Morning Preview: July 13, 2018

Terrie AmengualDaily Market Insights

Early Look

Friday, July 13, 2018

For the first time in a while, U.S. equity futures are flat across the board, as investors eagerly await several key bank quarterly earnings reports (JPM, WFC, C) on track for strong weekly gains as markets put the trade dispute between the U.S. and China aside (for now). As of Thursday’s close, all three benchmarks were set for solid weekly gains, with the S&P on track for a 1.4% advance, the Nasdaq eyeing a 1.8% rally and the Dow set for a 1.9% rise for the week. The dollar is tracking higher, while oil prices slip further, down around $70 per barrel.

U.S. stocks jumped on Thursday with the Nasdaq finishing at a new all-time record high as technology shares outperformed in a broad-based rally. Market sentiment recovered following a report that officials from the U.S. and China are working to resume trade negotiations to ease tensions, which was enough to push the S&P 500 Index to its highest levels since Feb 1 as it approached the 2,800 level (high 2,798.52), though still well off all-time highs of 2,872.87 on January 26th. Meanwhile, the Nasdaq Composite index traded to a fresh all-time high today, rising more than 100 points or 1.4% to highs of 7,823, led by all-time highs in Facebook, Microsoft and Amazon.

In Asian markets, The Nikkei Index jumped 409 points to settle at 22,597, the Shanghai Index slipped -6 points to end at 2,831 and the Hang Seng Index gained 44 points to close at 28,525. In Europe, the German DAX is up over 20 points at 12,520, while the FTSE 100 is about around 40 points trading just under 7,700. The attention this morning in the UK after President Trump criticized British Prime Minister Theresa May. Trump said May’s plans for a “soft” Brexit would “kill” any potential trade deal between the U.S. and the U.K.

Market Closing Prices Yesterday

· The S&P 500 Index jumped 24.27 points, or 0.87%, to 2,798.29

· The Dow Jones Industrial Average rose 224.44 points, or 0.91%, to 24,924.89

· The Nasdaq Composite spiked 107.31 points, or 1.39%, to 7,823.92

· The Russell 2000 Index advanced 6.61 points, or 0.39% to 1,690.28

Events Calendar for Today

· 8:30 AM EST Import Prices for June MoM…est. 0.1%

· 8:30 AM EST Export Prices for June MoM…est. 0.2%

· 10:00 AM EST University of Michigan Confidence Sentiment, July-P…est. 98.0

· 11:00 AM EST Fed releases Monetary Policy report to Congress

· 12:30 PM EST Fed’s Bostic holds Town hall chat in Northern Virginia

· 1:00 PM EST Baker Hughes Weekly Rig Count

World News

· President Donald Trump spoke harshly on British Prime Minister Theresa May in an interview published late Thursday, saying her “soft” Brexit plan would “kill” any potential trade deal between the U.S. and the U.K. “I would have done it much differently,” Trump told The Sun. “I actually told Theresa May how to do it but she didn’t agree, she didn’t listen to me. . . . I think what is going on is very unfortunate.”

Sector News Breakdown

Consumer

· McDonald’s (MCD) shares fell after the close after two states said they were investigating whether the fast-food chain’s salads were linked to dozens of cases of foodborne illness

· VF Corp. (VFC) upgraded to Buy from Neutral at Bank America

Energy

· Oil headed for the biggest weekly loss in more than five months (on track for losses of more than 5%) as escalating trade tensions between the U.S. and China rattled investors, while Libya’s plans to restore output allayed fears of a supply crunch

· Comstock Resources (CRK) says its wholly-owned subsidiary Comstock Escrow Corporation to offer $850 million in aggregate principal amount of senior unsecured notes due 2026.

Financials

· JPMorgan (JPM) Q2 EPS $2.29 vs. est. $2.22; Q2 FICC sales and trading revs $3.45B vs. Bloomberg est. $3.2B, Q2 equities sales and trading revs $1.96B vs. Bloomberg est. $1.7B; Q2 investment banking revs $1.95B vs. est. $1.76B

· Important morning ahead for quarterly earnings with JPMorgan (JPM), Citigroup (C), Wells Fargo (WFC) and PNC Bank (PNC) all expected to report

· Experian PLC (EXPN.LN) said Q1 trading was in line with its expectations and backed its guidance for the full fiscal year at constant currency; said total revenue grew 10% on year at constant-currency rates and organic revenue grew 8% for the three months ended June 30

· Waddell & Reed Financial, Inc. (WDR) today reported preliminary assets under management of $78.7 billion for the month ended June 30, 2018, compared to $79.8 billion on May 31, 2018.

· Manning & Napier (MN) reports preliminary AUM $22.8B as of June 30

Healthcare

· Johnson & Johnson (JNJ) confirmed subject to $4.69B verdict in talk-cancer link case; a jury has awarded $4.69B to 22 women and their families who alleged that decades of daily use of Johnson & Johnson’s asbestos-laden talcum powder products caused their ovarian cancer. The jury award includes $550M in compensatory damages and $4.14B in punitive damages against the company

· CytomX Therapeutics (CTMX) 5.102M share Secondary priced at $24.50

· Myovant Sciences (MYOV) 3.3M share Secondary priced at $22.50

· Spero Therapeutics (SPRO) 3.78M share Secondary priced at $12.50

· Xencor (XNCR) sees filing Investigational New Drug applications for tumor microenvironment activators XmAb23104 and XmAb22841 by the end of 2018

· Mersana Therapeutics (MRSN) files $250M mixed securities shelf

Industrials & Materials

· Terex (TEX) authorizes new $300M share repurchase program

· Northrop Grumman (NOC) said CEO Wes Bush will step down at the end of this year and be replaced by Kathy Warden, the company’s president and chief operating officer. Bush will remain chairman of the company through July 2019,

· Ingredion Inc. (INGR) shares fell -11%; guides Q2 EPS $1.63-$1.68 below the $1.92 est. and lowers year EPS view to $7.50-$7.80 from prior $7.90-$8.20 (est. $7.90) citing lower than expected North American performance

· JBT Corporation (JBT) announced it has purchased FTNON, a provider of equipment and solutions for the fresh produce, ready meals, and pet food industries. The purchase price is EUR32M

· Vectrus’ (VEC) wholly-owned subsidiary Vectrus Systems has won a $43M U.S. Army contract to provide installation maintenance services at U.S. Army Garrison Stuttgart and surrounding areas

Technology, Media & Telecom

· The U.S. Justice Department said it’s appealing a judge’s decision that allowed AT&T Inc.’s (T) takeover of Time Warner Inc., renewing the government’s antitrust fight against the merger, Reuters first reported

· Infosys (INFY) reported Q1 net income 36.1B rupees vs. est. 37.41B rupees; sees FY19 sales growth at 6%-8% on constant currency and FY operating margin 22%-24%

· Apple Inc. (AAPL) said it would launch a $300 million clean-energy fund for China with 10 of its suppliers, extending the U.S. tech giant’s commitment to China

· Worldwide PC shipments totaled 62.1M units in the second quarter of 2018, a 1.4% increase from the second quarter of 2017, according to preliminary results by Gartner. This is the first quarter of year-over-year global PC shipment growth since the first quarter of 2012

· Gogo (GOGO) announced that it has completed a comprehensive analysis of its business and is implementing an Integrated Business Plan designed to improve the company’s operational and financial performance

· Samsung Electronics will expand its capex for NAND flash memory to roughly $9B in 2019, up from approximately $6.4B in 2018, with a focus scaling up its 3D NAND chip output in Pyeongtaek, South Korea and Xian, China – DigiTimes

 

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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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