Early Look

Monday, March 2, 2020

Futures	Up/Down	%	Last
DJ Industrials	-133.00	0.52%	25,231
S&P 500	-20.50	0.70%	2,930
Nasdaq	-25.50	0.30%	8,428

 

 

U.S. stock futures fell overnight, following the major indexes’ worst week since 2008 as a coronavirus stock market correction took hold. The U.S. reported two coronavirus deaths this weekend (in Washington state) amid concerns of many more infections. Stocks fell for a seventh straight day Friday, though a late day (last few minutes) surge pushed stocks well off their lows to actually help the Nasdaq Comp finish in positive territory. According to Bespoke late Friday, there have only been five other days since 1983 where the S&P 500 rallied over 2% in the last 15 minutes of trading (four times in ’08 and on 2/14/18). All three indexes fell into correction territory, widely defined as a drop of at least 10%, but no more than 20%, from a recent peak. U.S. benchmark crude oil prices plunged 16% in its largest weekly decline since December 2008, as the spread of the coronavirus stokes fears of slowing global demand (lowest settlement since December 2018). OPEC and its allies face increased pressure to take action as they prepare to meet this week to discuss the possibility of additional production cuts. In Asian markets, The Nikkei Index gained 201 points to 21,344, the Shanghai Index jumped 90 points to 2,970 and the Hang Seng Index gained 161 points to settle at 26,291. In Europe, the German DAX is down over -70 points to 11,820, while the FTSE 100 is up around 20 points to move back above 6,600. Meanwhile, the U.S. 10-year Treasury yield touched an all-time low of 1.02% overnight. Related to virus overnight outside of the two deaths in the US and one confirmed case in New York, positive news came out of the epicenter of the disease after Hubei had 196 new confirmed cases on Sunday, the National Health Commission said on Monday, sharply down from 570 cases a day earlier and the lowest since Jan. 24.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -24.54 points, or 0.82%, to 2,954.22

·     The Dow Jones Industrial Average fell -357.24 points, or 1.39%, to 25,409.36

·     The Nasdaq Composite inched higher 0.89 points, or 0.01%, to 8,567.37

·     The Russell 2000 Index declined -21.44 points, or 1.43% to 1,476.43

 

Events Calendar for Today

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

·     10:00 AM EST    Construction Spending for January

·     10:00 AM EST    ISM Manufacturing for Feb

 

Earnings Calendar:

·     Earnings Before the Open: ALBO, CIR, CORE, DHC, EBIX, EGRX, EVRG, FOLD, GTT, IPAR, ITCI, TZOO, WSC, XRAY

·     Earnings After the Close: AMBC, APPF, ATSG, CPTA, EVRI, GNMK, GSKY, IPI, LVGO, MDRX, OMER, PI, PTCT, UVE, WIFI, ZGNX

 

Other Key Events:

·     Citigroup Global Property Conference, 3/2-3/4, in Hollywood, FL

·     Credit Suisse 25th Annual Energy Summit, 3/1-3/4, in Vasil, CO

·     Cowen 40th Annual Healthcare Conference, 3/1-3/4, in Boston, MA

·     Morgan Stanley Global Energy & Power Conference, 3/2-3/4, in New York

·     Morgan Stanley Tech, Media & Telecom Conference, 3/2-3/5, in San Francisco, CA

·     Raymond James Annual Institutional Investors Conference, 3/2-3/4, in Orlando, FL

 

 

Macro	Up/Down	Last
WTI Crude	0.50	45.26
Brent	0.70	50.37
Gold	41.30	1,608.00
EUR/USD	0.0078	1.1104
JPY/USD	-0.28	107.61
10-Year Note	-0.096	1.052%

 

 

World News

·     China’s factory and non-factory activity sank to record lows in February as China’s economy struggled to resume normal production following shutdowns due to the outbreak. The official manufacturing purchasing managers index tumbled to 35.7 in February from 50 in January and was below the lowered expectation of around 45. China’s nonmanufacturing PMI, also released on Saturday, sank to a record low of 29.6 in February from 54.1 in January

·     Hubei had 196 new confirmed cases on Sunday, the National Health Commission said on Monday, sharply down from 570 cases a day earlier and the lowest since Jan. 24. Overall, mainland China had 202 new confirmed cases, the lowest since Jan. 22

·     South Korea reported on Monday 476 new coronavirus cases, taking its national tally to 4,212, the Korea Centers for Disease Control and Prevention (KCDC) said

·     The head of Italy’s Civil Protection Agency said the cumulative number of confirmed cases of the virus had jumped to 1,694 from 1,128 on Saturday

·     Pete Buttigieg, who became a top-tier candidate for the Democratic presidential nomination, is ending his campaign, according to reports form the AP ahead of Super Tuesday

·     The first case of coronavirus in New York City was confirmed on Sunday to be a woman in her late 30s who recently traveled to Iran, a state official said. As of late Sunday, there were 76 confirmed cases of coronavirus, known as COVID-19, across the U.S.

 

Sector News Breakdown

Consumer

·     WillScot Corp. (WSC) agreed to buy Mobile Mini Inc. (MINI) in a stock swap valued at about $1.86 billion; WillScot said it will issue 2.405 shares, valued at about $42.18 based on Friday’s closing price of $17.54, for each share of Mobile Mini. https://on.mktw.net/2wVf6kq

·     Walmart (WMT) and Verizon (VZ) are in talks to outfit the retailer’s stores with antennas and other equipment to create 5G wireless service, initially bringing 5G service to a pair of locations this year to power new Walmart digital health services – WSJ

·     Wynn Resorts (WYNN), Las Vegas Sands (LVS), Melco (MLCO) shares will likely be active after casinos in Macau reported a record drop in gaming revenue, as they dealt with the cost of closing down their businesses for two weeks to deal with the deadly coronavirus outbreak. Gross gaming revenue was 3.1 billion patacas ($386.5 million) in February, down 87.8% YoY while estimates were for a median 90% slide.

·     Harley Davidson (HOG) CEO stepped down as part of a leadership shake-up at the American motorcycle manufacturer, which has struggled to reverse a decline in sales

 

Financials

·     Berkshire Hathaway (BRK/A) “is cheap and misunderstood after all these years,” according to the manager of the GoodHaven fund in Barron’s. Investor Warren Buffett has the “ability to be a capital provider when markets are in disarray,” he said. Buffett did so successfully during the 2008 financial crisis and probably has at least $50 billion to readily deploy

·     Hersha Hospitality (HT) files $400M mixed securities shelf

 

Healthcare

·     AbbVie (ABBV) said VIALE-C trial of venetoclax in combination with low-dose cytarabine versus LDAC in combination with placebo did not meet its primary endpoint; the study didn’t demonstrate statistically significant improvement in the primary endpoint of overall survival

·     Applied DNA Sciences (APDN) and Takis Biotech announced that the design of 4 DNA vaccine candidates will be produced for preclinical animal testing via the company’s proprietary PCR-based DNA manufacturing systems

·     Co-Diagnostics (CODX) announced that following a recent change to the FDA’s policy towards the coronavirus outbreak, the company’s coronavirus test kits are available to laboratories certified under the Clinical Laboratory Improvement Amendments for use according to the FDA guidelines.

·     Dentsply Sirona (XRAY) Q4 adjusted EPS 73c/$1.11B vs. est. 75c/$1.09B; sees FY20 adjusted EPS $2.55-$2.80 vs. est. $2.73 and sees FY20 revenue $4.1B-$4.15B vs. consensus $4.13B

 

Industrials & Materials

·     American Airlines (AAL) will suspend all U.S. flights to Milan after the U.S. State Department said it was raising its travel warning for parts of Italy due to the coronavirus outbreak

·     Nutrien (NTR) upgraded to Outperform, CF Industries to Market Perform at Bernstein

·     AZZ Inc. (AZZ) backs FY21 EPS view $2.65-$3.15 vs. est. $3.00 and backs FY21 revenue view $970M-$1.06B vs. consensus $1.08B

 

Technology, Media & Telecom

·     Twitter (TWTR) shares higher after Bloomberg reported Paul Singer’s Elliott Management has taken a sizable stake in the company and plans to push for changes, including replacing CEO Jack Dorsey. Elliott has nominated four directors to Twitter’s board and has had “constructive discussions” with company https://on.mktw.net/3aoMC17

·     Samsung and LG Innotek have shut their factories in South Korea after a worker tested positive for the coronavirus, according to Reuters. Samsung’s mobile device factory in Gumi will be closed until Sunday evening for disinfection work

·     NXP Semiconductors (NXPI) said they now believe that our expectations for total revenue in the first quarter of 2020 will be reduced due to the impact of the coronavirus; while we have not seen any material order cancellations, we currently expect the impact to revenue in the first quarter to be in the range of $50M-$150M

·     Nokia’s (NOK) Board of Directors has appointed Pekka Lundmark as President and CEO of Nokia. Lundmark is expected to start in his new role on September 1, 2020