Morning Preview: July 30, 2019

Auto PostDaily Market Report

Early Look

Tuesday, July 30, 2019

Futures

Up/Down

%

Last

DJ Industrials

-57.00

0.21%

27,141

S&P 500

-7.50

0.24%

3,014

Nasdaq

-30.50

0.37%

7,971

 

 

Stock futures are slipping following mixed trading yesterday as investors await the Federal Reserve’s decision on Wednesday—widely expected to be an interest-rate cut. Asian markets gained in early trading Tuesday, ahead of the first round of trade negotiations between the U.S. and China since early May and following dovish guidance from the Bank of Japan, as the Nikkei Index rose 92 points to 21,709, the Shanghai Index rose 11 points to 2,952 and the Hang Seng Index gained 40 points to 28,146. In Europe, the German DAX is down about -150 points to 12,260, while the FTSE 100 is up a few points to trade just under 7,700. Stocks finished mixed on listless trading Monday as investors hesitated to make major moves ahead of the Fed’s widely expected first rate cut since the financial crisis when the conclude on Wednesday. The S&P, Nasdaq and Russell ended with modest losses led behind weakness in technology, energy and discretionary while the Dow edged higher. Big catalysts remain this week between the Fed meeting, earnings, jobs data Friday and U.S.-China trade talks, all enough to push stocks to new highs or pullback after rallying over the last month. U.S. Treasury prices finished higher, pushing yields on both the two-year and 10-year yield notes 3 bps lower to 1.84% and 2.06%, respectively.

Events Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales…

·     8:30 AM EST      Personal Income for June…est. 0.4%

·     8:30 AM EST      Personal Spending for June…est. 0.3%

·     8:30 AM EST      PCE Deflator MoM for June…est. 0.1%

·     8:30 AM EST      PCE Deflator YoY for June…est. 1.5%

·     8:30 AM EST      PCE Core Deflator MoM for June…est. 0.2%

·     8:30 AM EST      PCE Core Deflator YoY f0r June…est. 1.7%

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:00 AM EST      S&P CoreLogic’s 20-city index for May

·     10:00 AM EST    Pending Home Sales MoM for June…est. 0.5%

·     10:00 AM EST    Consumer Confidence for July…est. 125.0

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AGCO, AME, AOS, BEN, BERY, BID, CMCO, CMI, CNX, COP, DHI, DORM, ECL, ELAN, EME, ETN, EXLS, FDP, GLW, GPN, GRUB, HCA, HUBB, HUN, INCY, IPGP, IR, IRWD, IT, LDOS, LLY, MA, MGLN, MLM, MMC, MO, MRK, PFE, PG, R, RL, SIRI, SLCA, ST, UAA

·     Earnings After the Close: ADSW, AKA, ALL, AMD, AMGN, ASH, ATEN, BEAT, BXP, BYD, CDAY, CHRW, COHR, CRY, CSLT, DLR, EA, EQR, EXAS, FEYE, FMC, GILD, GNW, GRPN, HA, MDLZ, MKSI, MOH, MXIM, NCR, NUVA, PAYC, PEG, UDR, UIS, UNM, VNOM, VRSK, WAT, WES, ZEN

 

Market Closing Prices Yesterday

·     The S&P 500 Index dipped -4.89 points, or 0.16%, to 3,020.97

·     The Dow Jones Industrial Average rose 28.90 points, or 0.11%, to 27,221.35

·     The Nasdaq Composite dropped -36.88 points, or 0.44%, to 8,293.33

·     The Russell 2000 Index declined -9.94 points, or 0.63% to 1,569.03

 

 

Macro

Up/Down

Last

WTI Crude

0.59

57.46

Brent

0.73

64.44

Gold

8.10

1,428.50

EUR/USD

0.0003

1.1148

JPY/USD

-0.22

108.56

10-Year Note

-0.012

2.052%

 

 

World News

·     The Bank of Japan announced Tuesday that it will leave its monetary policy unchanged, as expected, and maintained its guidance of extremely low rates at least through spring 2020, while noting it would not hesitate to take easing action if necessary.

 

Sector News Breakdown

Consumer

·     Beyond Meat (BYND) shares fell 9% on offering; Q2 EPS loss (24c)/$67.3M vs. est. loss (8c)/$57.71M; boosts FY19 revenue outlook to over $240M from over $210M vs. est. $223.4M; boosts FY19 adjusted EBITDA outlook to positive from break-even; shares dropped after files to sell 3.25M shares of common stock for holder

·     Chegg (CHGG) Q2 non-GAP EPS 23c/$93.9M vs. est. 10c/$92.39M; sees FY19 revenue $398M-$402M vs. est. $396.81M while guides FY19 Chegg Services Revenues $330M-$332M and gross margin 76%-77%

·     Del Taco (TACO) Q2 adjusted EPS 13c/$121.5M vs. est. 13c/$120.65M; Q2 system-wide comparable restaurant sales increased 2.2% vs. est. 2.7%; Company-operated comparable restaurant sales increased 1.7%; backs year EPS, sales and comp sales outlooks

·     D.R. Horton (DHI) Q3 EPS $1.26/$4.9B vs. est. $1.07/$4.52B; announces new $1B share repurchase authorization

·     Leggett & Platt (LEG) Q2 EPS 64c/$1.21B vs. est. 64c/$1.28B; cuts FY19 adj. EPS view to $2.40-$2.60 from $2.45-$2.65 (est. $2.47) and also lowers FY19 revenue view to $4.7B-$4.85B from $4.95B-$5.1B (est. $4.94B)

·     Restoration Hardware (RH) shares rose 4%; raises year revenue to $2.658B-$2.674B from prior view $2.643B-$2.663B (est. $2.65B); guides year EPS to $9.08-$9.52 vs. prior view of $9.10; sees Q2 revenue of $696M-$699M vs. prior $681M to $688M prior; said continue to be cautiously optimistic about prospects for H2 of 2019

·     Trex Company (TREX) Q2 EPS 61c/$206.5M vs. est. 64c/$201.72; guides Q3 revs to $205M-$210M vs. prior $190M

·     Texas Roadhouse (TXRH) Q2 EPS 63c/$689.83M vs. est. 63c/$688.08M; Q2 comparable restaurant sales increased 4.7% in Q2 at company restaurants and 4.3% at domestic franchised outlets; restaurant margin as a percentage of sales fell 53 bps to 17.6% of sales on higher labor costs, but edged past the consensus expectation for a mark of 17.4%

·     WD-40 (WDFC) said it will record a reserve for an uncertain tax position in Q4 which will result in a reduction of approximately $8.7M, inclusive of accrued interest of approximately $0.4M

 

Energy

·     BP PLC (BP) reports Q2 oil and gas production for the quarter averaged 3.8 million barrels a day of oil equivalent, 4% higher than a year earlier

·     Edison International (EIX) files to sell 25M shares of common stock

·     National Oilwell (NOV) Q2 Ebitda fell 14% YoY to $195M vs. est. $177M while revenue was $2.13B topping the $2.09B estimate

·     Transocean (RIG) Q2 EPS loss (34c)/$758M vs. est. loss (33c)/$766.51M; Operating and maintenance expense was $510 million, compared with $508 million in the prior quarter; General and administrative expense was $45 million, compared with $49 million in the prior quarter

·     Kinder Morgan (KMI) downgraded to market perform from outperform at BMO Capital

 

Financials

·     Arch Capital (ACGL) Q2 operating EPS 77c vs. est. 67c; 2Q book value per share $24.64 vs. $20.68 YoY and 2Q net premiums written $1.44B, +11% YoY

·     Everest Re (RE) Q2 operating EPS $7.85/$2.02B vs. est. $6.44/$1.94B; said Q2 book value per share was up from $194.43 at December 31, 2018 to $218.07 at June 30, 2019 and gross written premiums were $2.2 billion, an increase of 5% up YoY

·     Heartland Financial (HTLF) Q2 EPS $1.26 vs. est. 94c; 2Q net interest margin 4.06% vs. 4.23% YoY

·     Capital One Financial Corp. (COF) said that a hacker had accessed personal information of more than 100 million customers and potential customers. The bank said that the FBI had arrested a suspect it believed to be responsible for the hack into records from credit card customers and others who had applied for credit card products.

 

Healthcare

·     Eli Lilly (LLY) Q2 EPS $1.50/$5.64B vs. est. $1.45/$5.59B; raises FY19 EPS view to $5.67-$5.77 from $5.60-$5.70 and backs FY19 revenue view $22B-$22.5B

·     Merck (MRK) Q2 EPS $1.30/$11.76B vs. est. $1.16/$10.96B; sees year EPS $4.84-$4.94 up from prior view of $4.67-$4.79 (est. $4.76) and year sales $45.2B-$46.2B up from prior $43.9B-$45.1B (est. $44.8B)

·     Crispr Therapeutics (CRSP) Q2 EPS loss ($1.01) vs. est. loss of (90c) and reports Q2 revenue $318.000, vs $1.09M last year; said cash as of June 30 was $427.9M, compared to $437.5M as of March 31

·     Illumina (ILMN) Q2 EPS $1.35/$838M vs. est. $1.28/$835.16M; now expects Pacific Biosciences acquisition to close in Q4; cuts year EPS view to $6.00-$6.10 from prior $6.63-$6.73 and est. $6.19 and still sees year rev growth about 6%

·     Neurocrine (NBIX) Q2 revs $183.6M vs. est. $161.8M; said increase in net loss for 1H’19 is primarily due to $118.1 million of in-process research and development (IPR&D) in connection with the strategic collaboration with Voyager. This was partially offset by increased INGREZZA net product sales and a $22.6 million unrealized gain on the Company’s equity investment in Voyager

·     PerkinElmer (PKI) Q2 adjusted EPS $1.00/$722.5M vs. est. $1.00/$729.81M; backs FY19 adjusted EPS view $4.02-$4.07 (est. $4.05)

·     Hospitals would have to disclose the discounted prices they negotiate with insurance companies under a new Trump administration rule (THC, HCA, CYH, UHS). Hospitals that fail to share the discounted prices in an online form could be fined up to $300 a day, according to the proposal

 

Industrials & Materials

·     AK Steel (AKS) Q2 EPS 21c/$1.68B vs. est. 5c/$1.73B; said increase in liquidity consisting of cash and cash equivalents and availability under the company’s revolving credit facility

·     Leidos (LDOS) Q2 EPS $1.16/$2.73B vs. est. $1.11/$2.65B; net bookings totaled $3B in the quarter; raises FY19 EPS view to $4.50-$4.70 from $4.30-$4.65 and raises FY19 revenue view to $10.65B-$10.95B from $10.5B-$10.9 (vs. est. $4.61/$10.74B)

·     Ingersoll-Rand (IR) Q2 EPS $2.09/$4.53B vs. est. $2.05/$4.58B

·     McDermott (MDR) shares fell -30%; Q2 adjusted EPS loss (7c)/$2.1B vs. est. 10c/$2.28B; lowers year cap-ex to $145M from about $160M prior; sees year EPS loss about (32c) on Ebitda about $725M below prior view of about $1.65 and $1.1B; said $7.3 billion of new awards and book-to-bill ratio of 3.4×34% sequential-quarter increase in backlog to $21 billion, including a record level of $8.9 billion for offshore/subsea

·     Potlatch (PCH) Q2 adjusted EPS 25c/$215.6M vs. est. 17c/$214.7M

·     Terex (TEX) shares fell -9%; Q2 EPS $1.21/$1.31B in revs vs. est. $1.35/$1.31B; cut its adjusted EPS forecast for the full year to $3.40-$3.80 from $3.60-$4.20 and below est. $4.04 while reaffirms full year free cash flow guidance of $165M

·     Waste Connections (WCN) Q2 adjusted EPS 69c/$1.37B vs. est. 69c/$1.36B; raises FY19 revenue view to about $5.375B from $5.31B (est. $5.37B) while net income attributable to Waste Connections is estimated to be approximately $573M

 

Media & Telecom

·     Dish (DISH) Q2 EPS 60c/$3.21B vs. est. 65c/$3.14B; ended Q2 with 12.03M total Pay-TV subscribers, including 9.56M DISH TV subscribers and 2.47M Sling TV subscribers; said Q2 net pay-TV subscribers declined approximately 31,000 subscribers vs. a decline of approximately 151,000 YoY

·     SBA Communications (SBAC) Q2 AFFO $2.09/$500.15M vs. est. $2.03/$488.6M; raises FY19 AFFO view to $8.20-$8.60 from $8.02-$8.47 (est. $8.33) and also raises FY19 revenue view to $1.974B-$2.014B from $1.943B-$1.983B (est. $1.97B)

 

Technology

·     Huawei Technologies Co. said its first-half revenue rose 23.2% from a year earlier, as the technology giant appeared to shrug off the impact of a U.S. supplier blacklisting. The company said revenue rose to 401.3 billion yuan ($58.3 billion)—with steady growth at its consumer business which includes smartphones

·     Amkor Technology (AMKR) Q2 EPS loss (4c)/$895.3M vs. est. loss (12c)/$896.06M; sees Q3 EPS (3c) to 17c on revs $990M-$1.07B vs. est. 13c/$1.02B

·     Cognex (CGNX) shares fell -14%; after the Q2 beats were offset by downside Q3 revenue guidance; sees Q3 revs of $175-185M versus the $217.54M consensus as YoY decline is due to lower demand for consumer electronics, while the Q/Q decline is attributed to seasonal softness with increased weakness expected in Europe and Asia

·     Impinj (PI) Q2 EPS 3c/$38.2M vs. est. loss (9c)/$34.94M; reports Q2 gross margin 50.0% vs. 50.0% last year; sees Q3 EPS (4c) to 3c on revs $37.0M-$39.0M, vs. est. loss (2c)/$39.14M

·     NXP Semiconductor (NXPI) Q2 operating income $640M vs. $618M YoY

·     Micron Technology (MU) upgraded to Equal Weight from Underweight at Morgan Stanley and raised target to $48 from $31 saying global trade tensions and potential supply risks are driving shorter term inventory accumulation

·     RingCentral (RNG) shares rose 9%; Q2 adjusted EPS 21c/$215M vs. est. 16c/$204.71M; raises FY19 EPS view to 77c-79c from 71c-75c and ups year revenue view to $874M-$877M from $862M-$866M (above est. 73c/$864.19M)

·     Sanmina (SANM) Q3 adjusted EPS 82c/$2.03B vs. est. 77c/$1.97B; sees Q4 adjusted EPS 73c-83c on revs $1.9B-$2B vs. est. 78c/$1.94B

_________________________________________________________________

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