Morning Preview: August 24, 2018

Terrie AmengualDaily Market Report

Early Look

Friday, August 24, 2018

Stock futures are edging higher, with major averages on track to open roughly up 0.2% ahead of Federal Reserve chair Jerome Powell’s speech at the Jackson Hole central bankers’ meeting at 10:00 AM EST later this morning, as markets look for hints on the direction of monetary policy. The dollar, which snapped its 6-day losing streak yesterday on strong gains is at session lows ahead of the speech. The U.S. currency took a hit this week after U.S. President Donald Trump said he was “not thrilled” with the Federal Reserve under his own appointee, Chairman Jerome Powell, for raising interest rates. However, several Fed members including Kaplan and George yesterday reiterated the likelihood of additional rate hikes this and next year. Yesterday saw mixed returns as the Nasdaq Composite Index ended a multisession streak of gains, in an up-and-down session on Wall Street. In Asian markets, The Nikkei Index advanced 190 points to settle at 22,601, the Shanghai Index gained 4 points to settle at 2,729 and the Hang Seng Index fell -118 points to end at 27,671. In Europe, the German DAX is up around 20 points trading just under 12,400, while the FTSE 100 is up a few points at 7,570.

Market Closing Prices Yesterday

· The S&P 500 Index dropped -4.84 points, or 0.17%, to 2,856.98

· The Dow Jones Industrial Average fell -76.62 points, or 0.30%, to 25,656.98

· The Nasdaq Composite slumped -10.64 points, or 0.13%, to 7,878.46

· The Russell 2000 Index declined -5.49 points, or 0.32% to 1,717.05

Events Calendar for Today

· 8:30 AM EST Durable Goods Orders, July-P…est. (-1.0%)

· 8:30 AM EST Durable Goods Ex: Transportation, July-P…est. 0.5%

· 1:00 PM EST Baker Hughes Weekly Rig Count

World News

· Germany’s economic growth accelerated in Q2 thanks to solid domestic demand, as the Federal Statistical Office said GDP grew at a quarterly clip of 0.5% or an annualized rate of 1.8% in the second quarter. The outcome marks a pickup from 1.5% annualized growth in the first quarter

· Conservative lawmaker Scott Morrison unseated Malcolm Turnbull in a party rebellion to become Australia’s prime minister, marking a rightward shift for the ruling coalition

· The People’s Bank of China injected Rmb149bn ($22B) into the banking system through loans to commercial banks on Friday

Sector News Breakdown


· Gap (GPS) Q2 EPS 76c/$4.09B vs. est. 72c/$3.99B; Q2 total comparable sales +2% vs. estimate +1.5%; Q2 Old Navy comparable sales +5% vs. est. +4%; Q2 Gap Global comparable sales (-5%) vs. est. (-2.3%) and Q2 Banana Republic comparable sales +2% (in-line)

· Foot Locker (FL) Q2 EPS 75c vs. est. 70c and comp sales up 0.5% vs. est. 0.7%

· Ross Stores (ROST) Q2 EPS $1.04/$3.74B vs. est. $1.01/$3.66B; Q2 comparable store sales up 5% vs. est. 2.5%; sees Q3 EPS 84c-88c vs. est. 88c and still sees Q3 and Q4 comp sales up 1%-2%

· Fortune Brands Home & Security, Inc. (FBHS) signed an agreement to acquire Fiberon, LLC, a leading manufacturer of outdoor performance materials used primarily in decking, railing and fencing products for about $470M

· Hibbett Sports (HIBB) reported Q2 EPS loss (6c) vs. est. 7c on sales $211.1M and comp sales up 4.1%; cuts year EPS to $1.57-$1.75 from $1.65-$1.95 prior and vs. est. $1.85

· Lowe’s (LOW) files automatic mixed securities shelf

Energy, Industrials & Materials

· Cummins (CMI) downgraded to Underweight from Neutral at JPMorgan

· OSI Systems (OSIS) Q4 EPS $1.02/$287.3M vs. est. 94c/$274.13M; sees FY19 EPS $3.80-$4.00 on revs $1.125B-$1.165B vs. est. $3.84/$1.12B; reports Q4 backlog $976M, up 32% from last year


· Deutsche Bank AG (DB) has bought a stake in U.S. payments technology startup ModoPayments LLC, it said late Thursday; DB didn’t disclose financial details of the deal, nor the stake size


· Siemens AG (SIEGY) denied that it was planning a round of 20,000 administrative job cuts, in response to a report published in Germany’s Manager Magazin on Thursday.

· Immunomedics (IMMU) Q4 EPS loss (68c)/$0.39M vs. est. loss (22c)/$6.4M; Q4 cash and cash equivalents $612.1M and recognized $58.9M non-cash expense in 4Q vs. $25.5M a year ago

Technology, Media & Telecom

· Autodesk (ADSK) Q2 EPS 19c/$611.7M vs. est. 16c/$600.4M; 2Q total subscriptions 3.94 million and 2Q annualized recurring revenue $2.35B; reports subscription plan ARR was $1.68B, total ARR was $2.35B; reports total subscriptions of 3.94M at Q2-end; sees FY19 EPS 87c-95c on revs $2.485B-$2.505B vs. est. 90c/$2.49B; sees FY19 total ARR growth 28%-30%, net subscription additions 500K-550K

· Intuit (INTU) shares fell -2%; said Brad Smith will step down as CEO at the end of December, Smith will remain with Intuit and become executive chairman of Intuit’s board; Q4 adjusted EPS 32c/$988M vs. est. 23c/$952.21M; sees Q1 EPS 9c-11c on revs $955M-$975M vs. est. 16c/$988.92M; sees FY19 EPS $6.40-$6.50 on revs $6.53B-$6.63B vs. est. $6.51/$6.55B

· Splunk (SPLK) Q2 EPS 8c/$388.3M vs. est. 5c/$358.51M; sees Q3 revenue $430M-$432M vs. est. $427.56M; Q2 gross margins 78.4%; sees Q3 adjusted operating margin roughly 13%; raises FY19 revenue view to roughly $1.685B from $1.645B (est. $1.65B) while backs FY19 adjusted operating margin view of roughly 11.5%

· HP Inc. (HPQ) Q3 EPS 52c/$14.6B vs. est. 51c/$14.27B; sees Q4 EPS 52c-55c vs. est. 54c; sees FY18 EPS $2.00-$2.03 vs. est. $2.00; continues to anticipate generating free cash flow of at least $3.7B for FY18; Personal systems revenue up 12% y/y and Printing net revenue up 11% y/y

· Veeva (VEEV) Q2 EPS 39c/$209.6M vs. est. 34c/$203.47M; sees Q3 EPS 38c on revs $215M-$216M vs. est. 35c/$210.26M; raises FY19 adjusted EPS view to $1.47-$1.48 from $1.36-$1.38 (est. $1.37) while raises FY19 revenue view to $840M-$843M from $826M-$830M (est. $829.39M)

· VMware (VMW) Q2 EPS $1.54/$2.17B vs. est. $1.49/$2.15B; 2Q billings growth +13% and 2Q free cash flow $726M; raises FY19 adjusted EPS view to $6.14 vs. est. $6.08 and raises FY19 revenue view to $8.82B from $8.78B (est. $8.79B)

· Arista Networks (ANET) will replace GGP (GGP) in the S&P 500 effective prior to the open of trading on Tuesday, August 28

· Globant (GLOB) Q2 EPS 40c/$127.9M vs. est. 39c/$125.23M; sees Q3 EPS 41c-45c on revs $131.5M-$133.5M vs. est. 43c/$130.31M; sees FY18 EPS $1.65-$1.69 on revs $514M-$518M vs. est. $1.67/$510.25M

· Microsoft (MSFT) is being investigated by U.S. authorities over potential bribery and corruption related to software sales in Hungary, WSJ reports

· Netflix (NFLX) upgraded to Buy from Hold at SunTrust


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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