Morning Preview: June 26, 2019

Auto PostDaily Market Report

Early Look

Wednesday, June 26, 2019

Futures

Up/Down

%

Last

DJ Industrials

108.00

0.41%

26,672

S&P 500

13.50

0.46%

2,935

Nasdaq

54.50

0.71%

7,683

 

 

Stock futures in the U.S. are pointing to a higher open on Wall Street, helped after U.S. Treasury Secretary Steven Mnuchin rallied said a trade deal with China is mostly done. Mnuchin said to CNBC that “We were about 90% of the way there (with a deal) and I think there’s a path to complete this,” without offering specifics. “The message we want to hear is that they want to come back to the table and continue because I think there is a good outcome for their economy and the U.S. economy to get balanced trade and to continue to build on this relationship,” he said, adding he’s confident President Donald Trump and China’s president Xi Jinping will make inroads into those stalled talks at the weekend Group of 20 meeting. The headlines trumped comments last night reported by Reuters that the U.S. will not agree to any concessions or conditions on tariffs to restart trade talks with China. President Donald Trump is expected to meet with China’s President Xi Jinping on Saturday at the G-20 summit in Japan with hopes of restarting trade talks that stalled in early May, but expectations for a breakthrough are low. On Monday, China called for concessions by both sides, but the U.S. is unwilling to do that, a senior administration official told Reuters. In Asian markets, The Nikkei Index fell -107 points to 21,086, the Shanghai Index slipped -5points to 2,976 and the Hang Seng Index gained 36 points to 28,221. In Europe, the German DAX is higher by over 70 points to 12,300, while the FTSE 100 is up a few points to 7,430. Earnings in the chip space (MU) and transports (FDX) will impact some specific sectors, but all eyes remain on the G20 this weekend. U.S. stocks slid on Tuesday, led lower after Federal Reserve Chairman Jerome Powell said the central banks was still monitoring the economy for signs of weakness and would seek to avoid a knee-jerk reaction in terms of cutting benchmark interest rates. Stocks fell earlier on the day after fresh U.S. housing and consumer confidence data came in weaker than expected, which potentially could give the Federal Reserve more ammo to cut rates in the near future.

 

Market Closing Prices Yesterday

·     The S&P 500 Index slumped -27.97 points, or 0.95%, to 2,917.38

·     The Dow Jones Industrial Average fell -179.32 points, or 0.67%, to 26,548.22

·     The Nasdaq Composite dropped -120.98 points, or 1.51%, to 7,884.72

·     The Russell 2000 Index declined -9.05 points, or 0.59% to 1,521.04

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Durable Goods Orders, May-P

·     8:30 AM EST      Durable Goods Ex: Transportation

·     8:30 AM EST      Advance Goods Trade Balance for May

·     10:30 AM EST    Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ATU, GIS, PAYX, RAD, SCHN, UNF

·     Earnings After the Close: FUL, KBH, MLHR, PIR, WOR

 

Other Key Events:

·     SunTrust 2nd Annual Clinic Day in New York

·     Global Annual Meeting of Drug Information Association, 6/24-6/27, in San Diego

 

 

Macro

Up/Down

Last

WTI Crude

1.00

58.83

Brent

0.79

65.84

Gold

-16.10

1,407.35

EUR/USD

-0.0002

1.1365

JPY/USD

0.47

107.67

10-Year Note

+0.026

2.023%

 

 

World News

·     Special counsel Robert Mueller will testify before the House Judiciary and Intelligence committees on July 17, Reps. Jerry Nadler, D-N.Y., and Adam Schiff, D-Calif., announced late Tuesday.

·     Investor Intelligence poll shows equity newsletter writers seen as bullish rises a third week to 53.3% from 50.5% last week (its highest level since May 8th), while those expecting a correction tumbled a third week to 28.6%, a 7-week low, from 31.1%. Those considered bearish slipped to 18.1% from 18.4% last week; they stood at 34.6% at the end of 2018

 

Sector News Breakdown

Consumer

·     Target Corp. (TGT) announced its first-ever “Target Deal Days,” scheduled for July 15 and 16, to build upon the success of last year’s one-day sales event. Amazon.com Inc. (AMZN) had announced earlier Tuesday its Prime Day event will fall on the same dates, stretching over two days for the first time.

·     Protein stocks fell midday on Tuesday after reports the Justice Department has opened a criminal probe into allegations that chicken processors, including Tyson Foods (TSN), Pilgrim’s Pride (PPC) and Sanderson Farms (SAFM), colluded to fix poultry prices, according to Bloomberg

·     Big Lots (BIG) reaffirms Q2 and FY19 outlook in connection with the appointment of Jonathan Ramsden has been appointed Executive Vice President, Chief Financial and Administrative Officer, as previously disclosed on May 31

·     VICI Properties (VICI) 100M share Secondary priced at $21.50

 

Energy

·     The American Petroleum Institute (API) reported U.S. crude supplies dropped by -7.5M barrels for the week ended June 21, while showed a stockpile decline of -3.2M barrels in gasoline, and a weekly build o 160K distillate supplies

·     Iraq’s prime minister is denying allegations that drones which targeted Saudi oil pipelines last month could have taken off from Iraq, rather than Yemen.

·     Noble Corp (NE) says utilization excluding cold stacked units for its floating units expected to be 89% in 2Q; sees 2Q jackups utilization at 98%

 

Financials

·     IHS Markit (INFO) Q2 adjusted EPS 71c/$1.14B vs. est. 65c/$1.14B; backs FY19 adjusted EPS view $2.52-$2.57 (est. $2.55) and also backs FY19 revenue view $4.425B-$4.5B, including total organic growth of 5%-6% 

·     State Street (STT) downgraded to neutral from buy at UBS and cut tgt to $58 from $68

·     Qudian (QD) files to sell $250M of convertible senior notes due 2026

 

Healthcare

·     Lilly (LLY) said the FDA has granted fast track designation to empagliflozin for the reduction of the risk of cardiovascular death and hospitalization for heart failure in people with chronic heart failure

·     The Medicines Co. (MDCO) 4.545M share Secondary priced at $33.00

·     Global Blood Therapeutics (GBT) announces $200M common stock offering

·     Interxion (INXN) files to sell 4M newly issued ordinary shares

 

Industrials & Materials

·     FedEx (FDX) Q4 adjusted EPS $5.01/$17.8B vs. est. $4.93/$17.88B; said Q4 operating income was negatively affected by lower FedEx International Priority package and freight revenues at FedEx Express, higher costs at FedEx Ground and business realignment costs primarily associated with the U.S.-based voluntary employee buyout program; sees FY20 EPS growth low-single digits vs. est. $16.65; said operating income at FedEx Ground and FedEx Freight is expected to increase due to higher revenues

·     AeroVironment (AVAV) Q4 EPS 26c/$87.9M vs. est. 26c/$82.44M; sees FY20 adjusted EPS $1.47-$1.67 on revs $350M-$370M vs. est. $1.61/$351.23M

·     LyondellBasell (LYB) said it sees Q2 Ebitda up about 10%-20% QoQ; sees Q23 EPS $2.79-$2.91 vs. est. $2.78

·     Kaman (KAMN) has agreed to sell its distribution segment to affiliates of Littlejohn & Co. for $700 million in cash.

 

Technology, Media & Telecom

·     Micron (MU) Q3 EPS $1.05/$4.79B vs. est. 83c/$4.77B; sees Q4 EPS 45c plus/minus 7c on revenue $4.5B plus/minus $200M, vs. est. 78c/$4.9B; sees Q4 gross margin 29% plus/minus 150 basis points and sees Q4 operating expenses $785M plus/minus $25M; says it plans to reduce its capital expenditures in fiscal 2020 to help improve industry supply-demand balance

·     Shutterstock (SSTK) announced that Co-COO and CFO Steven Berns will depart from his roles at Shutterstock to pursue other opportunities, effective immediately

·     SYNNEX (SNX) Q2 adjusted EPS $2.86/$5.72B vs. est. $2.71/$5.52B; sees Q3 adjusted EPS $2.80-$2.92 on revenue $5.55B-$5.85B vs. est. $2.79/$5.58B

·     Apple Inc (AAPL) on Tuesday confirmed that it has acquired self-driving shuttle firm Drive.ai. Technology news website The Information reported earlier this month that the iPhone maker was considering acquiring the firm

·     Cambium Networks (CMBM) 5.8M share IPO price $12.00

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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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