Mid-Morning Look: March 04, 2019

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Mid-Morning Look

Monday, March 04, 2019

Index

Up/Down

%

Last

 

DJ Industrials

35.13

0.13%

26,061

S&P 500

7.64

0.27%

2,811

Nasdaq

27.95

0.37%

7,623

Russell 2000

-0.55

0.03%

1,589

 

 

U.S. equities open higher after getting a boost on Friday following new details of a possible trade agreement between the U.S. and China overnight. Reports (from the WSJ) indicated that Washington and China could reach a trade deal as early as this month saying the pact would end most U.S. tariffs levied against China in exchange for following up on its own promises to allow in more U.S. exports, among other measures. The news also lifted shares of China’s Shanghai index, which closed above the 3,000 level for the first time since June. Also helping China markets, a report that the country is planning to cut the value-added tax rate that covers the manufacturing sector by 3% points as part of measures to support the slowing economy. Industrials and Technology among the early sector gainers while Healthcare and Utilities decline. The S&P 500 index attempts to hold above the 2,800 level, while the Nasdaq Comp pares gains after trading at its best levels since early October. The dollar advanced despite President Trump warning against it becoming too strong while gold prices sink a 6th straight session that dollar strength and oil prices advance.

 

Treasuries, Currencies and Commodities

·     In currency markets, the U.S. dollar outperforms vs. other currencies as the dollar index (DXY) rises over 0.2%. Commodity prices are mixed as energy prices helping lead the commodity space higher, but the roll in gold prices continue as stocks jump, lessening demand for safe haven investments/gold prices drop a 6th straight session, down over 1% to $1,285 an ounce (a more than $60 point drop since topping out at 10-month highs just 2-months back). After outperformance last week (10-year yield rose 10 bps), the yield on the 10-year is little changed under 2.75% while the 2-year yield remains above 2.55%

 

Economic Data

·     Construction spending for December fell (-0.6%) MoM vs. est. 0.1% gain in the lone piece of economic data today and follows an unrevised 0.8% gain; private construction outlays fell 0.6% after rising 1.3% and private residential construction fell 1.4% after rising 3.4%

 

 

Macro

Up/Down

Last

 

WTI Crude

1.13

56.93

Brent

1.17

66.24

Gold

-14.60

1,284.60

EUR/USD

-0.0044

1.1321

JPY/USD

0.09

111.97

10-Year Note

-0.007

2.748%

 

 

Sector Movers Today

·     Retailers; PLCE shares decline in retail sector after Q4 results missed estimates by a wide margin and issued lower guidance for Q1 and year/sees FY19 adj. EPS $5.25-$5.75 on revs $1.89B-$1.92B well below the est. $7.77/$1.96B; ODP announces a new strategic collaboration with BABA to leverage the companies’ respective strengths to serve U.S. small-medium sized businesses; FL was upgraded to buy at Pivotal following better earnings on Friday; DDS was downgraded to underweight at JPMorgan after stock has rallied 25% year-to-date; in toy space, HAS was upgraded to outperform at BMO Capital

·     Pharma movers; LLY said it is offering a half-price version of its top-selling insulin Humalog, with a the low cost version of the diabetes treatment called Insulin Lispro down at $137.35 per vial (down from $265.20); ASND surges after highly-anticipated Phase III data for its growth hormone drug met its primary endpoint demonstrating superiority to daily TransCon in terms of annualized height velocity (AHV) at week 52; ZTS upgraded to buy at Stifel saying they believe the roadmap for Zoetis is favorable over the next 12-24 months as see accelerating revenue growth in 2020 (and possibly again in 2021) as a renewed Companion Animal (CA) product portfolio takes hold; RKDA rises after a unit was granted a license from Hawaii’s Department of Agriculture that allows for the cultivation of industrial hemp; EVOK falls as received a multi-disciplinary review (DR) letter from the FDA in association with the Gimoti 505(b)(2) NDA

·     Semiconductors; AMAT outperformed early in the semiconductor space; in research, BMO Capital downgraded XLNX to market perform from outperform following a recent surge in the stock price while raised its price target to $125 from $100 while upgraded ON to Outperform and raised price target to $30 from $20 as believes ON will continue to execute on its strategic focuses and will remain structurally more profitable going forward

 

Stock GAINERS

·     ASND +54%; after Phase III data for its growth hormone drug met its primary endpoint demonstrating superiority to daily TransCon in terms of annualized height velocity at week 52

·     CSII +8%; to replace Nutrisystem in the S&P 600 at open on 3/11

·     DISH +4%; was added to best ideas list at Guggenheim as believe DISH offers the most significant upside opportunity in 2019

·     NITE +67%; as BIIB to acquire the company for $25.50 in cash for each share as offer represents a total transaction value of approximately $800 million https://yhoo.it/2ENRxMd

·     LNG +4%; as the WSJ reported reporting that the U.S./China are close to a trade deal that would lift some tariffs/as part of the reported deal, China would buy $18 billion of LNG from Cheniere

·     RKDA +12%; after a unit was granted a license from Hawaii’s Department of Agriculture that allows for the cultivation of industrial hemp

 

Stock LAGGARDS

·     BBBY -3%; after being downgraded to underweight at Barclay’s saying it isn’t seeing signs of a turnaround and that it will be highly difficult for the company to build a home furnishing/decor business, which appears to be a critical factor in the ultimate success of a turnaround

·     CTL -4%; to delay filing 10-K, cites material weaknesses in internal controls

·     DVA -2% after Reuters cited the Trump administration’s effort to cut dialysis costs and introduce a payment model that favors home dialysis over clinic-based treatment

·     ENB -6%; after the company’s Line 3 project to start service a year late in 2020, prompting downgraded from at least three analysts on the news

·     EVOK -58%; as received a multi-disciplinary review (DR) letter from the FDA in association with the Gimoti 505(b)(2) NDA

·     HA -7%; downgraded to sell at Deutsche Bank citing the recent announcement that Southwest plans to begin flights to Hawaii and also compete in the island-hopping market.

·     PLCE -10%; after Q4 results missed estimates by a wide margin and issued lower guidance for Q1 and year/sees FY19 adj. EPS $5.25-$5.75 on revs $1.89B-$1.92B well below the est. $7.77/$1.96B

·     PM ; sees year EPS at least $5.28, down from prior view of at least $5.37 (est. $5.40) as reflects charge from class actions

_________________________________________________________________

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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