Morning Preview: July 22, 2019

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Early Look

Monday, July 22, 2019

Futures

Up/Down

%

Last

DJ Industrials

60.00

0.22%

27,190

S&P 500

8.50

0.29%

2,985

Nasdaq

36.50

0.46%

7,879

 

 

U.S. stocks are pointing to a higher open after pulling back from record highs early last week, with major averages slipping on Friday to post the weakest 5-day stretch for the S&P 500 since May amid renewed geopolitical concerns and sentiment turning lower after Iran said it seized two British oil tankers, the latest escalation of tensions between Tehran and the U.S. After setting its record high on Monday, the index pulled lower the remainder of the week, losing 1.2%, just the second down week for the index in the last seven. Oil prices are higher to start on the Iran concerns, while markets prepare for the busiest week of the earnings season. In Asian markets, The Nikkei Index fell -50 points to 21,416, the Shanghai Index fell -37 points to settle at 2,886 and the Hang Seng Index dropped -394 points to 28,371. In Europe, the German DAX is up around 10 points to 12,270, while the FTSE 100 is up around 20 points to 7,530. The other market catalyst comes next week, when the Federal Reserve is expected to lower interest rates to stimulate the economy. Reports from China state media that face-to-face talks with the U.S. can happen shortly as China has begun a number of goodwill gestures this weekend focused on U.S farm goods. In the UK, its Prime Minister is set to be announced on Tuesday.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -18.50 points, or 0.62%, to 2,976.61

·     The Dow Jones Industrial Average fell -68.77 points, or 0.25%, to 27,154.20

·     The Nasdaq Composite dipped -60.75 points, or 0.74%, to 8,146.49

·     The Russell 2000 Index declined -7.73 points, or 0.50% to 1,547.90

 

Events Calendar for Today

·     8:30 AM EST      Chicago Fed Nat Activity Index for June…est. 0.10

 

Earnings Calendar:

·     Earnings Before the Open: BOH, CADE, CALM, CBU, GNC, HAL, LII, ONB, PETS, RPM, SALT

·     Earnings After the Close: ACC, AMTD, BDN, BRO, CE, CR, ELS, FBK, HXL, STLD, WASH, WHR, ZION

 

 

Macro

Up/Down

Last

WTI Crude

0.99

56.62

Brent

1.23

63.70

Gold

0.00

1,426.70

EUR/USD

-0.0001

1.1220

JPY/USD

0.18

107.89

10-Year Note

-0.01

2.047%

 

 

World News

·     British finance minister Philip Hammond said on Sunday he would resign if Boris Johnson became prime minister because he felt unable to support a leader happy to take the country out of the European Union without a deal

·     Puerto Rico’s embattled governor Ricardo Rossello said he will not seek re-election but will not resign as the island’s leader, though he will step down as head of his pro-statehood party.

·     Trading on China’s new Nasdaq-style board for homegrown tech firms hit a high on Monday, sending shares up as much as 520%, increasing the firms’ combined value by $44 billion and surpassing the expectations. Modeled after Nasdaq, and complete with a U.S-style IPO system, STAR may be China’s boldest attempt at capital market reforms yet – Reuters

 

Sector News Breakdown

Consumer

·     Target (TGT) is another company that’s withstood pressure from Amazon according to Barron’s saying its operating earnings are improving and shares could rise further

·     Cal-Maine (CALM) Q4 EPS loss of (41c)/$280.6M, wider than the (31c) est. loss and missing the $294.5M estimate; Q4 dozen eggs rose 1.1% YoY to 254.8M

·     Hershey (HSY) upgraded to neutral from sell at UBS and raise tgt to $145

 

Financials

·     Equifax Inc. (EFX) is nearing a deal to settle several state and federal investigations into a 2017 data breach that exposed nearly 150 million Americans’ Social Security numbers and other sensitive personal information, with reports of paying around $700M to the FTC, the Consumer Financial Protection Bureau and most state attorneys general https://on.wsj.com/2JJK8Qk

·     KeyCorp (KEY), Signature Bank (SBNY) and U.S. Bancorp (USB) among the banks expected to be better positioned for a Federal Reserve rate cut according to Barron’s, thanks in part to a lower percentage of variable-rate loans versus some peers

·     UniCredit (UCG.IM) is said to weigh thousands of job cuts in new plan for the bank according to Bloomberg reported

·     Cadence (CADE) Q2 EPS 40c/$102.5M vs. est. 58c/$198.8M

 

Healthcare

·     Biohaven (BHVN) received a letter form the FDA for Nurtec for ALS in which the agency identified an issue related to the use of an ingredient manufactured by Apotex between 2014-2016

 

Industrials & Materials

·     About two-thirds of Circor International (CIR) shares were said to be tendered to Crane (CR) before the $48 per share offer’s expiration Friday according to reports. Despite majority tender, Crane’s bid failed on missed conditions

·     FedEx (FDX) mentioned positively in Barron’s saying shares could rise to $200 since earnings are likely to climb an average of 12% in each of the next two years due to e-commerce growth and higher profit margins and that worries about competitive threat from Amazon are overdone

 

Technology, Media & Telecom

·     Disney’s (DIS) “The Lion King” opened with $185 million in weekend sales at North America theaters and delivering a long-awaited boost to the slumping domestic box office. Meanwhile, Disney’s “Avengers: Endgame” film is poised to surpass “Avatar” to become the highest-grossing film of all-time

·     CBS (CBS) and AT&T (T) failed to renew their contact, resulting in millions of DirecTV subscribers losing access to CBS programming

·     KLA-Tencor (KLAC) upgraded to Neutral from Sell and Lam Research (LRCX), Applied Materials (AMAT) both upgraded to Buy from Neutral at Goldman Sachs in the semi-equipment sector

·     White House economic adviser Larry Kudlow will host a meeting with semiconductor and software executives on Monday to discuss the U.S. ban on sales to China’s Huawei Technologies Co Ltd, two sources briefed on the meeting said on Friday – Reuters

·     Netflix (NFLX) talked about in Barron’s noting it has a problem and the company’s strengths-including scale, value, and a vast library-may not be enough to make up for shortfalls in show quality

·     China’s Tencent Games (TCEHY) said that its Timi Studio will work with The Pokemon Company, a firm partially owned by Japan’s Nintendo (NTDOY), on developing a new game

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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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