Morning Preview: July 10, 2018

Scott GreenDaily Market Report

Early Look

Tuesday, July 10, 2018

Stocks futures overnight extend gains, with major averages on track to rise an eighth day in the last nine, as market attention turns to corporate earnings. U.S. stocks ended yesterday’s action with strong gains, as major indexes posted their third straight day of gains as equities rose broadly, although financial stocks led the day’s advance (and defensive assets such as utilities fell sharply). The Dow Jones Industrial Average closed above its 50-day moving average (was 24,634) for the first time since June 20. It also erased its losses for the year, ending up 0.2% for 2018 thus far. Financials led the gains ahead of earnings results from Citi, JPMorgan and Wells Fargo this Friday, with the sector ending up 2.3%, its biggest one-day percentage gain since late March. There were more headlines from President Trump on trade and NATO this morning, but markets are holding their gains. In Asian markets, The Nikkei Index gained 144 points to settle at 22,196, the Shanghai Index gained 12 points to close at 2,827, and the Hang Seng Index slipped -6 points to settle at 28,682. In Europe, the German DAX is up about 30 points at 12,575, while the FTSE 100 is up around 20 points above 7,700. Overall, European stocks rise for 6th day as focus turns to earnings season.

Market Closing Prices Yesterday

· The S&P 500 Index jumped 24.35 points, or 0.88%, to 2,784.17

· The Dow Jones Industrial Average rose 320.11 points, or 1.31%, to 24,776.59

· The Nasdaq Composite gained 67.81 points, or 0.88%, to 7,756.20

· The Russell 2000 Index advanced 10.55 points, or 0.62% to 1,704.60

Events Calendar for Today

· 6:00 AM EST NFIB Small Business Optimism for June

· 7:45 AM EST ICSC Weekly Retail Sales

· 8:55 AM EST Johnson/Redbook Weekly Sales

· 10:00 AM EST JOLTs Job Openings for May

· 4:30 PM EST API Weekly Inventory Data

World News

· President Donald Trump nominated Brett Kavanaugh to replace retiring U.S. Supreme Court Justice Anthony Kennedy on Monday night. Kavanaugh, 53, currently serves as a judge on the U.S. Court of Appeals for the District of Columbia Circuit. He served as staff secretary to President George W. Bush

· The National Federation of Independent Business (NFIB) small-business optimism index fell 0.6 points to 107.2; the NFIB reported that the percent of owners who reported higher net sales fell 5 points. Since Dec. 2016, the index has averaged 105.4, well above the 45-year average of 98.

· In Europe, the recent political turmoil in the U.K. was still in focus after Foreign Secretary Boris Johnson and Brexit minister David Davis resigned on Monday

· Eurozone house prices rose at the fastest pace in 11 years during the first three months of 2018; house prices in the first quarter were 4.5% higher than in the same quarter a year earlier

· German Jul ZEW Expectations lower at -24.7 vs. -18 consensus and German Jul ZEW Current Situations lower at 72.4 vs. 78.2 consensus

Sector News Breakdown


· Pepsi Co. (PEP) Q2 core EPS $1.61/$16.1B vs. est. $1.52/$16.08B; backs FY18 core EPS view of $5.70 vs. est. $5.66 and consistent with its previous guidance for 2018, PepsiCo expects: Full-year organic revenue growth to be at least in line with the 2017 growth rate of 2.3%

· Lowe’s (LOW) says COO, chief customer officer, corporate administration executive and chief development officer positions have been eliminated; responsibilities formerly under eliminated roles will be assumed by other senior leadership roles that will report directly to CEO Ellison

· Southwest Airlines (LUV) June traffic up 2.6% YoY, June capacity up 3.2% YoY and June load factor 86.9% vs 87.4% year ago

· J.M. Smucker Co. (SJM) is selling its U.S. baking business to a private-equity firm for $375 million, including debt

· Tesla Inc (TSLA) has hiked prices on its Model X and S cars by about 20 percent in China, the first automaker to do so in the world’s top automotive market in response to mounting trade tensions


· Pzena Investment (PZN) reports AUM as of June 30 $36.9B vs. $33.5B last year

· Deutsche Bank (DB) has hired one of its top shareholders, New York private-equity firm Cerberus Capital Management LP, as a paid adviser to help the troubled lender tackle runaway costs and boost lagging profits.

· TP ICAP shares plunge after the broker dealer parted ways with its chief executive and issued a profit warning


· Celgene Corp. (CELG) and Acceleron Pharma Inc. (XLRN) said a clinical trial showed their jointly developed drug was effective in treating a certain type of inherited blood disorder. The companies said the drug luspatercept significantly lowered the rate of transfusions needed in patients with transfusion-dependent beta-thalassemia

· Spero Therapeutics (SPRO) files to sell 4.5M shares of common stock

· OncoCyte Corporation (OCX) shares rise 55%; said that its most recent study of clinical samples in the development of DetermaVu™, its lung cancer diagnostic blood test, has produced encouraging results

· Inspire Medical Systems, Inc. (INSP) said that Aetna Inc. (AET) will provide coverage for the Company’s Inspire therapy for sleep apnea, effective immediately

Industrials & Materials

· Paccar (PCAR) announces $300M share repurchase program

· Cactus (WHD) files to sell 10M shares of Class A common stock

· Kratos Defense (KTOS) announced the delivery of the first production BQM-177A Subsonic Aerial Target, or SSAT, drone system for the U.S. Navy. These production deliveries are part of the previously announced low rate initial production, or LRIP, year one contracts worth approximately $37M

· Airbus (EADSY) expects to sell a double-digit number of CSeries jets this year and estimates demand for at least 3,000 of the aircraft over the next 20 years, Reuters

· Reliance Steel (RS) upgraded to Buy from Hold at Jefferies

Technology, Media & Telecom

· Altaba Inc. (AABA), the holding company that used to be Yahoo Inc., said it will sell about a third of its remaining stake in Yahoo Japan Corp. to the other large stakeholder in the Asian asset, Softbank Group Corp. Altaba said that Softbank had agreed to buy 613,888,888 shares of Yahoo Japan for $3.26 a share, about $2 billion in total. Altaba would still hold about 1.36 billion shares in Yahoo Japan if they sell all the shares

· Disney (DIS) is selling its uptown Manhattan campus to develop a new downtown campus for $650M, according to the Wall Street Journal


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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