Mid-Morning Look: April 16, 2019

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Mid-Morning Look

Tuesday, April 16, 2019






DJ Industrials




S&P 500








Russell 2000






U.S. equities remain on cruise control, continuing to push back near all-time highs as the S&P 500 index moves within 25 points of its all-time best of 2,940.91 in September, and well off the December lows of 2,346 (straight move up over the last 4-months) on trade deal hopes, the low interest rate environment and positive stocks buying momentum. The Nasdaq Composite a strong start, crossing the 8,000 level as the Nasdaq 100 briefly surpasses its all-time closing highs. Defensive and safe haven assets are broadly under pressure as stocks jump across the board, with gold prices plunging over 1% and Treasury prices sliding (yields moving to April highs). Stocks also helped again by more dovish Fed commentary after Boston Fed’s Eric Rosengren said the central bank does not need to adjust monetary policy at the moment, and Chicago Fed President Charles Evans said rates can stay unchanged until the fall of 2020. Tech outperforms, while healthcare and financials are mixed after earnings results (JNJ, UNH, BAC, and CMA). Pockets of weakness include transports after JBHT quarterly results missed and packaging stocks (IP, PKG, and WRK) after weaker box shipment data. This week also one of the busiest in the IPO market this year with eight names scheduled to price (BWAY, PINS, MNRL, GNLN, HOOK, PLMR, TPTX, and ZM).


Treasuries, Currencies and Commodities

·     In currency markets, the dollar index remains steady a second straight session, little changed as focus turns to earnings while commodity prices are mixed, with gold sliding given the “risk-on” trading attitude by investors with stocks surging. Treasury market’s are down slightly leaving the two-year yield flat at 2.39% and the 10-year yield up 2 bps to 2.57%; U.S. Dollar Index flat at 96.98. Oil prices are also down slightly, pulling back from 5-month highs late last week.


Economic Data

·     Industrial Production for March fell (-0.1%), missing the est. of up +0.2%and after rising 0.1% in February; industrial production was revised up to 0.1% gain from unchanged in Feb. Capacity utilization fell to 78.8% from 79% in Feb., revised down from 79.1%

·     U.S. Home Builders’ Confidence index (NAHB) in April rises to 63 vs 62 last month, according to NAHB/Wells Fargo; the builder confidence rises to its highest level since Oct. 2018; the present single family sales rise to 69 vs 68 last month and future single family sales falls to 71 vs 72 last month; prospective buyers traffic rises to 47 vs 44 last month







WTI Crude















10-Year Note





Sector Movers Today

·     Materials & Chemicals; DWDP downgraded to Sector Perform from Top Pick at RBC Capital after the spin-off of its Dow division based on fundamental economic macro concerns, particularly Europe and China as well as continued weakness in the Agriculture segment after the March floods. Packaging stocks (IP, PKG) decline following “disappointing” March containerboard industry data points reported today as Bank America downgraded shares of both saying box shipments were down a “surprising” 3.0% YoY and inventories declined 47,000 tons

·     MLPs; Barclay’s downgraded ALTM from OW to EW on the back of a reduced growth outlook for the next several years amid growing balance sheet pressure as the company works through the exercise of its JV pipeline options/cut SUN to EW and GLP to UW due to rising wholesale gasoline prices likely reducing margins in 1Q and potentially 2Q. Lastly downgrade SEMG and MIC mainly on valuation, as well as limited visibility for meaningful improvement in underlying fundamentals of the base businesses that would cause material upward revisions to our estimates. Raymond James also a handful of changes as they upgraded ET to Strong Buy from Outperform, while downgraded KMI and OKE from Strong Buy to Outperform on YTD strength and cut MPLX, and TRGP to Outperform (from Strong Buy) on risk/reward assessment

·     Refiners; Goldman Sachs said investors should focus on refiners able to generate free cash flow that can outperform in a $60-$70/bbl Brent environment, and attractive sum-of-the-parts upside while the firm downgraded HFC to sell from neutral on tighter Brent-WTI outlook, weak base oil margins, DK cut to neutral from buy as expects tighter Midland spreads and upgraded CVE

·     Healthcare services and providers; Dow component UNH shares opened higher by over 3% after its results topped views, as added nearly 900,000 new customers in the first quarter, and as a result is raising its year earnings forecast (but shares quickly reversed lower); CERN positive mention by Starboard Value’s Jeff Smith saying it remains cheap even after recent gains (spoke at the 13D Monitor Active-Passive Investor Summit)



·     CRSP +8%; and development partner VRTX gene therapy candidate CTX001 for Fast Track review for the treatment of transfusion-dependent beta thalassemia

·     JBHT -4%; Q1 top and bottom line results missed estimates (Q1 EPS $1.09/$2.09B vs. est. $1.26/$2.20B) while JBI load volumes declined 7% from the same period 2018

·     JNJ +2%: after top and bottom line earnings beat views with in-line mid-point of guidance as JNJ drug sales for arthritis and other autoimmune disorders beat estimates

·     KAR +2%; positive mention by Starboard Value’s Jeff Smith saying valuation is incredibly cheap for this great business with secular tailwinds

·     NFLX +1%; upgraded to buy with $400 tgt at Deutsche bank ahead of earnings after the close tonight on its view that no other streaming platforms are close to the company’s reach

·     OMC +5%; helping lift ad agencies after EPS topped the highest estimates

·     PGR +5%; as Q1 EPS handily topped estimates ($1.83 vs. $1.36 estimate)

·     RNN +41%; as the company and New Jersey and China-based BioSense Global LLC announce a pact to advance the development and commercialization of RX-3117 for pancreatic cancer and other cancers in Greater China

·     SGMS +8%; says Wynn Resorts intends to initially launch its digital sports betting and iGaming applications in New Jersey/services include sports betting and iGaming system

·     WDC +4%; upgraded to buy and tgt raised to $60 at Deutsche Bank saying favorable data points in both hard disk drive and NAND that will support a “solid” second half of the year recovery



·     BAC -2%; after it said the interest-rate boost that lifted Q1 is likely to fade over the rest of this year/said net interest income will probably increase 3% for 2019, down from 6% last year

·     BLKB -3%; CRM acquires Salesforece.org for $300M, which Needham says is BLKB’s biggest competitor and creates add’l challenges

·     CTSH -2%; downgraded at Wells Fargo and lower tgt to $75 (from $82) as see no near-term positive catalysts, while operating headwinds persist

·     FB ; NBC reported it gave favored companies access to user data in some cases and in others denied access to rivals, according to leaked documents seen by NBC Bay Area

·     HFC -2%; downgraded to sell at Goldman Sachs in refiner call

·     HIVE -16%; guides Q1 EPS loss (10c-9c) on revs roughly $33M, below the (1c) loss and $37.5M est.

·     IP -5%; following “disappointing” March containerboard industry data points reported today as Bank America downgraded shares of IP and PKG saying box shipments were down a “surprising” 3.0% YoY and inventories declined 47,000 tons

·     WVE -26%; as Phase 1 study of investigational suvodirsen (WVE-210201) in boys with Duchenne muscular dystrophy had favorable safety and tolerability results.


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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