Morning Preview: October 12, 2020

Auto PostDaily Market Report

Early Look

Monday, October 12, 2020





DJ Industrials




S&P 500










Stocks are looking higher in the U.S. after generally better results in Asia and Europe, with bond markets closed here in the states for Columbus Day. Technology stocks surging with big advances for Nasdaq Futures, while the S&P and Dow are looking modestly higher. Over the weekend, Democrats in the House and Republicans in the Senate expressed opposition to the latest $1.8T offer from the White House this weekend, pouring a bit of cold water that lifted stocks late last week. Major averages closed higher for a third straight day Friday on stimulus relief hopes into the weekend as the S&P 500 and Nasdaq Composite both posted their biggest weekly percentage gains since early July. For the week the S&P rose 3.84%, the Dow added 3.27% and Nasdaq climbed 4.56%. The SmallCap Russell 2000 index gains 6.38% showing biggest weekly gain since early June as energy and financials paced the gains. Speaking of financials, big banks are expected to unofficially kick off earnings season this week with Citi, JPMorgan, Wells Goldman and Bank America all due out my mid-week with trading revenue momentum to continue as well as better credit quality. U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin failed on Friday to reach agreement on a COVID-19 stimulus package, but talks will continue, while Senate Majority Leader Mitch McConnell expressed doubt an agreement could be reached before the Nov. 3 presidential election. In Asian markets, The Nikkei Index fell -61 points to 23,558, the Shanghai Index gained 86 points (2.64%) to settle at 3,358 and the Hang Seng Index surged 530 points (2.2%) to 24.649. In Europe, the German DAX is up around 30 points to 13,085, while the FTSE 100 is down a few points holding above the 6,000 level. The UK holding up despite reports that the U.K. government is set to announce further restrictions for England on Monday due to the virus outbreak. Heading into earnings season in the U.S., Earnings from S&P 500 companies are projected to drop 20.5% from a year earlier in the third quarter, according to FactSet, marking an improvement from the 25% decline anticipated at the end of June and the 32% drop reported for the second quarter.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 30.30 points, or 0.88%, to 3,477.13

·     The Dow Jones Industrial Average rose 161.39 points, or 0.57%, to 28,586.90

·     The Nasdaq Composite jumped 158.96 points, or 1.39%, to 11,579.94

·     The Russell 2000 Index advanced 9.00 points, or 0.55% to 1,637.55


Economic Calendar for Today

·     No Major Earnings of Economic Data today






WTI Crude















10-Year Note





World News

·     Under the current White House stimulus aid plan announced into the weekend: Federal unemployment insurance of $400 per week would be expanded until January 2021 (retro to Sept. 12), while adding $91B for an Employee Retention Tax Credit, which is meant to incentivize employers to keep their workers on payroll. It also adds $15B for food assistance, $60B for mortgage and rental assistance, $150B for education and $25B for student loan forgiveness, while direct stimulus payments would be increased for children. $10B of new funding would be made available for the postal service, $20B for airlines, $20B for the lodging industry and $300B for PPP loans for small businesses.


Sector News Breakdown


·     General Motors (GM) China sales grow 12% to 771,400 vehicles in Q3 compared with a year earlier, marking its first Chinese quarterly sales growth in two years; Q3 China sales driven by 26% rise in its mass-market Buick brand vs 2019 and 28% growth in premium brand Cadillac

·     PepsiCo (PEP) upgraded to Buy from Neutral at Citigroup and raise price target to $169 from $148.

·     Keurig Dr Pepper (KDP) will become a component of the Nasdaq-100 Index and the Nasdaq-100 Equal Weighted Index prior to market open on Oct. 19, switching from the NYSE



·     PG&E (PCG) told California regulators that its power equipment may have contributed to igniting the Zogg Fire, which has killed four people. In an 8-K filing, PCG it recorded alarms on some equipment surrounding a power line that served an area in Shasta County, Calif., where the fire is believed to have started.

·     Hi-Crush (HCRSQ) said it completed its financial restructuring and has emerged from Chapter 11 bankruptcy, eliminating $450M of debt from its balance sheet



·     Artisan Partners Asset Management Inc. (APAM) reported that its assets under management as of September 30, 2020 totaled $134.3 billion. Separate accounts accounted for $71.7 billion of total firm AUM, while Artisan Funds and Artisan Global Funds accounted for $62.6 billion

·     AllianceBernstein (AB) mentioned positively in Barron’s noting asset managers are hot properties at the moment, with activist investor Nelson Peltz taking stakes in Invesco (IVZ) and Janus Henderson (JHG) and pushing them to merge, while Morgan Stanley (MS) has agreed to pay $7B for Eaton Vance (EV). One of the hottest in the industry should be AllianceBernstein, offering a growth story and a nearly 9% yield

·     Pinnacle West (PNW) downgraded to Underperform from Neutral at Bank America



·     Alkermes (ALKS) said late Friday that the FDA advisory committees examining its ALKS 3831 (olanzapine/ samidorphan) determined that samidorphan meaningfully mitigates olanzapine-associated weight gain and that the safety profile of ALKS 3831 is adequately characterized.

·     AstraZeneca (AZN) wins $486M from U.S. to develop, supply COVID antibody treatment as the U.S. gov’t allows them to develop and secure supplies of as many as 100K doses of COVID-19 antibody treatment. AstraZeneca says it plans to supply up to 100K doses starting near the end of 2020, and the U.S. government can acquire up to an additional 1M doses in 2021

·     President Donald Trump has called the antibody cocktail he received to fend off the coronavirus “a cure,” but the chief executive of Regeneron Pharmaceuticals Inc. (REGN) said Sunday that Trump’s case is merely “a case of one,” and the treatment still needs more testing before its efficacy is known.

·     Mallinckrodt (MNK) has voluntarily initiated Chapter 11 proceedings in the U.S. Bankruptcy Court to modify its capital structure, including restructuring portions of its debt and resolve legal liabilities


Industrials & Materials

·     Caterpillar (CAT) and Rockwell Automation (ROK) are leveraging data and automation to make their sales more consistent and more profitable in the next few years, Barron’s said. The right time to buy Caterpillar, which supplies machines, is when the economy starts to improve. Caterpillar shares may trade at about $210- $220, up from $159 at recent close.

·     Eaton (ETN) and Quanta Services (PWR), which have electrification technologies, would benefit from a shift toward renewable energy and electric vehicles. Eaton’s value hasn’t been recognized because it’s still mostly viewed as a commercial vehicle stock, but the company registers over 60% of sales in its electric business, Gordon Haskett analyst said – Barron’s

·     In the paper sector: WRK upgraded from Market Perform to Outperform w/ $57 pt, IP upgraded from Market Perform to Outperform w/ $53 pt, PKG upgraded from Market Perform to Outperform w/ $134 pt and GEF upgraded from Market Perform to Outperform w/ $49 pt all at BMO Capital


Technology, Media & Telecom

·     Apple (AAPL) won a ruling to bar Fortnite from App Store until trial from a federal judge in California, but also sets out that it cannot not harm publisher Epic Games’ developer tools business, which includes the Unreal Engine software use by other video games.

·     Federal and state prosecutors investigating Google (GOOGL) for alleged antitrust violations are considering whether to force the company to sell its Chrome browser and parts of its advertising business, Politico reported this weekend.

·     The EU has been working to make powerful tech companies less powerful, and the bloc is building a list of businesses that are in its crosshairs, the Financial Times reported. The “hit list” includes up to 20 of the largest internet companies – based on market share of revenues and the number of users

·     PC Shipments record highest growth in a decade into the latest quarter with a 12.7% increase YoY, according to research firm Canalys. Overall, shipments of desktops, notebooks and workstations reached 79.2 million units. Notebook shipments touched 64 million units, shy of the 64.6 million record in the fourth quarter of 2011, and notebooks and mobile workstations shipments rose 28.3% YoY (HPQ, MSFT, DELL)

·     Digital TV Research says a new forecast suggests U.S. pay TV revenue will drop to $56B in 2025, and global pay TV revenue is headed for a 15-year low by then, having declined from a peak of $105B in 2015. And the global number will drop to $152B in 2025 – below even 2010’s $175B (watch shares of cable names ATUS, CHTR, CMCSA, VZ, DISH)

·     Disney’s (DIS) ABC network had record low viewership for its NBA Finals games as the first three games of the finals averaged 6.6M viewers a game (48% lower than last year). The Los Angeles Lakers beat the Miami Heat 106-93 on Sunday, capturing a record-tying 17th NBA Championship


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.

Live Trading

Open an Account

Paper Trading