Morning Preview: October 10, 2018

Terrie AmengualDaily Market Report

Early Look

Wednesday, October 10, 2018

Stock futures are mixed, moving lower with weakness in Europe, as investors continue to watch the developments with China regarding trade and tariffs while markets also await the start of earnings season next week. In Asian markets, The Nikkei Index rose 36 points to settle at 23,506, the Shanghai Index inched higher 4 points to 2,725 and the Hang Seng Index rose 20 points to end at 26,193. In Europe, the German DAX is off over -60 points at 11,900, while the FTSE 100 is down a few points at 7,225. Nickel and copper led losses for industrial metals, while precious metals slid and WTI crude fell further below $75 a barrel. Natural gas was a standout in commodities, with futures rallying as much as 2.4%. Hurricane Michael has become an extremely dangerous category 4 hurricane and is expected to be one of the strongest to hit Florida.

The S&P 500 extended its losing streak to 4-straight days yesterday, with weakness in stocks initially after the International Monetary Fund cut its growth forecast for the first time in more than two years, blaming escalating trade tensions and stresses in emerging markets. Materials and Industrial stocks led the declines after PPG tumbled on disappointing guidance, sparking a selloff. The Nasdaq Composite ended its three-day slide, and rebounding from a two-month low. The CBOE Volatility Index (VIX) gained 1.6% to 15.94, the highest since July 3rd.

Market Closing Prices Yesterday

· The S&P 500 Index slipped -4.09 points, or 0.14%, to 2,880.34

· The Dow Jones Industrial Average slid -56.21 points, or 0.21%, to 26,430.57

· The Nasdaq Composite gained 2.07 points, or 0.03%, to 7,738.02

· The Russell 2000 Index declined -7.65 points, or 0.47% to 1,621.87

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 8:30 AM EST Producer Price Index (PPI) MoM for Sept…est. 0.2%

· 8:30 AM EST PPI Ex: Food & Energy MoM for September…est. 0.3%

· 8:30 AM EST PPI Ex Food & Energy YoY (core) for September…est. 2.5%

· 10:00 AM EST Wholesale Inventories MoM, Aug-F…est. 0.8%

· 12:15 PM EST Fed’s Evans speaks on Economy and Monetary Policy

· 4:30 PM EST Weekly API Inventory data

· 6:00 PM EST Fed’s Bostic speaks on Economic Outlook

Earnings Calendar:

· Earnings Before the Open: FAST

· Earnings After the Close: SAR, VOXX

Other Key Events:

· Global Gaming Expo: G2E 2018, 10/8-10/10, in Las Vegas

· Cowen 21st Annual Therapeutics Conference, 10/9-10/10, in New York

World News

· U.S. Treasury Secretary Steven Mnuchin stopped short of accusing China of purposely depressing its currency, in a newspaper interview published Wednesday, but warned Beijing against engaging in a competitive devaluation of the yuan

· U.K. GDP grew 0.7% in the three months through August, putting the economy on track for its best calendar quarter in almost two years. In August, growth was unchanged. Economists predicted 0.1%

Sector News Breakdown

Consumer

· Conagra Brands (CAG) 16.312M share Secondary priced at $35.25

· Costco Wholesale (COST) had preliminary discussions over the past few months about offering a video streaming service for its executive members, The Information reports

· Keurig Dr Pepper (KDP) backs FY18 adjusted EPS view $1.02-$1.07 vs. est. $1.03

· Sears Holdings Corp. (SHLD) has hired M-III Partners LLC to prepare a bankruptcy filing that could come as soon as this week, according to people familiar with the situation https://on.mktw.net/2C6V5YH

Energy, Materials and Industrials

· Activist hedge fund Trian Fund Management has bought 2.59 million shares of paints and coatings maker PPG Industries Inc. (PPG) according to a filing Tuesday. PPG stock rose nearly 6% in the extended session Tuesday after ending the regular trading day down 10%

· Transports closed near the lows of the day on Tuesday, with the Dow Transports falling over -200 points on the day or 1.85%, with all 20 components in the index lower, led by losses of AAL -6.5%, CAR -6%, ALK -4% and JBLU down over 3%

· International Paper (IP) announces $2B share repurchase program

· Hurricane Michael, an “extremely dangerous” category 4 hurricane and expected to be one of the strongest to hit Florida, is intensifying as it heads north towards the Gulf coast of the US. Michael strengthened into a Category 4 hurricane as it heads toward Florida with winds of 130 miles an hour.

· Scorpio Tankers (STNG) 162.162M share Spot Secondary priced at $1.85

· PSEG (PEG) upgraded to Buy from Neutral at UBS

Financials

· AllianceBernstein L.P. (AB) said preliminary assets under management (AUM) decreased to $550 billion during September 2018 from $551 billion at the end of August. The 0.2% decline was due to market depreciation, partially offset by total firm wide net inflows

· Artisan Partners Asset Management Inc. (APAM) said its assets under management (“AUM”) as of September 30, 2018 totaled $116.6 billion. Separate accounts1 accounted for $58.7 billion of total firm AUM, while Artisan Funds and Artisan Global Funds accounted for $57.9 billion

· Invesco Ltd. (IVZ) preliminary month-end assets under management (AUM) of $980.9 billion, a decrease of 0.7% (from $985.1B). The decrease was driven by unfavorable market returns, net long-term outflows, lower money market AUM and foreign exchange; partially offset by reinvested distributions and non-management fee earning AUM inflows.

· Chubb (CB) files automatic mixed securities shelf

Healthcare

· Bayer AG (BAYRY) halted a study of its blockbuster blood-thinning drug Xarelto after an interim look at the data found patients who received a new heart valve and took the medicine were more likely to die or suffer serious complications – Bloomberg

· Novartis AG (NVS) said results from a post hoc analysis of the Phase II SUSTAIN study of crizanlizumab showed more patients treated with the drug didn’t experience a vaso-occlusive crisis as opposed to those treated with placebo.

· Intuitive Surgical (ISRG) upgraded to Overweight from Neutral at Piper Jaffray and raised tgt to $600 from $540

Technology, Media & Telecom

· SoftBank Group Corp. is in discussions to take a majority stake in WeWork Cos., according to people familiar with the talks. The investment could total between $15 billion and $20 billion and would likely come from SoftBank’s Vision Fund https://on.mktw.net/2IKG14o

· Amazon.com’s (AMZN) Amazon Web Services is said to have signed 5-year deals with Symantec (SYMC) and SAP (SAP) with an estimated combined value of about $1B, Bloomberg reports https://yhoo.it/2OdTzv6

· IDT Corp. (IDT) Q4 EPS 40c/$392.6M compared to 7c and $395M last year; said will discontinue dividend in favor of buybacks; Q4 adjusted Ebitda $16.8M

· IBM, in collaboration with Nvidia (NVDA), reports plans to incorporate new RAPIDS open source software in PowerAI on IBM POWER9, IBM Cloud, and IBM Watson Studio

· MongoDB (MDB) announced it has entered into a definitive agreement to acquire mLab, a San Francisco-based cloud database service

 

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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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