Mid-Day Outlook: September 11, 2017

Regal HelpdeskDaily Market Insights

Equities surge to start the week on reduced concerns as Hurricane Irma hit Florida with less force than expected (now downgraded to Tropical storm – though did serious damage in Florida, knocking out power for millions) and after North Korea failed to conduct another nuclear missile test over the weekend. The combination of factors has sent stocks back near record highs, while weighing on defensive and safe-haven assets, with gold and bonds tumbling early. The Nasdaq Comp trades up over 1%, trading above its all-time closing highs (all-time intraday high was 6,460 on 7/27), while the S&P 500 is less than 1% away from its best record level. Foreign markets also rebound as Asia shares jumped across the board, while Brazil’s Ibovespa index topped its prior intraday record high and Europe is broadly higher, led by a 1.3% gain for the German Dax. There were no U.S. economic data points to influence trading today while the FOMC is in a blackout period ahead of its September 20th meeting (where no rates hikes are expected). In corporate news, investors await the debut of Apple’s new iPhone announcement on Tuesday. The dollar rises from 2 ½ year lows last week.
 
Treasuries, Currencies and Commodities
·      In currency markets, the U.S. dollar rebounds from its worst week in about 2-months (and off 2 ½ year lows of 91.01 for the dollar index early last week) as stocks push higher and estimates of economic damage from Hurricane Irma are far less than anticipated; no major economic data today to move currencies or bonds; Bitcoin prices have fallen over 8% from Friday highs as China cracks down on cryptocurrencies; dollar rises vs. safe-haven yen
·      Precious metals moving lower, with gold prices sliding around 1%, down from 1-year highs as the dollar rebounds and investors shift back into riskier assets and out of defensive/perceived safe-haven assets; gold ended the week with a gain of 1.6% on Friday on dollar weakness
·      Energy futures slide to the lowest levels in a week on declining energy demand concerns due Hurricane Irma and Harvey. Bloomberg notes all Gulf Coast refineries are still not back to normal rates after Harvey hit in late August, further depressing crude demand/gasoline futures also dropping due to lower demand from fewer people driving due to Irma
·      Treasury markets are lower as yields are ripping higher amid a sell-off in defensive assets, as investors rotate back into riskier assets (stocks); the yield on the benchmark 10-yr rises over 6 bps to 2.11% after Treasury yield posted its largest weekly decline in more than 4 months last week
 
Sector Movers Today
·      Financials led higher by rebounds in shares of insurers and reinsurers after Irma, though very destructive over Florida, is estimated to have damage in the range of $15B-$50B, below last week’s estimates of over $100B; shares of UVE, HCI, FNHCwith high leverage to the state, along with reinsurers RE, RNR, XL, and P&C casualty TRV, CB, PGR, ALL, rebound
·      Movie theatres active after New Line Cinema and Warner Bros. (TWX) horror movie “It” smashed September box office records with $117.2M from 4,103 theaters in its North American box-office debut over the weekend (shares of beaten up movie theatres AMC, CNK, IMAX, RGC were active)
·      Housing & Building Products; Building products stocks USG, BECN, OC (which was downgraded at Nomura), which were expected to benefit from rebuilding efforts after Hurricane Irma, fell on Monday after the hurricane weakened in strength; though damage still great and hurricanes Harvey and Irma could provide lift to demand and pricing for building products companies
·      Casino, Lodging & Leisure; cruise lines rebound (RCL, CCL, NCLH) as Nomura notes after speaking with industry officials that silver lining from Irma is that the impact shouldn’t be as bad as feared because the storm’s eye tracked up FL’s west coast sparing the Port of Miami and Ft. Lauderdale; MBUU was upgraded to outperform at BMO Capital; in gaming, MGM was downgraded to hold at Deutsche Bank (stock underperforms other gamers today)
 
Stock GAINERS
·      ARRY +7%; as its binimetinib/encorafenib combo extends progression-free survival in certain advanced melanoma patients
·      AZN +1%; said a study of its key lung cancer treatment showed stronger-than-expected results in patients whom had not progressed following chemotherapy
·      MRNS +40%; ganaxolone shows treatment effect in mid-stage study in rare seizure disorder
·      RXDX +8%; RXDX-105 shows treatment effect in certain lung cancer patients in early-stage study
·      TEVA +11%; named 30-year veteran Kare Schultz as its new CEO
·      TRV +2%; amid rebound in insurance stocks
·      UVE +11%; rebounds with insurers as economic damage not as high as estimates from Irma
 
Stock LAGGARDS
·      ACHN -26%; after Janssen terminates Hep C collaboration
·      EFX -5%; extends losses after data breach affected 143M Americans information last week
·      EXR -3%; rebound in yields and downgraded at KeyBanc (upgraded LSI)
·      REGN -5%; after reporting asthma data with partner Sanofi
·      SNAP -2%; downgraded to hold at Deutsche Bank and tgt cut to $10
·      STX -2%; downgraded to hold at Jefferies saying checks suggest that STX may still be struggling with the ramp of 10TB helium drives
Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P.  Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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