Early Look

Tuesday, April 28, 2020

Futures	Up/Down	%	Last
DJ Industrials	361.00	1.49%	24,357
S&P 500	37.50	1.32%	2,906
Nasdaq	115.50	1.31%	8,939

 

 

U.S. stock futures are adding to yesterday’s gains on data showing slowing growth in the deadly virus that has closed the global economy, while a number of U.S. states and European countries have taken tentative steps to reopen their economies, as the Dow Jones Industrial Average tries to make it five straight higher days. Markets also brace for the onslaught of large cap earnings this week, highlighted by Dow components PFE, MRK, MMM and CAT this morning as well as GOOGL after the bell in tech. In Asian markets, The Nikkei Index slipped -12 points to 19,771, the Shanghai Index fell -5 points to 2,810 and the Hang Seng Index rose 295 points to 24,575. In Europe, the German DAX is u nearly 200 points to 10,850, while the FTSE 100 is up about 90 points to 5,940. After climbing for 11 of the last 14 sessions, the Stoxx Europe 600 gained 0.6%, putting the index on track to close up over 20% from the depths of March. Stocks surged again on Monday, attaining their highest levels since early March, led surprisingly by bank, technology and Smallcaps as the Russell 2000 jumped around 4%. Optimism about slowing coronavirus cases and deaths (in NY and European epicenter Italy amongst them) along with tentative steps toward reopening the economies of some U.S. states and timelines for some European countries helped push stocks higher. Crude oil however tumbled as June WTI closed -24.5% at $12.78 per barrel. U.S. Treasury prices fell, lifting the 10-year yield by 6 bps to 0.66%. Also today, the FOMC central bank begins its two-day meeting, and while no interest rate changes are expected, all eyes will be on tomorrow’s presser from Chairman Jay Powell. WTI plunged 25% on Monday, slumped another 20% overnight to $10 per barrel and there is still 20 days to go until the June settlement date. Weighing on prices remains fears over a lack of storage and a reshuffling of contracts by United States Oil Fund USO.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 41.74 points, or 1.47%, to 2,878.48

·     The Dow Jones Industrial Average rose 358.51 points, or 1.51%, to 24,133.78

·     The Nasdaq Composite climbed 95.64 points, or 1.11%, to 8,730.16

·     The Russell 2000 Index advanced 48.82 points, or 3.96% to 1,281.88

 

Economic Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:30 AM EST      Advance Goods Trade Balance for March…est. (-$55.0B)

·     8:30 AM EST      Wholesale Inventories MoM, Mar-P…est. (-0.4%)

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:00 AM EST      S&P CoreLogic CaseShiller index for February

·     10:00 AM EST    Consumer Confidence for April…est. 88.0

·     10:00 AM EST    Richmond Fed Manufacturing for April…est. (-42)

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AB, AXE, BRO, BYD, CAT, CMI, CNC, DCOM, DHI, DTE, ECL, FELE, GLW, HOG, IQV, LUV, MMM, MRK, MSCI, NUE, PEP, PFE, PII, PKG, ROK, ROP, SC, SIRI, SPGI, TROW, TRU, UPS, WAT, WDR, XRX, ZBRA

·     Earnings After the Close: AAT, AKAM, AMD, APAM, BXP, CERN, CHE, CHRW, CSGP, CYH, DXCM, F, FEYE, GOOGL, IRBT, JNPR, MASI, MDLZ, MEDP, MKSI, MPWR, MTH, MXIM, OI, OKE, PAYC, RRD, SBUX, SYK, UIS, WERN, WW

 

 

Macro	Up/Down	Last
WTI Crude	-0.96	11.82
Brent	0.39	20.38
Gold	-0.80	1,723.00
EUR/USD	0.0047	1.0876
JPY/USD	-0.54	106.71
10-Year Note	-0.003	0.657%

 

 

World News

·     The Fed expands municipal facility to smaller counties and cities, to lend up to $500 bln under municipal liquidity facility on $35 bln of treasury equity and says changes to municipal liquidity facility will allow ‘substantially more’ entities to borrow

 

Sector News Breakdown

Consumer

·     General Motors Co (GM), Ford Motor Co (F), and Fiat Chrysler Automobiles NV (FCAU) are targeting May 18 to resume some production at their U.S. factories after shutting down plants in March due to the coronavirus outbreak, the Wall Street Journal reported

·     PepsiCo (PEP) Q1 core EPS $1.07/$13.88B vs. est. $1.03/$13.21; Q1 North America beverages up 7%; Q1 organic revs rose 7.9% vs. est. 3.6%; says the Company’s previous financial outlook regarding fiscal year 2020 is no longer applicable; continues to expect total cash returns to shareholders of approximately $7.5B with dividends of $5.5B and share repurchases of $2B

·     Southwest (LUV) Q1 EPS (15c)/$4.23B vs. es.t loss (41c)/$4.52B; said Boeing agreed to an arrangement allowing the airline to take delivery of no more than 48 MAX aircraft through December 31, 2021; is offering to sell 55M shares of common stock and offering of $1B convertible senior notes

·     Keurig Dr. Pepper (KDP) Q1 adjusted EPS 29c/$2.61B vs. est. 27c/$2.55B; reaffirms 2020 guide, sees FY net sales +3-4%, likely at bottom of range, sees FY adj EPS $1.38-1.40

·     Knoll Inc. (KNL) 1Q adj EPS $0.40/$340M vs. est. $0.34, says cuts FY CAPEX by $20Mm and to cut qtrly dividend to 4c from 17c

·     The RV Industry Association’s March 2020 survey of manufacturers found that total RV shipments ended the month with 30,288 units, a decrease of 20.3% from the 38,015 units shipped in March 2019. Towable RVs, led by conventional travel trailers, totaled 27,723 units for the month, a decrease of 17.9% compared to last March’s total of 33,754 units (shares of WGO, THO, LCII leveraged to data)

 

Energy

·     WTI plunged 25% on Monday, slumped another 20% overnight to $10 per barrel and there is still 20 days to go until the June settlement date

·     Equitrans Midstream Corp. (ETRN) decreased its regular quarterly cash dividend to 15c from the previous dividend of 45c per share

 

Financials

·     Cathay General (CATY) Q1 EPS 59c vs. est. 67c (and 83c YoY); said Q1 total loans increased $458.7M, or 12.2% annualized, to $15.5B due in part to higher drawdowns by our commercial loan borrowers

·     Heartland Financial (HTLF) Q1 EPS 54c vs. est. 75c; said net interest margin was 3.81% for Q1 compared to 3.86% YoY and 4.12% during Q1 of 2019; total interest income for the first quarter of 2020 was $131.0 million compared to $120.7

·     Principal Financial (PFG) Q1 EPS $1.15 vs. est. $1.13; reports Q1 assets under management of $631.1B down -6.6% YoY; maintains quarterly dividend at 56c; Q1 book value per share rises to $47.21 from $45.63 YoY

·     WesBanco (WSBC) Q1 EPS 41c vs. 78c YoY, 1Q net interest margin 3.54% vs. 3.68% YoY and 1Q adjusted net $27.5 million, -36% YoY

·     WSFS Financial Corp. (WSFS) said it has temporarily suspended all share repurchases until it has a clearer view on the impact of COVID-19 on the economy and performance

 

Healthcare

·     HealthStream (HSTM) Q1 EPS 22c/$61.57M vs. est. 14c/$63.09M; withdraws 2020 guidance

·     Moderna, Inc., (MRNA) announced that it has submitted an Investigational New Drug (IND) application to the U.S. FDA for the company’s mRNA vaccine candidate (mRNA-1273) against the novel coronavirus (SARS-CoV-2) to evaluate mRNA-1273 in phase 2 and late stage studies

·     Quotient Limited (QTNT) reported very strong final study performance data for its SARS-CoV-2 antibody test. The Company expects to complete the CE marking process and the submission of the FDA emergency use authorization for the MosaiQ COVID-19 Antibody Microarray in the next few days. Discussions with potential customers in Europe and the US are ongoing.

·     Universal Health (UHS) Q1 adjusted EPS $1.73/$2.83B vs. est. $2.55/$2.92B; 1Q acute care adjusted admissions +4% vs. +4.90% YoY, 1Q behavioral health adjusted admissions -2% vs. +2.90% YoY; suspends stock repurchase program, payment of dividend

 

Industrials & Materials

·     Boeing Co. (BA) said it will reopen its 787 Dreamliner operations in South Carolina, with most workers returning May 3 or May 4 and executives and managers returning earlier. Operations were temporarily suspended April 8 due to coronavirus shelter-in-place orders.

·     Caterpillar (CAT) Q1 adj. EPS $1.60/$10.64B vs. est. $1.69/$10.92B; said has cut discretionary expenses and that about 75% of primary production facilities continue to operate; says Q1 to be more impacted form Q1 on virus

·     3M (MMM) Q1 adjusted EPS $2.16/$8.1B vs. est. $2.03/$7.91B; withdraws year guidance; cuts year cap-ex to $1.3B from prior view $1.6B-$1.8B; said sees $350M-$400M savings from cost cutting in Q2; suspends share buyback plan

·     Canadian National (CNI) Q1 EPS C$1.22 vs. est. C$1.09 and Q1 revenue C$3.55B vs. est. C$3.49B; withdraws 2020 guidance, maintains dividend; 1Q operating ratio 65.7% vs. 69.5% YoY and 1Q carloads -6% vs. +1% YoY

·     Celanese (CE) Q1 EPS $2.29/$1.5B vs. est. $2.25/$1.55B; continue to focus on those items within our control and will take further actions to maximize our cash generation in a weaker than anticipated demand environment and position ourselves for recovery; lowers year capex view to less than $350M from prior $500M and suspends EPS guidance

·     Crane (CR) Q1 adjusted EPS $1.15/$798M vs. est. $1.25/$820.76M; cuts FY20 adj. EPS view to $3.00-$4.25 from $6.20-$6.50 (est. $5.20) and also cuts FY20 revenue view to $2.8B-$3B from $3.5B (est. $3.25B); cuts FY20 free cash flow view to $200M-$250M from $330M-$360M. Guidance represents the company’s “current and best estimate” of full-year result

·     PPG (PPG) Q1 adjusted EPS $1.19/$3.38B vs. est. $1.18/$3.4B; said net sales and EPS includes an estimated unfavorable impact from the effects of the COVID-19 pandemic of approximately $225M and $0.35, respectively; withdraws full-year guidance

 

Technology, Media & Telecom

·     Amkor Technology (AMKR) Q1 EPS 26c/$1.15B vs. est. 15c/$1.10B; said Q1 revenue grew almost 30% year-on-year, driven by strength in the communications and consumer markets; sees Q2 EPS (13c) to 8c on revs $1.0B-$1.1B vs. est. 11c/$996M

·     Avnet (AVT) Q3 EPS 38c/$4.3B vs. est. 32c/$4.06B; says will not issue Q4 guidance due to COVID-19 uncertainty

·     Cognex (CGNX) 1Q adj EPS $0.18 vs. est. $0.08 on revs $167.2Mm vs. est. $155.4Mm; guides 2Q rev/EPS decline sequential and YoY, sees 2Q gross margin in mid-70% range, below 1Q; sees 2Q op exp decline more than 10%

·     F5 Networks (FFIV) 2Q adj EPS $2.23 vs. est. 1.95, sees 3Q adj EPS $1.91-2.13 vs. est. $1.86 and Q3 revs $555M-$585M vs. est. $552M

·     Harmonic (HLIT) Q1 EPS loss (10c)/$78.4M vs. est. loss (5c)/$85.02M; sees Q2 adjusted EPS loss (18c)-(9c) on revs $62M-$77M vs. est. 2c/$97.24M; withdraws FY20 guidance

·     Impinj (PI) 1Q adj EPS $0.13 vs. est. ($0.06) on revs $47.8Mm vs. est. $38.36Mm, adj gross margin 46.1% vs est. 49.6%, not giving 2Q guidance

·     Sanmina (SANM) 2Q adj EPS $0.32 vs. est. $0.53 on net sales $1.59B; guides 3Q revs $1.50-1.60B, sees 3Q adj EPS $0.30-0.40 vs. est. $0.59