Northern Trust Securities: US Summary

The authors of the content on this page from Sept 2012 to June 2017 are:
Market Commentaries: Gary Paulin, Ameet Patel, Paul Moran, Douglas Morton, Oliver Sherman, Ben Brownette, Rob Arnott, James Santo, Neil Campling
Research: Ameet Patel, Paul Moran, Douglas Morton, Oliver Sherman, Rob Arnott, Neil Campling

S&P -0.37% (2040.0), D -0.52% (17435.4), N -0.52% (4315.6), CL1 +0.17% (48.27), Copper -0.63% (206.55), Gold +0.00% (1254.70) 10YrYld -0.01 (1.8487), DXY +0.23% (95.29), Vix +2.38% (16.33).

The S&P closed up 65bps from the European close, which was just off the day’s lows, to end the day at afternoon highs. Volumes off more than 10% from yesterday to 7.2bln shares falling just below the 20day avg of 7.3bln. Dollars traded off 12% to $258bln also slipping below avg of $265bln. Despite the better 2nd half the day down volume 2:1 over up volume.

First full day post-Fed minutes and while the major averages bled a bit lower, a lot of moves from yesterday afternoon paused or even reversed a bit. 10yr yield couldn’t hold overnight/morning gains and actually ticked down slightly to <1.85%. June hike probabilities coming in slightly to 30% from 32% last night. Follow-up Fed-Speak today not offering much more other than confirming that as we stand now they seem prepared to hike. In stocks, yesterday’s big winners, financials, were among the laggards while the defensive and higher yielding sectors were amongst the leaders also pretty much the opposite of yesterday but more muted. Materials strong on a relative basis today, but XME’s +1.2% move just a fraction vs yesterday’s 6.1% decline. The dollar seems to be where we see the most continuity from yesterday, DXY +30bps today to a new high for the move, best level since late March and Gold continued a touch lower. Crude fairly resilient, closing down just fractionally again and rallying about 3% from the day’s worst levels. We continue to see the case for it to continue higher. M&A continues to make news this week: FMC TECHNOLOGIES -4.7% on an all stock deal with Technip that would create a $13bln combined co, MONSANTO +3.5% comes clean on an approach from Bayer, CHURCH & DWIGHT +2.2% continues trade well despite denying any talks, and MARKETO +5% increasingly seen as a target. TESLA (NTS Sell) +1.9% after last night’s offering announcement. No change to the view of execution/competition risks and not even sure proceeds cover cash burn for balance of the year. In earnings SALESFORCE.COM +4.1% a standout. Also in tech CISCO (NTS Sell) +3.2% on strong execution, though remains a sell for us. Fading growth will prevent re-rating higher. Closed down 2.6% from morning highs. TAKE-TWO (NTS Buy) +4.5% delivers in the e-gaming space. “Grand Theft Auto” franchise bigger than any movie ever. We remain buyers of the theme, call for more on our names there. Retail closely watched at the moment and AMERICAN EAGLE +18.3%, URBAN OUTFITTERS +13.9% bucking the trend while L BRANDS (QCC) -5% continuing to struggle. The (traditional) daddy of them all WALMART (NTS Buy) +9.6% looks to have taken people by surprise. We continue to be buyers with the view that their client base extends demographically well beyond Amazon Prime members and they have the scale to compete head on with AMAZON offering investors an investible alternative to Amazon.

OUTPERFORMERS: Metals/Mining +4.2%, Food/Staples Retailers +2.5%, Dept Stores +2%, Gold Miners +2%, Steel +1.5%

UNDERPERFORMERS: InvBanks -2.4%, Coal -2.3%, Drillers -1.9%, Airlines -1.5%, Refiners -1.4%

COMMODS: OJ +1.9%, NatGas +1.7%, Crude +10bps, Soybeans -35bps, Heating Oil -60bps…..Coffee -4.7%, Silver -3.7%, Corn -2.4%, Wheat -2.3%, Nickel -1.8%

ECON: Chicago Fed Nat Activity Index +0.1 vs -0.2 est, Initial Jobless Claims 278k vs 275k est, Philly Fed Business Optimism -1.8 vs 3.0 est, Leading Inex +0.6% vs 0.4% est

AFTER-HRS NEWS/MOVES:

OCEAN RIG UDW +37% q1 eps/revs beat
PACIFIC BIOSCIENCE -7.4% $30mm at the mkt offering
CELLDEX -1% $60mm at the mkt offering
ABRAXAS PETROLEUM -13.5% 25mm share offering, boosts capex
SHOE CARNIVAL -8.9% q1 eps/revs miss
MENTOR GRAPHICS +3.6% q1 beat
GAP STORES +3.7% q1 inline w/ preannouncement, does not reaffirm fy, closing 75 stores
DRY SHIPS -7.3% reports q1, talks w lenders to restructure debt
APPLIED MATERIALS +8.9% q2 beat & raise
BROCADE -3.4% q2 inline, guides down q3
ROSS STORES -6.5% q1 revs miss, q2 seen below est

ACTIVE TODAY:

TMT
SALESFORCE.COM +4.1% q1 beat & raise
CISCO SYSTEMS +3.2% q3 beat, forecast tops est
TAKE-TWO INTERACTIVE +4.5% q4 beat
MARKETO +5% positive view of m&a possibility @ Bernstein
L-3 COMMUNICATIONS +20bps u/g @ RBC Capital

CONSUMER
WALMART +9.6% q1 beat
CHURCH & DWIGHT +2.2% says has not been engaged in talks
DICK’S SPORTING GOODS +8.6% q1 inline, Golf Galaxy rebounds
URBAN OUTFITTERS +13.9% q1 eps inline, revs beat
TORO CO -5.1% q2 revs miss, cuts sales outlook
HYATT -2.9% / HILTON -7.2% both d/g @ BofA/Merrill
MONRO MUFFLER -7.3% q1 miss, fy view below est
ADVANCED AUTOPARTS -20bps q1 miss, CFO out
AMERICAN EAGLE OUTFITTERS +18.3% q1 beat
URBAN OUTFITTERS +13.9% q1 beats on record sales for the qtr
L BRANDS -5% q1 inline w/ preannouncement, cuts q2 view
TESLA MOTORS +1.9% $2bln offering
FLOWERS FOODS +4.6% q1 miss

CAPITAL GOODS
PACCAR -3.4% bearish truck comments from Daimler

FINANCIALS
GOLDMAN SACHS -3.3% space giving back some post-minutes gains from yesterday

MATERIALS
POTASH +3.4% CEO expects China contract settlement in next few weeks
MONSANTO +3.5% confirms unsolicited proposal from Bayer
ALCOA +1.1% / FREEPORT-MCMORAN +4.2% both init neutral @ Goldman
EAGLE MATERIALS -2.8% q4 beat but poor wallboard pricing

ENERGY
FMC TECHNOLOGIES -4.7% $13bln all stock tie-up w/ Technip