Morning Preview: March 20, 2020

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Early Look

Friday, March 20, 2020





DJ Industrials




S&P 500










U.S. stock futures are bouncing sharply, looking to add to yesterday’s advance as investors remain hopeful after various large stimulus packages and central bank intervention aimed at helping companies, citizens and markets deal with the impact of the coronavirus that has shut down daily life as we know it. Stocks getting a boost from another jump in oil as following the biggest rise in WTI crude futures on record yesterday of 24%, prices are jumping once again, up another 7% after falling to its lowest levels since 2002 earlier this week as President Trump notes he will talk to Russia and Saudi Arabia about their current price war. In Asian markets, The Nikkei Index was closed the Shanghai Index rose 43 points to close at 2,745 and the Hang Seng Index jumped 1,095 points or 5% to settle the week at 22,805. In Europe, the German DAX is higher by 500 points to move above the 9,100 level, while the FTSE 100 is up around 200 points (nearly 4%) to 5,350. Overall, there were big gains seen across every asset class overnight as policymakers pulled out all the stops and adopted a “whatever it takes” approach to mitigate economic fallout from COVID-19. The latest moves will see the Fed increase the access to dollars to global central banks grappling with liquidity shortages, while governments around the world pledged or are considering as much as $3T in fiscal support. Volume can actually be greater than in recent days given today is quadruple witching day, which refers to the simultaneous expiration of market index futures, stock futures, market index options and stock options.


Market Closing Prices Yesterday

·     The S&P 500 Index climbed 11.29 points, or 0.47%, to 2,409.39

·     The Dow Jones Industrial Average rose 188.27 points, or 0.95%, to 20,087.19

·     The Nasdaq Composite jumped 160.73 points, or 2.30%, to 7,150.58

·     The Russell 2000 Index surged 67.58 points, or 6.82% to 1,058.75


Economic Calendar for Today

·     10:00 AM EST    Existing Home Sales MoM for February

·     1:00 PM EST       Baker Hughes Weekly Rig Count






WTI Crude















10-Year Note





World News

·     Senate Majority Leader Mitch McConnell proposed direct payments of $1,200 per person and $2,400 for couples as part of a sweeping Republican response to the coronavirus outbreak, according to a copy of the legislation obtained by The Associated Press. The GOP leader unveiled his plan as Congress raced to craft a $1 trillion rescue package to shore up households, healthcare and the U.S. economy amid the pandemic crisis

·     Stifel in a note last night said they forecast 2,750 for the S&P 500 (+15%) by Apr-30, 2020 (P/E 19.4x 2020E EPS $142 down 10% y/y, with P/E supported by an equity risk premium >5% and low rates). The S&P 500 has fallen below its 999dma, and if the COVID-19 events are a short, sharp shock as they expect (more like 1980, 1987 and 1990) and not yet a systemic and prolonged process (like 2000-02 for capex, 2008-09 for financing), then as the virus fades with warmth/humidity, an easing of government-directed extreme shut-downs and other factors, the S&P 500 should soon bounce


Sector News Breakdown


·     Carnival Corp. (CCL) Q1 adj EPS 22c on revs $4.8B vs. est. 13c and $4.61B; advanced bookings for the remainder of the year are meaningfully lower than the prior year, with prices offered at a discount due to the pandemic, the company said

·     Cintas (CTAS) Q3 adj EPS $2.16 vs. est. $2.02; Q3 res $1.81B vs. est. $1.8B; and Q3 gross margin 45.5% vs. 44.9% YoY; not providing Q4 guidance, withdraws FY20 guidance (said a week ago we were expecting today to raise revenue and EPS guidance based upon our fourth quarter outlook….but much has changed in the past week)

·     Hersha Hospitality (HT) said due to the recent lodging demand shocks stemming from the COVID-19 outbreak, the company’s Q1 and FY20 guidance presented in its Q4 2019 earnings release should not be relied upon

·     Hawaiian Airlines (HA) said it expects March revenue to down at least 25% from a year ago, and April revenue to be down over 50%, as a result of reduced demand related to the COVID-19 pandemic; outlook for March equates to about $2 million less revenue per day.

·     Hibbett Sports (HIBB) Q4 adj EPS 51c vs. est. 61c and comp sales rose 4% vs. 3.8% YoY

·     Ollie’s Bargain Outlet (OLLI) Q4 adj EPS 74c on revs $422.43M vs. est. 75c and $439.04M; Q4 comparable store sales decreased -4.9% vs. est. -2.2% and down from a 5.4% increase in the prior year; says not providing yearly guidance due to virus

·     Scholastic (SCHL) Q3 adj EPS loss (34c) on revs $373.3M vs. est. loss (64c) and $342.1M; said after strong Q3 with revenue gains of 4% and a threefold improvement in adjusted EBITDA, and year-to-date results trending ahead of our fiscal year targets thinks Q4 will be affected by coronavirus-related school closings mandated by states and districts, which will impact our school-based businesses directly

·     Tesla Inc. (TSLA) said late Thursday it will temporarily halt production at its Fremont, Calif., auto factory and its solar-panel factory in Buffalo, N.Y., amid efforts to limit the spread of the novel coronavirus. The halt at the Fremont factory will take effect at the end of the day Monday “to allow an orderly shutdown,” the company said


Energy, Industrials & Materials

·     Following the biggest rise in WTI crude futures on record yesterday of 24%, prices are jumping once again, up another 7% after falling to its lowest levels since 2002 earlier this week as President Trump notes he will talk to Russia and Saudi Arabia about their current price war

·     Fluor Corporation (FLR) said it received a notice from the NYSE indicating that the company is not in compliance with listing as a result of its failure to timely file its Annual Report on Form 10-K for the year ended December 31, 2019 with the SEC

·     Hertz (HTZ) and Avis (CAR) shares bounce after asking the Treasury Department to include their industry in federal plans to rescue travel companies ravaged by the coronavirus.



·     Mylan N.V. (MYL) shares rose 14%; has restarted production of hydroxychloroquine sulfate tablets at its West Virginia facility in order to meet COVID-19-related demand, although it is not formerly approved for this use

·     SmileDirectClub (SDC) is one of the largest 3D printing manufacturers in the U.S., and as a result has opened its manufacturing facility to partner with medical supply companies and health organizations to increase production of medical supplies necessary to combat the COVID-19 pandemic

·     Cardinal Health (CAH) was upgraded to buy from underperform at Bank America noting an undemanding valuation and added that drug distributors are one of the subgroups we see as best positioned to manage through the COVID-19 outbreak

·     GenMark Diagnostics (GNMK) soars in reaction to the FDA’s issuance of Emergency Use Authorization for its qualitative (yes or no answer) ePlex SARS-CoV-2 Test

·     OraSure Technologies (OSUR) said it is actively engaged with several labs and researchers to demonstrate the effectiveness of its existing medical devices for coronavirus sample collection.


Technology, Media & Telecom

·     CrowdStrike (CRWD) shares rose 20%; Q4 adj EPS loss (2c) on revs $152.1M vs. est. loss (9c) and $137.8M; sees Q1 EPS loss (6c-7c) vs. est. loss (8c) and sees 2021 EPS loss (10c-14c) vs. est. loss (18c) and year revs $723.3M-$733.5M vs. est. $680.9M


Market commentary provided by Catena Media Financials US, LLC, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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