Mid-Morning Look: May 01, 2019

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***Please note: This will be the final Mid-Morning Look for the rest of the week.

***Service will resume normally on Monday May 6th








Mid-Morning Look

Wednesday, May 01, 2019






DJ Industrials




S&P 500








Russell 2000






U.S. equities open with gains across the board early, helped by a 6% advance from Dow component and tech behemoth Apple (AAPL) after strong earnings and guidance while investors digest a mixed bag of economic data as a private payrolls report from ADP came in significantly higher, but ISM manufacturing posted a 30-month low. Trade talks ongoing in China with the U.S., more important data later this week (nonfarm payrolls report on Friday) and a slew of earnings again tonight and the remainder of the week …but today’s highlight likely the FOMC meeting, where expectations are for the Fed to hold rates steady, but likely increase views for their soft stance on rates going forward amid low inflation reports (though jobs data has been solid and stock markets are at all-time highs). US Treasury yields fall after manufacturing data disappoints and the dollar extended its recent pullback from 2019 highs. Oil prices decline after bearish weekly inventory data. New highs for the S&P 500 as gets closer to 3,000!


Treasuries, Currencies and Commodities

·     In currency markets, the US dollar sunk further, dropping after a weak ISM manufacturing report, and pulling back over the last week from 2019 highs ahead of the FOMC meeting later this afternoon where the Fed is expected to hold steady on interest rates, but likely strike a more dovish tone as weaker inflation readings offset a strong economy/rising stocks. Oil prices slide on weaker inventory data, as both the EIA and API reported weekly crude stockpiles rose above consensus views (bearish), while gold little changed. Treasury market’s rally as yields fall across the board on mixed economic data and ahead of the Fed meeting later today.


Economic Data

·     Private payroll data very strong as ADP said U.S. companies added 275,000 workers in April, the biggest monthly gain since last July and exceeding analysts’ forecast of a 180,000 increase. Private payroll gains in the month earlier were revised up to 151,000 from an originally reported 129,000. The ADP figures come ahead of the U.S. Labor Department’s non-farm payrolls report on Friday

·     ISM Manufacturing for April falls to a 30-month low of 52.8, below the 55.0 estimate and from prior reading of 55.3 as new orders fell to 51.7 vs 57.4 MoM, employment fell to 52.4 vs 57.5 while inventories rose to 52.9 vs 51.8; prices paid fell to 50.0 vs 54.3

·     Construction Spending for March fell (-0.9%) worse than the unchanged estimate while February was revised to 0.7% from 1.0%; private construction fell 0.7% in March and private residential construction fell 1.8% to the lowest level since Dec. 2016; public construction fell 1.3% in March







WTI Crude






Spot Gold









10-Year Note





Sector Movers Today

·     Autos; monthly auto sales data released today; 1) HMC April US auto sales rose 0.1% vs. est. 1.9%; 2) FCAU April US auto sales fell (-6.1%) vs. est. (-4.3%) as April Jeep sales fell (-8%) YoY; 3) TM US auto sales fall (-4.4%) vs. est. (-0.7%); 4) NSANY US April auto sales rose 9% vs. est. up 12.6%; auto and auto parts maker MTOR Q2 results beat estimates, boosted by higher truck production, primarily in North America, which partially offset impact of a strong dollar/raises 2019 forecast

·     REITs; EXR 1Q beat that was 2c ahead of the high end of the Company’s own quarterly guidance. Management while raised guidance by 0.5% at the midpoint; GTY 1Q19 AFFO miss, but maintained its 2019 AFFO guidance; OFC posted in-line FFO but noted a ramp in development leasing YTD; PSB posted 1Q19 FFO beat, another quarter of >9% cash rent spreads, and improving cash SSNOI growth; QTS FFO for the quarter fell below consensus though mgmt. affirmed above-consensus FY19 guidance; RPAI reported a 1Q beat and management affirmed the FY19 operating FFO guidance; TCO posted Q1 beat and affirmed guidance; UDR earnings results were largely in line with expectations

·     Medical equipment and devices; TNDM beats again as revs of $66M (up 142% y/y), well ahead of the Street’s $47.5M, as 1) pump shipments increased 232% to 14,732 pumps; 2) operating margin improved to negative 17% from negative 57%; and 3) adjusted EBITDA was positive; EXAS delivered another strong Q1 beat, guided Q2 revenues and volumes above consensus, and raised its FY’19 volume and revenue guide; CRY beat top line estimates and reported in line profitability while leading product lines, On-X and JOTEC continue to grow in the double digits

·     Restaurants; YUM Q1 EPS beat and revs were mostly in-line while Q1 Worldwide comparable sales +4% topped the 2.7% est. on better KFC comps (rose 5%) while Pizza Hut comps were flat; CHEF upgraded to outperform at BMO as believe the pullback and underperformance relative to the group provides a compelling re-entry point; MCD was downgraded at Longbow; DIN with weaker Q1 comp sales (Applebee’s 1.2% below 3.3% est and iHop 1.2% vs. 2.4% est.); DENN reported in-line quarterly results

·     Software movers; PAYC tgt raised by several analysts after sustained good momentum with another beat-and-raise quarter/30% y/y growth and full-year guidance raised to +27% at the midpoint, from 25.5%; TWLO rises on another impressive quarter, with robust customer/revenue growth and expansion rates and raised guidance; SSNC shares fell after cutting its forecast for revenue in 2019, prompting a downgrade by Jefferies saying the story has shifted from high growth to slower growth; TTWO was upgraded to outperform at Cowen as believe that console stocks are poised to benefit from the seasonal trade into the summer followed by the run up in the new console cycle; in security, FEYE Q1 revenue and margins in line with expectations and billings above Street consensus ($181.9M vs. $176.0M est.)



·     AAPL +6%; reported March quarter revenue and EPS ahead of the Street (1% and 4%, respectively). IPhone revenue was above consensus, services revenue increased 16%y/y and was also ahead of the Street, revenue guidance for the June quarter is 3% above consensus

·     CVS +4%; posted a Q1 EPS/revenue beat and boosted its profit outlook to $6.75-$6.90, higher than the $6.68-$6.88 prior view, lifting the beaten up shares

·     EL 4%; raised its full-year guidance for the second time this year after it exceeded expectations in the latest quarter on the back of rising sales in Asia

·     ENPH +26%; after beating quarterly revenue and said it sold out Q2 production

·     HLT +4%; Q1 EPS of 80c beat by 4c on in-line revs of $2.2B as mgmt and franchise fee revenue is projected to increase between 6% and 8% in Q2 compared to Q2 of 2018

·     HRS +6%; raised FY guidance: EPS from continuing operations of $8.15 (from $7.90-$8.00), and revenue of ~$6.72B, up ~9% from fiscal 2018 (increased from previous guidance of up 8-8.5%).

·     MAT +2%; expanded its global licensing pact with DIS for Pixar for upcoming 2020 films

·     NUS +17%; upgraded at Deutsche Bank after Q1 EPS tops highest estimates, helped by better op margins (11% vs. 9.6% YoY) and revs in China better ($209M vs. $193M consensus);

·     PCRX +15%; rises in response to rival pain drug maker HRTX getting CRL from the FDA

·     RCL +6%; earnings topped estimates as bookings and onboard spending lift Royal’s 2019 yield-growth outlook midpoint (excluding Silversea) to 4.8% from 4%, and raises its 2019 EPS view



·     CLX -4%; misses Q3 revenue estimates as cleaning segment sales impacted by a significantly milder cold and flu season

·     FTR -17%; after a larger Q4 EPS loss and said 1 net broadband losses of 38,000 and customer churn of 1.99%, up slightly from Q4

·     HRTX -13%; as received a Complete Response Letter from the FDA for its new drug application for non-opioid postoperative pain medicine HTX-011/CRL stated that the FDA is unable to approve the NDA in its present form based on the need for additional CMC and non-clinical information

·     NBRV -17%; received a Complete Response Letter (CRL) from the U.S. FDA for the NDA seeking marketing approval of CONTEPO(TM) for injection for the treatment of cUTI

·     PBI -19%; after Q1 EPS missed the lowest estimate and also lowered its 2019 guidance

·     TAP -6%; after Q1 EPS and sales fell short of consensus and worldwide brand volume of 18.2M hectoliters was down 4.7% during the quarter


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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