Early Look
Monday, September 14, 2020
Futures |
Up/Down |
% |
Last |
DJ Industrials |
232.00 |
0.84% |
27,725 |
S&P 500 |
37.50 |
1.12% |
3,360 |
Nasdaq |
163.50 |
1.48% |
11,211 |
U.S. stock futures are looking at a strong open, with major averages attempting to bounce back after stocks closed lower for a second consecutive week Friday as the S&P 500 fell 2.5%, the Dow dropped 1.7%, and the Nasdaq Composite declined 4.1% as tech extended its pullback from record highs just two weeks prior on profit taking and fear of sky high valuations. In Asian markets, The Nikkei Index rose 152 points to 23,559, the Shanghai Index gained 18 points to 3,278 and the Hang Seng Index climbed 136 points to 24,640. In Europe, the German DAX is down a few points to 13,190, while the FTSE 100 is off about -10 points to 6,020. Several M&A deals in the tech and healthcare announced this weekend is helping boost market sentiment: Gilead reached a $21B agreement to acquire Immunomedics, Nvidia is paying $40B to buy Arm Holdings from Japan’s SoftBank and Oracle appears poised to take over TikTok’s U.S. operations, with MSFT no longer in the running. There was also news on the virus from this weekend as Pfizer said its coronavirus vaccine could be distributed to Americans before the end of the year, while AstraZeneca restarted Phase 3 trials in the U.K. Lastly, the FOMC is expected to maintain its dovish stance on policy and investors will continue to look out for signs of an economic recovery.
Market Closing Prices Yesterday
· The S&P 500 Index gained 1.78 points, or 0.05%, to 3,340.97
· The Dow Jones Industrial Average rose 131.06 points, or 0.48%, to 27,665.64
· The Nasdaq Composite dropped -66.05 points, or 0.60%, to 10,853.54
· The Russell 2000 Index declined -10.48 points, or 0.70% to 1,497.27
· No Major Economic Data Released
Earnings Calendar:
· Earnings Before the Open: None
· Earnings After the Close: CSBR, LEN, MIND, VNCE
Other Key Events:
· Jefferies Virtual Software Conference, 9/14-9/15
· Morgan Stanley 18th Annual Global Healthcare Virtual Conference, 9/14-9/18
· RBC Capital Global Industrials Conference, 9/14-9/15
· Roth Capital Solar & Storage Symposium, 9/14-9/17
· ShopTalk 2020 (rescheduled from March 2020), 9/14-9/17
· Wells Fargo Net Lease REIT Forum
Macro |
Up/Down |
Last |
WTI Crude |
-0.26 |
37.07 |
Brent |
-0.27 |
39.56 |
Gold |
2.80 |
1,943.90 |
EUR/USD |
0.0021 |
1.1867 |
JPY/USD |
-0.18 |
105.98 |
10-Year Note |
-0.041 |
0.66% |
World News
· Japan’s Chief Cabinet Secretary Yoshihide Suga, who is set to become prime minister this week, said on Sunday there was no limit to the amount of bonds the government can issue to support an economy hit by the coronavirus pandemic. – Reuters
· Tropical Storm Sally slowed down Sunday as it churned northward toward the U.S. Gulf Coast, increasing the risk of heavy rain and dangerous storm surge before an expected strike as a Category 2 hurricane in southern Louisiana. Forecasters from the National Hurricane Center in Miami said Sally is expected to become a hurricane on Monday and reach shore by early Tuesday.
Sector News Breakdown
Consumer
· Barron’s said it was clear what Nikola Corporation (NKLA) got by partnering with General Motors Company (GM), who announced a $2B equity investment in the electric vehicle maker, but the Detroit automaker got something even more important, belief from investors that it will translate its new technologies, including autonomous driving, into higher valuation and could double its stock price
· Crocs (CROX) stock could double over time according to Barron’s, with more styles, smart marketing, and a growing e-commerce effort. The company is on track to gain more market share and deliver higher profits as casual footwear finds new fans during the pandemic
· J. Jill (JILL) has avoided filing for bankruptcy protection after a majority of its lenders and shareholders agreed to support an out-of-court financial restructuring deal. JILL said late Friday it obtained more than 95% support from lenders to push back its debt maturities by two years until May 2024, and lenders also agreed to lend the retailer at least $15M.
· MGM Resorts (MGM) downgraded to sell from neutral at Goldman Sachs with $20 tgt as we anticipate a slower recovery in Las Vegas which will drive downside to consensus estimates and fundamental underperformance
Energy
· BP Plc (BP) becomes the first oil major to call the end of an era many thought would last another decade or more, saying the relentless growth of oil demand is over in its latest energy outlook. Oil consumption may never return to levels seen before the coronavirus crisis took hold and even the firm’s most bullish scenario sees demand no better than “broadly flat” for the next two decades as the world moves away from fossil fuels
· Sunrun (RUN) and Vivint Solar (VSLR) announced that they have received notification from the Department of Justice of early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction remains subject to other customary closing conditions
· BP PLC (BP) also upgraded to outperform from neutral at Credit Suisse on valuation grounds saying European Integrated Oil and Gas sector’s next phase of recovery looks less predictable; firm downgraded Total (TOT) to Neutral from Outperform
Financials
· The biggest U.S. stock exchanges and major market-makers are joining forces to fight a proposed tax on financial transactions under consideration by N.J. Governor Phil Murphy. Members of the newly formed coalition such as NYSE, Nasdaq Inc. (NDAQ), Citadel Securities and Virtu Financial Inc. (VIRT) are threatening to move operations out of the state if the tax is enacted. Murphy said on Aug. 31 he was “very seriously” considering a tax on high-volume electronic trading in the state, home to Wall Street’s massive server farms.
Healthcare
· AstraZeneca (AZN) said clinical trials for the Oxford coronavirus vaccine, AZD1222, have resumed in the U.K. following confirmation by the Medicines Health Regulatory Authority that it was safe to do so. On September 6, the standard review process triggered a voluntary pause to vaccination across all global trials to allow review of safety data by independent committees, and international regulators.
· Gilead (GILD) reaches $21 billion deal for Immunomedics (IMMU), agreeing to pay $88 a share in cash, whose shares closed at $42.25 Friday, which represents a 108% premium. The Wall Street Journal first reported Saturday that Gilead and Immunomedics were nearing a more than $20 billion deal. https://on.mktw.net/32oLTvF
· Elanco Animal Health (ELAN) positive mention in Barron’s saying shares are up about 15% since the company closed its nearly $7 billion acquisition of Bayer Animal Health in early August – that rally has been a long time coming for investors in the animal-care company. Now, Elanco has a good opportunity to change the trajectory of its stock performance, in part because it will have more global reach with the Bayer unit
· Pfizer (PFE) and BioNTech (BNTX) have submitted an amended protocol to the FDA to expand enrollment in their Phase III Covid-19 vaccine trial to up to 44,000 participants, a significant increase from the previous target of 30,000.
· Sorrento Therapeutics (SRNE) signs an agreement with Mayo Clinic securing exclusive rights to a technology platform that, it says, is capable of generating a great diversity of stable antibody-drug-nanoparticle albumin-bound (nab) immune complexes (ADNICs) targeting many types of human diseases including various solid and liquid tumors.
· Axsome Therapeutics (AXSM) announced that AXS-05, a novel, oral, investigational NMDA receptor antagonist with multimodal activity, rapidly and significantly improved patient-reported outcomes of depression in patients with major depressive disorder, or MDD, in the GEMINI Phase 3 trial
· President Donald Trump signed an executive order on Sunday to reduce the cost of prescription drugs for U.S. seniors by more closely aligning prices with what pharmaceutical companies charge in other countries. The order is unlikely to have an immediate effect because it requires federal rulemakings that could take months to complete
Industrials & Materials
· Elbit Systems Cyclone, a wholly owned subsidiary of Elbit Systems (ESLT), has won a contract by Lockheed Martin (LMT) for the manufacture of assemblies for Forward Equipment Bay assemblies for the F-35.
· U.S. federal aviation administration said late Friday it will start joint operations evaluation board for Boeing (BA) 737 Max on sept. 14 at London Gatwick airport – Reuters
· Pentair (PNR) upgraded to Buy from Neutral at Citigroup
Technology, Media & Telecom
· Oracle Corp. (ORCL) will reportedly take over TikTok’s business in the U.S. after China’s ByteDance rejected Microsoft Corp.’s (MSFT) offer. The WSJ reported that Oracle had been chosen as the winner in bidding for TikTok, and that an announcement would be made soon that Oracle will be TikTok’s “trusted tech partner” in the U.S. The deal would apparently fall short of an outright sale of the popular app. https://on.mktw.net/2RmyyxJ
· Nvidia (NVDA) agreed to buy chip designer Arm for $40B from Japan’s SoftBank Group Corp (SFTBY), confirming reports this weekend. Reports initially showed SoftBank (SFTBY) is nearing a deal to sell chip designer Arm Holdings to Nvidia for more than $40B, Bloomberg reported this weekend (SoftBank bought Arm four years ago for $32B) https://on.mktw.net/3hnzQDb
· Microsoft (MSFT) finally announced a launch date and pricing for its next-generation Xbox videogame console, with gamers now able to finance the new system for $34.99 a month for two years and have access to Microsoft and EA’s (EA) online game catalogs at no additional cost Barron’s noted this weekend
· Snowflake (SNOW) 28M share IPO price range raised to $100-$110 from $75-$85
· NFL Media and DISH Network (DISH) have reached an agreement on a new multi-year contract for NFL Network and NFL RedZone.
· Red Ventures confirmed Monday a deal to pay $500 million to ViacomCBS Inc. (VIAC) to acquire CNET Media Group. The deal is expected to close in the fourth quarter of 2020
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.