Morning Preview: September 26, 2018

Terrie AmengualDaily Market Report

Early Look

Wednesday, September 26, 2018

U.S. stock futures are edging higher as Treasury yields fall from multi-month highs and the dollar steadies as markets go into “wait and see” mode ahead of today’s Fed decision at 2:00 PM EST. Stocks finished mixed on Tuesday as the Federal Reserve began its two-day meeting on monetary policy and markets prepare for a third-rate hike of 2018 later today. Defensive utilities and consumer staples fell, countering gains in discretionary and energy shares on Tuesday, while the tech heavy Nasdaq Comp managed to eke out a small gain despite a pullback in semiconductor stocks on cautious analyst commentary. While the Fed is widely expected to deliver its third rate increase of 2018, investors will follow closely the central bank’s projections for future rate increases as well as comments from Fed Chairman Jerome Powell Wednesday afternoon at his 2:30 press conference. Trade still remains an issue for market sentiment amid ongoing trade clashes between China and the U.S., amid an apparent escalation of tensions between the economic superpowers. In Asian markets, The Nikkei Index rose 93 points to settle at 24,033, the Shanghai Index gained 25 points to end at 2,806 and the Hang Seng Index gained 317 points to finish at 27,816. Chinese and Hong Kong equities were standouts, rising after MSCI said it’s considering increasing the weight of mainland shares in global indexes according to Bloomberg. In Europe, the German DAX is down a few points at 12,350, while the FTSE 100 is flat slightly above the 7,500 level. The U.S. economy could shrink by about 2% in the first year of an all-out trade conflict with the rest of the world, while China and other economies could gain, according to new research published Wednesday by the European Central Bank.

Market Closing Prices Yesterday

· The S&P 500 Index slipped -3.81 points, or 0.13%, to 2,915.56

· The Dow Jones Industrial Average fell -69.84 points, or 0.26%, to 26,492.21

· The Nasdaq Composite gained 14.22 points, or 0.18%, to 8,007.47

· The Russell 2000 Index advanced 3.49 points, or 0.20% to 1,708.80

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 10:00 AM EST New Home Sales MoM for Aug…est. 630K

· 10:30 AM EST Weekly DOE Inventory Data

· 2:00 PM EST FOMC Rate Decision (25 basis point hike expected)

Earnings Calendar:

· Earnings Before the Open: ATU, KMX, OMN, WOR

· Earnings After the Close: BBBY

Other Key Events:

· FOMC Rate Decision at 2:00 PM EST with 2:30 press conference from Fed Chair Powell

· Johnson & Rice 2018 Energy Conference, 9/24-9/26, in New Orleans

· Stephens 8th Annual Bank CEO Forum, 9/24-9/26, in Little Rock

· Denver Gold Forum industry conference, 9/24-9/26, in Colorado Springs

· Bank of America 2018 Global Real Estate Conference, 9/25-9/26 in NY

· Dreamforce (Salesforce.com) 2018 conference, 9/25-9/28, in San Francisco

· Roth Capital 6th Annual Solar and Storage Symposium, 9/25-9/26, in Anaheim

· Wells Fargo 2018 Consumer Forum, 9/26-9/28, in Dana Point, CA

World News

· French consumer confidence dropped unexpectedly in September to its lowest level in more than two years, as the consumer confidence indicator fell to 94 in September from 96 in August, below the long-term average of 100

· Canada’s largest province is set to unveil a new law this week that will shape the future of cannabis legalization in Ontario,sources told MarketWatch on Tuesday, addressing the open question about how the substance will be sold in retail shops in the country’s most populous province https://on.mktw.net/2IfPalb

Sector News Breakdown

Consumer

· Nike (NKE) Q1 EPS 67c/$9.95B vs. est. 63c/$9.94B; Q1 gross margin +44.2% vs. Bloomberg estimate +44.3%; Q1 North America revs rose 6% to $4.15B, Q1 EMEA revs up 11% to $2.61B, Q1 Greater China revs rose 24% $1.38B (Bloom est. $1.40B)

· KB Home (KBH) Q3 EPS 87c/$1.23B vs. est. 77c/$1.26B; 3Q deliveries 2,988 and 3Q adjusted housing gross margin 23.1%; Q3 average selling prices $408.2K vs. $411.4K last year. Net orders for the third quarter increased 3% to 2,685. Net order value declined 5% to $1.02 billion; sees FY18 housing revenue of $4.6B, low end of prior $4.6B-$4.8B view

· Cintas (CTAS) Q1 EPS $1.89/$1.70B vs. est. $1.80/$1.68B; raises year EPS to $7.19-$7.29 from $7.00-$7.15 (est. $7.16) and raises year revs to$6.8B-$6.86B from prior $6.75B-$6.82B (est. $6.81B)

· Daimler (DDAIF) CEO Dieter Zetsche will step down next year from the post he’s held since 2006, handing the reins to Ola Kaellenius

· Rollins (ROL) will replace Andeavor (ANDV) in the S&P 500, S&P SmallCap 600 constituent Inogen (INGN) will replace Rollins in the S&P MidCap 400, and Vanda Pharmaceuticals (VNDA) will replace Inogen in the S&P SmallCap 600 prior to the open of trading on Monday, October 1.

· Scientific Games Corporation (SGMS) announced a new, exclusive three-year contract for lottery instant “scratch” games with one of the world’s leaders in gaming, hospitality and entertainment, Hard Rock International, which owns international trademarks for the Hard Rock® brands

· FlexShopper (FPAY) 10M unit Secondary priced at $1.00

Energy

· The American Petroleum Institute (API) reported that U.S. crude supplies rose by 2.9M barrels for the week ended Sept. 21, showed supplies of gasoline up 949,000M barrels, but distillates fell by -944,000 million barrels

· CenterPoint (CNP) 17M share Secondary priced at $27.75

Financials

· Capital Bancorp (CBNK) 2.229M share IPO priced at $12.50

· Synchrony (SYF) downgraded to Neutral from Buy at Banc America

· The Navigators Group (NAVG) announced the expiration of the 30-day ’go-shop’ period, pursuant to which Navigators will be acquired by The Hartford Financial Services (HIG); during the go-shop period, Navigators solicited 44 potential acquirers, but did not receive any alternative acquisition proposals

· Nelnet has (NNI) withdrawn its application with the Federal Deposit Insurance Corporation and the Utah Department of Financial Institutions to establish Nelnet Bank, a Utah-chartered industrial bank

Healthcare

· Agilent Technologies (A) announced it has signed a definitive agreement to acquire privately-owned ACEA Biosciences Inc., a developer of cutting-edge cell analysis instruments for life science research and clinical diagnostics, for $250M in cash

· Cancer Genetics, Inc. (CGIX) said that it has signed a non-exclusive supply agreement with Agilent Technologies Inc. through which Agilent (A) will manufacture Cancer Genetics’ proprietary FISH probe reagents

· Community Health (CYH) settlement ends DOJ investigation into Health Management Associates’ (HMA) Medicare, Medicaid and Tricare billing for inpatient admissions following emergency room visits between Jan. 2008 and Dec. 2012

· Entasis Therapeutics (ETTX) 5M share IPO priced at $15.00

· Amag Pharmaceuticals (AMAG) has acquired global rights to develop and market digoxin immune Fab, a polyclonal antibody in development for the treatment of severe preeclampsia in pregnant women

· Verastem (VSTM) and CSPC Pharmaceutical Group announced their entry into an exclusive licensing agreement for CSPC to develop and commercialize Verastem Oncology’s COPIKTRA (duvelisib)

· Nightstar Therapeutics (NITE) files to sell 4M American Depositary Shares

· AnaptysBio (ANAB) 2.2M share Secondary priced at $94.46

Industrials & Materials

· AAR Corp. (AIR) Q1 adjusted EPS 54c/$466M vs. est. 52c/$452.93M; Q1 adjusted Ebitda $36.4M

· Raytheon (RTN) was awarded a $1,528,780,740 modification to Foreign Military Sales (Poland) contract W31P4Q-15-C-0022 for Phased Array Tracking Radar to Intercept on Target (PATRIOT)

Technology, Media & Telecom

· Nielsen Holdings Plc (NLSN) which is weighing a sale under pressure from an activist investor, has drawn interest from suitors including Blackstone Group LP and the Carlyle Group LP, Bloomberg reported. The two private equity firms are considering submitting bids for the company https://bloom.bg/2zu1ag2

· Arco Platform (ARCE) 11.111M share IPO priced at $17.50

· SurveyMonkey (SVMK) 15M share IPO priced at $12.00

· CBS Corp. (CBS) named ex-Time Warner CEO Dick Parsons as its interim chairman, filling a role vacated by Les Moonves after he was accused of sexual harassment. The board unanimously approved the move.

· Lam Research (LRCX) downgraded to Neutral from Buy at UBS

· IBM upgraded to Buy from Neutral at UBS

· Ciena (CIEN) downgraded to Neutral from Buy at UBS

· Manhattan Associates (MANH) downgraded to Hold from Buy 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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