Morning Preview: July 23, 2019

Auto PostDaily Market Report

Early Look

Tuesday, July 23, 2019

Futures

Up/Down

%

Last

DJ Industrials

80.00

0.29%

27,256

S&P 500

7.50

0.26%

2,996

Nasdaq

28.50

0.36%

7,953

 

 

U.S. futures are pointing to another day of stock market gains, buoyed by positive news out of Washington as President Trump and congressional leaders said they had struck a debt and budget agreement. The agreement is on a broad outline for $1.37 trillion in agency spending next year and slightly more in fiscal 2021, with large budget gains for both the Pentagon and domestic agencies. Also helping sentiment was a report in The South China Morning Post that a U.S. delegation led by U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin is likely to visit Beijing next week, for the first face-to-face meetings since the G20. The news helps markets build on gains from Monday as stocks ended steadily higher late day ahead of a very busy week of earnings. Nearly 1/3 of S&P 500 companies are set to report quarterly earnings this week, and the same percentage of Dow Industrial companies. Technology shares paced yesterday’s gains, led by semiconductor names, with Applied Materials, Micron and Lam Research all rising at least 3.7% after receiving from Goldman Sachs. However defensive staples, utilities and REITs underperformed broader markets along with consumer discretionary names. U.S. Treasury prices edged higher, with both the two-year and 10-year yields adding a basis point to 1.81% and 2.04%, respectively, while oil prices jumped on increasing tensions with Iran, as WTI crude oil settled +1.1% to $56.22 per barrel after skidding more than 7% last week. In Asian markets overnight, The Nikkei Index rose 204 points to 21,620 the Shanghai Index rose 12 points to 2,900 and the Hang Seng Index gained 95 points to 28,466. In Europe, the German DAX is surging over 160 points to 12,450, while the FTSE 100 is up around 50 points to 7,560. The pound drifted lower on Tuesday ahead of the unveiling of the next British prime minister.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 8.42 points, or 0.28%, to 2,985.03

·     The Dow Jones Industrial Average rose 17.70 points, or 0.07%, to 27,171.90

·     The Nasdaq Composite jumped 57.65 points, or 0.71%, to 8,204.14

·     The Russell 2000 Index declined -3.11 points, or 0.20% to 1,544.78

 

Events Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:00 AM EST      FHFA House Price Index MoM for May…est. 0.4%

·     10:00 AM EST    Richmond Fed Index for July…est. 5

·     10:00 AM EST    Existing Home Sales MoM for June…est. 5.32M

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AN, ASTE, AVY, BIIB, CNC, DGX, FELE, FITB, FNB, GPK, HAS, HOG, IPG, JBLU, KEY, KO, LMT, MTG, PCAR, PHM, PII, SHW, SWK, TRU, TRV, TTS, UTX

·     Earnings After the Close: CMG, CSGP, DFS, EW, FCF, FE, HIW, IRBT, MANH, NAVI, PSB, RHI, SPN, TER, TRMK, UCBI, USNA, V, VMI, WRB

 

 

Macro

Up/Down

Last

WTI Crude

-0.01

56.22

Brent

-0.09

63.17

Gold

-7.70

1,419.20

EUR/USD

-0.0029

1.118

JPY/USD

0.25

108.12

10-Year Note

+0.003

2.049%

 

 

Sector News Breakdown

Consumer

·     Whirlpool (WHR) Q2 adjusted EPS $4.01/$5.19B vs. est. $3.71/$5.03B; raises FY19 adjusted EPS view to $14.75-$15.50 from $14.00-$15.00 (est. $14.81); updates FY19 free cash flow view to approximately $800M vs. prior view $800M-$900M

·     AutoNation (AN) Q2 EPS $1.12/$5.34B vs. est. $1.06/$5.29B; Q2 comp-store revs was relatively flat compared to the same period a year ago; Q2 comp-store gross profit totaled $879 million, an increase of 5% YoY

·     Hasbro (HAS) Q2 adjusted EPS 78c/$984.5M vs. est. 50c/$956.75M; Q2 partner brands rev up due to increases in marvel’s avengers and spider-man franchises

·     PulteGroup (PHM) Q2 EPS 86c/$2.49B vs. est. 83c/$2.47B; backlog of 11,793 homes valued at $5.1B; 2Q net new orders 6,792, +7.1% YoY and Q2 gross margin on home sales 23.1% vs. 24% YoY

 

Energy

·     Bonanza Creek Energy, Inc. (BCEI) 2Q preliminary estimated sales volumes increased 18% sequentially to approximately 24.4 MBoe/d and Q2 capital expenditures totaled $81.7M; backs FY19 capital expenditure view $230M-$255M

·     TechnipFMC (FTI) has been awarded a significant integrated Engineering, Procurement, Construction and Installation contract from Neptune Energy for the Seagull project, located in the Central North Sea

·     Ring Energy (REI) announced an amended cap-ex budget for 2019 of approximately $152M. The amended CAPEX results in a reduction of approximately $2M from the preliminary budget of $154M announced on April 29, 2019. The decrease is the result of a reduction in new horizontal wells to be drilled in 2019 from 50 to 32 and the reallocation of those funds to the upgrading/reworking of a large number of existing wells and necessary improvements to current infrastructure which will improve operational efficiencies

·     California Resources (CRC) and Colony Capital (CLNY) through its energy investment management arm, Colony HB2 Energy, announced that they have formed a strategic joint venture in which Colony has committed to fund $320M for the development of CRC’s flagship Elk Hills field, located in the San Joaquin Basin

 

Financials

·     TD Ameritrade (AMTD) Q3 adjusted EPS $1.04/$1.49B vs. est. 97c/$1.47B; said Q3 average client trades per day of 825,000 up 5.2% YoY; announced CEO Tim Hockey to step down upon the appointment of a new leader to guide its next phase of growth; 3Q net new client assets $19.5 billion, -1.5% YoY

·     KeyCorp (KEY) Q2 adjusted EPS 44c/$1.61B vs. est. 44c/$1.62B; 2Q NIM 3.06% vs. 3.19% YoY and estimate 3.13%; Q2 net charge-offs $65 million, +8.3% YoY and Q2 non-interest expenses $1.02 billion, +2.6% YoY

·     Banco Santander (SAN) reported an 18 per cent drop in second-quarter net earnings, as restructuring charges in Spain and the UK offset gains in Brazil and the US

·     Brown & Brown (BRO) Q2 EPS 32c/$575.4M vs. est. 28c/$554.4M; Q2 organic revs up 3.9%

·     NBT Bancorp (NBTB) Q2 EPS 69c vs. est. 66c; Q2 book value per share $24.65, Q2 CET1 capital ratio 10.95% and non-interest income for the three months ended June 30 was $34.2M

·     Washington Trust (WASH) Q2 EPS 99c vs. est. $1.02; 2Q net interest income up 2.3% YoY to $33.9M and net interest margin 2.81% vs. 3.05%YoY

·     Zions Bancorp (ZION) Q2 EPS 99c vs. est. $1.10; said “operating expenses continued to be well controlled, rising less than 1% from the prior year’s second quarter, and credit quality remained very clean with annualized net charge-offs totaling only 0.12% of average loans and leases”; said Q2 NIM 3.54% vs. 3.56% YoY and below est. 3.67%

 

Healthcare

·     Biogen (BIIB) Q2 EPS $9.15/$3.62B vs. est. $7.53/$3.48B; boosted its adjusted EPS for the year to $31.50-$32.30 from $28-$29 (estimate $29.59) and sees FY revenue $14 billion to $14.2 billion, saw $13.6 billion to $13.8 billion (est. $13.95 billion)

·     Centene (CNC) Q2 EPS $1.34/$18.36B vs. est. $1.23/$18.01B; raises FY19 EPS view to $4.29-$4.49 from $4.24-$4.44 (est. $4.36) and raises FY19 revenue view to $73.6B-$74.2B from $72.8B-$73.6B (est. $73.07B)

·     HealthStream (HSTM) Q2 EPS 7c/$63.8M vs. est. 7c/$63.1M; sees year revs $251M-$258M vs. est. $255.7M and sees year operating income $13.2M-$15.2M

·     ACADIA Pharmaceuticals Inc. (ACAD) announced top-line results from its Phase 3 ENHANCE study, which evaluated Pimavanserin as an adjunctive treatment in adult schizophrenia patients with persistent inadequate response to their current antipsychotic therapy. A total of 396 patients with moderate-to-severe psychotic symptoms were randomized to receive either Pimavanserin or placebo added to their current antipsychotic treatment

·     CannTrust Holdings Inc. (CTST) announces that as a result of months of discussions, CannTrust has agreed to waive the exclusivity provision under the Brokerage Agreement between CannTrust and Kindred Partners Inc.

·     NanoString Technologies, Inc. (NSTG) announced the publication of a study in the journal Nature Medicine that demonstrates the capability of the GeoMx™ Digital Spatial Profiler (DSP) to characterize toxicities associated with immunotherapy using checkpoint inhibitors

 

Industrials & Materials

·     Celanese (CE) Q2 adjusted EPS $2.38/$1.59B vs. est. $2.35/$1.66B; still sees FY adjusted EPS about $10.50 vs. est. $10.21

·     Crane Co. (CR) Q2 EPS $1.58/$842M vs. est. $1.56/$834.25M; backs FY19 adjusted EPS view of $6.25-$6.45 on revs of roughly $3.3B vs. est. $6.41/$3.33B

·     Steel Dynamics (STLD) Q2 EPS 87c/$2.77B below est. 89c/$2.82B; Q2 operating income fell -6% QoQ to $295M and the average external product selling price for the company’s overall steel operations decreased $23 sequentially to $879 per ton

·     Hexcel (HXL) Q2 adjusted EPS 94c/$609.0M vs. est. 89c/$605.9M; guides FY adj EPS $3.43-3.53, was $3.38-3.52 prior; Backs FY19 revenue view of $2.38B-$2.48B vs. est. $2.43B; raises quarterly dividend to 17c from 15c per share

 

REITs:

·     Agree Realty (ADC) Q2 FFO 74c/$44.92M vs. est. 74c/$44.3M; raises FY19 acquisition guidance to $625M-$675M

·     American Campus Communities (ACC) Q2 FFO 56c/$217.4M vs. est. 54c/$214.52M; backs FY19 FFOM view $2.35-$2.45 (est. $2.42)

·     Brandywine Realty (BDN) Q2 FFO 35c/$144.2M vs. est. 26c/$144.7M; narrows its FFO per share forecast for the full year to $1.40-$1.44 from $1.39-$1.45 and vs. est. $1.43

·     Equity Lifestyle (ELS) Q2 FFO 96c/$248.4M vs. est. 93c; sees Q3 FFO $1.03-$1.09 vs. est. $1.07 and sees year FFO $4.12-$4.22 vs. est. $4.17

 

Technology, Media & Telecom

·     Apple Inc. (AAPL) could be within a week of agreeing to a deal to buy Intel Corp.’s (INTC) modem-chip business, according to a Monday afternoon report. The Wall Street Journal reported that Apple and Intel are in advanced talks on a deal that values the business at $1 billion or more that could lead to a deal in the next week https://on.mktw.net/2y10zAX

·     Cadence Design (CDNS) Q2 EPS 57c/$580M vs. est. 53c/$579.48M; raises FY19 EPS view to $2.11-$2.17 from $2.04-$2.12 (est. $2.09) and also ups FY19 revenue view to $2.315B-$2.335B from $2.31B-$2.34B (est. $2.32B); Q3 rev mid-point missed views weighing on shares

·     Clear Channel Outdoor (CCO) files to sell 100M shares of common stock

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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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