Morning Preview: July 18, 2018

Terrie AmengualDaily Market Report

Early Look

Wednesday, July 18, 2018

U.S. stock futures are flat ahead of day two of testimony from Fed Chairman Powell (this time to the House Financial Services Committee), along with another round of earnings. So far, 88% of the 41 S&P 500 companies that have reported at this point have beaten profit forecasts, setting the tone for a positive earnings season. Asian markets were mixed while Europe trades higher. In Asian markets, The Nikkei Index rose 96 points to settle at 22,794, the Shanghai Index lost -10 points to settle at 2,787 and the Hang Seng Index lost -64 points to settle at 28,117. In Europe, the German DAX is higher by roughly 100 points at 12,760, while the FTSE 100 is up around 50 points at 7,675.

Stocks logged gains on Tuesday, as the Dow Industrial Average advanced for a 4th day in a row, and the Nasdaq Composite logged another record closing high. The move came as markets reacted favorably to Federal Reserve Chairman Jerome Powell testimony to the Senate panel indicating that the U.S. central bank would continue raising benchmark rates due the health of the economy but would execute its monetary-policy strategy at a steady pace. Powell will appear before a House committee Wednesday. Economic data was mixed as industrial production rose 0.6% in June to more than offset a similarly sized decline in May, the Federal Reserve said Tuesday.

Market Closing Prices Yesterday

· The S&P 500 Index jumped 11.12 points, or 0.40%, to 2,809.55

· The Dow Jones Industrial Average rose 55.53 points, or 0.22%, to 25,119.89

· The Nasdaq Composite spiked 49.40 points, or 0.63%, to 7,855.12

· The Russell 2000 Index advanced 8.72 points, or 0.52% to 1,687.26

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 8:30 AM EST Housing Starts MoM for June…est. (-2.2%) to 1.32M

· 8:30 AM EST Building Permits MoM for June…est. +2.2% to 1.33M

· 10:30 AM EST Weekly DOE Inventory Data

· 2:00 PM EST Fed Beige Book released

Earnings Calendar:

· Earnings Before the Open: ABT, ASML, GWW, MS, MTB, MTG, NVS, NTRS, TXT, USB

· Earnings After the Close: AA, AXP, BMI, BXS, CCI, CCK, CP, EBAY, IBM, PLXS, PTC, RECN, SLG, TCBI, UMPQ, URI

World News

· U.S. Total Cross-Border Investment Inflow (TIC) $69.9B in May and U.S. net long-term portfolio securities inflows at $45.6B in May; said China holds $1.18T in U.S. Treasuries, an increase of $1.2B from last month, Japan holds $1.05T, an increase of $17.6B from last month; Foreign net buying of Treasuries at $26.7B and Foreign net selling of equities at $26.6B

· Investor Intelligence poll shows newsletter writers classified as bulls rise a second week, climb to 55.3% from 52.4% last week as those looking for a correction turn optimistic on stocks; bears unchanged at 18.5% and those looking for a correction drops to 26.2%, the lowest since the end of January, from 29.1% last week

· Inflation in the UK remained steady at 2.4% in June, below market expectations and raising questions over whether the Bank of England will increase interest rates at its August meeting

Sector News Breakdown


· Sonic Automotive (SAH) shares fell -11% as guides Q2 and year EPS below estimates; says 2Q earnings hurt by lower than anticipated new vehicle gross profit/unit in certain key brands as sees Q2 EPS 32c-36c vs. est. 49c and year EPS $1.90-$2.00, vs. est. $2.26


· The American Petroleum Institute (API) reported that U.S. crude supplies rose by 629,000 barrels for the week ended July 13, showed supplies of gasoline also climbed by 425,000 barrels, while distillate stockpiles added 1.7 million barrels


· Interactive Brokers (IBKR) Q2 EPS 39c/$445M vs. est. 41c/$409.02M; Q2 total DARTs increased 19% from the year-ago quarter to 797,000

· Fidelity National (FNF) Q2 adjusted EPS 86c/$2.12B vs. est. 82c/$2.09B; announces new 25M share repurchase program

· M&T Bank (MTB) authorizes new $1.8B stock repurchase program

· Northern Trust (NTRS) approves new stock repurchase program of 25M shares; raises quarterly dividend to 55c from 42c

· LegacyTexas (LTXB) Q2 EPS 59c vs. est. 68c; 2Q net interest margin 3.93% and 2Q provision for credit losses $17.5M

· United Community Financial (UCFC) Q2 EPS 19c (in-line) and reports Q2 NII $21.4M; Q2 net interest margin 3.36% vs. 3.46% last year

· Fulton Financial (FULT) Q2 EPS 20c vs. est. 13c; 2Q net interest margin 3.39%

· Hope Bancorp (HOPE) Q2 EPS 36c/$138M vs. est. 37c/$139.19M; Q2 net interest margin 3.61% vs. 3.75% last year

· Fifth Third Bank’s (FITB) Financial Risk Solutions group introduced Fifth Third Market Trade, an online platform for executing and confirming foreign exchange trades

· Coastal Financial (CCB) 2.85M share IPO priced at $14.50


· Novartis (NVS) has joined Pfizer (PFE) in shelving price increases for medicines in the US after criticism from President Donald Trump over rising costs

· Rubius Therapeutics (RUBY) 9.53M share IPO priced at $23.00

· AstraZeneca PLC (AZN) said that it is increasing its stockpile of drugs in preparation of a hard Brexit. A spokesperson for the U.K.-listed drug maker said the company has already spent 40 million pounds ($52.8 million) in case of a no-deal scenario. The pharmaceutical major is increasing by 20% its stockpile of drugs that it receives from Europe into the U.K

· Smith’s Group PLC (SMIN.LN) said that its medical division is expected to report a revenue decline for fiscal 2018 as the company returns to overall growth

· Coherus BioSciences (CHRS) said the Committee for Medicinal Products for Human Use identified certain outstanding issues for its pegfilgrastim biosimilar candidate CHS-1701 application after the June 27 meeting

· Cara Therapeutics (CARA) announces offering of 4.5M shares of common stock

· Healthcare Services (HCSG) Q2 EPS 35c/$503.7M vs. est. 38c/$508.36M; increases quarterly dividend to 19.375c per share

· Crinetics (CRNX) 6M share IPO priced at $17.00

· NanoString (NSTG) 4M share Secondary priced at $12.50

Industrials & Materials

· CSX Corp. (CSX) Q2 EPS $1.01/$3.1B vs. est. 87c/$3B; said it expects mid-single digit revenue growth in 2018; says Q2 freight environment strong, yielding volume, pricing gains

· United Continental (UAL) Q2 EPS $3.23/$10.78B vs. est. $3.06/$10.72B; raises FY18 EPS view to $7.25-$8.75 from $7.00-$8.50 (est. $7.69); sees 3Q capacity +4.5% to +5.5% and sees FY capacity +4.5% to +5%, saw +4.50% to +5.50%

· Textron (TXT) Q2 EPS 87c/$3.73B vs. est. 70c/$3.53B; raises FY18 EPS view to $3.15-$3.35 from $2.95-$3.15 (vs. est. $3.16); raises FY18 cash flow view to $750M-$850M

· Marten Transport (MRTN) Q2 EPS 25c/$197.02M vs. est. 22c/$192.97M

· Genesee & Wyoming (GWR) total traffic in June 2018 was 271,166 carloads, a decrease of 3,422 carloads, or 1.2%, compared with June 2017. G&W’s same railroad traffic in June 2018 increased 5,740 carloads, or 2.2%, compared with G&W’s traffic in June 2017

· BHP Billiton (BHP) shares rose after the Anglo-Australian miner said it was aiming to increase iron ore production as much as 3% in 2019

· Airbus (EADSY) said supplier Pratt & Whitney, a unit of United Technologies (UTX), is catching up on engine delays and improvements should be seen in 2H18, Reuters reports

Technology, Media & Telecom

· The European Union plans to hit Alphabet Inc.’s Google (GOOGL) with a record antitrust fine of €4.34 billion ($5.06 billion) on Wednesday, according to an official familiar with the matter

· Mellanox (MLNX) Q2 EPS $1.25/$268.5M vs. est. $1.09/$263.72M; raises FY18 revenue to $1.065B-$1.085B from $1.05B-$1.07B (est. $1.06B) and sees FY18 gross margin 68.5%-69.5%; sees Q3 revenue $270M-$280M vs. est. $269.91M; Q2 gross margin 61.4% vs. 65.5% last year

· Texas Instruments Inc. (TXN) announced that President and Chief Executive Brian Crutcher is out because of code of conduct violations. Chairman Rich Templeton will take on the added roles of president and CEO “on an ongoing, indefinite basis,” and the company said it will not be searching for a replacement.

· Ericsson (ERIC) shares rose 10% after the Swedish telecom equipment maker said it swung to a an operating profit in the second quarter.

· Adtran (ADTN) Q2 adjusted EPS loss (10c)/$128M vs. est. loss (32c)/$127.55M


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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