Morning Preview: October 09, 2020

Auto PostDaily Market Report

Early Look

Friday, October 9, 2020

Futures

Up/Down

%

Last

DJ Industrials

105.00

0.37%

28,416

S&P 500

12.50

0.37%

3,450

Nasdaq

28.50

0.25%

11,567

 

 

New day, same story as U.S. futures are looking at a higher open, on track for their best weekly returns since August as investors kept hopes for an American stimulus deal alive, at the end of a positive week for markets. Tech stocks may get a boost on possible M&A news in the semiconductor sector after the WSJ reported that AMD is in advanced talks to acquire XLNX. There was also positive data out of China as the Caixin China services purchasing managers index rose to 54.8 in September from 54.0 in August, the 5th straight month above the 50 expansions level. In Asian markets, The Nikkei Index fell -27 points to 23,619, the Shanghai Index surged 1.68% to 3,272 and the Hang Seng Index slipped -74 points to 24,119. In Europe, the German DAX is down slightly at 13,040, while the FTSE 100rises around 40 points to 6,015. It was another winning day on Wall Street Thursday led by some of the years’ top declining sectors as energy rises nearly 7% so far this week with crude futures up above $41 per barrel as Hurricane Delta heads towards the Gulf Coast, while financials are up nearly 4% this week, as the XLF closed above its 200-day moving average for the first time since February. Volatility from stimulus package anticipation has been the main driver as negotiations between either a “fat” or “skinny” deal remains the big question. House Speaker Pelosi wants a comprehensive deal saying on Thursday she wouldn’t accept a small deal just for airline aid without guarantees a more comprehensive aid bill will be on the docket, while President Trump has suggested a skinny bill. By Thursday’s conclusion, all 11 major S&P sectors ended higher heading into the final trading day of the week.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 27.38 points, or 0.80%, to 3,446.83

·     The Dow Jones Industrial Average rose 122.05 points, or 0.43%, to 28,425.51

·     The Nasdaq Composite spiked 56.38 points, or 0.50%, to 11,420.98

·     The Russell 2000 Index advanced 17.51 points, or 1.09% to 1,628.55

 

Economic Calendar for Today

·     10:00 AM EST    Wholesale Inventory for August

·     10:00 AM EST    Wholesale Sales MoM for Aug

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

 

Macro

Up/Down

Last

WTI Crude

-0.45

40.74

Brent

-0.39

42.95

Gold

21.00

1,914.80

EUR/USD

0.004

1.1799

JPY/USD

-0.15

105.88

10-Year Note

+0.00

0.767%

 

 

World News

·     A private gauge of China’s services-sector activity expanded at a faster pace in September, buoyed by strong domestic demand amid a continued economic recovery at the end of third quarter. The Caixin China services purchasing managers index rose to 54.8 in September from 54.0 in August, Caixin Media Co. and research firm Markit said Friday. It was the fifth straight month the index stayed above the 50

·     The U.K. economy grew 2.1% in August, according to data released Friday that showed the slowest monthly gain since the initial lockdowns. The gain in GDP leaves the U.K. economy 9.1% below February levels. It also was below economist expectations for growth of 4.6%. U.K. GDP had climbed 6.4% in July, 9.1% in June and 2.7% in May.

·     The emergence of cryptocurrencies presents opportunities for terrorists, rogue nations and other criminals who present a threat to U.S. national security, the Department of Justice said Thursday in a report. – Bloomberg

·     The Tennessee Titans have had another positive test result to raise their outbreak to 23 cases, a person familiar with the situation told The Associated Press on Thursday. Also, an inconclusive positive result from Wednesday now is positive. The Titans’ facility remains closed and the team remains prohibited from any in-person activities, putting Sunday’s game with Buffalo at risk

 

Sector News Breakdown

Consumer

·     KB Homes (KBH) boosted its quarterly dividend to 15c from 9c

·     SpartanNash (SPTN) discloses that it issued warrants to Amazon (AMZN) as part of a commercial agreement with the company.

 

Energy, Materials and Industrials

·     Bloom Energy (BE) converted $249M of 10% convertible promissory notes due 2021; also called the outstanding balance of $79M of its 10% senior secured notes due 2024, utilizing the net proceeds from recent Green convertible senior notes offering.

·     Alcoa (AA) will curtail its San Ciprián aluminum smelter in Spain and initiate a collective dismissal that will affect approximately 530 employees; to take restructuring charge of 19c-22c in Q4 for severance

·     Westlake Chemical (WLK) upgraded to Buy from Neutral with a price target of $78, up from $60 at Citigroup

·     Matson (MATX) said it expects Q3 net income and diluted eps to be $67.2-$69.4M and EPS $1.55-$1.60 (est. 96c) with operating income for ocean transportation to be $84.5-$86.5M vs. $43.9M YoY and sees YoY increase in consolidated operating income driven primarily by China service strength; total debt decreased by $66.4M during the three months to $823.6M as of September 30, 2020

 

Financials

·     American Express (AXP) downgraded to neutral from positive at Susquehanna

·     Cohen & Steers, Inc. (CNS) preliminary assets under management of $70.5 billion as of September 30, 2020, a decrease of $1.6 billion from assets under management at August 31, 2020. The decrease was due to net outflows of $24 million, market depreciation of $1.2 billion and distributions of $303 million

·     Citadel Securities bolsters its presence at the New York Stock Exchange by buying the NYSE market-making business of smaller rival IMC Financial Markets, the companies said.

·     Franklin Resources (BEN) was double-upgraded to Buy from Underperform at Bank America

·     London Stock Exchange Group PLC said Friday that it has agreed to sell its entire shareholding in the parent company of Borsa Italiana to Euronext NV for an equity value of 4.33 billion euros ($5.09 billion). https://on.mktw.net/34Hf1y2

 

Healthcare

·     Gilead Sciences Inc. (GILD) said that a late-stage study of its experimental COVID-19 treatment showed it shortened time to recovery. The company said a study of remdesivir (trade name Veklury), plus standard of care shortened the time of recovery by an average four days, compared with a placebo and standard of care.

·     Emergent BioSolutions (EBS) announces the initiation of an NIAID-sponsored Phase 3 clinical trial, INSIGHT-013, evaluating COVID-HIG (one of four such products)

·     GenMark Diagnostics (GNMK) said it sees Q3 revs about $42.6M vs. est. $38.1M; received Emergency Use Authorization, or EUA from the FDA for its ePlex Respiratory Pathogen Panel 2, or RP2

·     HCA Healthcare (HCA) forecast Q3 revenues of ~$13.3B, +5% Y/Y vs. est. $12.67B; sees income before income taxes of around $950M, down from $979M, a year ago; said Q3 results include reversal of $822M in government stimulus income recorded in Q2, related to general distribution funds received under the CARES Act, as well as losses on retirement of debt of $211M; prelim 3Q same facility equivalent admissions -4%, and revenue per equivalent admission +15%.

·     Selecta Biosciences, Inc. (SELB) and IGAN Biosciences announced that they have entered into a Research License and Option agreement to study Selecta’s ImmTOR (TM) immune tolerance platform in combination with IGAN’s immunoglobulin A (IgA) protease for the treatment of IgA Nephropathy (IgAN)

·     Sorrento Therapeutics Inc. (SRNE) files for shelf of up to 996,803 shares of common stock by selling stockholders

·     Kronos Bio (KRON) 13.2M share IPO priced at 19.00

·     Shattuck Labs (STTK) 11.88M share IPO priced at $17.00

·     Spruce Biosciences (SPRB) 6M share IPO priced at $15.00

 

Technology, Media & Telecom

·     AMD (AMD) is in advanced talks to buy rival chip maker Xilinx (XLNX), people familiar with the matter say, in a deal that could be worth more than $30 billion, the WSJ reported https://on.wsj.com/3dcyGtv

·     Extreme Networks (EXTR) shares jump 20%; raises Q1 adjusted EPS view to 5c-8c from prior 1c-4c (est. 2c) and ups Q1 revenue view to $233M-$236M from $220M-$230M (est. $223.61M) citing better-than-expected preliminary results across geographies and major market segments

·     Model N (MODN) said it sees Q4 EPS and revenue above guidance as continues to execute strongly; said sales strategy targeting new logos, customer base expansions, and SaaS transitions continues to deliver strong results

·     NXP Semiconductors (NXPI) announces a significant improvement in our outlook for Q3 as sees revenue $2.27B vs. est. $2.0B as experienced material improvement in demand across all end markets, but particularly in automotive and mobile end markets in Q3

·     The Defense Dept. selected AT&T (T), Nokia (NOK) and Ericsson (ERIC) among others to take part in 5G testing at five military sites – the largest full-scale 5G tests for dual-use applications in the world

_________________________________________________________________

Market commentary provided by Catena Media Financials US, LLC, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

Live Trading

Open an Account

Paper Trading

Register