Early Look

Tuesday, August 25, 2020

Futures	Up/Down	%	Last
DJ Industrials	182.00	0.64%	28,421
S&P 500	14.50	0.41%	3,441
Nasdaq	23.50	0.20%	11,659

 

 

Stock futures are on track for more gains in what has become a regular occurrence, as the latest advance follows a discussion between U.S. and Chinese trade negotiators, with both sides seeing progress on a Phase One trade deal and committing to its success in their first formal dialogue since early May. According to a statement by the USTR, “the parties addressed steps that China has taken to effectuate structural changes called for by the Agreement that will ensure greater protection for intellectual property rights, remove impediments to American companies in the areas of financial services and agriculture, and eliminate forced technology transfer.” Also providing optimism, Federal Reserve Chairman Jerome Powell’s remarks on monetary policy at this week’s Kansas City Fed Jackson Hole symposium. In Asian markets, The Nikkei Index rose 311 points to 23,296, the Shanghai Index fell -12 points to 3,373 and the Hang Seng Index fell -65 points to 25,486. In Europe, the German DAX is up around 75 points to 12,145, while the FTSE 100 is little changed holding above the 6,100 level.

 

In other news, the Dow Jones Industrial Average announced a major shake-up last night to its components, prompted by Apple Inc.’s (AAPL) decision for a 4-for-1 stock split, which will reduce the index’s tech-sector weighting. Software company Salesforce.com Inc. (CRM) will replace oil giant Exxon Mobil Corp. (XOM), biotech drugmaker Amgen Inc. (AMGN) will replace pharmaceutical company Pfizer Inc. (PFE) and industrial conglomerate Honeywell International Inc. (HON) will replace defense contractor Raytheon Technologies Corp. (RTX), S&P Dow Jones said.

 

Stocks surged again on Monday as the S&P 500 and the Nasdaq reached new record closing highs and the Dow Jones Industrial Average settled above the 28,000 level for the first time in 6-months amid optimism over potential medical advances in the war against the coronavirus pandemic. The S&P 500 reclaimed its February closing high last week, adding to it again on Monday led by financials, energy and industrial stocks while healthcare lagged. The Dow remains nearly 4.2% below its all-time high, and down 0.8% year-to-date, while the Nasdaq and the S&P have gained 26.8% and 6.2%, respectively YTD. The news of the FDA approving the emergency use of blood plasma in COVID-19 patients and on a report the Trump administration may fast-track a vaccine candidate helped the reopening trade as airlines, cruise lines, travel, restaurants and gaming stocks soaring on Monday.

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 34.12 points, or 1.00%, to 3,431.28

·     The Dow Jones Industrial Average rose 378.13 points, or 1.35%, to 28,308.46

·     The Nasdaq Composite jumped 67.92 points, or 0.60%, to 11,379.72

·     The Russell 2000 Index advanced 15.99 points, or 1.03% to 1,568.47

 

Economic Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:00 AM EST      FHFA House Price Index for June…est. 0.3%

·     9:00 AM EST      S&P CoreLogic Case Shiller index for June

·     10:00 AM EST    Consumer Confidence for August…est. 93.0

·     10:00 AM EST    New Home Sales for July…est. 790K

·     10:00 AM Est     Richmond Fed Manufacturing for August…est. 10

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AMWD, BBY, HAIN, HRL, PINC, PLCE, SJM

·     Earnings After the Close: ADSK, CRM, ELMD, HEI, HPE, INTU, JWN, OOMA, PSTG, SCSC, TOL, URBN

 

Other Key Events:

·     Fed’s Daly speaks

·     Davidson Virtual West Coast Bank tour, 8/25-8/27

·     BMO Capital Virtual Technology Summit, 8/24-8/28

·     Piper Annual Medtech and Diagnostics Bus Tour, 8/25-8/27

·     Raymond James Virtual Diversified Industrials Conference, 8/25-8/26

 

 

Macro	Up/Down	Last
WTI Crude	0.04	42.66
Brent	0.28	45.41
Gold	-7.00	1,932.20
EUR/USD	0.0048	1.1836
JPY/USD	0.39	106.37
10-Year Note	+0.029	0.68%

 

 

Sector News Breakdown

Consumer

·     Autohome (ATHM) reports Q2 results that beat EPS and revenue estimates; Q2 highlights: Revenue fell 2.5% y/y to $327.4M; revenue breakdown: Media services, RMB932.1M (-9.4%); Leads generation services, RMB841.0M (-5.4%); Online marketplace and others, RMB540.2M (+37.8%); cost of revenues was $37.5M and OpEx totaled $181.4M.

·     American Woodmark (AMWD) Q1 sales $390.1M vs. est. $381.8M; 1Q EPS 97c vs. $1.59 YoY and Q1 operating income $26.8 million, -40% YoY

·     Hormel Foods (HRL) Q3 net sales $2.38B vs. est. $2.35B; Q3 EPS 37c tops the 34c estimate; Q3 operating margin 10.5% and FCF up 72% to $242M

 

Energy, Industrials & Materials

·     Oil production in the Gulf of Mexico continued to decline Monday as Tropical Storms Marco and Laura closed in on the region. About 82% of Gulf oil production and 57% of natural-gas production has been shut in, according to the Bureau of Safety and Environmental Enforcement

·     Portland General Electric (POR) board forms special committee to undertake review; lowers full-year 2020 guidance to $1.30 to $1.60 from $2.20-$2.50 prior and sees no impact expected to dividend guidance or long-term eps growth rate; co remains financially sound, with ample liquidity

 

Healthcare

·     Amgen Inc. (AMGN) will replace pharmaceutical company Pfizer Inc. (PFE) in the Dow Jones Industrial Average

·     Qiagen (QGEN) announced the U.S. launch of the new Access Anti-SARS-CoV-2 Total test, a digital test done on a portable device that provides results in about 10 minutes to detect antibodies in people exposed to the SARS-CoV-2 virus

·     Premier (PINC) Q4 EPS 58c on revs $342.8M vs. est. 61c and $315.1M; said is not establishing fiscal 2021 annual guidance

 

Industrials & Material:

·     Honeywell International Inc. (HON) will replace defense contractor Raytheon Technologies Corp. (RTX), S&P Dow Jones said in the Dow Jones Industrial Average

·     Standex (SXI) Q4 adj EPS 65c on sales $139.4M (down -33% YoY) vs. est. 47c and $137.5M; expects Q1 consolidated company revenue to be flat to slightly above Q4 2020

·     ArcelorMittal (MT) and SSAB tell their U.S. customers they will increase steel plate pricing by $40/st, effective immediately, for new orders; decision follows Nucor’s (NUE) Friday announcement that it would implement a minimum base price of $560/st

·     U.S. corn futures may be active after a U.S. Department of Agriculture report showed crop ratings in the U.S. Midwest deteriorated in the past week by the most in eight years amid dry weather in the Midwest; The USDA says crop ratings of “good” or “excellent” fell by five percentage points to 64%, and ratings fell in 16 of the 18 states monitored by the agency (watch DE, BG, ADM)

 

Technology, Media & Telecom

·     Palo Alto Networks (PANW) Q4 EPS $1.48 on revs $950.4M vs. est. $1.39 and $923.8M; 4Q billings $1.39 billion, +32% YoY, 4Q product revenue $305.6M and 4Q Subscription and Support revenue $644.8 million, +29% YoY; to acquire The Crypsis Group for $265M; guides Q1 res $915M-$925M vs. est. $901M

·     Software company Salesforce.com Inc. (CRM) will replace oil giant Exxon Mobil Corp. (XOM) in the Dow Jones Industrial Average

·     21Vianet Group (VNET) said it intends to offer and sell 17M American depositary shares (ADSs)

·     General Atlantic and Sequoia Capital, two top investors in TikTok’s Chinese parent company ByteDance, are vying to be part of a deal for the U.S. operations of the video-sharing app as it seeks to avoid a ban by the Trump administration – WSJ reports

·     Radware (RDWR) has added three new scrubbing centers in India, Brazil and Israel, supporting customer growth in emerging markets