the FCC to investigate Sinclair Broadcasting Group (SBGI) for “deliberately distorting news” and asked the commission to pause its ongoing review of the company’s proposed $3.9 billion acquisition of Tribune Media Co (TRCO) – Reuters
- Seven Stars Cloud (SSC) is starting a search for a U.S.-based chief financial officer after the resignation of Simon Wang
- Netflix (NFLX) upgraded to Buy from Hold at Deutsche Bank with $350 tgt