Morning Preview: July 24, 2019

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Early Look

Wednesday, July 24, 2019

Futures

Up/Down

%

Last

DJ Industrials

-63.00

0.23%

27,261

S&P 500

-9.50

0.31%

2,998

Nasdaq

-48.50

0.60%

7,935

 

 

Stock futures are pulling back slightly after major U.S. averages climbed on Tuesday, lifted by a series of better-than-expected earnings from companies ranging from Dow components Coca-Cola to United Technologies, while markets remain hopeful of a trade deal between the U.S. and China as well as lower interest rates when the FOMC convenes next week at its policy meeting. Late yesterday, stocks surged into the close on reports U.S. Trade Representative Robert Lighthizer and senior U.S. officials are set to travel to China next Monday for the first high-level, face-to-face trade negotiations since talks broke down in May. That helped extend early market gains following news the White House and congressional leaders struck a debt and budget agreement. Overnight in Asian markets, The Nikkei Index gained 88 points to settle at 21,709, the Shanghai Index rose 23 points to 2,923 and the Hang Seng Index rose 57 points to 28,524. In Europe, the German DAX is up over 30 points to 12,530, while the FTSE 100 is down roughly 60 points to move below 7,500. Another busy day of earnings upcoming led by some technology giants as well as industrial Dow components Boeing and Caterpillar.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 20.44 points, or 0.68%, to 3,005.47

·     The Dow Jones Industrial Average rose 177.29 points, or 0.65%, to 27,349.19

·     The Nasdaq Composite jumped 47.27 points, or 0.58%, to 8,251.40

·     The Russell 2000 Index advanced 10.18 points, or 0.66% to 1,554.96

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     9:45 AM EST      Markit US Manufacturing PMI, July-P…est. 51.0

·     9:45 AM EST      Markit US Services PMI, July-P…est. 51.8

·     9:45 AM EST      Markit US Composite PMI, July-P

·     10:00 AM EST    New Home Sales MoM for June…est. 659K

·     10:30 AM EST    Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ALXN, ANTM, ARCH, BA, BCO, NKU, BSX, CAT, DTE, EVR, FCX, FLIR, GD, HLT, IART, IQV, KNX, LAD, MHO, MPX, NDAQ, NEE, NOC, NSC, NTRS, OC, ROL, SIX, SLAB, SLGN, T, TMO, UOS, VFC

·     Earnings After the Close: ALGN, AMP, ANIK, AGSN, BHE, CERN, CLGX, CTXS, CUZ, ECHO, ESS, F, FB, FFIV, GGG, HLX, ISBC, KLAU, KN, LSTR, LVS, MTH, NOW, NTGR, ORLY, PKG, PTC, RJF, RUSHA, SEIC, SLM, TMK, TSLA

 

 

Macro

Up/Down

Last

WTI Crude

0.28

57.05

Brent

0.15

63.98

Gold

8.20

1,426.00

EUR/USD

-0.001

1.1142

JPY/USD

-0.13

108.10

10-Year Note

-0.01

2.061%

 

 

Sector News Breakdown

Consumer

·     Chipotle (CMG) Q2 adjusted EPS $3.99/$1.4B vs. est. $3.76/$1.41B; said Q2 comp restaurant sales increased 10.0%, net of 40 bps from loyalty deferral, and included nearly 7% of comparable restaurant transaction growth; digital sales grew 99.1% and accounted for 18.2% of sales for the quarter; sees 2019 high single digit comparable restaurant sales growth, up from the prior mid to high single digit range expectation

·     iRobot (IRBT) shares fell -15%; Q2 EPS 25c/$260.2M vs. est. 5c/$267.96; lowers FY19 EPS view to $2.40-$3.15 from $3.15-$3.40 and cuts FY19 revenue view to $1.2B-$1.25B from $1.28B-$1.31B saying although achieved our U.S. revenue target in the Q2, we believe that the direct and indirect impacts of the ongoing U.S.-China trade war and the recently implemented 25% tariffs are likely to constrain U.S. market segment growth in the 2H

·     Usana (USNA) Q2 EPS 91c/$256.0M vs. est. 93c/$254.58M; backs year EPS and revenue outlook

·     Starbucks (SBUX) announced plans to make Starbucks Delivers available throughout the U.S. in early 2020 through an agreement with Uber Eats (UBER) as the preferred delivery provider of Starbucks items

 

Energy

·     The American Petroleum Institute (API) said weekly stockpiles fell -10.96M barrels in the latest week, with gasoline stockpiles rising 4.436M barrels and distillates rising 1.42M barrels

·     FirstEnergy (FE) Q2 adjusted EPS 61c/$2.5B vs. est. 60c/$2.68B; sees Q3 EPS 68c-80 vs. est. 79c and backs year EPS of $2.45-$2.75 vs. est. $2.52

·     Superior Energy (SPN) Q2 EPS loss (16c)/$436M vs. est. loss (22c)/$466.83M

 

Financials

·     Visa (V) Q3 adjusted EPS $1.37/$5.8B vs. est. $1.32/$5.7B; Q3 payments volume up 9% and Q3 cross-border volume up 7%; said Q3 processed transactions up 12%; Visa backs FY19 revenue growth view of low double digits

·     Discover Financial (DFS) Q2 EPS $2.32 vs. est. $2.11; said Direct Banking pretax income of $941M increased 7.3% from $877M in the year-ago quarter, driven by higher net interest income and partly offset by an increase in provision for loan losses and higher operating expenses; net interest income increased 9% Y/Y driven by loan growth and net interest margin expansion; NIM was 10.47% up 26 basis points Y/Y

·     Carlisle (CSL) Q2 EPS $2.65/$1.31B vs. est. $2.35/$1.32B

·     Chubb (CB) Q2 core EPS $2.60 vs. est. $2.56; Q2 book value per share up 3.2%; book and tangible book value per share were up 3.2% and 4.7%, respectively, from prior quarter, and up 7.7% and 11.9%, respectively, from December 31, 2018.

·     CoStar Group (CSGP) Q2 adjusted EPS $2.23/$344M vs. est. $2.00/$336.63M; raises FY19 adjusted EPS view to $10.00-$10.14 from $9.90-$10.10 (est. $10.06) while raises FY19 revenue view to $1.382B-$1.39B from $1.37B-$1.39B (est. $1.38B)

·     W. R. Berkley (WRB) Q2 EPS $1.12/$2.02B vs. est. 64c/$1.94B; said overall investment income grew nearly 23% as steady income from the core portfolio was enhanced by better-than-average investment fund performance

 

Healthcare

·     Edwards Life Sciences (EW) Q2 adjusted EPS $1.38/$1.1B vs. est. $1.33/$1.04B; sees Q3 adjusted EPS $1.13-$1.23 on revs $1.02B-$1.06B vs. est. $1.25/$1.02B; raises FY19 adjusted EPS to $5.20-$5.40 from $5.10-$5.35 and ups FY19 revenue view to $4B-$4.3B from $3.9B-$4.3B

·     Merck’s (MRK) Hadlima, a biosimilar to AbbVie’s (ABBV) rheumatoid arthritis treatment Humira received FDA approval

·     Jounce Therapeutics (JNCE) announced an update on its strategic collaboration with Celgene Corporation (CELG), originally established in July 2016. Under the terms of a new license agreement, Celgene has licensed worldwide rights to JTX-8064, a highly-selective, potential first-in-class antibody that targets the LILRB2 receptor on macrophages

·     OrthoPediatrics Corp. (KIDS) said it has received 510(k) clearance from the U.S. FDA for its next generation Cannulated Screw System for treating smaller stature patients with fractures and fusions

·     RA Pharmaceuticals (RARX) 4M share Secondary priced at $32.50

 

Industrials & Materials

·     Canadian National (CNI) Q2 EPS C$1.73/C$3.96B vs. est. C$1.65/C$3.93B; backs prior FY19 EPS growth in the low double-digit range vs. last year’s adjusted diluted EPS of C$5.50 and continues to assume mid-single-digit volume growth in 2019 in terms of revenue ton miles

·     UPS (UPS) announced the addition of UPS Access Point locations in standalone CVS (CVS) Pharmacy locations nationwide, allowing consumers to pick up and return packages. The collaboration is set to begin rolling out immediately and is planned for more than 6,000 stores

·     Valmont (VMI) Q2 EPS $1.90/$700.9M vs. est. $2.25/$725.43M; cuts FY19 revenue growth view to 6%-7% from 7%-8% and cuts FY19 operating margin improvement to 10-40 bps from 20-50 bps; lowers year EPS to $8.10-$8.70 from $8.30-$8.90 (est. $8.58)

 

Technology, Media & Telecom

·     Snap (SNAP) Q2 adjusted EPS loss (6c)/$388.02M vs. est. loss (10c)/$359.56M; reports Q2 Daily Active Users increased 8% YoY to 203M and vs. est. 197.1M; DAUs were up sequentially and YoY on each of iOS and Android platforms; sees 3Q DAUs of 205M-207M vs. est. 193.4M; sees 3Q revenue $410M-$435M vs. est. $402.9M

·     Texas Instruments (TXN) Q2 EPS $1.36/$3.67B vs. est. $1.22/$3.6B; sees Q3 EPS $1.31-$1.53 on revs $3.65B-$3.95B below the mid-point of guidance for $1.38/$3.83B

·     Dish Network (DISH) to buy $5 billion in wireless assets, clearing path to T-Mobile (TMUS), Sprint (S) merger according to Bloomberg, a divesture could allay antitrust concerns by the Justice Department, which could sign off on the deal as soon as Thursday

·     Facebook (FB), Google (GOOG), Netflix (NFLX), Apple (AAPL) and Amazon (AMZN) along with Microsoft (MSFT) active overnight after The Department of Justice announced that the Department’s Antitrust Division is reviewing whether and how market-leading online platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation

·     Manhattan Associates (MANH) Q2 EPS 42c/$154.34M vs. est. 34c/$146M; raises FY19 EPS view to $1.46-$1.50 from $1.42-$1.46 (est. $1.44) and raises FY19 revenue view to $598M-$604M from $582M-$592M (est. $588.5M)

·     Teradyne (TER) Q2 EPS 66c vs. est. 62c; sees 3Q EPS 64c-74c on revs $540-580M vs. est. 63c/$541.4MM

_________________________________________________________________

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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