Morning Preview: September 21, 2018

Terrie AmengualDaily Market Report

Early Look

Friday, September 21, 2018

U.S. stock futures are pointing to a higher open, looking to build on record closing highs for the Dow Industrials and S&P 500 index while tracking strong gains overnight in Europe and Asia. Oil prices rise ahead of a meeting of OPEC members and other large crude exporters this weekend in Algeria that will focus on production increases as U.S. sanctions restrict Iranian exports. Treasury yields edge higher in what has been a good week, with the 10-year rising as high as 3.09% (4-month highs) while the dollar steadied after weakness yesterday. There is only one piece of data this morning, the Manufacturing PMI report at 9:45 AM EST, with markets looking for further confirmation of the improved US economy as the U.S. Federal Reserve makes its interest-rate decision next week (rate hike expected). In corporate news, shares of semiconductor company Micron Technology Inc. (MU) fell overnight after Q1 results.

Record highs on Thursday as the Dow Industrials and benchmark S&P 500 index, while the tech heavy Nasdaq Cop and Russell 2000 played catch-up. The Dow traded to new all-time intraday record highs, surging another +200 points (taking out the January 26th record closing high of 26,616), while the S&P 500 tops its all-time best of 2,916.50 on 8/29. Major averages are on pace for solid returns this week as investors put trade/tariff fears to the back burner in favor of focusing on the economy.

In Asian markets, The Nikkei Index gained 195 points to settle at 23,869, the Shanghai Index jumped 68 points (2.5%) to close at 2,797 and the Hang Seng Index jumped 475 points to settle at 27,953. In Europe, the German DAX is higher by about 80 points at 12,400, while the FTSE 100 is up around 70 points at 7,440. In emerging markets, volatility erupted in India’s stocks market led by sharp declines in shares of financials taking the BSE Sensex from a 1% gain to a drop of as much as 3%.

Market Closing Prices Yesterday

· The S&P 500 Index jumped 22.80 points, or 0.78%, to 2,930.75

· The Dow Jones Industrial Average rose 251.22 points, or 0.95%, to 26,656.98

· The Nasdaq Composite gained 78.19 points, or 0.98%, to 8,028.23

· The Russell 2000 Index advanced 17.25 points, or 1.01% to 1,720.18

Events Calendar for Today

· 9:45 AM EST Markit US Manufacturing PMI, Sept-P…est. 55.0

· 9:45 AM EST Markit US Services PMI, Sept-P…est. 55.0

· 1:00 PM EST Baker Hughes Weekly Rig Count

Sector News Breakdown

Consumer

· United Natural Foods (UNFI) Q4 EPS 76c/$2.592B vs. est. 85c/$2.61B; sees FY19 adjusted EPS $3.48-$3.58 vs. est. $3.54 and sees FY19 revenue $11.1B-$11.3B vs. est. $11.03B (guidance excludes impact of pending Supervalu acquisition);

· Steelcase (SCS) Q2 EPS 41c/$875.8M vs. est. 29c/$873.7M; sees Q3 EPS 28c-33c on revs $885M-$915M vs. est. 25c/$834.2M; 2Q gross profit margin 33%

· Pier 1 Imports (PIR) preliminary Q2 EPS (64c)-(62c) loss vs. est. loss (55c); Q2 prelim comp sales down (-11.4%) and sees Q2 quarter-end inventories to decrease approximately 17% versus a year ago; also discontinues FY19 guidance

· Under Armour (UAA) upgraded to Neutral from Underweight at JPMorgan

· Skyline (SKY) 10M share Secondary priced at $29.25

· Farfetch (FTCH) 44.244M share IPO priced at $20.00

· McDonald’s Corp. (MCD) plans to raise its quarterly dividend 15% to $1.16 per share from $1.01

Energy

· Royal Dutch Shell (RDS/A) is in discussions to sell $1.3 billion worth of assets in the Caesar Tonga field in the Gulf of Mexico to Focus Oil, Bloomberg reports https://on.mktw.net/2ppww1E

· Consolidated Edison, Inc. (ED) said one of its subsidiaries has agreed to acquire a Sempra Energy (SRE) subsidiary that owns 981 megawatts (MW) AC of operating renewable electric production projects, for a purchase price of $1.54 billion (projects have $576 million of existing project debt) https://on.mktw.net/2xCwoQ2

· Peabody (BTU) in agreement to buy the Shoal Creek metallurgical coal mine from private coal producer Drummond Company for $400M

Healthcare

· Medtronic PLC (MDT) said that it plans to buy the Israel-based Mazor Robotics Ltd. (MZOR) for $1.64 billion in cash, with holders receiving $58.50 for each ADR https://on.mktw.net/2xErwKo

· Opiant Pharmaceuticals (OPNT) said it has closed a multiyear contract with the U.S. Health and Human Services’ Biomedical Advanced Research and Development Authority (BARDA) valued as high as $4.6M to fund the development of lead candidate OPTN003

· Crispr Therapeutics (CRSP) 4.211M share Secondary priced at $47.50

· Fate Therapeutics (FATE) 9.26M share Spot Secondary priced at $13.50

· Molecular Templates (MTEM) 8.2M share Secondary priced at $5.50

· Viking Therapeutics (VKTX) 9.5M share Secondary priced at $18.50

· Y-mAbs Therapeutics (YMAB) 6M share IPO priced at $16.00

· Fate Therapeutics (FATE) files to sell common stock, no amount given

Industrials & Materials

· American Airlines (AAL) raises price of first and second checked bags by $5 each, to $30 for first bag and $40 for second; change is for tickets purchased starting Sept. 21 for travel in U.S. and other North American and Caribbean destinations (notes first increase since 2010, follows moves by competitors)

· Twin Disc (TWIN) 1.333M share Secondary priced at $22.50

· Veritiv (VRTV) files to sell 1.5M shares of common stock for holders

· Eaton (ETN) upgraded to Buy from Neutral at UBS

Technology, Media & Telecom

· Micron (MU) Q4 EPS $3.53/$8.44B vs. est. $3.33/$8.25B; Q4 adjusted gross margin +61.4%; Q4 cash flow $5.16B vs. $3.2B last year

· Adobe (ADBE) announced it has entered into a definitive agreement to acquire privately held Marketo, the market-leading cloud platform for B2B marketing engagement, for $4.75B, subject to customary purchase price adjustments. With nearly 5,000 customers, Marketo brings together planning, engagement and measurement capabilities into an integrated B2B marketing platform https://on.mktw.net/2xFzfrk

· Texas Instruments (TXN) raises dividend 24%, announces $12B share repurchase plan

· AT&T Inc. (T) defended a court ruling that allowed it to buy Time Warner, arguing that both the law and current industry realities showed the acquisition wouldn’t harm competition

· EVO Payments (EVOP) 7.022M share Secondary priced at $24.50

· Google (GOOGL) employees brainstormed ways to alter search functions to counter the Trump administration’s controversial 2017 travel ban, the Wall Street Journal reported on Thursday, citing internal emails

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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