Mid-Morning Look: April 10, 2019

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Mid-Morning Look

Wednesday, April 10, 2019

Index

Up/Down

%

Last

 

DJ Industrials

-18.93

0.07%

26,131

S&P 500

3.51

0.12%

2,881

Nasdaq

19.80

0.25%

7,929

Russell 2000

7.83

0.50%

1,567

 

 

U.S. equities open mixed, as the Dow Industrial Average slips early while the S&P 500 and Nasdaq Composite post modest gains ahead of a busy day today of potential market moving catalysts. On Capitol Hill, big bank CEOs (JPM, GS, C, MS, WFC, etc.) undergo grilling in front of the House Financial Services Committee this morning, questioned on pay, profit and regulation among other items. U.S. investors also digest the latest U.S. inflation data (CPI today, PPI tomorrow) and await minutes of the Federal Reserve’s latest policy meeting later this afternoon. In central bank news, the European Central Bank’s Governing Council keeps key interest rates unchanged (as expected) and said it sees key ECB interest rates remaining at their present level at least through the end of 2019, in keeping with its statement last month. ECB President Draghi with some dovish comments sinking the euro. Treasury prices edge higher a yields slip while the dollar is mixed. U.S. stocks have been soaring to start the year, posting its best Q1 in over a decade, but will the upcoming earnings season and risks of slowing global growth dent those gains in Q2 remains the question.

 

Treasuries, Currencies and Commodities

·     In currency markets, the euro declines after ECB President Mario Draghi one again repeated the ECB’s readiness to adjust all instruments if needed/considered mitigating side effects of negative interest rates. Overall the dollar index (DXY) with a modest bounce after recently pulling back. Commodity prices are mixed with oil prices rebounding despite some bearish inventory data overnight as Venezuela told OPEC that the country’s oil output sank to a new long-term low last month due to U.S. sanctions and blackouts. Treasury market’s rally with the 10-year yield sinking to around 2.47% (down 3 bps)

 

Economic Data

·     Consumer prices for March (CPI) rose 0.4%, in-line with estimates while core prices (ex: food & energy) rose 0.1% vs. est. 0.2%; on a YoY basis core prices rose 2% (slowest in a year) vs. est. 2.1% and overall core prices rose 1.9% YoY (vs. est. up 1.8%)

 

 

Macro

Up/Down

Last

 

WTI Crude

0.48

64.46

Brent

0.44

71.05

Gold

2.80

1,306.90

EUR/USD

-0.002

1.1243

JPY/USD

-0.06

111.08

10-Year Note

-0.03

2.472%

 

 

Sector Movers Today

·     Retailers; LEVI rises after its first earnings report as a public company showed revenue grew near the high end of the company’s expectations, helped by categories outside its main denim lines and in Asia; JWN was upgraded to overweight at KeyBanc noting its powerful brand strength and strong management team in particular; CAL was upgraded to buy at Loop Capital following management meetings that clarified and expanded on near- and long-term company strategy; UAA was assumed coverage at Citigroup with a buy rating (up from neutral prior); TPX rises as Wedbush said the resignation of Mattress Firm CEO Steve Stagner raises the likelihood of a renewed relationship with Tempur Sealy

·     Metals & Materials; Deutsche Bank said improved Chinese demand and supply/demand dynamics specific to aluminum and will drive outperformance for those two metals, while also recommends adding gold to portfolio for 2019 due to more dovish Fed and potential for weaker U.S. dollar – firm upgraded GOLD and PAAS to buy with top picks being TECK, HCC, GOLD, and WPM –firm also raised forecasts for iron ore for next 3 years, saying it will take VALE until around 2022 to get close to the output that was originally planned for 2019 – cuts RYI to hold; RBC downgraded GLNCY to sector perform citing recent rally in shares

·     Asset managers; WDR said its assets under management at the end of March was $71.654 billion, up from $71.64 at the end of February, with market action offsetting outflows; IVZ reports preliminary AUM $954.8B as of March 31, up 1% driven by favorable market returns, non-management fee earning AUM inflows, and reinvested distributions; APAM said AUM as of March 31 totaled $107.8B; TROW reported prelim month-end AUM $1.08 trillion as of March 31; LM prelim AUM of $758.0 billion as of March 31, 2019 – month’s AUM included long-term net inflows of approximately $0.9 billion, driven by fixed income inflows of $1.8 billion and alternative inflows of $0.3 billion

·     Media & Telecom movers; DIS investor day tomorrow (several analyst upgraded into meeting, with BMO raising rating today to outperform); AT said that an FT report that HBO is considering selling its European unit is “completely baseless,” according CEO John Stankey; LBTYA was downgraded to Underperform from Neutral at Bank America; Nomura lowered the high end 1Q and FY19 estimates for CHTR to reflect slower synergy ramp, less advertising revenue, and working capital drag on FCF; CMCSA tgt raised to Street high $53 at Buckingham; Intelsat (I) shares drop after tweet – INTELSAT 29e satellite, just 3 years into service, suffers fuel leak, enters safe mode; customers being relocated; service-life consequences unclear https://bit.ly/2OY07es

 

Stock GAINERS

·     DAL 1%; reports earnings, as strong travel demand boosted Q1 results

·     FSLR +6%; added to conviction buy list and raise tgt to $75 from $64 at Goldman as estimates the Malaysia facility could add as much as 23% upside to his 2021 EPS estimate

·     GILD +1%; upgraded to buy at UBS as believes 2019 estimates will move higher as NASH pre-commercialization spend likely comes out of guidance

·     JBLU +2%; reported strong March traffic data and on reports they could announce service to London, European cities this week (first reported by CNBC)

·     SRNE +9%; as study results show potential non-dopaminergic approach to controlling Parkinson’s motor symptoms in a rodent model

·     TPX +6%; as Wedbush said the resignation of Mattress Firm CEO Steve Stagner raises the likelihood of a renewed relationship with Tempur Sealy

·     TSLA +1%; Reuters reported that a Bipartisan lawmaker group to introduce legislation today that would boost electric vehicle tax credit, granting each automaker a $7,000 tax credit for an additional 400,000 vehicles on top of the 200,000 vehicles eligible for $7,500 tax credits

·     UAA +2%; assumed with a buy at Citigroup (prior analyst had a neutral) as see upside to management’s F19 gross margin guidance

 

Stock LAGGARDS

·     ABC -4%; received two analyst downgrades (Evercore and Bank America) after its largest holder and distribution partner (WBA) last week slashed its forecast, saying its U.S. business faces reimbursement pressures

·     HSDT -51%; after the FDA declined the company’s request for De Novo classification and clearance of its Portable Neuromodulation Stimulator device

·     I -3%; after tweet – INTELSAT 29e satellite, just 3 years into service, suffers fuel leak, enters safe mode; customers being relocated; service-life consequences unclear https://bit.ly/2OY07es

·     LYFT -6%; with expected IPO of Uber coming – LYFT falls under $64 per share (IPO price at $72)

·     MSM -4%; as quarterly results and forecast fell short of expectations, while gross margin outlook also disappointed/said conditions generally remained solid in the industrial economy in the quarter, although there was some moderation in February

·     SNA -3%; downgraded to neutral at Baird on indications of more challenging near-term performance and industry/competitive environment

·     SNAP -3%; after research firm eMarketer “significantly downgraded its growth outlook for Snapchat” following a troubled redesign of the app

·     WDFC -5%; as Q2 revenue of $101.3M missed estimate and issued mostly in-line guidance

_________________________________________________________________

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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