Mid-Morning Look: March 29, 2019

Auto PostDaily Market Report

Mid-Morning Look

Friday, March 29, 2019






DJ Industrials




S&P 500








Russell 2000






U.S. equities are looking to end the month and quarter on a strong note, with the S&P 500 on track for its biggest quarterly increase in a decade, with today’s gains being attached to renewed optimism over progress in U.S.-China trade talks, which also pushed stocks higher during the Asian trading session. Helping lift stocks this quarter was hopes of trade deals with top countries, an overly dovish Fed which has changed its outlook to no more rate hikes this year (from prior view of two), strong quarterly earnings results and buying momentum after the December stock swoon. Treasury yields looking to end the quarter at their lowest levels in over 15-months while oil prices also on track for its best quarter in a decade on OPEC production cuts. The trade hopes heading into the week are off-setting a rough weak of economic data globally with softer GDP data yesterday in the US and housing. In stock news today, the first of many highly anticipated upcoming IPOs this year, car hailing company LYFT raised $2.3B by selling 32.5M shares at $72 per share (with Uber, Pinterest, AirBnB among others expected this year). Wells Fargo shares active after CEO Sloan steps down. CLEG shares surged after BMY’s planned takeover of the company was recommended by proxy advisory firm Institutional Shareholder Services. It’s also March 29 but the U.K. is not leaving the EU today, despite years of promises. When the U.K. is actually going to leave is still a matter to be decided, with Prime Minister Theresa May putting her already twice-rejected deal to another vote in Parliament later today.


Coming into today (final day of week, month and quarter): the Dow is heading for a 0.8% weekly gain, while logging a nearly 0.8% drop for March and a roughly 11% charge higher in the first quarter. The S&P 500 is on track for a 0.5% weekly gain, a 1% monthly rise and a quarterly advance of more than 13%. The NASDAQ, on track for 0.4% weekly rise, up 1.8% for the month and surging more than 16% for the first three months of the year. The small-cap Russell 2000, is about to put in a 2.5% March drop, trimming its quarterly advance to just under 15%.


Treasuries, Currencies and Commodities

·     In currency markets, the dollar is mixed to slightly lower after rebounding the last 3-days, posting gains this week against emerging market currencies and the British Pound despite mixed economic data readings/Brexit uncertainty. Commodity prices rebound from yesterday losses, with energy, precious metals higher. Treasury market’s with a turbulent week, as yields have fallen since last Wednesday FOMC meeting reflecting global growth fears – yields steady the last 2-days but the benchmark 10-year remains near 15-month lows.


Economic Data

·     Personal Income for February rose 0.2%, just below the 0.3% estimate while personal spending for Jan rose 0.1%, also missing the mark of 0.3%; January real personal spending rose 0.1% (est. 0.3%); Jan. PCE prices fell (-0.1%) vs. est. unchanged (up 1.4% YoY) while January core PCE prices rose 0.1% below the 0.2% (rose 1.8% YoY); savings rate at 7.5% in January vs 7.7% prior month

·     The January PCE inflation index slipped 0.1% in January to knock the yearly rate down to 1.4% from 1.8%. That’s the lowest level since the fall of 2016, putting it well below the Federal Reserve’s 2% target.

·     Chicago PMI in March slowed to a reading of 58.7 from 64.7, and was below the 58.7 economist estimate; order backlogs fell into contraction territory, while production and new orders fell but were still above their January levels; inventories fell at the fastest pace since July 2018.

·     The U.S. March Final Michigan Sentiment rose to 98.4, topping the 97.8 estimate and was above the 97.8 in the preliminary reading (last month index was 93.8); the expectations index rose to 88.8 vs. 84.4 last month and the economic conditions index rose to 113.3 vs. 108.5 last month

·     New home sales for February rose 4.9% to 667,000 annual rate, above the 620K estimate, while new home sales rose 31k in Feb. from prior month (previous three months’ new home sales data revised down by 51K); the median new home price fell 3.6% y/y to $315,300 while the average selling price at $379,600; months’ supply at 6.1 in Feb. compared to 6.5 prior month







WTI Crude















10-Year Note





Sector Movers Today

·     Auto related sector; car-hailing company LYFT priced its 32.5M share initial public offering at $72 a share, the top of the recently increased price range, valuing the company at about $24 billion; auto dealer stocks active after KMX reported 4Q earnings above market estimates, but comparable store sales for the period lagged expectations saying used unit sales growth was hurt by delays in February tax refunds vs last year; TSLA tgt cut to $215 at JPM and lowers estimate for 1Q Model 3 deliveries to 50K from 55K and total deliveries of 70,500 from 75,500 prior

·     Retailers; H&M’s Q1 net profit was lower than last year but beat forecasts as the company has struggled with its shift to online as it loses foot traffic to stores/says its overstocking issue is under control and it has decreased markdowns; OXM Q4 results mixed as adjusted EPS just beat on slightly weaker sales (and weaker margins at 55.1%) while guides Q1 and year sales below views; YETI downgraded at Morgan Stanley as likes l-t outlook, but sees balanced risk/reward; Barclays said came away from the FL investor day event with incremental confidence in our bullish call on the stock, as believe management is making prudent investments

·     Biotech movers; GILD and GLPG announced results for the experimental arthritis treatment filgotinib “matches best in class efficacy” from competitors like ABBV while putting forward a thus far superior safety profile, according to one analyst (Leerink said Filgotinib could add 10%, or $5 to $6 a share to GILD’s value); BPMC 4.05M share Secondary priced at $74.00; SGMO presented new preclinical data showing significant (>80%) reduction of tau expression in the nonhuman primate brain following administration of zinc finger protein transcription factors

·     Oil Services & Equipment; Wells Fargo downgraded FTSI as the stock is up 47% YTD vs SPX +13% and is discounting active fleet growth and pricing that we believe is aggressive; upgraded OIS based on reasonable LT valuation, more resilient NT L48 completion activity, potential upside from Downhole Technologies margins and in 2020-2021 from offshore equipment orders and upgraded RNGR on attractive valuation and potential FCF generation on a more disciplined business approach. Largest cuts to ests are primarily for select SMid cap/pressure pumpers (CJ, LBRT, SPN, RES)/register slight increases for select companies (HAL, FRAC, OIS, APY)



·     AMRS +17%; successfully delivered on its first milestone for its cannabinoid partner, LAVVAN, earning its first payment of $10M

·     BB +11%; Q4 beats with a net profit of 8c vs. an expected loss of (6c) while software and services revenue totaled $248M (+14% Y/Y)

·     CELG +6%; as BMY’s planned takeover of CELG was recommended by proxy advisory firm Institutional Shareholder Services, saying the deal’s strategic rationale is sound

·     EXP +10%; shares extended late day gains on Thursday after Activist investor Sachem Head Cap requested a break-up of the company/want to sell the wallboard, cement and especially the frac sand businesses

·     KMX +8%; reported 4Q earnings above market estimates, but comparable store sales for the period lagged expectations

·     PRGS +15%; shares jumped after its fiscal 2019 forecast to reflect Ipswitch acquisition as now sees FY adjusted EPS $2.46-$2.52 (est. $2.37) on higher revs

·     SAIC +6%; as Q4 results came in above expectations, and the company says that 2018 results reflects strongest financial performance in five years/Q4 revenues increases 6% Y/Y to $1.2B



·     AZN -6%; agreed to pay up to $6.9 billion to Japan’s Daiichi-Sankyo Co. for the shared rights to a new cancer drug, as the drugmaker further expands in oncology https://on.wsj.com/2uEetqZ

·     DWDP -2% as lowers Q1 revenue view to down high-single digits from previous view of down mid-single digits citing near-term trends and discrete headwinds in some of its key value chains

·     OXM -3%; Q4 results mixed as adjusted EPS just beat on slightly weaker sales (and weaker margins at 55.1%) while guides Q1 and year sales below views

·     RH -17%; as reported its second negative earnings surprise in the past three quarters driven by significant top-line slowdown in the final two months of the fiscal year/cut year outlook

·     SGH -21%; reported EPS slightly ahead but guided revenue/profitability well below as Brazil customers are opting to wait until the 2H to meet local content rules given the weakening pricing environment

·     WFC -1%; as CEO Tim Sloan announced his retirement which drew mixed reviews on Wall Street (upgraded at Raymond James saying removes a “headwind” while Deutsche downgraded to hold citing mgmt uncertainty and Opco calling the change a start of a process, not a resolution)


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.

Live Trading

Open an Account

Paper Trading