Hammerstone’s Early Look

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Friday, January 3, 2020

FuturesUp/Down%Last
DJ Industrials-360.001.24%28,483
S&P 500-44.501.37%3,214
Nasdaq-138.501.55%8,753

 

 

U.S. stock futures are plunging while oil prices are skyrocketing following news that a top Iranian general and an Iraqi militia’s deputy commander were killed in a U.S. airstrike at Baghdad’s airport. Geopolitical tensions have ramped up after reports that an airstrike killed Iran General Qassem Soleimani, head of its elite Quds Force. Late Thursday night, the Pentagon said President Donald Trump had approved the attack, and comes after the U.S. vowed Iran would be held “fully responsible” for the recent attack on the U.S. Embassy in Baghdad by Iranian-backed militias. The news has oil prices higher by about 4% for both WTI and Brent, lifting energy stocks but pressuring broader markets. The sell-off in stocks has also prompted a further rotation into safe-haven assets with gold and Treasury prices jumping. In Asia, the Nikkei Index remains closed, the Shanghai Index dipped -1 point to 3,083 and the Hang Seng Index slipped -92 points to 28,451. In Europe, the German DAX is lower by around -240 points (1.8%) to 13,144, while the FTSE 100 is down over 40 points to 7,550. U.S. stocks started the New Year off with new record highs for major averages on Monday, led by industrials and technology as the Nasdaq Composite (up a 13th time in last 15 days) surged over 1.3%, led by last year winners with FAANG stocks and semiconductors pushing higher. The Dow Jones Industrial Average gains were paced by financials and the aforementioned tech as nearly 1/3 of the index touched 52-week highs yesterday (AAPL, CAT, GS, INTC, JPM, MSFT, NKE, UTX and Visa).

Market Closing Prices Yesterday

  • The S&P 500 Index gained 27.07 points, or 0.84%, to 3,257.85
  • The Dow Jones Industrial Average rose 330.36 points, or 1.16%, to 28,868.80
  • The Nasdaq Composite surged 119.58 points, or 1.33%, to 9,092.19
  • The Russell 2000 Index slipped -1.70 points, or 0.10% to 1,666.77

 

Events Calendar for Today

  • 10:00 AM EST     Construction Spending MoM for Nov
  • 10:00 AM EST     ISM Manufacturing for December
  • 10:30 AM EST     Weekly EIA Natural Gas Inventory Data
  • 11:00 AM EST     Weekly DOE Inventory Data
  • 1:00 PM EST        Baker Hughes Weekly Rig Count
  • 2:00 PM EST        FOMC Meeting Minutes from December meeting

 

Earnings Calendar:

  • Earnings Before the Open: LW

 

Other Key Events:

  • Monthly Auto Sales for December
  • FOMC Meeting Minutes from December meeting

 

 

MacroUp/DownLast
WTI Crude2.3763.55
Brent2.6568.90
Gold23.101,551.30
EUR/USD-0.00451.1127
JPY/USD-0.55108.02
10-Year Note-0.0731.803%

 

 

World News

  • Oil prices jump overnight after a U.S. strike near Baghdad international airport killed Qassem Soleimani, the Iranian general who led the Revolutionary Guards’ Quds force according to reports overnight. U.S. Defense Secretary Mark Esper said Thursday that America was ready to deploy more force in Iraq after an attack on its embassy in Baghdad this week. The attack comes after a U.S. embassy compound in Baghdad was stormed by protesters this week.

 

Sector News Breakdown

Consumer

  • Resources Connection (RECN) Q2 EPS 38c/$184.5M vs. est. 31c/$185.5M; 2Q adjusted Ebitda rose 13% YoY to $22.7Mand company says pipeline stronger heading into 3Q than in 12 months
  • Avon Products (AVP) CEO Jan Zijderveld will step down, effective immediately upon closing of the sale of the company to Natura &Co, scheduled to occur later today

 

Energy, Industrials & Materials

  • Oil prices jumped overnight after a U.S. strike near Baghdad international airport killed Qassem Soleimani, the Iranian general who led the Revolutionary Guards’ Quds force according to reports
  • Alcoa Corp. (AA) agreed to sell a waste-treatment facility Gum Springs in Arkansas to a subsidiary of France-based Veolia Environnement SA for $250 million as it proceeds with a plan to get leaner by shedding non-core assets
  • Landec (LNDC) reports Q2 EPS loss (16c) on revs $142.6M vs. est. loss (6c)/$142.5M; sees Q3 EPS 6c-9c on rev $154M-$158M below the 20c/$162.3M estimate
  • Ryanair (RYAAY) may not receive its first delivery of the grounded Boeing (BA) 737 MAX aircraft until October, Reuters
  • S. Energy (USEG) announces 1-for-10 reverse stock split

 

Healthcare

  • Illumina, Inc. (ILMN) and Pacific Biosciences of California, Inc. (PACB) announced that they have mutually agreed to terminate their merger agreement, previously announced on November 1, 2018, under which Illumina would acquire Pacific Biosciences at a fully diluted enterprise value of approximately $1.2 billion in an all-cash transaction; ILMN to pay $98M termination fee
  • Incyte Corp. (INCY) shares fell over 10% overnight; said the pivotal Phase 3 GRAVITAS-301 study evaluating itacitinib in combination with corticosteroids in patients with treatment-naïve acute graft-versus-host disease (GVHD) did not meet the primary endpoint of improving overall response rate (ORR) at Day 28 compared to placebo plus corticosteroids
  • Novan (NOVN) share fell over 70%; said that the primary endpoint for SB206 trial not achieved in either B-SIMPLE1 or B-SIMPLE2, however multiple sensitivity analyses are supportive and consistent across both studies and support a potential path forward for the asset
  • DiaMedica Therapeutics (DMAC) files $50M mixed securities shelf
  • OncoCyte (OCX) announces $7.6M registered direct offering

 

Technology, Media & Telecom

  • Arista Networks (ANET) still sees Q4 revs $540M-$560M vs. est. $551M (from 8K) while announces chief customer officer to resign
  • Synaptics (SYNA) upgraded to overweight from equal-weight at KeyBanc with $80 tgt

 

 

 

 

 

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