Morning Preview: September 27, 2018

Terrie AmengualDaily Market Report

Early Look

Thursday, September 27, 2018

Stock futures in the U.S. are looking to rebound after yesterday’s late day decline dragged markets into the “red”, but markets are currently looking at a flat open. Markets are still trying to digest yesterday’s FOMC interest rate hike decision while still dealing with the increased tensions between the U.S. and China after President Trump accused Beijing of trying to interfere in the U.S. midterm elections and of attempting to damage him politically. The comments come following the ongoing trade dispute between the two where each imposed new tariffs on one another recently. A couple of potential political items on the agenda today include a meeting between President Trump and deputy attorney general Rod Rosenstein (reports earlier in the week he may be fired or resign) as well as Supreme Court nominee Brett Kavanaugh and Christine Blasey Ford, who’s accused him of sexual assault, will present dueling accounts of what happened 36 years ago at 10:00 AM EST today in a Senate committee hearing. On the economic front, second-quarter GDP is expected to be confirmed at 4.2%, while weekly jobless claims may have remained near historic lows at 210,000 last week

Stocks ended with a thump on Wednesday as Wall Street plunged into negative territory the final 30-minutes of trading, led by a sell-off in bank stocks in the wake of the Federal Reserve’s latest interest rate decision. The FOMC, as widely expected, boosted its target range for benchmark rates 25 bps to 2%-2.25%, as Fed dots show 12 of 16 officials favor four rate hikes in 2018 (one more this year) and three in 2019. Markets took the news in stride, pushing to intraday highs shortly after the 2:00 PM EST statement. However, stocks started turning after Fed Chairman Powell began his press conference, culminating in a late day plunge that pushed the Dow Industrials down 200 points from its highs. Chairman Powell, although not directly saying stocks are expensive, did say by some valuation measures stocks high historically. That coupled with some late quarter market positioning/rebalancing after strong gains likely led to the late day reversal.

In Asian markets, The Nikkei Index dropped -237 points (1%) to settle at 23,796, the Shanghai Index dipped -15 points to close at 2,791 and the Hang Seng Index slipped -101 points to end at 27,715. In Europe, the German DAX is down about -50 points at 12,330, while the FTSE 100 is up a few points around 7,520. Italian markets/currencies slipped amid concerns about the government’s looming budget announcement. Italy’s new government was expected to present its budget targets Thursday, but the two major coalition parties have reportedly been sparring with Economy Minister Giovanni Tria over an acceptable target.

Market Closing Prices Yesterday

· The S&P 500 Index slumped -9.59 points, or 0.33%, to 2,905.97

· The Dow Jones Industrial Average fell -106.93 points, or 0.40%, to 26,385.28

· The Nasdaq Composite dropped -17.11 points, or 0.21%, to 7,990.37

· The Russell 2000 Index declined -17.20 points, or 1.01% to 1,691.61

Events Calendar for Today

· 8:30 AM EST Gross Domestic Product for Q2-T…est. 4.2%

· 8:30 AM EST Personal Consumption for Q2-T…est. 3.8%

· 8:30 AM EST GDP Price Index Q2-T…est. 3.0%

· 8:30 AM EST Core PCE QoQ Q2-T…est. 2.0%

· 8:30 AM EST Durable Goods Orders for Aug-P…est. 2.0%

· 8:30 AM EST Durables Goods Orders Ex: Transportation, Aug-P…est. 0.4%

· 8:30 AM EST Weekly Jobless Claims…est. 210K

· 8:30 AM EST Continuing Claims…est. 1.678M

· 8:30 AM EST Advance Goods Trade Balance for Aug…est. (-$70.6B)

· 9:45 AM EST Bloomberg Consumer Comfort Index…prior 60.2

· 10:00 AM EST Pending Home Sales MoM for Aug…est. (-0.5%)

· 10:30 AM EST Weekly EIA Natural Gas Inventory Data

· 11:00 AM EST Kansas City Fed Manufacturing Index for Sept…est. 17

Earnings Calendar:

· Earnings Before the Open: ANGO, CAG, CCL, FGP, MKC, RAD

· Earnings After the Close: AEHR, CAMP

World News

· The International Monetary Fund (IMF) said a revised, “staff-level” arrangement with Argentina brings the total amount of financing up to $57 billion from $50 billion.’

Sector News Breakdown


· Bed Bath & Beyond (BBBY) shares fell over 15% as Q2 EPS 36c/$2.935B below the consensus 50c/$2.96B; Q2 comp sales fell (-0.6%) vs. est. up 0.4% and included strong sales growth from the company’s customer-facing digital channels, and sales from stores that declined in the mid-single-digit percentage range; sees FY18 EPS at about $2.00 vs. est.$2.27; says on track to achieve growth in net earnings by FY2020

· H&M Hennes & Mauritz (HNNMY) said its shift online to counter lackluster high street sales helping, after good Q3 sales boosted revenues for the nine months to August

· PetIQ (PETQ) 5M share Secondary priced at $39.00

· McCormick (MKC) Q3 EPS $1.28/$1.35B vs. est. $1.27/$1.36B; sees FY EPS $4.95-$5.00 vs. est. $4.96

· AutoZone (AZO) authorizes additional $1.25B stock repurchase

Energy, Materials and Industrials

· H.B. Fuller (FUL) Q3 adjusted EPS 86c/$770.1M vs. est. 90c/$784.84M; lowers FY18 EPS to $3.05-$3.20 from $3.15-$3.40 vs. est. $3.23; adjusting EPS guidance by $0.10 per share to reflect unfavorable movement in foreign currency exchange rates and narrowing the EPS range to reflect current business conditions

· MPLX purchased an eastern U.S. Gulf Coast export terminal with 4 million barrels of third-party leased storage capacity and a 120,000-bpd dock from Pin Oak Holdings, for approximately $450M

· Bloom Energy Corp. (BE) said it has received $100 million in financing from KeyCorp for commercial and industrial projects.

· Covia (CVIA) announced that it has reduced proppant capacity by 3.3M tons in response to changes in market demand


· RE/MAX Holdings (RMAX) backs Q3 revenue view $54M-$56M vs. est. $53.72M; still sees Q3 adjusted EBITDA $27.0M-$29.0M and agent count increasing 5.0%-6.0% over 3Q17


· Aldeyra (ALDX) files to sell 5.25M shares of common stock

· Ra Medical Systems (RMED) 3.9M share IPO priced at $17.00

· Sutro Biopharma (STRO) 5.667M share IPO priced at $15.00

· Hologic, Inc. (HOLX) announced that it has signed a definitive agreement to acquire Focal Therapeutics, a privately-held company, for $125 million in cash.

· LeMaitre Vascular, Inc. (LMAT) acquired the vascular clot management business of Applied Medical Resources Corporation for $14.2M, of which $11.0M was paid at closing and $3.2M will be paid in two post-closing installments

· ChemoCentryx (CCIX) files to sell $75M in common stock

· Indivior (INVVY) shares slumped for a second day after slashing its revenue guidance for opioid-addiction treatment Sublocade

Technology, Media & Telecom

· Comtech Telecom (CMTL) Q4 EPS 31c/$167.4M vs. est. 27c/$174.6M; sees FY revenue $600.0M-$625.0M vs. est. $603M; sees FY adjusted Ebitda $80.0M-$86M

· Amazon (AMZN) is opening a new store that sells items from its website rated 4 stars and above. The store is set to open this Thursday in New York’s SoHo neighborhood


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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