Early Look

Wednesday, April 1, 2020

Futures	Up/Down	%	Last
DJ Industrials	-690.00	3.17%	21,061
S&P 500	-82.50	3.21%	2,487
Nasdaq	-212.50	2.73%	7,574

 

 

Global stock futures move sharply lower overnight, falling after President Donald Trump warned of two difficult weeks ahead amid the pandemic that has killed now more than 4,000 Americans and infected close to 189,000, though public health officials stressed that the stark prediction for thousands of deaths could be less if people change their behavior. Currently, the White House projects the U.S. could face 100K-240K total deaths from the coronavirus pandemic. Concerns remain over the spread of COVID-19 in the U.S. and Europe in particular, with economic activity under lockdown amid a rising tally of infections and a mounting death toll. Spain reported its highest numbers of deaths since the crisis began Tuesday, while the total global figure for cases inches closer to the 1 million mark.

 

Stocks closed out Tuesday weak, ending sharply lower in a late day pullback as investors look to put the worst first quarter for the Dow on record behind them as the impact of the coronavirus impacted global stock markets. For the month of March, the Dow lost 13.7%, the S&P 500 sank 12.5% and the Nasdaq fell 10.1%. The Dow notched its worst first quarter on record, according to Dow Jones Market Data, down 23.2%, while the S&P 500 retreated 20% and the Nasdaq 14.2%.

 

In Asian markets, The Nikkei Index declined -851 points (4.5%) to 18,065, the Shanghai Index slipped -15 points to 2,734 and the Hang Seng Index slumped -517 points to 23,085. In Europe, the German DAX is lower by -300 points to 9,650, while the FTSE 100 is down nearly -200 points to move back below 5,500. The Stoxx Europe 600 index fell 2.6% to 311.64, after gaining 1.6% on Tuesday. It closed out the first quarter with a 23% loss, its biggest since the third quarter of 2002.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -42.06 points, or 1.60%, to 2,584.59

·     The Dow Jones Industrial Average fell -410.32 points, or 1.84%, to 21,917.16

·     The Nasdaq Composite slumped -74.05 points, or 0.95%, to 7,700.10

·     The Russell 2000 Index declined -5.21 points, or 0.45% to 1,153.10

 

Economic Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:15 AM EST      ADP Employment Change for March

·     9:45 AM EST      Markit US Manufacturing, Mar-F

·     10:00 AM EST    Construction Spending for Feb

·     10:00 AM EST    ISM Manufacturing for March

·     10:30 AM EST    Weekly DOE Inventory Data

 

 

Macro	Up/Down	Last
WTI Crude	0.11	20.59
Brent	-0.65	25.70
Gold	11.40	1,608.00
EUR/USD	-0.0096	1.0935
JPY/USD	0.00	107.54
10-Year Note	-0.056	0.612%

 

 

World News

·     U.S. pension funds that delayed rebalancing their portfolios are likely to pump about $400 billion into stocks over the next two quarters, analysts at JP Morgan said, providing a potential boost to equity markets. U.S. pension funds bought $200 billion in stocks by the first quarter of 2009, in the aftermath of the global financial crisis — equivalent to $600 billion today

·     Investor Intelligence Poll showed newsletter writers considered bullish increase to 31.4% from 30.1%, while bearish sentiment falls to 36.3% versus 41.7% last week and 32.7% the prior week while those expecting a correction rises to 32.3% from a five-week low of 28.2% last week

·     Japan’s Manufacturing Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 44.8 from a final 47.8 in February, its lowest since April 2009. The PMI survey showed output and new orders fell to levels not seen since April 2011

·     IHS Markit Eurozone manufacturing purchasing managers index fell in March to 44.5 from 49.2 in February. It was the lowest reading in 92 months, but not a surprise as the flash estimate was 44.8. Spain’s manufacturing PMI slid to 45.7, from 50.4.

·     The Caixin China manufacturing purchasing managers index, which is tilted toward small, private manufacturers, rose to 50.1 in March from 40.3 in February,

 

Sector News Breakdown

Consumer

·     Children’s Place (PLCE) said all stores in US and Canada remain closed until further notice; effective Apr 1st, CEO will forgo 100% of her salary and other senior leaders take temporary 25% salary cuts; effective Apr 5th, will furlough all US and Canada field mgmt. and store associates

·     Macy’s Inc. (M) is leaving the S&P 500index and will join the S&P SmallCap 600 and Otis Worldwide Corp. and Carrier Global Corp. will join the S&P 500 (Otis replacing Raytheon which is being acquired by UTX and Carrier replacing Macy’s)

·     Tailored Brands (TLRD) said it reopened its e-commerce fulfillment centers this week after instituting some social distancing and cleaning measures; though the company’s retail stores will remain temporarily closed until at least May 4.

·     Wynn Resorts (WYNN), MGM Resorts (MGM): Macau’s gaming bureau reported March gross revenue from games of fortune in the region decreased 79.7% year-over-year to 5.257B patacas.

 

Energy

·     The American Petroleum Institute (API) reported U.S. crude supplies rose by 10.5 million barrels for the week ended March 27, showed gasoline stockpiles up by 6.1 million barrels, while distillate inventories declined by nearly 4.5 million barrels.

·     BP PLC (BP) warned that results in the first quarter of this year would be hit by weak demand stemming from the coronavirus and low commodity pricing; it estimates a $1 billion noncash impairment charge for the period.

·     California’s Public Utilities Commission is considering whether to back off plans to fine PG&E (PCG) an additional $462M related to deadly wildfires in 2018 on concerns that the harsher punishment could scuttle the utility’s plan to emerge from bankruptcy protection.

·     Delek US (DK) agreed to the dropdown of the Big Spring gathering system to Delek Logistics Partners (DKL) for $100M in cash and 5M common units representing limited partnership interest in Delek Logistics.

·     Oceaneering International (OII) confirms its Q1 2020 guidance, though withdraws FY2020 guidance; said it expects to lower its capital expenditures for 2020 to $60M-$80M, and reduce its unallocated expenses to an average per quarter in the upper $20M range

 

Financials

·     Banks weighed down the main European index, with those in the U.K. leading the way south after announcing they would halt 2020 dividends at the behest of the Bank of England.

 

Healthcare

·     Akorn (AKRX) says it no longer has any bids in the sale process that are sufficient to pay all obligations under its term loan agreement, citing broader market uncertainties related to the COVID-19 crisis.

·     InflaRx NV (IFRX) shares jump over 100% after saying dosing is underway in a randomized clinical trial in Netherlands evaluating its experimental drug, IFX-1, in patients with severe COVID-19-induced pneumonia

·     Thermo Fisher Scientific (TMO) announces the availability of its AcroMetrix Coronavirus 2019 (COVID-19) RNA Control used to help laboratories validate and monitor COVID-19 molecular diagnostic tests

 

Industrials & Materials

·     Lockheed Martin (LMT) was awarded a $4.7B modification for the procurement of 78 F-35 combat aircraft, the Department of Defense said; award includes 48 F-35A combat aircraft for the Air Force, 14 F-35B combat aircraft for the Marine Corps, 16 F-35C fighter aircraft for the Navy

·     FedEx Corp. (FDX) said it will implement a temporary surcharge on all international parcel and freight shipments from all origins in the FedEx global network, effective April 6.

·     Landec (LNDC) 3Q adj EPS cont ops $0.04 vs. est. $0.01 on revs $152.9Mm vs. est. $147.4Mm; says to streamline curation foods biz; backs FY20 revs $580-590Mm vs. est. $585Mm

·     Grainger (GWW) said it took a $1B draw on its unsecured revolving credit facility as a proactive measure to increase the company’s cash position and preserve financial flexibility

·     Northrop Grumman (NOC) files senior debt, securities shelf offering

 

Technology, Media & Telecom

·     Xerox Holdings (XRX) is ending its more than $30 billion tender offer to buy larger rival HP Inc. (HPQ) and a proxy fight to replace the company’s board, Dow Jones reported

·     The Madison Square Garden Co. (MSG) said its board of directors had approved the spinoff of its sports and entertainment businesses; said it expected the spinoff to completed in mid-April.

·     Blackberry (BB) Q4 adj EPS 9c vs. est. 4c; Q4 revenue up 1% YoY to $282M vs. est. $296.5M, said total cash, cash equivalents, short-term and long-term investments was $990M; Q4 adj software and services revs up 16% YoY to $287M

·     Match Group Inc. (MTCH) said they expect our Q1 results to be around the low end of the ranges we previously shared publicly

·     Verint (VRNT) Q4 adjusted EPS $1.11 on revs $349.5M vs. est. $1.16 and $376.1M