Hammerstone’s Early Look


Wednesday, July 22, 2020

DJ Industrials-109.000.41%26,617
S&P 500-11.500.34%3,240



Stocks futures reversed course overnight, with major averages slipping, pointing to a mixed open as the U.S. government ordered China to close its consulate in Houston in an “unprecedented escalation,” according to China’s Foreign Ministry, in the latest sign of deteriorating ties between the two countries. The move comes a day after the DOJ also accused two Chinese hackers of working for the government to steal terabytes of data, including coronavirus research, from Western companies across 11 nations. Following the escalation of tensions, the dollar rose against the Chinese yuan, breaking the key 7 level, but falls to new 2020 lows vs. the euro which approaches the 1.16 level. Tensions between the two global powerhouses have been quiet over the last few weeks, with little talk regarding trade, allowing global stocks to surge to new/or near record highs as investors have turned their attention to stimulus measures, improving economic data, and reopening of global economic following the coronavirus pandemic. Last night, President Donald Trump finally urged Americans to wear face masks, and warned the pandemic will get worse before it gets better.


Stocks were at it again on Tuesday as the Dow and S&P 500 index closed higher as stocks hurt the most during the coronavirus pandemic surged, though finished off the session’s best levels while the Nasdaq Composite touched a fresh all-time high early in the day before sliding to close near the lows amid profit taking ahead of a busy week of tech earnings results. Precious metal outperformance stood out as gold traded to new 9-year highs and silver prices jumped to its best level since 2014 as the dollar index slumped to near 52-week lows. Market sentiment was encouraged by the promise of additional U.S. fiscal stimulus, after the European Union forged a historic budget package intended to dampen the economic impact of the effects of the COVID-19 pandemic, while a new stimulus plan in Washington remains in the works. Despite the pullback, the S&P 500 marked its highest close since Feb. 21. The S&P 500 is 3.8% from its Feb. 19 closing high, while the Dow is off 9.2% from its Feb. 12 all-time closing peak. In Asian markets overnight, The Nikkei Index fell -132 points to 22,751, the Shanghai Index rose 12 points to 3,333 and the Hang Seng Index dropped -577 points to 25,057. In Europe, the German DAX is down a little over 50 points to 13,115, while the FTSE 100 is also down over -50 points to 6,210.

Market Closing Prices Yesterday

  • The S&P 500 Index jumped 5.46 points, or 0.17%, to 3,257.30
  • The Dow Jones Industrial Average rose 159.53 points, or 0.60%, to 26,840.40
  • The Nasdaq Composite dropped -86.73 points, or 0.81%, to 10,680.36
  • The Russell 2000 Index advanced 19.56 points, or 1.33% to 1,487.51


Economic Calendar for Today

  • 7:00 AM EST       MBA Mortgage Applications Data
  • 9:00 AM EST       FHFA Housing Price Index MoM for May
  • 10:00 AM EST     Existing Home Sales MoM for June…est. 4.75M
  • 10:30 AM EST     Weekly DOE Inventory Data


Earnings Calendar:




WTI Crude-0.4941.43
10-Year Note-0.0090.59%



World News

  • Global cases of COVID-199 million, 616,769 deaths as U.S. counts more than 1,000 deaths in a day. The U.S. case tally climbed to 3.9 million and the death toll rose to 142,068, after more than 1,000 Americans died in a single day for the first time in weeks, according to a New York Times tracker. President Donald Trump finally urged Americans to wear face masks, and warned the pandemic will get worse before it gets better


Sector News Breakdown


  • iRobot (IRBT) Q2 EPS $2.07 on revs $279.9M vs. est. $1.22 and $265M; 2Q consumer units shipped 1,044, -2.8% YoY and average gross selling price $307, +3.7% YoY; says anticipate 2020 revenue will be relatively unchanged to slightly higher than 2019
  • Ollie’s Bargain Outlet (OLLI) guides Q2 revenue $515M well above est. $387.84M and sees Q2 comp sales growth of approximately 40%; Gross margin of approximately 39%, returning to historical second quarter levels; Operating margin1 of approximately 16%
  • Uber Technologies (UBER) filed a mixed securities shelf
  • Usana Health (USNA) raises FY net sales to $1.05B-$1.10B from prior $1B-$1.08B and FY EPS to $4.70-$5.25 from prior $4.00-$4.90



  • The American Petroleum Institute (API) showed a surprise build of 7.54M barrels of oil for the week ending July 17, gasoline inventories showed a draw of 2M barrels, distillate inventories show a draw of 1.36M barrels and Cushing inventories show a build of 716K barrels.
  • EOG Resources (EOG) said for Q2, anticipates a net loss of $126 mln on mark-to-market of its financial commodity derivative contracts



  • Capital One Financial (COF) Q2 adj EPS loss ($1.61) on revs $6.6B vs. est. loss ($1.53) and $6.82B; 2Q credit-card charge-offs 4.46% vs. 4.76% YoY, provision for credit losses $4.25 billion vs. $1.34 billion YoY, net interest margin (NIM) 5.78% vs. 6.80% YoY and net interest income (NII) $5.46 billion, -5% YoY
  • Fulton Financial (FULT) Q2 EPS 24c vs. est. 10c; 2Q net interest margin (NIM) 2.81% vs. 3.44% YoY and net interest income (NII) $152.8M
  • KeyCorp (KEY) Q2 revs were $1.72B above the $1.59B estimate with Q2 EPS 16c; 2Q NIM on taxable-equivalent basis 2.76% vs. 3.06% YoY
  • MarketAxess (MKTX) Q2 diluted EPS $2.20/$184.8M vs. est. $2.12/$181.29M
  • Navient (NAVI) 2Q core EPS 92c vs. est. 42c; 2Q FFELP net income $146 million, +11% YoY and 2Q consumer lending net income $87 million, +2.4% YoY
  • TD Ameritrade (AMTD) Q3 adj EPS $1.09 on revs $1.59B vs. est. 84c and $1.39B; 3Q net interest margin 1.39% vs. 2.23% YoY, operating margin 49.1% vs. 48.3% YoY; said Q3 number of trades 213.9 million vs. 51.9 million YoY; 3Q net new client assets $32.8 billion, +68% YoY and  average client trades per day 3.40 million vs. 824,600 YoY; expects Schwab transaction to close 2H 2020
  • Interactive Brokers (IBKR) Q2 EPS 46c on revs $539M vs. est. 33c and $485.4M; recognized an aggregate loss of approximately $104M from WTI Crude oil event in April when price of the May 2020 physically-settled contract dropped to an unprecedented negative price of $37.63; Customer equity grew 33% YoY to $203.2 billion and customer accounts increased 36% YoY to 876 thousand; total DARTs increased 111% from the year-ago quarter to 1.75 million
  • W R Berkley Corp. (WRB) Q2 EPS 38c on revs $1.94B vs. est. 10c and $2.0B; 2Q net premiums written $1.74 billion, -0.2% YoY, net premiums earned $1.68 billion, +1.8% YoY and combined ratio reported 98.7% vs. 93.9% YoY



  • Boston Scientific (BSX) announced it has received U.S. FDA approval for the WATCHMAN FLX Left Atrial Appendage Closure Device
  • Intuitive Surgical (ISRG) Q2 adj EPS $1.11 vs. est. $0.43 on revs $852Mm vs. est. $673.8Mm; says ended qtr with $6.1B cash & equivalent; says qtrly Da Vinci procedures -19% YoY; Q2 surgical system placements 178, -35% YoY
  • Kiniksa (KNSA)953M share Secondary priced at $21.00
  • Option Care Health (OPCH) 18M share Secondary priced at $12.50
  • Healthcare Services (HCSG) Q2 EPS 31c on revs $452M vs. est. 26c and $449.4M
  • Thermo Fisher (TMO) Q2 EPS of $3.89 topping estimates of $2.89 with revs $6.92B, narrowly topping consensus; adjusted operating margin of 27.0% vs. consensus of 22.0%;


Industrials & Materials

  • AAR Corp. (AIR) Q4 EPS 26c on revs $416.5M vs. est. loss 23c/$351.85M
  • Canadian National (CNI) Q2 adjusted EPS C$1.28 vs. estimate C$1.26 and revs C$3.21 billion fell -19% YoY (in-line); Q2 operating ratio 75.5% vs. 57.5% YoY and Q2 carloads -16% vs. +2% YoY
  • Dover (DOV) Q2 EPS $1.13/$1.5B vs. est. 93c/$1.47B; sees negative FY organic revenue change; says remain positioned well for second half with a higher backlog compared to this time last year and said “as we expected, activity declined across a majority of markets we serve”
  • Heartland Express (HTLD)261M share Spot Secondary priced at $20.50
  • Summit Materials (SUM) Q2 adj EPS 50c on revs $575M vs. est. 25c and $550M; 2Q adjusted Ebitda $160.2M up 14% YoY
  • United Airlines (UAL) 2Q adj EPS ($9.31) vs. est. ($9.02) on revs $1.475B vs. est. $1.32B, total liquidity July 20 was about $15.2B, expects liquidity end 3Q over $18B; forecast avg daily cash burn about $25Mm during 3Q; expects demand remain suppressed until treatment or vaccine for Covid, expects July load factor about 45% with less than 15% of flights having more than 70% seats filled


Technology, Media & Telecom

  • Snap Inc. (SNAP) shares fell -10%; Q2 EPS loss (9c) on revs $452.4M vs. est. loss (9c) and $441.6M; Q2 daily active user 238M vs. est. 239M; not providing Q3 view; 2Q adjusted Ebitda loss $95.6M vs. est. loss $124.8M and Q2 negative free cash flow $82.3M vs. est. loss $142.7M
  • Teradyne (TER) Q2 adjusted EPS $1.33/$839M vs. est. $1.03/$754.84M; sees Q3 adjusted EPS $1.01-$1.17 on revenue $745M-$805M vs. est. 64c/$603.16M.
  • Texas Instruments (TXN) Q2 EPS $1.48 (includes $0.33 benefit for items not in original guidance) vs. est. $0.88 on revs $3.24B vs. est. $2,94B; guides 3Q EPS $1.14-1.34 vs. est. $1.01, sees 3Q revs $3.26-3.54B vs. est. $3.12B
  • Jamf Holding Corp. (JAMF) priced its IPO at $26 a share, significantly higher than the $17-$19 range announced last week, raising about $468 million. The Enterprise Management software provider will offer 18 million shares, up from its previous offering size of 16 million shares.
  • Check Point (CHKP) Q2 EPS $1.58/$506M vs. est. $1.44/$488.04M
  • VERB Technology (VERB)909M share Secondary priced at $1.10






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