Morning Preview: June 21, 2018

Terrie AmengualDaily Market Report

Early Look

Thursday, June 21, 2018

U.S. stock futures are pointing to a lower open, with the Dow Industrial Average on track for an 8th straight loss, while the Nasdaq Composite and Russell 200 Small Cap index pull back from record closing highs as markets again remain focused on the trade-related tensions between the U.S. and counterparts. U.S. stocks closed mostly higher on Wednesday, as a rally in technology shares lifted the Nasdaq to its latest in a series of records, though the Dow fell a seventh straight session. The index remains pressured by uncertainty surrounding trade policy, an issue that is seen as having a larger impact on its multinational components. With the recent string of losses, the Dow is now down by 0.3% this year as of Wednesday’s close, while the S&P and Nasdaq have risen 3.5% and 12%, respectively. In Asian markets, The Nikkei Index gained 137 points to settle at 22,693, the Shanghai Index drop -39 points to settle at 2,875 and the Hang Seng Index fell -400 points to close at 29,296. In Europe, the German DAX is down over -100 points after Daimler profit warning amid tariffs, while the FTSE 100 is flat at 7,625. Investors remain concerned the tensions and recent tariffs could develop into a headwind for the global economy. Last night, auto maker Daimler was the first to lower its profit outlook citing the impact of increased tariffs. European stocks mostly lower ahead of a Bank of England policy decision, with the central bank widely expected to stand pat on interest rates, given Brexit-related uncertainties.

Market Closing Prices Yesterday

· The S&P 500 Index gained 4.73 points, or 0.17%, to 2,767.32

· The Dow Jones Industrial Average fell -42.41 points, or 0.17%, to 24,657.80

· The Nasdaq Composite jumped 55.93 points, or 0.72%, to 7,781.51

· The Russell 2000 Index advanced 13.54 points, or 0.80% to 1,706.99

Events Calendar for Today

· 8:30 AM EST Weekly Jobless Claims

· 8:30 AM EST Continuing Claims

· 8:30 AM EST Philly Fed Business Outlook for June

· 9:00 AM EST FHFA House Price Index MoM for April

· 9:45 AM EST Bloomberg Consumer Comfort Index

· 10:00 AM EST Leading Index for May

· 10:30 AM EST Weekly EIA Natural Gas Inventory Data

Earnings Calendar:

· Earnings Before the Open: BKS, CMC, DRI, KR, MEI, PDCO

· Earnings After the Close: AMSWA, RHT, SGH

Other Key Events:

· Fed says results of 2018 Dodd-Frank stress tests to be released 6/21 at 4:30 PM EST

· JMP Securities Life Sciences Conference, 6/20-6/21, in New York

World News

· The Swiss National Bank kept its key policy rate in deeply negative territory despite signs of healthy economic activity and slowly rising inflation, as the bank remains constrained by the actions of the European Central Bank.

· Norway’s central bank kept its key policy rate at a record low of 0.5% but said this would probably go up in September.

· Brazil’s central bank held its benchmark interest rate steady Wednesday as a weaker currency hits the outlook for economic growth and inflation. The bank kept its Selic lending rate at the historic low of 6.5%, where it has been since March

· Germany‘s top central banker has said it will take years for monetary policy in the EuroZone to return to normal, supporting the European Central Bank‘s dovish outlook for interest rates

· The UK government borrowed less than City economists expected in May as the year-to-date deficit fell to its lowest level since 2007

Sector News Breakdown

Consumer

· Daimler (DDAIF) lowers its Ebit forecast for the year

· American Outdoor Brands (AOBC) Q4 EPS 24c/$172M vs. est. 10c/$165.6M; Q4 gross margin +33.4% vs. Bloomberg estimate +29.9%; sees Q1 adjusted EPS 10c-14c on revs $130M-$140M vs. est. loss (1c)/$123.44M; though guides year revs $570M-$600M below the $610M est.

· Barnes & Noble Education (BNED) reports Q4 net income $17.2M vs. $4.5M last year; Q4 revenue $357.7M; sees FY19 revenue $2.2B-$2.3B vs. est. $2.19B; Q4 comp sales up 0.1%; sees full-year BNC comp.-store sales declining in mid-single digit percentage range

· Craft Brew Alliance (BREW) says CFO Joseph Vanderstelt is leaving for a similar role at a non-alcohol beverage company on the east coast

· Steelcase (SCS) Q1 EPS 14c/$754M vs. est. 14c/$756.5M; sees Q2 EPS 28c-33c on revs $865M-$890M vs. est. 28c/$822M

· Thor Industries (THO) reports $250M share buyback authorization

· Toyota (TM) has begun slashing costs, starting with sales and marketing, and shifting resources into research that will help it keep up with new competitors – Reuters reported

Energy & Industrials

· PG&E (PCG) sees a $2.5B pretax charge in Q2 which does not include any amounts for potential penalties or fines that may be imposed by governmental entities; the estimated charge is for claims related to 14 of the Northern California wildfires

· Nexen Energy, a unit of China’s CNOOC Ltd (CEO), said that it would move ahead with the construction of its C$400M ($300.5M) Long Lake Southwest expansion project in northern Alberta

· Methode Electronics (MEI) Q4 EPS 98c/$249M vs. est. 73c/$246.08M; sees year EPS $2.81-$2.96 vs. est. $3.09

· Commercial Metals (CMC) Q3 EPS 41c/$1.20B vs. est. 43c/$1.28B; Q3 adjusted Ebitda $101M

· Limoneira (LMNR) files to sell $50M in common stock

Financials

· Not much in way of news in the financial sector, though the Fed stress test data is expected after the close of trading tonight for top banks

Healthcare

· Aptinyx (APTX) 6.4M share IPO priced at $16.00

· AvroBio (AVRO) 5.25M share IPO priced at $19.00

· Becton Dickinson (BDX) upgraded to Overweight from Neutral at JPMorgan

· Kezar Life Sciences (KZR) 5M share IPO priced at $15.00

· Rhythm Pharmaceuticals (RYTM) 5.732M share Secondary priced at $26.42

· Xeris Pharmaceuticals (XERS) 5.7M share IPO priced at $15.00

· Akers Biosciences Inc. (AKR.LN) shares fell after the company said it had received a class-action lawsuit seeking to recover losses on behalf of shareholders

· Reata Pharmaceuticals (RETA) announced the initiation of a Phase 1 clinical trial of Reata’s RTA 1701, a highly selective and orally bioavailable allosteric RORgammat inhibitor

Technology, Media & Telecom

· Micron (MU) Q3 EPS $3.15/$7.8B vs. est. $3.14/$7.75B; Q3 adjusted gross margin +60.9%

· HP Inc. (HPQ) said that its board authorized $4 billion for stock repurchases; as of the end of April, HP said it had $1.2 billion remaining in approved share repurchases

· CACI (CACI) raises FY18 EPS view to $11.54-$11.74 from $11.26-$11.50 (est. $11.59) and backs FY18 revenue view $4.4B-$4.5B (est. $4.48B); sees FY19 EPS $8.98-$9.38 on revs $4.55B-$4.75B vs. est. $8.98/$4.62B

· Wix.com (WIX) announces $350M private offering of convertible senior notes due 2023

· AT&T (T) is planning to unveil a video service, tentatively named WatchTV, that will use a “skinny bundle” and cost as little as $15 a month in an effort to recapture some of the millions of cord-cutters who have dropped cable and satellite – WSJ

· Charter Communications (CHTR) and Verizon Communications (VZ) both upgraded to Buy from Neutral at Goldman Sachs while the firm downgraded Dish Network (DISH) to neutral and Sirius (SIRI) to sell

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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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