Mid-Morning Look: April 02, 2019

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Mid-Morning Look

Tuesday, April 02, 2019






DJ Industrials




S&P 500








Russell 2000






U.S. equities are mixed as technology shares rise slightly while the Dow Industrial Average is down around 75-points, dragged lower by weakness in WBA after the Dow component lowered its year sales outlook after a weaker Q4 result. Volume is down compared to yesterday when markets spiked following upbeat manufacturing data out of China and the U.S. In economic news, a reading of durable-goods orders sank 1.6%, compared with consensus economists’ estimates for a larger decline. Markets are also watching the UK regarding the ongoing drama of Brexit between the EU as well as upcoming trade talks in the U.S. (tomorrow) with China. Monthly auto sales data released today, following strong gains yesterday on trade deal hopes, while airlines rise on an upbeat outlook from Delta. Overall a small pullback from yesterday levels, but the S&P still near its best levels since October.


Treasuries, Currencies and Commodities

·     In currency markets, the dollar extends its recent gains as the dollar index (DXY) rises to around 97.50 (nearing its 2019 highs of 97.71) after having bounced off its 200-day MA of 95.95 two-weeks ago after the Fed lowered its rate hike outlook. Meanwhile Treasury yields down slightly (10-year at 2.48%) after spiking about 9 bps yesterday to around 2.50% amid a quiet day of economic data while gold prices are little changed at $1,295 an ounce. Oil prices extend gains, adding to yesterday’s 2% advance as WTI crude tops $62 per barrel ahead of inventory data


Economic Data

·     Durable Goods Orders for February fell (-1.6%) vs. est. (-1.8%), the largest decline since October, while Durable goods new orders revised down to 0.1% for Jan. from 0.3%; new orders ex-trans. rose 0.1% in Feb. after 0.1% fall and new orders ex-defense fell 1.9% in Feb. after 0.4% rise







WTI Crude















10-Year Note





Sector Movers Today

·     Autos; LYFT falls further below its IPO deal price last week of $72 per share, with Seaport Global initiating with a sell and $42 tgt this morning; monthly auto sales: TM March US auto sales fell (-3.5%) vs. est. (-5%); FCAU March US auto sales fell (-7.3%) vs. est. down (-6.4%); HMC March US auto sales rose 4.3% vs. est. 0.1%; GM said Q1 US deliveries fell (-7%) as all four brands showed declines); NSANY March US auto sales fell (-7%) vs. est. down (-13.9%)

·     Medical equipment and devices; DGX were upgraded to buy from hold at Jefferies given the belief that UNH’s upcoming rollout of its preferred lab network is a positive catalyst for both stocks, as their likely inclusion should bolster organic growth beginning in 2020; VIVO shares dropped after cutting its forecast as sees Q2 revs $50.5M vs. est. $56.4M; ANGO Q3 EPS and sales both fell short of consensus views; ATRC was upgraded to buy at BTIG

·     Asset managers; BLK is launching its largest sweeping organizational overhaul in years, according to Bloomberg citing an internal memo, installing new leaders at its alternatives investment division, reorganizing staff and shifting more  responsibility for clients to regional leaders; OZM said its assets under management as of April 1 was about $31.5 billion, down from $32.3 billion as of March 1, includes about $325 million of redemptions; AMP sold its Ameriprise Auto & Home (AAH), a business unit of Ameriprise Financial for gross proceeds of $1.05 billion in cash

·     Managed care (UNH, CI, CNC, WCG, HUM) – CMS announced final 2020 Medicare Advantage (MA) rates will rise by 2.53%, a ~1% increase from prelim est. of +1.59% (in-line with most analyst expectations)/Stephens said rate book analysis indicates that CNC and WCG will receive rate updates above the overall industry average, while ANTM’s weighted rate increase will trail the peer group by ~160 basis points

·     Transports; airlines get a lift after DAL guided Q1 adj. EPS view to 85c-95c from 70c-90c prior (consensus 81c) with 1Q preliminary revenue growth about 7% (saw 5%-6% y/y) and 1Q preliminary system capacity up 5% (saw up 4%)



·     ADMA +44%; FDA approves its immunodeficiency disease treatment ASCENIV/ASCENIV is used for the treatment of Primary Humoral Immunodeficiency Disease in adults and adolescents (12-17 years of age).

·     AMP +3%; sold its Ameriprise Auto & Home (AAH), a business unit of Ameriprise Financial for gross proceeds of $1.05 billion in cash https://bit.ly/2Us2U4Q

·     COMM +6%; upgraded to Outperform at Credit Suisse and names it as a top pick with “highest conviction,” and raises the target from the Street-low $20 to the Street-high $34 as sees “material” upside from the Arris International acquisition

·     DAL +6%; guided Q1 adj. EPS view to 85c-95c from 70c-90c prior (consensus 81c) with 1Q preliminary revenue growth about 7% (saw 5%-6% y/y

·     DOW +4%; DWDP announced that it has completed the separation of its Materials Science Division through the spin-off of Dow Inc. (now DOW)

·     FB +2%; Deutsche Bank said its move into e-commerce via its Instagram app could add billions of dollars to the company’s revenue within a few years

·     LW %; tops FQ3 estimates and lifts full-year guidance saying volume was up 4.0% during the quarter and price/mix impacted sales by 3.0%/gross margin was reported at 29.5% of sales vs. 28.1% a year ago

·     QRVO +2%; two analyst upgraded with Goldman Sachs raising to buy from neutral and raised price target to $79 from $66 while KeyBanc upgraded to overweight with an $85 tgt

·     SGMO +29%; in response to interim data from a Phase 1/2 clinical trial evaluating its SB-525 gene therapy in patients with severe hemophilia A



·     APYX -36%; announced it has voluntarily withdrawn its application for premarket notification 510(k) regulatory clearance of J-Plasma/Renuvion for use in dermal resurfacing procedures

·     CVS -3%; down in sympathy with shares of WBA after lower guidance

·     EVOK -44%; received a Complete Response Letter (CRL) from the FDA for its 505(b)(2) NDA for Gimoti for the relief of symptoms associated with acute and recurrent diabetic gastroparesis

·     UGI -6%; said it will buy the rest of APU it doesn’t own for $2.44B in cash and stock; based on Monday’s closing prices, that values AmeriGas shares at $35.325 https://on.mktw.net/2FR32Th 

·     VIVO -17%; dropped after cutting its forecast as sees Q2 revs $50.5M vs. est. $56.4M

·     WBA -13%; lowered its 2019 forecast and posted weaker Q2 results (Q2 EPS of $1.64 missed by 10c on mostly in-line revs); cuts FY19 EPS view to ‘roughly flat’ from up 7%-12% view prior


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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