Morning Preview: October 04, 2019

Auto PostDaily Market Report

Early Look

Friday, October 4, 2019

Futures

Up/Down

%

Last

DJ Industrials

-106.00

0.40%

26,074

S&P 500

-12.50

0.44%

2,899

Nasdaq

-31.50

0.41%

7,626

 

 

U.S. futures are trading lower, giving back some of yesterday’s rally, as markets brace for one of the more important economic data points in some time. The highlight of the day, the monthly nonfarm payroll report for September at 8:30 AM EST, with estimates for 145K jobs being added as well as 130K private payrolls jobs and unemployment to hold steady at 3.7%. Stock markets desperately want to see a good number here after a week of disappointing results (ISM Manufacturing, ADP private payrolls and ISM services index) have pressured stocks and boosted Treasury and gold prices. In Asian markets, The Nikkei Index rose 68 points to 21,410, the Shanghai Index remained closed for the week, and the Hang Seng Index fell -289 points to end the week at 25,821. In Europe, the German DAX is down a few points to hold just above 11,900, while the FTSE 100 is up around 15 points, but still holding just below the 7,100 level. In Washington, Politico reported that U.S. Energy Secretary Rick Perry is expected to announce his resignation by the end of November, while the WSJ reported Ukraine’s general prosecutor’s office said Friday it is reviewing past investigations into a gas company linked to former U.S. Vice President Joe Biden’s son. It has been a volatile week thus far dominated by weaker economic data points around the world, but investors can catch a sigh of relief with a good jobs figure today.

Events Calendar for Today

·     8:30 AM EST      Change in Nonfarm Payrolls for Sept…est. 145K

·     8:30 AM EST      Change in Private Payrolls for Sept…est. 130K

·     8:30 AM EST      Change in Manufacturing Payrolls for Sept…est. 3K

·     8:30 AM EST      Unemployment Rate for Sept…est. 3.7%

·     8:30 AM EST      Average Hourly Earnings for Sept…est. 0.3%

·     8:30 AM EST      Trade Balance for August…est. (-$54.5B)

·     8:30 AM EST      Fed’s Rosengren speaks at Boston Fed Conference

·     10:25 AM EST    Fed’s Bostic speaks at Tulane University

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 23.02 points, or 0.80%, to 2,910.63

·     The Dow Jones Industrial Average rose 122.42 points, or 0.47%, to 26,201.04

·     The Nasdaq Composite surged 87.02 points, or 1.12%, to 7,872.27

·     The Russell 2000 Index advanced 6.72 points, or 0.45% to 1,486.35

 

 

Macro

Up/Down

Last

WTI Crude

-0.10

52.35

Brent

0.16

57.87

Gold

1.80

1,515.50

EUR/USD

0.0013

1.0978

JPY/USD

-0.16

106.76

10-Year Note

-0.012

1.522%

 

 

World News

·     The risk of a recession remains low “with appropriate monetary policy,” Fed Vice Chairman Richard Clarida said Thursday during a question-and-answer session sponsored by the WSJ

·     Former Fed Reserve Chairman Ben Bernanke said the Federal Reserve has more ammunition to fight the next recession than many people think

·     India’s central bank cut its benchmark repo rate by 25 basis points, its fifth consecutive rate cut this year, as it seeks to bolster the country’s sagging economic growth

 

Sector News Breakdown

Consumer

·     Costco (COST) Q4 EPS $2.47/$47.5B in revs vs. est. $2.54/$47.7B; Q4 total comp sales w/gas FX up 5.1% vs. est. 5%

·     Ascena Retail Group (ASNA) reports comparable sales were flat in FQ4 on sales $1.45B; said comp sales for Dressbarn +12%, Total Premium Fashion +1% were offset by drops at Justice (-5%), Catherine’s (-8%) and Lane Bryant (-3%); said gross margin fell 320 bps to 54.3% of sales primarily due to higher promotional activity to address elevated inventory levels

·     Grocery Outlet (GO) 13M share Secondary priced at $33.75

·     Juul’s valuation slashed by 37% to $24B by hedge fund Darsana–WSJ

 

Energy, Industrials and Materials

·     E&P sector rating changes at Credit Suisse as downgraded Range Resources (RRC) and Continental (CLR) to neutral while cut Whiting Petroleum (WLL) to underperform

·     Rattler Midstream (RTLR), a unit of Diamondback Energy (FANG), and Oryx Midstream’s joint venture have agreed to buy Reliance Gathering for $355 million in cash.

·     Myers Industries (MYE) announced that Dave Banyard has resigned as President and CEO, effective October 25, 2019, to accept another professional opportunity

·     Patterson-UTI (PTEN) reported that for the month of September 2019, the Company had an average of 135 drilling rigs operating. For the three months ended September 30, 2019, the Company had an average of 142 drilling rigs operating

 

Healthcare

·     Arbutus Biopharma Corporation (ABUS) announced its decision to discontinue the clinical development of AB-506, an oral capsid inhibitor. AB-506 was in a Phase 1a/1b clinical trial for the treatment of chronic hepatitis B (CHB).

·     MEI Pharma (MEIP) shares rose after saying updated data from the ongoing Phase 1b study of ME-401 in patients with Indolent B-cell malignancies continued to show positive results, with response rates of 78% in relapsed or refractory follicular lymphoma and 89% in chronic lymphocytic leukemia or small lymphocytic lymphoma.

·     Aptevo Therapeutics (APVO) said during Q3, revenue for IXINITY continued to increase; preliminary net product sales of IXINITY during the third quarter of 2019 are approximately $9M compared to $5.8M for the same period in 2018, an increase of quarterly net revenue of approximately 55% YoY and 22% QoQ

·     Heron Therapeutics (HRTX) 8.57M share Spot Secondary priced at $17.50

 

Technology, Media & Telecom

·     HP Inc. (HPQ) will cut as much as 16% of its workforce as part of a broad restructuring aimed at cutting costs and increasing sales growth or slashing 7,000-9,000 jobs through firings and voluntary early retirement, as the cuts will help save roughly $1B by the end of fiscal 2022

·     Smart Global (SGH) shares fall -15%; Q4 EPS 50c/$278.4M misses the est. 67c/$286M; Q4 adj Ebitda misses as well at $25.2M vs. est. $30.7M; sees Q1 EPS 68c-78c on revs $275M -$285M well below the 85c/$308.51M est.

·     Better-than-expected demand for its latest handset has reportedly prompted Apple Inc. (AAPL) to ask suppliers to ramp up production for its iPhone 11 models. Apple has asked for a 10% boost to production, roughly 8 million units, the Nikkei Asian Review reported Friday, citing a source who said the fall has been “so far much busier than we expected.”

·     Avaya (AVYA) announces $500 million share repurchase authorization and $250 million debt paydown; said to expand its portfolio with a new “Avaya Cloud Office by RingCentral” UCaaS offering; RingCentral becomes exclusive provider of UCaaS solutions to Avaya; RingCentral contributes $500 million, comprised of a $125 million preferred equity investment and an advance of $375 million for future payments and certain licensing rights

_________________________________________________________________

Content is provided by Hammerstone Inc., which has no affiliation with Regal Securities, Inc. (“Regal”) This commentary is provided for information purposes only, and is not a recommendation, offer or solicitation by Regal to buy or sell securities or to adopt any investment strategy. Regal has not participated in the creation of the Hammerstone content and does not directly or indirectly endorse the content. Any reliance on this material is at the sole discretion of the reader.

Live Trading

Open an Account

Paper Trading

Register