Morning Preview: May 18, 2018

Scott GreenDaily Market Report

Early Look

Friday, May 18, 18

U.S. stock futures are pointing to a stronger open, looking to end the week on a positive note as markets keep close watch on headlines related to trade between the U.S. and China, following a day that focused around NAFTA and U.S. trading partners Canada and Mexico. On Thursday, the Dow slipped over 50 points, while the S&P 500 and Nasdaq Composite each closed slightly lower, but the Small Cap Russell 2000 continued its march higher, closing at all-time record highs. With the Fed meeting in the rear-view mirror and earnings season mostly over now, attention turns to trade as U.S. President Donald Trump said Thursday that Beijing had become too “spoiled” and he had lowered his expectations for negotiations. The other story remains the recent spike in borrowing costs as the 10-year yield moves above the 3.11% level its highest since 2011 and the U.S. dollar, which has found solid footing amid stronger than expected economic data. There are no major economic points today. Shares of retailer WMT and tech giant CSCO dragged the Dow lower yesterday, while retailer JWN falls overnight on lower comps and AMAT sends semi equipment names lower after its results. This morning, machinery giant Deere falls on a miss to the top and bottom line, though raised its year outlook. In Asian markets, The Nikkei Index rose 91 points to settle at 22,930, the Shanghai Index jumped 39 points to settle at 3,193 and the Hang Seng Index gained 105 points to finish at 31,047. In Europe, the German DAX is up a few points at 13,120, while the FTSE 100 is down a few points around the 7,775 level. Note as of Thursday’s close, the Dow was set to drop 0.5% for the week, with the S&P 500 and Nasdaq looking at losses of 0.3% each.

Market Closing Prices Yesterday

· The S&P 500 Index slipped -2.33 points, or 0.09%, to 2,720.13

· The Dow Jones Industrial Average fell -54.95 points, or 0.22%, to 24,713.98

· The Nasdaq Composite dropped -15.82 points, or 0.21%, to 7,382.47

· The Russell 2000 Index advanced 8.92 points, or 0.55% to 1,625.29

Events Calendar for Today

· 3:00 AM EST Fed’s Mester speaks at ECB Monetary Policy

· 1:00 PM EST Baker Hughes Weekly Rig Count

World News

· The Chinese government said it hasn’t made any offer to the U.S. to cut its trade surplus by $200 billion, Reuters and other media outlets reported Friday. Media reports Thursday said China had offered to buy $200 billion in U.S. goods in a bid to whittle down that trade surplus and stave off a trade war between the two nations

· ECB’s Nowotny says central bank should not wait too long to normalize policy- “Some ECB governing council members including me think that we should not wait too long until we normalize monetary policy,” Nowotny said at an event in Vienna

· The euro area’s current-account surplus narrowed to 32.0 billion euros ($37.77 billion) in March from EUR36.8 billion in February, the European Central Bank said

Sector News Breakdown

Consumer

· Nordstrom (JWN) shares fell -7%; Q1 EPS 51c/$3.47B vs. est. 44c/$3.46B; said total Company net sales increased 5.8% in Q1 YoY which reflected an increase of approximately 250 bps primarily due to the shift of a Nordstrom Rewards loyalty event; said Q1 comparable store sales rose 0.6% vs. est. up 1.1%; raises FY18 EPS view to $3.35-$3.55 from $3.30-$3.55 (est. $3.43) and backs FY18 revenue and comp sales view

· Boot Barn (BOOT) announces offering of 7.21M shares of common stock for holders

· Rocky Brands (RCKY) raises quarterly dividend to 12c from 11c per share

Financials

· PayPal (PYPL) is buying Swedish small-business platform iZettle for $2.2 billion to expand in Europe and Latin America and increase its presence in brick and mortar stores https://on.mktw.net/2rR9txD

· AmTrust Financial Services Inc. (AFSI) shares rose over 10% overnight after Carl Icahn disclosed a stake in the company and said he planned to oppose its plans to go private

· Lloyds Banking Group PLC (LYG) said it is selling its Irish residential-mortgage portfolio to Barclays PLC for 4B pounds ($5.4B), as part of its strategy to become a low-risk, U.K.-focused bank

· Synchrony (SYF) announces $2.2B stock repurchase program

· Whitestone REIT (WSR) files $750M mixed securities shelf

· Markel (MKL) board approves $300M share repurchase program

· Riot Blockchain (RIOT) gets subpoena from SEC for documents pursuant to investigation

Healthcare

· Cerner (CERN) shares rise as much as 7.2% after Veterans Affairs Dept says it awarded 10-year IT contract valued at up to $10B; VA will adopt Cerner’s electronic health record platform, enabling patient data to be shared between VA, Defense Dept and community providers

· Iqvia (IQV) backs Q2 EPS view of $1.17-$1.24 (est. $1.26) and backs Q2 revenue view $2.47B-$2.52B (est. $2.50B); backs FY18 EPS, revenue and Ebitda views

· Amgen Inc. (AMGN) and Novartis AG (NVS) jointly announced FDA approval of Aimovig, a first-of-its-kind treatment for migraines. In a statement, Novartis said the Federal Drug Administration approved Aimovig’s use for the preventive treatment of migraines in adults

· Dicerna (DRNA) granted FDA orphan status for hyperoxaluria treatment

· Quotient (QTNT) said it completed the MosaiQ verification and validation (V&V) phase for its initial blood grouping MosaiQ microarray and started its European field trials

Energy, Industrials & Materials

· Deere (DE) shares fall 2%; Q2 adjusted EPS $3.14/$10.72B vs. est. $3.30/$9.83B; says CEO says made significant progress working with suppliers to ramp up production; sees FY adjusted net about $3.1B, up from prior $2.85B (est. $3.09B); and sees FY net income $2.3B (had seen $2.1B); sees FY equipment sales +30% up from prior +29.0%

· Eaton (ETN) upgraded to buy from neutral at Bank America

· Old Dominion (ODFL) announces new $250M stock repurchase program

· Orion Engineered (OEC) raises FY18 EBITDA view to $280M-$300M from $270M-$300M

Technology, Media & Telecom

· Applied Materials (AMAT) shares fell -5%; Q2 EPS $1.22/$4.57B vs. est. $1.14/$4.45B; sees Q3 EPS $1.13-$1.21 on revs $4.33B-$4.53B vs. est. $1.16/$4.53B

· Dell Technologies Inc. said it continues to evaluate potential business opportunities, including a potential public offering of shares of DHI Common Stock of Dell, a potential business combination between Dell and VMware, Inc. (VMW) and a potential conversion of shares of Class V Common Stock of Dell into shares of DHI Common Stock of Dell. Dell is also considering maintaining the status quo

· 21Vianet (VNET) reports Q1 EPS 1c as revenues from hosting and related services increased by 13.3% year over year to RMB800.8 million (US$127.7M)

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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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