Tuesday, November 13, 2018
U.S. equities have rallied off the lows, as the Dow Jones Industrial Average traded more than 150 points lower Tuesday morning, as a tumble in shares of Dow components Boeing and Home Depot Inc. weighed on markets. However, stocks have been slowly bouncing back, as the Dow has reversed losses to trade higher by 30 points, while the Nasdaq Composite leads today’s gains after falling over 2.7% Monday. The dollar falls from 18-month highs, while Treasuries rally pushing yields lower. In the UK, Prime Minister Theresa May told her cabinet that there were still a “small number of outstanding issues” to be resolved before the UK and Brussels can achieve a Brexit agreement – though there have been many headlines out this morning. With all the earnings and macro news, the real focus remains energy prices as WTI crude oil has tumbled to its lowest price of the year, falling 5% and briefly slipping below the $57 per barrel level. The impact right now only in the energy complex as major US averages unphased (though transports getting a nice bounce on the plunging oil). Stocks looking to rebound after all major averages dropped on Monday. Another focus remains on trade after Bloomberg noted last night Treasury Secretary Steven Mnuchin and China’s Vice Premier Liu He resumed talks before a meeting between Presidents Trump and Xi at the G-20 this month.
Treasuries, Currencies and Commodities
· In currency markets, after the dollar rose to fresh 18-month highs yesterday, European counterparts are rebounding today as the dollar index (DXY) sinks -0.3%; the euro bounces off its lowest levels since June 2017 (1.1216) to edge higher while the pound rises on improved Brexit hopes/commentary. In the U.K., its crunch time as investors are watching whether Tuesday’s meeting of Prime Minister Theresa May’s cabinet will yield anything new.
· Energy futures absolutely bludgeoned again as WTI crude on track for a record 12th straight day of declines, headed for its lowest levels of 2018 (after hitting 4 ½ year highs just a month ago). The move was prompted midday yesterday after a tweet by President Donald Trump added to oil’s woes, as he voiced disapproval over a potential production cut by Saudi Arabia and OPEC, and said prices “should be much lower based on supply!” Also not helping oil prices, OPEC lowers oil demand forecast and warns of oversupply in 2019 in assessment this morning.
· Treasury market’s rise after being closed yesterday for holiday, with the yield on the benchmark 10-year falling over 3 bps to under 3.15%; bonds getting a boost amid rotation out of stocks yesterday; no major US economic data today
· Precious metals extend recent declines; dropping to near $1,200 an ounce, lowest levels in over a month (gold prices have slumped after the dollar touched 18-month highs yesterday)
· AAP +9%; rises following beat on quarterly EPS, revs and comp sales/ Q3 comp sales rose 4.6% vs. est. 2.2%
· BZH +21%; giving a boost to homebuilders after Q4 earnings and sales topped consensus/dollar value of homes in backlog as of September 30 decreased 5.7% to $628.0M
· GE +3%; agreed a deal to raise up to about $4B from selling part of its stake in oilfield services group BHGE, accelerating the break-up plan it set out in June
· JCI +4%; to sell power business for $13.2B in cash to Brookfield Business Partners; expects $11.4B in net proceeds from power business sale
· NVDA +5%; and XLNX both upgraded to positive at Susquehanna as expects the companies to benefit from the market for Artificial Intelligence inferencing
· SLDB +19%; following its Q3 report that included an update on DMD gene therapy candidate SGT-001/dosing has resumed in the Phase 1/2 IGNITE DMD study after being suspended earlier this year over safety concerns
· SWN +5%; two-fold rise as was upgraded to neutral at Bank America while natural gas prices rise to its highest level since 2014 in New York, topping the $4 per mln btu level
· VOD +8%; after a tough quarter came in largely to analysts’ expectations, and new CEO Nick Read set up a path forward, with a dividend freeze to help address heavy debt
· BA -3%; as Boeing’s 737 Oct. net orders 43 vs 61 in Sept./also reports Boeing held back information on 737 that crashed in Indonesia, according to safety experts
· BBY -1%; downgraded to neutral at Bank America saying slowing comp growth and continued margin pressure to likely limit earnings/downgrade is based on tough compares in co’s key products and cost inflation that will make an upside less likely
· EVER -38%; after reported a wider-than-expected loss and provided a downbeat outlook, citing margin compression (downgraded at Bank America)
· HD -3%; posted beat and raise quarterly results, but shares slipped off earlier highs, turning negative as sees Q4 comp sales lower than Q3 due to hurricane impact
· PCG -4%; remains pressured following wildfire impact on the utility
· TDW -9%; falls after quarterly earnings and revenue miss
· TSN -3%; reported a decline in sales in the latest quarter, ($9.99B vs. $10.3B estimate) as the average price for its products fell 4.1% during the quarter
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.