Morning Preview: January 4, 2018

Scott GreenDaily Market Report

Early Look
Thursday, January 4, 18
  
Stock futures are on track for another strong open, with the S&P 500 and NASDAQ looking to extend their record setting levels, while the Dow Industrials appear set to open above the 25,000-level milestone as sentiment remains positive and momentum clearly to the upside as global stocks rally. In Asian markets, The Nikkei Index surged 741 points (3.26%) to end at 23,506 as its markets reopened (and moves to a 26-year high), the Shanghai Index gained 16 points to finish at 3,385 and the Hang Seng Index rose 175 points to settle at 30,736. In Europe, the German DAX is up over 100 points at 13,100, while the FTSE 100 is flat around the 7,675 level. The upbeat sentiment is being buoyed by a continued rise in commodity prices, solid economic data and bond yields remaining at historic lows. Energy companies contributed to the global gains, tracking a rise in oil prices.
 
U.S. stocks markets finished at records on Wednesday, putting the main indexes in a similar position to where they ended 2017. A rally in energy, technology and health-care paced the gains on Wall Street. The Dow Jones Industrial Average neared the psychological close of 25,000, meanwhile, the S&P 500 index closed above 2,700, for the first time ever, while the Nasdaq Composite Index jumped 0.8% at 7,065 just a day after closing above 7,000 for the first time. Minutes from the Federal Reserve’s December meeting, showed mixed sentiment among policy makers in expectations for three increases to benchmark interest rates in 2018. Crude-oil prices surged to 3-year highs, closing at $61.63.
 
Events Calendar for Today
·      7:30 AM EST       Challenger Job Cuts YoY for Dec
·      8:15 AM EST       ADP Employment Change for December…est. 190K
·      8:30 AM EST       Weekly Jobless Claims…est. 242K
·      8:30 AM EST       Continuing Claims…est. 1.925M
·      9:45 AM EST       Bloomberg Consumer Comfort Index…prior 52.4
·      9:45 AM EST       Markit US Services PMI, Dec-F…est. 52.5
·      9:45 AM EST       Markit US Composite PMI, Dec-F…prior 53.0
·      10:30 AM EST     Weekly EIA Natural Gas Inventory Data
·      11:00 AM EST     Weekly DOE Inventory Data
 
Earnings Calendar
·      Earnings Before the Open: ANGO, LW, MON, RPM, WBA
·      Earnings After the Close: AEHR, PSMT, SONC
 
Market Closing Prices Yesterday
·      The S&P 500 Index jumped 17.25 points, or 0.64%, to 2,713.06
·      The Dow Jones Industrial Average rose 98.67 points, or 0.40%, to 24,922.638
·      The Nasdaq Composite spiked 58.63 points, or 0.84%, to 7,065.53
·      The Russell 2000 Index advanced 2.56 points, or 0.17% to 1,552.58
   
World News
·      Japanese manufacturing activity expanded at the fastest pace in almost four years in December, as the Markit/Nikkei Japan Manufacturing Final Purchasing Managers Index (PMI) was a seasonally adjusted 54.0 in December, slightly below the preliminary reading of 54.2 but still above a final reading of 53.6 in November
·      U.K. services PMI rises to 54.2 in December from 53.8 in November, beating views
·      Eurozone final December services PMI rises to 56.6 from 56.2 in November
 
Sector News Breakdown
Consumer
·      Tesla (TSLA) Q4 Model 3 deliveries 1,550 vehicles below Bloomberg est. 2,917; said Q4 total deliveries 29,870 vehicles, incl. 15,200 Model S and 13,120 Model X; 2017 Model S and X deliveries 101,312, exceeding its forecast for 100,000 units; 4Q production totaled 24,565 vehicles, of which 2,425 were Model 3; says intend to achieve 5,000/ week milestone by end-2Q
·      Zumiez Inc. (ZUMZ) December comp sales rose 7.9% vs. est. 4.1% and guides Q3 EPS to 88c-90c from 78c-84c (est. 80c); raises Q4 SSS view to up 7% from up 3% to 5%; overall Dec total sales rose 11.4% to $160.0M
·      Costco (COST) reports December comp sales up 11.5%; reports December net sales of $14.94B, an increase of 14.3% from $13.07 billion during the similar period last year; reports December e-commerce sales up 33%
·      Taylor Morrison (TMHC) raises stock repurchase program to $200M; files to sell 11M shares of Class A common stock
·      Rite Aid (RAD) Q3 revenue $5.35B below estimate $7.64B; Q3 adjusted Ebitda $214.2M
·      Resources Connection (RECN) Q2 EPS 27c/$156.7M vs. est. $152.7M; Q2 adjusted Ebitda $13.4M vs. Bloomberg est. $12.3M
 
Energy
·      The American Petroleum Institute (API) reported U.S. crude supplies fell by 5 million barrels for the week ended Dec. 29, showed a rise of 1.9 million barrels in gasoline stockpiles, while inventories of distillates climbed by 4.3 million barrels
·      CenterPoint Energy (CNP) expected earnings on a guidance basis for 2017 will include re-measurement of deferred tax liabilities and credit to income tax expense; sees 2017 eps exceeding guided range $1.25-$1.33, vs. est. $1.33
 
Financials
·      Private equity firm Apollo Global Management LLC (APO) is nearing a deal to acquire investment firm Fortress Investment Group LLC’s stake in U.S. subprime lender OneMain Holdings Inc (OMF), people familiar with the matter said https://goo.gl/okiW25 
·      MarketAxess (MKTX) announced total monthly trading volume for December 2017 of $104.4B, consisting of $60.4B in U.S. high-grade volume, $40.7B in other credit volume, and $3.3B in liquid products volume
·      Alexandria Real Estate (ARE) files to sell 6M shares of common stock
 
Healthcare
·      Drugmakers have implemented price rises of several times the rate of inflation on over a thousand U.S. products amid elevated scrutiny on healthcare costs, the Financial Times reports
·      Insmed Incorporated (INSM) announced new data from its Phase 3 clinical program for adult patients with treatment refractory NTM lung disease. This program is made up of both the INS-212 and INS-312 studies, both of which are evaluating ALIS
·      Five Prime Therapeutics, Inc. (FPRX) announced the December 2017 submission of an Investigational New Drug (IND) application for FPA150, a first-in-class immuno-oncology antibody that targets B7-H4.
·      Zimmer Biomet Holdings, Inc. (ZBH) said it received FDA clearance for the Sidus® Stem-Free Shoulder system as a total shoulder arthroplasty solution
 
Industrials & Materials
·      Landec (LNDC) Q2 EPS 2c/$136.5M vs. est. 1c/$136.3M; sees Q3 EPS 14c-16c on revs $140M-$145M vs. est. 25c/$147.6M
·      RPM International (RPM) Q2 EPS 52c/$1.32B vs. est. 59c/$1.29B; boosts 2018 forecast
 
Technology, Media & Telecom
·      Intel Corp. (INTC) admitted Wednesday that its chips have a vulnerability that will require software patches, but denied a media report that said other companies’ chips were not affected and that the software updates will have a major effect on devices’ performance.
·      Intel Corp. (INTC) CEO Brian Krzanich sold millions of dollars’ worth of shares after the company was informed of vulnerabilities in its semiconductors but before it was publicly disclosed. It is important to note that the sale was part of a 10b5-1 plan, but the filing also notes that Krzanich adopted the plan just a month before the sales, on Oct. 30, 2017. According to researchers, Intel and other chip makers were informed June 1, 2017
·      Snap Inc. (SNAP) downgrades to underperform at Cowen and cuts estimates as ad buyers are seen preferring Facebook’s Instagram Stories over Snap Ads
·      Alibaba Cloud, China’s largest provider of internet computing services, plans to update its systems at 1 a.m. on Jan. 12 to handle potential chip security issues, co. says in an emailed statement

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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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