Early Look

Wednesday, June 5, 2019

Futures	Up/Down	%	Last
DJ Industrials	154.00	0.61%	25,500
S&P 500	17.50	0.61%	2,822
Nasdaq	56.50	0.79%	7,235

 

Stock futures are higher for a second day, on track to build from yesterdays Fed induced gains, as market momentum builds on hopes for the Fed to reverse course and lower interest rates in 2019 to further boost growth. Commentary from Fed officials the last two days has helped propel markets higher, after Fed Chairman Powell indicated trade tensions could lead the central bank to cut interest rates, saying that the Fed would “act as appropriate” to lengthen the U.S.’s economic expansion. The comments echoed those of St. Louis Fed President James Bullard on Monday. Treasury prices have rallied over recent weeks, taking a breather on Tuesday as the 10-year Treasury note yield rose 3.4 bps to 2.119%, off its lowest finish since September 2017. The two-year note yield gained 2.4 bps to 1.872%, bouncing from a multiyear low of 1.848% on Monday, while the 30-year bond yield climbed 5.2 bps to 2.602%, marking its biggest daily rise since April 1. In Asian markets overnight, The Nikkei Index jumped 367 points to 20,776, the Shanghai Index…the Hang Seng Index gained 133 points to settle at 26,895. In Europe, the German DAX is up around 80 points to 12,050, while the FTSE 100 is higher by 40 points above 7,250. All is quiet on the trade front for the moment, with tariffs expected to be enacted on Mexico shortly, and no recent “tough” commentary from either side in the dispute with China. U.S. stocks will try and build off its best one-day rally since January, as major averages closed yesterday with sharp gains of over 2%, led by a rebound in technology, financials and energy.

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:15 AM EST      ADP Employment Change for May…est. 185K

·     9:45 AM EST      Markit US Services PMI, May-F…est. 50.9

·     9:45 AM EST      Markit UC Composite PMI, May-F

·     9:45 AM EST      Fed’s Clarida welcome remarks at Fed conference

·     10:00 AM EST    ISM Non-Manufacturing Index for May…est. 55.4

·     10:30 AM EST    Weekly DOE Inventory Data

·     11:00 AM EST    Fed’s Bostic speaks on Housing Panel in Atlanta

·     2:00 PM EST       Fed Beige Book released

 

Earnings Calendar:

·     Earnings Before the Open: AEO, A LOT, BF/B, CPB, GIII, SCWX, VRA

·     Earnings After the Close: ABM, CLDR, ESTC, GEF, FIVE, MDB, REVG, SFIX, UNFI

 

Other Key Events:

·     Annual Worldwide Developers Conference, 6/3-6/7, in San Jose, CA

·     Baird Global Consumer & Technology Service conference, 6/4-6/6, in New York

·     Bank America Global Technology Conference, 6/4-6/6, in San Francisco

·     Jefferies 2019 Healthcare Conference, 6/4-6/7, in New York

·     REITWeek 2019 Investor Conference, 6/4-6/6, in New York

·     Roth Capital 6th Annual China Solar Tour, 6/6-6/6, in Shanghai

·     UBS Global Industrials and Transportation Conference, 6/5-6/6, in New York

·     William Blair Growth Stock Conference, 6/5-6/6, in Chicago

·     Fed Beige Book released

·     Eurozone services PM for May and PPI and retail sales for April

 

Market Closing Prices Yesterday

·     The S&P 500 Index surged 58.82 points, or 2.14%, to 2,803.27

·     The Dow Jones Industrial Average rose 512.40 points, or 2.06%, to 25,332.18

·     The Nasdaq Composite spiked 194.10 points, or 2.65%, to 7,527.12

·     The Russell 2000 Index advanced 38.58 points, or 2.62% to 1,508.56

 

 

Macro	Up/Down	Last
WTI Crude	-0.30	53.18
Brent	0.10	62.07
Gold	11.90	1,337.40
EUR/USD	0.0023	1.1275
JPY/USD	0.16	108.31
10-Year Note	+0.002	2.121%

 

 

World News

·     U.S. Treasury Secretary Steve Mnuchin will meet with Yi Gang, governor of the People’s Bank of China, this weekend at the G-20 summit in Japan, Reuters reported Tuesday night. It will be the first face-to-face meeting between the two prominent trade negotiators since talks between the U.S. and China stalled last month.

·     There’s always a chance of war with Iran, President Trump said before attending commemorations for the invasion that helped end World War II. He told U.K. TV he’d rather talk to President Rouhani, but military action is possible if Iran takes steps to get nuclear weapons

·     The euro-area May services PMI was revised up to 52.9 from 52.5, while the composite was revised to 51.8 from the flash reading of 51.6

 

Sector News Breakdown

Consumer

·     GameStop (GME) shares fell -8%; Q1 EPS 7c/$1.55B vs. est. loss (3c)/$1.64B; Q1 comp sales drop (-10.3%) vs. est. (-6.4%); sees FY capital expenditure $100M-$110M while reaffirms year comp sales decline of (5%-10%) and sales (also down 5%-10%); 1Q new hardware sales -35% and new software sales -4.3%; said it is eliminating its dividend amid falling sales

·     Carnival Corp. (CCL) and its subsidiary Princess Cruise Lines has been ordered to pay $20 million for environmental violations just two years after it paid $40 million for dumping oil-contaminated waste into the ocean,

·     Quanex (NX) Q2 EPS 19c/$218.2M vs. est. 12c/$220.41M

·     The Trump administration on Tuesday ended the most popular forms of U.S. travel to Cuba, banning cruise ships and a heavily used category of educational travel in an attempt to cut off cash to the island’s communist government (shares of NCLH, CCL, RCL were active)

·     China fined Ford Motor Co.’s (F) main joint venture in the country for antitrust violations, marking the latest action toward a U.S. company as tensions between the two nations escalate.

 

Energy, Industrials & Materials

·     The American Petroleum Institute (API) reported U.S. crude supplies climbed by nearly 3.6 barrels for the week ended May 31, showed a stockpile increase of 2.7M barrels in gasoline, while distillate supplies jumped higher by 6.3M barrels.

·     Watch shares of Cummins (CMI), Navistar (NAV) and Paccar (PCAR) after Class 8 net orders in May were 10,800 units, down 70% year-over-year according to ACT Research

·     Chemours Co. (CC) named Mark Newman to the newly created role of chief operating officer, and promoted its vice president of business finance and treasurer Sameer Ralhan to chief financial officer and treasurer.

·     Patterson-UTI (PTEN) reported that for the month of May, the company had an average of 158 drilling rigs operating. For the two months ended May 31, the company had an average of 162 drilling rigs operating

·     Northwest Natural Gas (NWN) 1.25M share Spot Secondary priced at $67.00

 

Financials

·     AIG (AIG) downgraded to Hold from Buy at Deutsche Bank

·     Kemper (KMPR) 1.35M share Spot Secondary priced at $83.00

 

Healthcare

·     Eli Lilly & Co. (LLY) said its Emgality injection was approved by the U.S. FDA for the treatment of episodic cluster headache in adults. Lilly said Emgality is the first and only treatment that reduces the frequency of attacks

·     Emergent BioSolutions Inc. (EBS) said the FDA has approved its Prior Approval Supplement for its cholera vaccine Vaxchora

·     HealthEquity (HQY) Q1 EPS 41c/$87.1M vs. est. 34c/$84.06M; raises year rev view to $339M-$345M from prior $333M-$339M (est. $337.5M) and raised year EPS view to $1.28-$1.34 from $1.23-$1.29 (est. $1.28) and boosted year Ebitda

·     LabCorp (LH) was notified by the American Medical Collection Agency that the personal data of about 200,000 consumers may be at risk in an alleged data hack

·     Cronos Group (CRON) upgraded to Buy from Underperform at Bank America

·     Medtronic (MDT) upgraded to Outperform from Market Perform at Wells Fargo and raised tgt to $110

·     ReWalk Robotics, Ltd. (RWLK) said the FDA cleared the company’s ReStore soft exo-suit system for sale to rehabilitation centers across the United States

·     Sientra (SIEN) 17.39M share Secondary priced at $5.75

 

Technology, Media & Telecom

·     Salesforce (CRM) Q1 adjusted EPS 93c/$3.74B vs. est. 61c/$3.68B; sees Q2 adjusted EPS 46c-47c on revs $3.94B-$3.95B vs. est. 66c/$3.94B; raises FY20 adjusted EPS view to $2.88-$2.90 from $2.74-$2.76 (est. $2.69) and ups FY20 revenue view to $16.1B-$16.25B from $15.95B-$16.05B (est. $16.1B)

·     Skyworks (SKWS) cuts its Q3 adjusted EPS midpoint view to $1.34 from $1.50 (est. $1.50) and also lowered Q3 revenue view to $755M-$775M from $815M-$835M (below est. $826.27M) citing the impact from ceasing all shipments to Huawei Technologies Co.

·     Ambarella (AMBA) shares rose 9%; Q1 EPS 1c/$47.2M vs. est. loss (5c)/$47.01M; sees Q2 revenue $51M-$53M above est. $48.81M while guides gross margin on a non-GAAP basis is expected to be between 57.0% and 59.0%; Q1 adjusted gross margin of 59.6% was down from 61.8% a year ago, but in line; authorized a $50M buyback program through the end of June 2020

·     Guidewire (GWRE) shares fell -7%; Q3 adjusted EPS 18c/$162.9M vs. est. 8c/$155.28M; guides Q4 adjusted EPS 47c-53c on revs $199M-$207M well below est of 61c/$226.41M; mixed year outlook as raises FY19 EPS view to $1.36-$1.42 from $1.35-$1.41 but cuts FY19 revs to $711M-$719M from $725M-$732M (est. $730.76M)

·     Pivotal Software (PVTL) shares fell -20%; Q1 EPS loss (3c)/$185.7M vs. est. loss (5c)/$184.14M; but cuts year rev outlook to %756M-$767M from prior view of $798M-$806M (est. $802.6M); also guides Q2 revs lower at $185M-$189M vs. est. $197.6M

·     TiVo (TIVO) shares rose 8% after it received a favorable determination by Administrative Law Judge MaryJoan McNamara of the International Trade Commission, ITC, that Comcast’s (CMCSA) X1 platform infringes Rovi’s patents

·     Altair (ALTR) files to sell $175M of convertible senior notes due 2024

·     Descartes Systems (DSGX) announces offering of 6M common shares