Mid-Morning Look: July 25, 2019

Auto PostDaily Market Report

Mid-Morning Look

Thursday, July 25, 2019

Index

Up/Down

%

Last

 

DJ Industrials

-86.59

0.32%

27,`83

S&P 500

-10.36

0.34%

3,009

Nasdaq

-60.84

0.73%

8,262

Russell 2000

-5.75

0.36%

1,574

 

 

U.S. equities pressured early, erasing earlier gains amid a surge in Treasury yields and comments out of the European Central Bank meeting which whipped currencies and yields around. Today also marks the busiest day of earnings season, with some sixty S&P 500 companies reporting alone and pressuring some sectors. Autos decline given weakness in Ford, TSLA, VC, BWA results; Dow component BA falling again (slipped yesterday on earnings), as airlines (LUV, AAL) talk about impact of Max 737 grounding in their earnings results; software stocks, a Wall Street darling, pressured early after disappointing results or guidance from NOW, PTC, CTXS among others. Regarding central banks, the European Central Bank signaled that it will increase monetary policy support after summer break, saying it expects to keep key ECB interest rates “at their present or lower levels at least through the first half of 2020.” During his press conference, ECB President Draghi said significant monetary stimulus needed – says inflation expectations have declined/pressures remain muted. Overall, the ECB’s monetary policy-setting Governing Council left key interest rates unchanged today, with the main refinancing operations interest rate at 0.00%, marginal lending facility at 0.25%, and deposit facility at -0.40% (easing measures were somewhat expected). The S&P 500 and Nasdaq Composite both falling from record high levels yesterday while the Dow Industrial Average remains under pressure following weakness in Boeing.

 

Treasuries, Currencies and Commodities

·     In currency markets, the euro moved to highs, rising 0.4% to around 1.1188, bouncing after hitting 2-year lows earlier (June 2017) of 1.1102 against the U.S. dollar, after Mario Draghi left rates unchanged but said a “significant degree” of monetary stimulus is needed and the outlook is “getting worse and worse.” The dollar coming off strong gains in recent days. Commodity prices mixed as oil prices rebound following yesterday’s late day pullback, while gold prices slide after comments from ECB’s Draghi saying he sees a low risk of recession. Treasury market’s erase early rally, as the yield on the benchmark 10-year rises above 2.08% after touching earlier lows of 2.01%, as comments from the ECB and its President Draghi at its policy meeting, along with stronger U.S. economic data, has led to volatility in Treasuries.

 

Economic Data

·     Weekly Jobless Claims fall 10K to 206K vs. est. 218K; continuing Claims 1.676M vs. est. 1.688M; the 4-week moving avg. at 213k in the week ending July 20

·     Durable Goods Orders, June-P rise 2%, above the est. 0.7%; Durable Goods: Ex Transportation, June-P jumps 1.2% (after 0.5% rise prior) vs. est. 0.2% (Durable goods new orders revised down to -2.3% for May from -1.3%)

 

 

Macro

Up/Down

Last

 

WTI Crude

0.60

56.48

Brent

0.68

63.86

Gold

-6.20

1,417.40

EUR/USD

0.0035

1.1175

JPY/USD

0.28

108.46

10-Year Note

0.038

2.081%

 

 

Sector Movers Today

·     Autos; Ford (F) shares slipped after Q2 EPS missed by 2c and guided year EPS $1.20-$1.35 vs. est. $1.39 (below views); TSLA shares dropped over 11% overnight as posted a larger Q2 EPS loss of ($1.12) on lighter revs and cuts year cap-ex to $1.5B-$2B from prior $2B-$2.5B; auto parts retailers weaker after ORLY with a top and bottom line Q2 miss as Q2 comps came in light of ests (+3.4% vs +4.6% consensus) and gross margin (52.8% vs. 52.9% consensus) – watch AZO, AAP; in auto suppliers, VC Q2 miss as eps 28c vs. 37c est on sales $733M vs. $723M/cuts year Ebitda forecast to 230-250M from 245-270M prior; BWA Q2 results were mostly in-line but supplier cut EPS view for year to $3.75-$4.00 from $4.00-$4.35 prior and also cut top end of sales view; THRM another names with a top and bottom line miss

·     Software; sector likely to be under pressure, especially in the SaaS sector after NOW and PTC results; NOW Q2 results beat but 2Q billings growth +31% vs. +34% YoY and sees 3Q non-GAAP subscription billings $857M-$862M vs estimate $878.7M; PTC shares dropped on lower Q4 outlook as sees Q4 EPS 42c-47c on revs $330M-$338M below est. 50c/$340.04M and said Q3 license & subscription bookings $109M, -3.5% YoY; CTXS drops on Q2 miss and softer guidance for Q3 eps $1.15-$1.30 on revs $700M-$720M below the $1.54/$761.7M est.

·     Semiconductors; sector coming off record highs the day prior after better TER, SLAB, TXN results and guidance; XLNX Q1 results in-line overnight, but shares slip on lower revenue outlook for Q2 to $800M-$850M vs. est. $853M which reflects the negative impact of the U.S. supplier restriction on Huawei(co excluded Huawei from its outlook, which led to a 4% sales and 12% EPS shortfall vs. consensus); in memory space (MU, WDC, STX), SK Hynix said it will cut its DRAM production capacity from Q4 and convert part of the lines at its M10 FAB to CMOS image sensor mass production lines and also reduce its NAND wafer input by more than 15%, up from its previous plans to cut input 10% compared to last year.

·     Airlines; discount airlines drop after SAVE quarterly results disappoint warning on rising costs (though headline was a beat), downgraded by two analysts citing the discount airline’s forward guidance; ALGT posted a top/bottom line miss and narrowed its year profit forecast; in major carriers, LUV mixed Q2 (EPS beat/revs miss) as said BA MAX groundings reduced operating income by $175M and would remove the Boeing 737 Max aircraft from its flight schedule through Jan. 5th; AAL Q2 EPS narrow EPS beat on in-line revs of $11.96B while narrows year EPS view and said MAX grounding negatively impacting Q3 pre-tax earnings by $125M

·     Pharma; BMY shares reverse losses – mixed study results as Part 2 of the CheckMate -227 trial, evaluating Opdivo plus chemotherapy, did not meet the pre-specified primary endpoint, while Part 1 of the study did meet co-primary endpoint (BMY also reported a Q2 EPS/sales beat on better drug sales and boosted its year EPS view by 10c to top/bottom end); RHHBY raised its outlook for the second time this year on what it said were growing sales of its new drugs, as it reported rising revenues; LLY said the FDA approves its BAQSIMI (glucagon) nasal powder 3 mg for the treatment of severe hypoglycemia (low blood sugar) in people at least four years old; AGN and EDIT Brilliance Phase 1/2 trial of AGN-151587 (EDIT-101) is open for patient enrollment

 

Stock GAINERS

·     BMY +4%; strong reversal from last night decline of 4% after mixed study results of the CheckMate -227 trial (one part beat endpoint while other part missed) – as a strong EPS/sales beat and raised guidance lift shares

·     DBD +24%; Q2 EPS beat and boosted its FY19 adjusted EBITDA outlook from $380-420M to $400-420M while expects FY19 revenue of $4.5B (up slightly from $4.4-4.5B) vs. $4.46B consensus

·     FB +1%; reported a solid 2Q as ad revenues came in ahead of expectations despite a larger FX headwind, with stable user trends and accelerating advertising revenue growth

·     FTI +5%; reported Q2 adjusted EBITDA of $450MM, well above consensus of $383MM as all three segments posted better than expected results (orders of $11.2B were a record)

·     MAS +7%; mixed Q2 as EPS 88c vs. 82c est./sales $2.28B vs. $2.33B/raises dividend by 6c to 54c/narrows 2019 View To Adj EPS $2.62-Adj EPS $2.72 from 2.60-2.80

·     MMM +3%; reported stronger results this quarter and reaffirmed its adjusted-profit outlook and sees full-year organic local currency sales growth in the range of -1% to +2%

·     WWE +7%; Q2 eps 11c vs. 1c est.; Q2 sales $268.9M vs. $270.7M/reaffirms year/Q2 Oibda of $34.6M beats views but guides Q3 Oibda $17M-$22M below $34M est

 

Stock LAGGARDS

·     ALGN -21%; Q2 beat but guided Q3 EPS/revs well below views ($1.09-$1.16 on revs $585M-$600M below est. $1.24/$623.65M) and sees FY19 revenue at low end of 20%-30% growth target

·     HP -4%; guided to lower activity in FQ4 vs. current consensus and slightly missed on EBITDA this quarter (adjusted EBITDA of $196MM, below consensus of $201MM)

·     LNTH -19%; on Q2 miss and guidance cut saying TechneLite sales negatively impacted by multiple molybdenum-99 supplier issues.

·     NKTR -5%; disclosed that it received a General Advice Letter from the FDA regarding its marketing application for mu-opioid pain med NKTR-181

·     NXGN -14%; after FQ1 miss and guidance cut as sees 2019 revs $536M-550M from $543M-559M and lower earnings view

·     PTC -18%; downgraded by several analyst after results as company lowered its full year guidance across most key metrics including bookings, ACV, total revenue, and FCF

·     PYPL -5%; mixed Q2 results (EPS beat/revs short of consensus) with strong but cut its outlook for year revs (shares of SQ weak in reaction); on loan lending

·     SAVE -14%; quarterly results disappoint warning on rising costs (though headline was a beat), downgraded by two analysts citing the discount airline’s forward guidance

·     TREE -16%; as EPS missed by 22c though beat on revs, with shares pressured by a miss on mortgage revs which fell -18.4% YoY (co did raise year rev outlook)

·     TSLA -11%; delivered record number of vehicles in Q2, but posted a worse-than-expected loss and announced another major management change, lowered cap-ex

 

Syndicate

·     Cara Therapeutics (CARA) 5.5M share Spot Secondary priced at $23.00

·     Fellazo Inc. (FLLCU) 5M share IPO priced at $10.00

·     Health Catalyst (HCAT) 7M share IPO priced at $26.00

·     Livongo Health (LVGO) 12.7M share IPO priced at $28.00

_________________________________________________________________

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.

Live Trading

Open an Account

Paper Trading

Register