Morning Preview: September 17, 2019

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Early Look

Tuesday, September 17, 2019

Futures

Up/Down

%

Last

DJ Industrials

-45.00

0.17%

27,035

S&P 500

-3.50

0.12%

2,998

Nasdaq

-13.50

0.17%

7,866

 

 

U.S. stocks are pointing to a modestly lower open, adding to yesterday’s pullback (which snapped the Dow Industrial Average 8-day win streak), as geopolitical macro fears weighed heavily on sentiment. Stocks ended lower on Monday as weekend attacks on Saudi oil facilities boosted oil prices (WTI jumped 15% for its biggest one-day gain in a decade) and increased concerns about rising tensions with Iran. The S&P energy index gained more than 3% to notch its second-best daily performance of the year, while Brent settled with its largest one-day percentage gain since at least 1988. The attacks on the crude facilities in Saudi Arabia cut the kingdom’s production in half (and represents about 5% of global output) and sparked worries over the impact of an oil shock on economic growth. Increased demand for safe-haven U.S. debt pushed Treasury yields lower and the price of gold rose. Market attention may turn to the Fed as they convene for a 2-day meeting that will wrap up tomorrow afternoon with expectations for a rate cut highly anticipated. Oil prices are giving back some of its gains this morning. In Asian markets, The Nikkei Index rose 13 points to 22,001, the Shanghai Index dropped -52 points (1.74%) to settle at 2,978 and the Hang Seng Index fell -334 points to 26,790. In Europe, the German DAX is down -30 points to 12,350, while the FTSE 100 is up a few points to 7,330. All eyes on the Fed and Saudi Arabia to see how long it takes to get production up and running.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -9.43 points, or 0.31%, to 2,997.96

·     The Dow Jones Industrial Average fell -142.70 points, or 0.52%, to 27,076.82

·     The Nasdaq Composite slipped -23.17 points, or 0.28%, to 8,153.54

·     The Russell 2000 Index advanced 6.46 points, or 0.41% to 1,584.60

 

Events Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:15 AM EST      Industrial Production MoM for August…est. 0.2%

·     9:15 AM EST      Capacity Utilization for August…est. 77.6%

·     10:00 AM EST    NAHB Housing Market Index for Sept…est. 66

·     4:00 PM EST       Net Long-term TIC flows for July…prior $99.1B

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: APOG, CBRL

·     Earnings After the Close: ADBE, CHWY, FDX

 

Other Key Events:

·     Goldman Sachs 28th Annual Communaacopia Conference, 9/17-9/19, in New York

·     BMO Capital 14th Annual Real Estate Conference, 9/17-9/18

·     FDA Joint Regulatory Conference, 9/16-9/18, in Washington DC

 

 

Macro

Up/Down

Last

WTI Crude

-1.06

61.84

Brent

-1.12

67.90

Gold

-6.20

1,505.30

EUR/USD

0.0015

1.1016

JPY/USD

0.05

108.17

10-Year Note

-0.027

1.818%

 

 

World News

·     The German ZEW Indicator of Economic Sentiment rose 21.6 points to a -22.5 reading in September, weak but better than the reading of -37.9 that was expected as per FactSet

·     Today the U.K.’s Supreme Court starts three days of hearings over Prime Minister Boris Johnson’s decision to suspend Parliament. The court has not given a date for when it will rule on the case but it is expected within a week

 

Sector News Breakdown

Consumer

·     Apogee Enterprises (APOG) Q2 adjusted EPS 72c/$357.1M vs. est. 65c/$352.7M; still sees year EPS $3.00-$3.20 vs. est. $3.05 and still sees year capex $60M-$65M

·     Veoneer Inc. (VNE) received a production contract to make thermal cameras for fully autonomous vehicles to handle conditions of low visibility such as those during darkness, smoke, sun and headlight glare

·     Home Depot (HD) downgraded to Neutral from Buy at Guggenheim

·     Stage Stores (SSI) announced plans to convert substantially all its stores to off-price

·     Funko (FNKO) files to sell 4M shares for holders

·     SeaWorld (SEAS) CEO Gustavo Antorcha resigns, names current CFO Swanson interim CEO, and names Castro Gulacsy (current CAO) as interim CFO

 

Energy

·     Dril-Quip Inc. (DRQ) said its contract with Repsol for supply of drilling systems for its project located offshore Vietnam has been terminated; firm estimates $82 mln in contract value will be removed from backlog (had reported backlog of $322M at the end of its latest quarter)

·     EOG Resources Inc. (EOG) agreed to sell natural gas to Cheniere Energy Inc. (LNG) for about 15 years, beginning in early 2020; quantity starts at 140,000 MMBtu per day and increases to 440,000 MMBtu per day under the long-term gas supply agreements

·     Concrete Pumping (BBCP) Q3 EPS 5c/$78.7M vs. est. 6c/$84.45M; said 18% rev driven largely by the contribution from our successful Capital Pumping acquisition, as well as broad end-market strength in the U.S. and growth in Eco-Pan; sees FY19 revenue to be approximately $284M and adjusted EBITDA to be approximately $95M

 

Healthcare

·     Aclaris Therapeutics, Inc. (ACRS) announced positive results from its Phase 3 clinical trial, THWART-2 (WART-302), of A-101 45% Topical Solution (A-101 45% Topical Solution), an investigational new drug for the treatment of common warts; says its topical solution for common warts met the primary and secondary efficacy endpoints

·     Champions Oncology (CSBR) reports Q1 adjusted EPS loss of (5c) on revs $6.7M (vs. 5c profit a year ago for EPS) vs. est. revs $7.5M; said slightly weaker revs the cause was mainly due to the timing of study completions and revenue recognition

·     Kitov Pharmaceuticals (KTOV) files to sell 2.81M ADSs for holders

 

Industrials & Materials

·     FedEx Express (FDX) said shipping rates will increase by an average of 4.9% for U.S. domestic, U.S. export and U.S. import services; FedEx Ground and FedEx Home Delivery shipping rates will increase by an average of 4.9%. FedEx SmartPost shipping rates will also increase; FedEx Freight shipping rates will increase by an average of 5.9% for shipments within the U.S. and between the contiguous U.S. and Canada

·     Circor (CIR) upgraded to Overweight from Sector Weight at KeyBanc while the firm downgraded Actuant (ATU) to Sector Weight from Overweight

 

Technology, Media & Telecom

·     Corning Inc. (GLW) lowers display volume forecast to a sequential decline of a high-single digit percentage in Q3; says continues to expect Q3 prices to be flat with Q2; now expects Q3 optical communications sales to decline YoY by a low-teen % vs. prior expectation of low-single digit % decline; for FY 2019, company now forecasts optical communications sales will decline by 3% to 5% vs prior expectation of a low-to-mid-single digit % increase

·     KLAC Corp (KLAC) raises quarterly dividend to 85c from 75c and adds $1B share buyback authorization; guides Q3 EPS $2.04-$2.34 on revs $1.31B-$1.39B below est. $2.39 and revs $1.38B

·     Sony Corp (SNE) said it was rejecting a call by Daniel Loeb’s activist hedge fund Third Point LLC to spin-off its chips business, saying that the business is a “crucial growth driver” for them

·     Shopify (SHOP) 1.9M share Spot Secondary priced at $317.50

·     WeWork Company’s (WE) IPO is likely delayed until October at the earliest – WSJ reported

·     Shopify (SHOP) files to sell 1.9M Class A subordinate voting shares

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Content is provided by Hammerstone Inc., which has no affiliation with Regal Securities, Inc. (“Regal”) This commentary is provided for information purposes only, and is not a recommendation, offer or solicitation by Regal to buy or sell securities or to adopt any investment strategy. Regal has not participated in the creation of the Hammerstone content and does not directly or indirectly endorse the content. Any reliance on this material is at the sole discretion of the reader.

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