Mid-Morning Look: July 22, 2019

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Mid-Morning Look

Monday, July 22, 2019






DJ Industrials




S&P 500








Russell 2000






U.S. equities open mixed, as the Nasdaq Composite outperforms given strength in the semiconductors sector as investors brace for a busy week of earnings and data releases, with 145 companies of the S&P 500 and ten of the thirty Dow components are due to report this week. Oil prices advanced as tensions in the Persian Gulf rise following Iran’s seizure of a British tanker on Friday. Oil services giant HAL surges after its quarterly results and commentary helped the beaten shares. Also helping lift markets, a CNBC report that a U.S. debt ceiling, budget deal is near final that would suspend debt ceiling for two years. It’s all about earnings this week with some big names in the S&P 500 reporting including FAANG names Facebook, Alphabet and Amazon, along with blue chips including McDonald’s and Boeing. Markets also await fresh economic data with expectations growing for additional stimulus from central banks as the ECB meets later this week and the FOMC will meet next week (with a 25 bps cut “baked into the market, and a small outside chance still of a 50 bps cut as per fed fund futures). A big run of quarterly results led by tech companies and industrial names this week after banks last.


Treasuries, Currencies and Commodities

·     In currency markets, the U.S. dollar with a modest 0.2% gain vs. the British Pound, which dipped back below the 1.25 level while up slightly vs. the yen just shy of 108, and flat vs. the euro. Commodity prices are edging higher, with gold prices flat to little changed, but down from last week’s six-year high levels while oil prices bounce on increased tensions with Iran after they seized a UK oil tanker vessel last Friday. Treasury market’s rally as yields dip to start the week.







WTI Crude















10-Year Note





Sector Movers Today

·     Semiconductors; sector among early gainers after reports that White House economic adviser Larry Kudlow and Treasury Secretary Steven Mnuchin to discuss the U.S. ban on sales to China’s Huawei Technologies Co this week. Also helping, positive ratings changes at Goldman Sachs on equipment stocks, raising ratings on LRCX, AMAT and KLAC on belief that meaningful capex cuts and production adjustments from memory chip makers, coupled with recent supply-side disruptions, will result in an improvement in memory supply/demand and drive higher levels of Wafer Fab Equipment spending in 2020 (also upgraded MU, while cut MRVL, KEYS).

·     Boating/marine sector a focus today, with several analyst cautious on the group; Raymond James downgraded MBUU, HZO and MCFT to market perform from strong buy citing the persistent softness in demand for new powerboats within the U.S. market, punctuated by the double-digit decline in registrations in June which was reported Friday, with registrations down ~14% for the month and down ~6% year-to-date; BC was downgraded to neutral at JPMorgan cut tgt to Street low $46 from $61 saying the company is heavily exposed to the areas of weakness in aluminum fish boats and outboard engines, expects a fall in 2019 sales of boat and propulsion sales; SunTrust lowered estimates and tgts for BC, HZO, MBUU and MCFT following their summer dealer survey and expect a more cautious tone/tempered guidance from mgmt teams

·     Pharma movers; MYL estimates cut at Mizuho on anticipated weakness in the U.S. business, and a disappointing generic Advair launch; VNDA said the FDA identified deficiencies in the marketing application seeking expanded approval of co’s drug Hetlioz to treat jet lag disorder; DRRX shares jumped after entering into agreement with GILD which gets exclusive worldwide rights to develop and sell a long-acting injectable HIV product using Durect’s Saber technology; NTEC shares plunge as its drug for treating symptoms of Parkinson’s disease was not shown to be superior to MRK’s in reducing “daily off time”, the period in which disease symptoms return; generic/specialty names were very weak early (MNK, TEVA)

·     Exchanges & Brokers; Citigroup downgraded NDAQ to sell as sees risk of slowing non-trading organic growth for Nasdaq and believes the company’s operating margin/expense guidance for 2020 may disappoint, while cut ICE to neutral following rally in shares; SCHW was upgraded to outperform at Wells Fargo and upped tgt to $50 (from $42) as believe SCHW’s business is nearing an inflection point as we expect accelerating growth in several key areas/at the same time, are encouraged by updated guidance from the company



·     AMAT +4%; Goldman Sachs upgrade equipment stocks LRCX, AMAT and KLAC on belief that meaningful capex cuts and production adjustments from memory chip makers will result in an improvement in memory supply/demand

·     BG +2%; said it will form a joint venture with BP to create a bioenergy company in Brazil.

·     EFX +1%; agreed to pay at least $575M, and potentially up to $700M, in a settlement with the FTC, the Consumer Financial Protection Bureau, and 50 U.S. states and territories over the 2017 hack that exposed private information of about 147 million

·     HAL +6%; Q2 profit topped estimates by 5cwhile total revenue fell short of consensus, though revenue from international markets rise more than 12% to $2.60B in the quarter

·     RPM +8%; Q4 adjusted EPS topped estimates by 10c on in-line revenue of $1.6B, while Ebitda beat $241M vs. est. $226.5M and guidance was mostly in-line for the year

·     SKIS +112%; rises after MTN agreed to buy the ski resort owner for $11 per share in stock in a deal valued at $264M https://bit.ly/2JIjuHo



·     BHVN -1%; said the FDA issued a Complete Response Letter (CRL) for its marketing application for NURTEC (riluzole) for the treatment of amyotrophic lateral sclerosis (ALS).

·     CADE -17% after big earnings and revenue miss/2Q19 EPS came lower than expected mostly driven by an elevated provision resulting from four C&I credits

·     CALM -3%; Q2 EPS and revenue missed estimates, reports egg sales rose 1.1% Y/Y to 254.772M in Q4 saying the average price decreased 37.3% to $1.062 per dozen and cut its dividend

·     LII -3%; posted Q2 earnings that missed expectations and cut its full-year outlook, citing adverse weather conditions/residential heating and cooling revenue fell 4% to $689M vs. $733M and cuts FY19 adjusted EPS view to $11.30-$11.90 from $12.00-$12.60

·     MBUU -10%; weakness in boating and marine stocks (BC, MCFT, HZO) after weak monthly boating data late Friday prompted many analysts to downgrade stocks/lower estimates

·     NFLX -2%; shares down for an 8th straight session, third day since earnings results on lower subs, and now down over 18% during this losing streak

·     PETS -3%; after Q1 EPS of 26c missed the 46c estimate as sales and gross margins were negatively impacted by increased online competition


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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