Morning Preview: April 05, 2019

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Early Look

Friday, April 5, 2019

Futures

Up/Down

%

Last

DJ Industrials

32.00

0.12%

26,420

S&P 500

4.50

0.16%

2,887

Nasdaq

15.50

0.21%

7,577

 

 

Stock futures are on track for further gains, once again boosted on trade headlines after China’s Xinhua News Agency reported that President Xi Jinping said in a letter to President Donald Trump that substantial progress has been made in U.S.-China trade talks, and called for an early conclusion to negotiations. Xinhua added that Vice Premier Liu He, who met with Trump on Thursday in Washington, said new consensus had been reached on the text of a trade agreement. Also today, markets eagerly await today’s U.S. jobs report, where 177K nonfarm payrolls jobs are expected and 177K private payrolls (after last month’s surprisingly low 20K, 25K results respectively) and the unemployment rate to hold steady at 3.8% with wages to rise 0.3%. Asian and European markets delivered mixed results as the Nikkei Index gained 82 points to 21,807, the Shanghai Index gained 30 points to 3,246 and the Hang Seng Index fell -50 points to 29,936. In Europe, the German DAX is down slightly under the 12,000 level, while the FTSE 100 is up a few points holding above 7,400. Yesterday, stocks closed mostly higher, with the Dow rallying 166 points and the S&P 500 posting its first six-day winning streak since February 2018, on continued hopes that the U.S. and China will reach a trade truce.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 5.99 points, or 0.21%, to 2,879.39

·     The Dow Jones Industrial Average rose 166.50 points, or 0.64%, to 26,384.63

·     The Nasdaq Composite slipped -3.77 points, or 0.05%, to 7,891.78

·     The Russell 2000 Index advanced 6.58 points, or 0.42% to 1,567.49

 

Events Calendar for Today

·     8:30 AM EST      Change in Nonfarm payrolls for March…est. 175K

·     8:30 AM EST      Change in Private Payrolls for March…est. 177K

·     8:30 AM EST      Change in Manufacturing Payrolls for March…est. 10K

·     8:30 AM EST      Unemployment Rate for March…est. 3.8%

·     8:30 AM EST      Average Hourly Earnings for March…est. 0.3%

·     1:00 PM EST       Baker Hughes Weekly Rig Count

·     3:00 PM EST       Consumer Credit for February…est. $17.0B

 

 

Macro

Up/Down

Last

WTI Crude

-0.07

62.03

Brent

-0.25

69.15

Gold

-1.58

1,290.70

EUR/USD

0.001

1.1231

JPY/USD

0.06

111.72

10-Year Note

+0.001

2.531%

 

 

World News

·     President Donald Trump said Thursday he will nominate Herman Cain, the former Republican presidential candidate, to a seat on the Federal Reserve Board. Trump has previously said he will appoint former Wall Street Journal editorial writer Stephen Moore to the Fed (rounding out the two vacant spots on the Fed’s seven-member board)

·     U.K. Prime Minister Theresa May has written to the European Union requesting a further delay to Brexit until June 30, while she struggles to find a cross-party resolution to parliament’s deadlock. In her letter to the Donald Tusk, president of the European Council, May officially asked for an extension that will delay the U.K.’s exit beyond April 12 to June 30, but also requested a “termination clause”, according to the Daily Mail

·     German industrial production in February rose 0.7% month over month, beating analysts’ projections of 0.5%.

 

Sector News Breakdown

Consumer

·     Duluth Holdings (DLTH) Q4 EPS 64c/$250.5M vs. est. 75c/$258.16M; sees FY19 EPS 74c-80c on revs $645M-$655M vs. est. $1.01/$675.01M

·     AquaBounty (AQB) 2.5M share Spot Secondary priced at $2.25

·     Autoliv (ALV) downgraded to Underperform from Sector Perform at RBC Capital

·     Adient (ADNT) upgraded to Sector Perform from Underperform at RBC Capital

·     Constellation Brands (STZ) downgraded to Hold from Buy at Deutsche Bank

 

Energy, Industrials & Materials

·     Science Applications International (SAIC) wins Safety and Mission Assurance Engineering Contract, which has a two-year base period, followed by two two-year options valued at up to $292M

·     Baker Hughes (BHGE) reports the average U.S. rig count for March was 1,023, down 26 from February 2019

·     Greenbrier (GBX) Q2 adjusted EPS 22c/$658.67M vs. est. 24c/$628.73M; new railcar deliveries totaled 5,100 units for the quarter. New railcar backlog, as of February 28, was 26,000 units with an estimated value of $2.7B; lowers FY19 EPS view to $3.60-$3.80 from $4.20-$4.40 (est. $3.61) while backs FY19 revenue view of over $3B (est. $3.09B)

·     CSX Corp. (CSX) downgraded to Neutral from Buy at UBS

·     International Paper (IP) downgraded to Sector Perform from Outperform at RBC Capital

 

Financials

·     Franklin Covey (FC) Q2 EPS loss (25c)/$50.36M vs. est. loss (27c)/$48.9M

·     Marsh & McLennan (MMC) downgraded to Market Perform from Outperform at Wells Fargo

 

Healthcare

·     Acceleron (XLRN) announced it is discontinuing development of ACE-2494, a systemic muscle agent the company had been studying in a Phase 1 healthy volunteer trial for the potential treatment of neuromuscular disorders

·     Merrimack (MACK) announced the company is discontinuing development of MM-310, its antibody-directed nanotherapeutic for the treatment of solid tumors as the result of a comprehensive review of available safety data from its Phase 1 study

·     Novartis (NVS) said Amgen (AMGN) issued a notice of termination of its migraine collaboration agreements with the company based on an alleged material breach of the collaboration agreements. Novartis has filed a lawsuit asking the court to confirm that Amgen has no right to terminate the agreements

·     Chimerix (CMRX) said ContraVir Pharmaceuticals will no longer pursue development of CMX157 and it terminated a license agreement with the company. Chimerix will reacquire all worldwide rights to CMX157, its novel lipid acyclic nucleoside phosphonate, for certain antiviral indications

 

Technology, Media & Telecom

·     Samsung Electronics Co. said it expects to post a 60% decline in Q1 operating profit as memory-chip demand has faded, the latest fallout from a global pullback in spending; said it expected an operating profit of 6.2 trillion South Korean won ($5.5 billion), down from 15.64 trillion won a year earlier and expects revenue to decrease 14% to 52 trillion won for the quarter

·     Amazon (AMZN) is readying earbuds with built-in Alexa access for as early as the second half of this year, according to Bloomberg (taking on AAPL air pods)

·     Viacom (VIAB) upgraded to Outperform from Sector Perform at RBC Capital

·     Baozun (BZUN) 2.25M share Secondary priced at $40.00

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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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