Morning Preview: May 24, 2019

Auto PostDaily Market Report

Early Look

Friday, May 24, 2019

Futures

Up/Down

%

Last

DJ Industrials

181.00

0.71%

25,644

S&P 500

20.50

0.71%

2,839

Nasdaq

48.00

0.66%

7,359

 

 

U.S. stock futures are looking at a rebound after yesterday’s dismal performance, helped by comments from President Trump on trade (seems we spike or fall on any individual comment/tweet) after saying the U.S. could ease harsh measures taken against Huawei Technologies Co. as part of a wider trade deal with China, according to Reuters. The technology sector (and market overall) has been slammed after the Trump administration effectively banned U.S. companies from dealing with the Chinese company last week over concerns that its telecom equipment poses a national security threat, though some companies were to get a 90-day window before the ban begins. Speaking about a possible trade deal Thursday at the White House, Trump said: “If we made a deal, I could imagine Huawei being possibly included in some form or some part of it,” according to Reuters, though he said the company was “very dangerous” from a security standpoint. Also out of Washington, the WSJ reported President Trump is expected to release an executive order as early as next week to mandate the disclosure of prices in the health-care industry, which could direct federal agencies to pursue actions to force a host of players in the industry to divulge cost data. In Asian markets, The Nikkei Index fell -33 points to 21,117, the Shanghai Index was little changed holding at 2,852 and the Hang Seng Index rose 856 points to settle at 27,353. In Europe, the German DAX is higher by about 100 points to 12,050, while the FTSE 100 is up around 50 points to 7,275. European markets are active, as the British Pound snaps its recent decline vs. major rivals (though has slipped from earlier highs) after Theresa May said she will step down as UK prime minister and Conservative party leader June 7th, after failing three times to get a Brexit deal passed through Parliament. Energy stocks are getting a lift amid a rebound for oil after posting its biggest one day drop of 2019 and is on track for its biggest weekly drop this year.

 

It was a rough day on Wall Street yesterday as all three major market indexes declined more than 1% as markets continued to deal with the possibility of a prolonged trade war that will stifle global growth while also pressured as the Fed indicated in its Fed minutes that it may not make rate cuts soon. In addition to the China trade issues, investors dealt with tumbling oil prices which fell below $58 per barrel to its lowest level in 2-months and its worst percentage gain this year. Safe haven assets surged as well with the yield on the 10-year Treasury note plummeting to its lowest since December 2017 (lows below 2.30%).

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -34.03 points, or 1319%, to 2,822.24

·     The Dow Jones Industrial Average fell -286.14 points, or 1.11%, to 25,490.47

·     The Nasdaq Composite plunged -122.56 points, or 1.58%, to 7,628.28

·     The Russell 2000 Index declined -30.25 points, or 1.97% to 1,501.38

 

Events Calendar for Today

·     8:30 AM EST      Durable Goods Orders, Apr-P…est. (-2.0%)

·     8:30 AM EST      Durable Goods Ex; Transportation…est. 0.1%

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

Earnings Calendar:

·     Earnings Before the Open: DXLG, FL, HIBB, THR

 

 

Macro

Up/Down

Last

WTI Crude

0.67

58.58

Brent

0.77

68.53

Gold

-2.35

1,281.05

EUR/USD

0.0009

1.1190

JPY/USD

0.08

109.69

10-Year Note

+0.008

2.331%

 

 

World News

·     UK retail sales were flat in April after several months of strong growth, but the figures were better than estimates. Retail sales in April were flat compared with March, and 5.2% higher than a year earlier, the Office for National Statistics said Friday.

 

Sector News Breakdown

Consumer

·     Decker’s Brands (DECK) shares rose 4%; Q4 non-GAAP EPS 85c/$394.1M vs. est. 7c/$377.97M; sees Q1 non-GAAP EPS loss ($1.25)-($1.15) on revs $250M-$260M below est. ($1.0o)/$267.72M; sees FY20 non-GAAP EPS $8.20-$8.40 on revs $2.01B-$2.12B vs. est. $8.34/$2.09B; reports gross margin of 51.6% vs. 48.0% a year ago; UGG brand revenue fell 7.2% Y/Y to $239M during the quarter, while Hoka One revenue was up 33% to $67M

·     Hibbett Sports (HIBB) Q1 EPS $1.61/$343.3M vs. est. $1.31/$326.1M; sees FY EPS $2.00-$2.15 up from prior view of $1.80-$2.00 (est. $1.89); sees FY comparable sales +0.5% to +2%, saw -1% to +1%; Q1 comp sales rose 5.1% vs. est. 1.2%

·     Bloomin’ Brands (BLMN) upgraded to Buy from Neutral at Guggenheim (follows a downgrade of BMO yesterday)

·     Constellation Brands (STZ) downgraded to Equal Weight at Morgan Stanley

·     Cavco Industries (CVCO) Q4 EPS $2.17/$241.1M vs. est. $1.46/$227M

·     Ross Stores (ROST) Q1 EPS $1.15/$3.8B vs. est. $1.12/$3.79B; Q1 comparable sales +2% vs. est. +1.8% and sees 2Q comparable sales +1% to +2%; sees 2Q EPS $1.06-$1.11 vs. est. $1.13 and raises FY EPS to $4.38-$4.52 from prior $4.30-$4.50 and vs. est. $4.51

 

Financials

·     Legg Mason Inc. (LM) said it is cutting 120 people, or about 12% of staff, and streamlining its executive committee, following activist investor Nelson Peltz joining its board this week

·     Intuit (INTU) Q3 adjusted EPS $5.55/$3.27B vs. est. $5.41/$3.23B; sees FY19 adjusted EPS view to $6.67-$6.69 vs. est. $6.57 and raises FY19 revenue view to $6.738B-$6.758B from $6.53B-$6.63B (est. $6.66B); Small Business, $887M; Consumer, $2.2M; Strategic Partner, $235M and QuickBooks online subscriptions grew 32% to 4.2M

 

Healthcare

·     Dynavax Technologies (DVAX) said it will explore strategic alternatives for its immuno-oncology portfolio and will reduce the company’s workforce and operations to focus resources on Heplisav-B commercialization.

·     Novocure (NVCR) said the FDA has approved the NovoTTF-100L System in combination with pemetrexed plus platinum-based chemotherapy for the first-line treatment of unresectable, locally advanced or metastatic, malignant pleural mesothelioma.

·     Globus Medical (GMED) downgraded to Market Perform from Outperform at Wells Fargo and lowered the price tgt to $41 from $50

 

Industrials & Materials

·     Dow Inc. (DOW) upgraded to Neutral on valuation at JPMorgan

·     Mosaic (MOS) doubles quarterly dividend to 5c per share

·     RBC Bearings (ROLL) announces $100M share repurchase program

·     Umicore to acquire cobalt refining and cathode precursor business in Finland from JV of Freeport-McMoRan (FCX) and Lundin Mining for $150M plus working capital at the time of the close, which was ~$40M at the end of March.

 

Technology, Media & Telecom

·     Autodesk (ADSK) shares fell -8%; Q1 adjusted EPS 45c/$735M vs. est. 47c/$740.13M; sees Q2 adjusted EPS 59c-63c on revs $782M-$792M vs. est. 62c/$788.53M; still sees FY adjusted EPS $2.71-$2.90 vs. est. $2.85; said on track to achieve fiscal 2020 ARR and free cash flow guidance and reaffirming fiscal 2023 targets; total ARR increased 33% to $2.83B and Subscription plan ARR increased 70% to $2.38B

·     DXC Technology (DXC) Q4 EPS $2.19/$5.28B vs. est. $2.09/$5.31B; raises quarterly dividend to 21c from 19c

·     HP Inc. (HPQ) Q2 EPS 53c/$14.04B vs. est. 51c/$13.94B; said delivered solid Q2 financial results, with strong non-GAAP EPS growing double-digits and coming in at the high end of our outlook; sees year EPS $2.14-$2.21 (vs. prior view $2.12-$2.22) and vs. estimate $2.15; said Q2 Personal Systems net revenue up 2% y/y, 2Q Commercial net revenue up 7% y/y, 2Q Consumer net revenue down 9% y/y and 2Q Printing net revenue down 2% y/y

·     HP Enterprise (HPE) Q2 EPS 42c/$7.2B vs. est. 37c/$7.4B; raises FY19 EPS view to $1.62-$1.72 from $1.56-$1.66 and vs. est. $1.65 and reiterates free cash flow guidance range of $1.4B-$1.6B, up over 35% from the prior year

·     Lions Gate (LGF/A) shares fell -4%; Q4 adjusted EPS 11c/$913.7M vs. est. 22c/$947.7M; 4Q adjusted Oibda $103.3M vs. Bloomberg est. $117.9M

·     Splunk (SPLK) Q1 adjusted EPS 2c/$425M vs. est. loss (14c)/$395.38M; sees Q2 revenue roughly $485M vs. est. $479.37M; sees Q2 adjusted operating margin roughly 3%; raises FY20 revenue view to about $2.25B from $2.2B vs. est. $2.22B while non-GAAP operating margin is expected to be approximately 14%

_________________________________________________________________

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.

Live Trading

Open an Account

Paper Trading

Register