Mid-Morning Look: March 14, 2019

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Mid-Morning Look

Thursday, March 14, 2019

Index

Up/Down

%

Last

 

DJ Industrials

-24.16

0.09%

25,678

S&P 500

-1.80

0.06%

2,809

Nasdaq

-2.10

0.03%

7,641

Russell 2000

-4.41

0.28%

1,551

 

 

U.S. equities slipping early, with the S&P 500 and Nasdaq Composite down for the first time in four days after Bloomberg News reported that a meeting between President Donald Trump and President Xi Jinping to sign an agreement ending trade tensions between U.S. and China was more likely to take place in April at its earliest, instead of this month. President Donald Trump said on Wednesday that he was in “no rush” to pass a deal. The headlines weighed on market sentiment early. Tech rolled quickly, led by weakness in FB on reports of investigation on data sharing, while semiconductor space also rolls from the highs. Software space in focus ahead of earnings from ORCL, ADBE tonight. US economic data mixed as jobless claims rise slightly and import rises jump, nut new home sales decline.

 

Treasuries, Currencies and Commodities

·     In currency markets, the dollar index (DXY) rebounding on the day, up about 0.25% as it retraces recent losses against the Pound, euro and yen. Commodity prices are mixed as oil prices touch 4-month highs after bullish inventory data this week as well as reports that OPEC oil output fell sharply in February as sanctions hit Venezuela’s production and as Saudi Arabia moved to curb supplies. Total production from the group fell by 221,000 barrels a day to 30.5m b/d. Gold prices tumble back below the $1,300 an ounce level as the dollar rebounds. Treasury market’s mostly steady, with yields slipping from earlier highs, as the 10-year moves back down to 2.61% (off highs above 2.63% prior).

 

Economic Data

·     Import Prices for February rose 0.6% MoM, topping the 0.3% estimate and after rising 0.1% in January (prices gain of 0.6% m/m largest monthly increase since May); export prices rose 0.6% after falling 0.5% in January and export prices rose 0.3% y/y in Feb.

·     Weekly Jobless Claims rose 6K to 229K, slightly above the 225K estimate while the prior week claims were unrevised from 223K; the 4-week moving avg. at 223.75k in the week ending March 9; continuing claims rose 18k to 1.776m in the week ending March 2

·     New home sales for January fell 6.9% to 607K annual rate, missing the 622K estimate, while the prior month was upwardly revised to 652K from 621K (previous three months’ new home sales data revised up by 63K); the median new home price fell 3.8% y/y to $317,200; average selling price at $373,100; 16% of new homes sold cost more than $500K, down from 18% prior month

 

 

Macro

Up/Down

Last

 

WTI Crude

0.39

58.65

Brent

0.28

67.83

Gold

-13.70

1,295.60

EUR/USD

-0.0024

1.1304

JPY/USD

0.39

111.57

10-Year Note

0.002

2.612%

 

 

Sector Movers Today

·     Software movers; CLDR shares dropped after Q4 results miss revenue and EPS estimates and include downside guidance (guided Q1 EPS loss 25c-22c on revs $187M-$190M below the est. loss of (4c)/$219M and lower FY20 guidance; MDB Q4 results beat on EPS and revenue with 71% Y/Y revenue growth and upside guidance for both Q1 and year; in research, MSFT, CRM and NOW initiated with buy ratings at Mizuho, positive on all; earnings tonight from ORCL, ADBE; WAGE shares rise after saying it plans to file a majority of its delayed quarterly and annual reports with the SEC before Tuesday evening.

·     Semiconductors; NXPI tgt raised to $110 at Deutsche Bank as the company continues to expect 2Q to grow q/q albeit at a potentially slower rate than some of its more optimistic semi peers; SMTC shares slipped on a lower Q1 EPS/rev outlook after Q4 results beat as weakness expanded from just smartphones to broader end-markets including data center; strength early on no specific news, with gains in LRCX and KLAC; AVGO to report earnings tonight

·     Equipment and E&P sector; SND posted a Q4 beat as revenues increased 21% to $52.2M primarily due to increase in average selling price per ton, offset by lower volumes/overall tons sold were ~610,000, down 14% Y/Y; FET upgraded to buy and NBR downgraded to neutral at Citigroup; in Canadian E&P, Credit Suisse upgraded SU to outperform and IMO to neutral while downgraded HSE to neutral; SMLP was downgraded at Credit Suisse in MLP sector

·     Housing & Building Products; MAS tgt raised to Street high $52 at SunTrust citing the recent news that the company was exploring strategic alternatives for its cabinets and windows units; EXP was downgraded to neutral at Longbow as see limited earnings upside. Firm said bullish stance on cement pricing is now offset by incremental concern about wallboard volumes/prices as checks reveal an incrementally more competitive landscape and downward revisions for 2019 pricing expectations (neutral on CBPX and USG)

 

Stock GAINERS

·     GE +4%; reverses earlier losses after guiding year adjusted EPS 50c-60c below the 67c estimate, while looking ahead to 2020 and 2021, GE expects adjusted Industrial free cash flows to be positive in 2020, with the pace of improvement accelerating in 2021

·     GIS +1%; upgraded to buy at Deutsche Bank saying although the stock has appreciated already ~20% YTD and pressures still exist, the core U.S. base business at General Mills seems to have stabilized and the opportunity with Blue Buffalo remains underappreciated

·     LRCX +4%; as semi-equipment stocks broadly outperforming rest of semi space and tech in general (AMAT, MKSI shares also notably higher)

·     MDB +26%; as Q4 results beat on EPS and revenue with 71% Y/Y revenue growth and upside guidance for both Q1 and year

·     NTRS +2%; upgraded to buy at Buckingham while raising tgt (to $115) and estimates to reflect the compounding impact of QTD equity market appreciation

·     SNAP +8%; upgraded to buy with $15 tgt at BTIG and tgt raised to $11 at Jefferies citing acceleration in performance advertising, reduced seediness of content on Discover platform, user stickiness, our testing of Android rebuild and improved employee morale

·     WAGE +29%; after saying it plans to file a majority of its delayed quarterly and annual reports with the SEC before Tuesday evening

 

Stock LAGGARDS

·     CLDR -12%; after Q4 results miss revenue and EPS estimates and include downside guidance (guided Q1 EPS loss 25c-22c on revs $187M-$190M below the est. loss of (4c)/$219M and lower FY20 guidance

·     DG -7%; Q4 EPS of $1.84 missed estimates by 4c on in-line sales of $6.65B, while year EPS guidance of $6.30-$6.50 missed the $6.65 estimate, while comps of 4% topped views

·     FB -2%; after the NY Times reported federal prosecutors are pursuing a criminal investigation into deals that Facebook struck with global technology companies such as AMZN AAPL, MSFT and SNE, allowing the companies to see personal information

·     GCO -6%; Q4 EPS and sales fell short of consensus (comps better up 4% vs. 3%) while year view of $3.35-$3.75 midpoint misses $3.68 est

·     SFS -16%; after Q4 EPS and Ebitda fell short of consensus on in-line sales while guided year EPS 41c-46c vs. est. 45c and Ebitda midpoint guide also missed

·     SMTC -6%; shares slipped on a lower Q1 EPS/rev outlook after Q4 results beat as weakness expanded from just smartphones to broader end-markets including data center

·     TLRD -22%; after warning of a down trend at Men’s Wearhouse and Jos. A. Bank during Q4 and into Q1 of 2019 citing both the macro-environment as well as the need to execute more quickly and effectively on our core growth strategies (guided Q1 EPS 10c-15c below 51c est.)

·     TTWO -3%; shares dropped after SNE denied speculation that it’s looking at an acquisition of the videogame maker, throwing cold water on a few days’ rally

_________________________________________________________________

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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