Morning Preview: July 03, 2019

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Early Look

Wednesday, July 3, 2019

Futures

Up/Down

%

Last

DJ Industrials

66.00

0.25%

26,863

S&P 500

8.50

0.29%

2,988

Nasdaq

32.50

0.41%

7,870

 

 

Stocks are looking at a higher open in the U.S., building on yesterday’s record highs for the S&P 500 Index, despite Treasury markets surging on slowing global growth fears. The S&P 500 set fresh record highs on Tuesday, while the Dow Industrial Average and the Nasdaq are within 1% of their records as 10-year Treasury yield slides to new two-year low of 1.95% after dropping 4 bps yesterday to 1.97%. Note that U.S. stock markets are closed on Thursday for 4th of July and today is a half day as the stock market closes at 1:00 PM EST. It is a busy morning of economic data ahead of the abbreviated market session with jobs data, services numbers, durable goods and factory orders. In Asian markets, The Nikkei Index fell -116 points to 21,638, the Shanghai Index fell -28 points to 3,015 and the Hang Seng Index dipped -20 points to 28,855. In Europe, the German DAX is higher by roughly 100 points to 12,625, while the FTSE 100 is up over 50 points to 7,615. Markets in Europe reacted with enthusiasm this morning as Christine Lagarde, head of the International Monetary Fund, was officially proposed as the new chief of the European Central Bank. In corporate stock news, TSLA shares jump over 7% after a positive delivery update while SYMC shares jump on reports AVGO is in talks to acquire the company.

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     7:30 AM EST      Challenger Job Cuts YoY for June

·     8:15 AM EST      ADP Employment Change for June…est. 140K

·     8:30 AM EST      Trade Balance for May…est. (-$54.0B)

·     8:30 AM EST      Weekly Jobless Claims…est. 223K

·     8:30 AM EST      Continuing Claims…est. 1.675M

·     9:45 AM EST      Markit US Services PMI, Jun-F…est. 50.7

·     9:45 AM EST      Markit US Composite PMI, Jun-F

·     10:00 AM EST    Durable Goods Orders, May-F…est. (-1.3%)

·     10:00 AM EST    Factory Orders for May…est. (-0.6%)

·     10:00 AM EST    ISM Non-Manufacturing Index for June…est. 56.0

·     10:30 AM EST    Weekly DOE Inventory Data

·     12:00 PM EST    Weekly EIA Natural Gas Inventory Data

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 8.68 points, or 0.29%, to 2,973.01

·     The Dow Jones Industrial Average rose 69.25 points, or 0.26%, to 26,786.68

·     The Nasdaq Composite gained 17.93 points, or 0.22%, to 8,109.09

·     The Russell 2000 Index declined -9.13 points, or 0.58% to 1,560.54

 

 

Macro

Up/Down

Last

WTI Crude

0.48

56.74

Brent

0.57

62.98

Gold

6.85

1,425.50

EUR/USD

0.0009

1.1294

JPY/USD

-0.21

107.67

10-Year Note

-0.022

1.953%

 

 

World News

·     The Caixin China services purchasing managers’ index slipped to 52.0 in June from 52.7 in May, Caixin Media Co. and research firm Markit said, the lowest in four months, but remained above the 50 mark that separates expansion of activity from contraction.

·     President Donald Trump, who has criticized the Federal Reserve for not cutting interest rates, said Tuesday that he intends to nominate two economists to fill influential positions on the central bank’s Board of Governors. Trump said he would name to the board Christopher Waller, who is EVP and research director at the Federal Reserve Bank of St. Louis, and Judy Shelton, the U.S. executive director for the European Bank of Reconstruction and Development

·     Investor Intelligence Poll says equity newsletter writers considered bullish rises for a 4th week to 55.2% from 53.3% last week, while those expecting a correction slides to 26.7% from 28.6% and bearish sentiment remains unchanged at 18.1%

·     The top-ranked United States women’s soccer team will face the winner of Wednesday’s semifinal between the Netherlands and Sweden in the Americans’ third straight appearance in the World Cup title match after beating England 2-1 yesterday.

 

Sector News Breakdown

Consumer

·     Tesla (TSLA) shares rose 8%; said in Q2 they achieved record production of 87,048 vehicles and record deliveries of approximately 95,200 vehicles (vs. est. 87,750). Model S/X production 14,517 and deliveries 17,650 (vs. est. 16,430) while Model 3 production 72,531 and deliveries 77,550 (vs. est. 70,960) for total of 87,048 production and 95,200 deliveries. Customer vehicles in transit at the end of the quarter were over 7,400.

·     Usana (USNA) cuts FY19 EPS view to $3.70-$4.10 from $5.00-$5.35 (est. $5.17) while cuts FY19 revenue view to $1.02B-$1.06B from $1.21B-$1.26B (below est. $1.23B); disclosed the challenging consumer environment it encountered in China during the quarter, due largely to the negative media coverage of the health products and direct selling industries in China

·     J Sainsbury PLC (SBRY.LN) said total retail sales were down 1.2% in Q1, dragged down by a poor clothing business sale; the second-largest U.K. grocer by market share said that on a like-for-like basis, sales excluding fuel were down 1.6% in Q1, compared with 0.2% in the prior year

 

Energy, Industrials & Materials

·     The American Petroleum Institute (API) reported that U.S. crude supplies fell by -5M barrels for the week ended June 28, showed stockpile declines of -387,000 barrels for gasoline and -1.7M barrels for distillates.

·     U.S. orders for Class 8 trucks fell 69% y/y to 13,100 vehicles, though figure was up 20% MoM and above the Wells Fargo estimate range of 9K-11K – shares of Cummins (CMI), Paccar (PCAR) and Navistar (NAV) may be active on the data

·     Baker Hughes (BHGE) announces June international rig count for June 2019 was 1,138, up 12 from the 1,126 counted in May 2019, and up 179 from the 959 counted in June 2018

·     Occidental Petroleum Corp.’s (OXY) board has pushed back on activist investor Carl Icahn’s proposal to replace four of its directors.

·     Patterson-UTI (PTEN) reported that for the month of June, the company had an average of 150 drilling rigs operating. For the three months ended June 30, the company had an average of 158 drilling rigs operating

·     Omnova Solutions (OMN) shares jumped over 50% after agreeing to be acquired by Synthomer for $10.15 per share while reports Q2 EPS 12c/$205.7M vs. est. 21c/$216.7M

·     Celanese Corp. (CE) said it expects to record future expense of ~$100m to $110m from closing of manufacturing operations at its site in Mexico

·     German trade association VCI has lowered its outlook for the chemical industry this year; in the first half, chemical sector production declined by 6.5% on year in Germany, while revenue dropped 4% to 95.9 billion euros ($108.29 billion); the trade group revised its outlook for the year downward, now expecting production to decline 4% and revenue to fall 3%.

 

Financials

·     MarketAxess Holdings Inc. (MKTX) announced total monthly trading volume for June 2019 of $182.9 billion, consisting of $91.3 billion in U.S. high-grade volume, $86.5 billion in other credit volume, and $5.0 billion in liquid products volume

·     Unite Group PLC (UTG.LN) has agreed to buy Liberty Living Group PLC from the Canada Pension Plan Investment Board for 1.4 billion pounds ($1.77 billion) in cash and stock https://on.mktw.net/2XoMfl1

 

Healthcare

·     The FDA has accepted Insys Therapeutics’ (INSY) NDA for its investigational, naloxone nasal spray for the emergency treatment of opioid overdose in both adult and pediatric patients

 

Technology, Media & Telecom

·     Symantec Corp. (SYMC) shares jumped after a report that the security software company is being targeted for an acquisition by Broadcom Inc. (AVGO), Bloomberg News reported which is in “advanced talks” to purchase Symantec, and an agreement could be reached within weeks. No potential purchase price was reported https://on.mktw.net/2XoCoeQ

·     Amazon.com Inc. (AMZN) said that it is aiming to create 2,000 new jobs in the U.K. in 2019 as it grows its U.K. business.

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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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