Morning Preview: April 17, 2018

Scott GreenDaily Market Report

Early Look

Tuesday, April 17, 18

Stock futures are pointing to a higher open amid positive earnings optimism ahead of a busy week for large caps. In addition to several key earnings today (GS, JNJ, UNH, IBM, LRCX) there is also a heavy dose of economic data including housing starts and industrial production, along with a full slate of Fed speakers (four today). A lack of escalation in the trade tensions between China and the U.S. has also helped buoy financial markets the last few days.

U.S. stocks finished sharply higher on Monday, as all eleven S&P sectors advanced in a broad rally as the Q1 earnings season got underway and geopolitical tensions showed signs of easing after the coordinated missile attack on strategic targets in Syria Almost 70 S&P 500 companies are scheduled to report results this week as earnings season kicks in full swing, with Netflix (NFLX) reporting last night and topping consensus views and guiding higher, sending shares higher.

In Asian markets, The Nikkei Index rose 12 points to settle at 21,847, the Shanghai Index fell -43 points to end at 3,066 and the Hang Seng Index dropped -252 points to settle at 30,062. In Europe, the German DAX is up around 100 points at 12,500, while the FTSE 100 is up around 20 points at 7,220. Weaker-than-expected U.K. wage data and German ZEW also a small factor in currency moves.

Market Closing Prices Yesterday

· The S&P 500 Index jumped 21.54 points, or 0.81%, to 2,677.84

· The Dow Jones Industrial Average rose 212.90 points, or 0.87%, to 24,573.04

· The Nasdaq Composite spiked 49.63 points, or 0.70%, to 7,156.28

· The Russell 2000 Index advanced 13.52 points, or 0.87% to 1,563.03

Events Calendar for Today

· 7:45 AM EST ICSC Weekly Retail Sales

· 8:30 AM EST Housing Starts MoM for March…est. 1.266M

· 8:30 AM EST Building Permits MoM for March…est. 1.321M

· 8:55 AM EST Johnson/Redbook Weekly Sales

· 9:15 AM EST Industrial Production MoM for March…est. 0.4%

· 9:15 AM EST Capacity utilization for March…est. 77.9%

· 9:15 AM EST Fed’s Williams speaks on Economic Outlook in Madrid

· 10:00 AM EST Fed’s Quarles to testify before House Financial Services panel

· 11:00 AM EST Fed’s Harker speaks on Economics

· 1:10 PM EST Fed’s Evans speaks discusses Economic outlook

· 4:30 PM EST API Weekly Inventory Data

Earnings Calendar:

· Earnings Before the Open: CMA, GS, JNJ, MBWM, NTRS, PGR, PLD, UNH

· Earnings After the Close: ADTN, BMI, CSX, FULT, HOPE, IBM, ISRG, IBKR, LRCX, LTXB, UAL, WSBC

World News

· U.S. Total Cross-Border Investment (TIC) inflow $44.7B in February; said China holds $1.18T of U.S. Treasuries, an increase of $8.5B from last month (and most in 6-months), while Japan holds $1.06T, a decrease of $6.3B from last month. Foreign net buying of Treasuries at $43.19B and foreign net selling of equities at $1.2B

· German economic sentiment dropped further in April, as the ZEW think tank said its measure of economic expectations fell to minus 8.2 points from 5.1 points in March (est. for -3 points)

· China reported forecast-beating Q1 economic growth of 6.8% on Tuesday, lifted by surprisingly strong exports, along with the resilient retail sales and factory output

· The jobless rate in the U.K. declined to 4.2% in the three months through February, compared with 4.3% in the three months through January. The unemployment rate was last as low as 4.2% in 1975, the Office for National Statistics said

· UK wage growth excluding bonus payments accelerated to an annual 2.8% during the three-month period, the fastest rate of growth since 2015, driven by higher pay settlements in construction and manufacturing.

· U.S. and U.K. officials warned that Russia has increased cyberattacks on American and British companies and government agencies

Sector News Breakdown


· Tesla Inc. (TSLA) has halted Model 3 production for four to five days, according to a report from Buzzfeed late Monday. The temporary shutdown came without warning and workers are expected to use vacation days or stay home without pay, though a small number are being offered paid work in another part of the Fremont, Calif. factory, Buzzfeed reported

· S&P SmallCap 600 constituent Five Below (FIVE) will replace DST Systems (DST) in the S&P MidCap 400

· Coca-Cola (KO) upgraded to Neutral from Sell at Goldman Sachs

· Steve Wynn has settled all remaining claims in a long-running lawsuit centered around a since-dissolved shareholders’ agreement with his ex-wife, Elaine Wynn.


· ProPetro Holding (PUMP) will replace Five Below in the S&P SmallCap 600 effective prior to the open of trading on Thursday, April 19

· Natural gas at Citigroup 2018 composite spot natural gas price forecast to $2.75/MMBtu from $3.00/MMBtu, and for 2019 to $2.60/MMBtu from $3.35/MMBtu as sees higher oil prices adversely impacting the outlook for U.S. natural gas prices; downgraded CHK to sell and SWN, RRC, COG and AR to neutral


· EMC Insurance (EMCI) lowers FY18 EPS guidance to $1.10-$1.10 from $1.40-$1.60 (est. $1.55); sees Q1 EPS 18c-22c, below consensus 55c saying results were impacted by a higher than anticipated level of non-catastrophe losses in the property and casualty insurance segment

· Comerica (CMA) Q1 EPS $1.54vs. est. $1.53; Q1 provision for credit losses $12M

· Hanover (THG) estimates catastrophe impact $66M-$76M; says the impact, which is equal to 5.5% of earned premium at the midpoint, stemmed primarily from winter storms in the Midwest and Northeast and includes benefit of favorable development of ~$9.5 million on prior-year cat losses

· Pinnacle Financial (PNFP) Q1 EPS $1.13/$218.7M vs. est. $1.10/$220.46M; Q1 return on average assets was 1.53% and Q1 net interest margin 3.77%


· Johnson & Johnson (JNJ) Q2 EPS $2.06/$20.0B vs. est. $2.00/$19.5B; sees FY EPS $8.00-$8.20 on sales $81B-$81.8B vs. est. $8.10 and $81.19B

· United Healthcare (UNH) Q1 EPS $3.04/$55.19B vs. est. $2.91/$54.83B; raises FY18 EPS view to $12.40-$12.65 vs. est. $12.54

· Bayer AG (BAYRY) said it would sell new shares to investment company Temasek for roughly 3 billion euros ($3.7 billion), proceeds Bayer will use to help finance its takeover of Monsanto Co (MON)

· CRISPR Therapeutics (CRSP) announced the presentation of new data from the company’s allogeneic chimeric antigen receptor T cell (CAR-T) program at the American Association for Cancer Research (AACR) Annual Meeting 2018. The data presented today demonstrate the generation of CAR-T cells targeted to BCMA and CD70 through CRISPR/Cas9 gene editing that have high editing rates, consistent expression, and selective and potent cell killing

· Bristol-Myers (BMY) says Opdivo demonstrated sustained overall survival advantage over standard of care in patients with recurrent or metastatic squamous cell carcinoma of the head and neck; patients treated with Opdivo experienced a 32% reduction in the risk of death after two years minimum follow-up

Industrials & Materials

· Celanese (CE) Q1 EPS $2.79/$1.85B vs. est. $2.33/$$1.67B; Acetyl Chain recorded its highest ever net sales of over $1B, a 32% increase YoY; Engineered Materials delivered record net sales of $665M in Q1, 29% higher YoY; raises FY18 EPS view to up 20%-25% from up 12%-16%


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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