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Early Look: Tuesday, June 16, 2020

FuturesUp/Down%Last
DJ Industrials478.001.85%26,151
S&P 50041.001.34%3,103
Nasdaq124.001.27%9,913

Stocks are surging around the globe, with U.S. futures pointing to an extension of yesterday’s sharp turnaround higher following more central bank commentary and actions. Federal Reserve Chairman Jerome Powell testifies on Tuesday in front of the Senate. Yesterday, the Federal Reserve said it will begin buying a broad and diversified portfolio of corporate bonds, extending a program that until now has been limited to purchasing bond exchange-traded funds. The Bank of Japan on Tuesday extended its corporate lending package to about $1 trillion overnight. On top of the central bank news, reports continue to flow that the White House is considering a $1 trillion infrastructure spending proposal.

In Asian markets, The Nikkei Index jumped 1,051 points (4.88%) to 22,582, the Shanghai Index jumped 41 points (1.44%) to settle at 2,931 and the Hang Seng Index gained 567 points (2.39%) to 24,344. In Europe, the German DAX is up around 350 points to 12,265, while the FTSE 100 is up over 140 points back above the 6,200 level. Stocks reversed course midday Monday, staging its biggest intraday turnaround in over 3-months after the Fed said it would begin buying a broad portfolio of U.S. corporate bonds. U.S. economic data was also encouraging, as New York state manufacturing jumped in June well above consensus vies. The positive events outweighed concerns of a second virus wave and a potentially weaker than expected Chinese economic recovery, which had sent stock futures lower the night prior. Treasury prices reversed lower as the risk trade gained momentum, with yields on the 10-year and 30-year notes both ending flat.

Market Closing Prices Yesterday

  • The S&P 500 Index gained 25.28 points, or 0.83%, to 3,066.59
  • The Dow Jones Industrial Average rose 157.62 points, or 0.62%, to 25,763.16
  • The Nasdaq Composite jumped 137.21 points, or 1.43%, to 9,726.02
  • The Russell 2000 Index advanced 31.92 points, or 2.30% to 1,419.61

Economic Calendar for Today

  • 7:45 AM EST       ICSC Weekly Retail Sales
  • 8:30 AM EST       Retail Sales MoM for May
  • 8:30 AM EST       Retail Sales Less-Autos for May MoM
  • 8:55 AM EST       Johnson/Redbook Weekly Sales
  • 9:15 AM EST       Industrial Production for May
  • 9:15 AM EST       Capacity Utilization for May
  • 10:00 AM EST     Business Inventories for April
  • 10:00 AM EST     NAHB Housing Market Index for June
  • 4:30 PM EST        API Weekly Inventory Data

Earnings Calendar:

  • Earnings After the Close: GRPN, HRB, INWK, ORCL, VNCE

Other Key Events:

  • American Diabetes Assoc Virtual Conference, 6/12-6/16
  • FBN Securities Silicon Valley Tech Virtual Tour, 6/15-6/16
  • Jefferies 42nd Annual Nasdaq Investors Conference, 6/15-6/17
  • JPMorgan 2020 Energy, Power & Renewables Conference, 6/16-6/17
  • Oppenheimer 20th Annual Consumer Conference, 6/16-6/17
  • Raymond James Human Health Innovation Conference, 6/16-6/17

World News

  • U.S. total cross-border investment inflows at $125.3B in April and U.S. net long-term portfolio securities outflows at $128.4B in April; note Japan holds $1.27T, a decrease of $5.7Bb from last month, while China holds $1.07T of U.S. Treasuries, a decrease of $8.8B from last month; Foreign net selling of Treasuries at $176.7B and Foreign net selling of equities at $5.6B

Sector News Breakdown

Consumer

  • Lennar Corp. (LEN) Q2 EPS $1.65 on revs $5.3B vs. est. $1.14 and $5.21B; New orders of 13,015 homes down 10%; new orders dollar value of $4.9 billion down 16%; backlog of 17,975 homes down 6%; backlog dollar value of $7.1 billion down 8%; Homebuilding operating margins of $636.2 million, up from $608.3 million
  • Turtle Beach (HEAR) shares up 24%; guides Q2 sales up 75% to $74M-$77M vs. est. $43.8M; expects higher rev to drive higher adjusted Ebitda for qtr and year; expects to enter July with channel inventories still needing significant replenishment
  • WW International Inc. (WW) said digital subscriptions boosted numbers from a year ago because of the COVID-19 pandemic; said subscriptions rose 7% to 4.9 million in the second quarter, consisting of 3.8 million digital subscribers, and 1.1 million studio and digital subscribers
  • Eldorado Resorts (ERI) announces offering of 18M shares of common stock
  • Eldorado Resorts, Inc. (ERI) announced it has signed a letter of intent to enter into a $400M mortgage with VICI Properties Inc. (VICI) that is secured by the recently opened Caesars Forum Convention Center in Las Vegas
  • David’s Tea (DTEA) Q4 sales fell 11.6% to C$73.5M; q4 same store sales fell 17.3%; Q4 adjusted EPS $0.12
  • Luckin Coffee (LK) says to delay filing of co’s annual report on form 20-F as per SEC filing

Energy

  • The IEA said in its closely-watched monthly report that oil demand is expected to drop by 8.1M barrels per day in 2020, slightly less than forecast in May’s report, before rebounding by a record 5.7M bpd in 2021.
  • Exxon Mobil (XOM) has cut crude production at the Liza field offshore Guyana due to problems with gas reinjection equipment, a move meant to avoid excessive gas flaring, the country’s environmental regulator says.

Financials

  • First Horizon (FHN) and Iberiabank (IBKC) receive regulatory approval from the Fed for their all-stock merger; they expect the transaction to be completed on July 1, 2020.

Healthcare

  • Celldex (CLDX) 13.378M share Spot Secondary priced at $9.75
  • Royalty Pharma (RPRX) 77.7M share IPO priced at $28.00
  • Aveo (AVEO) announces $40M common stock offering
  • Constellation (CNST) announces offering of 4M shares of common stock
  • Inventiva (IVEVF) announced positive results from a Phase 2 clinical trial, NATIVE, evaluating lanifibranor in adult NASH patients with liver steatosis and moderate-to-severe necroinflammation without cirrhosis.
  • Eli Lilly’s (LLY) Lyumjev (insulin lispro-injection, 100 units/mL and 200 units/mL), a rapid-acting insulin to improve glycemic control in type 1 and type 2 diabetics was approved by the FDA

Industrials, Materials & Transports

  • Alcoa (AA) downgraded to hold from buy at Deutsche Bank
  • American Airlines (AAL) is working with Citigroup on a potential junk bond offering that may be secured by collateral including airport slots and gates, Bloomberg reported
  • Delta Air Lines (DAL) says it will resume service to China with two weekly flights to Shanghai from Seattle and Detroit, with the first flight beginning next week from Seattle and weekly flights from both cities starting in July.
  • Axon (AAXN) announces offering of 3M shares of common stock
  • Mercury Systems (MRCY) announced that it has received a $49M order from a leading defense prime contractor for high-performance signal processing and RF solutions for a missile defense program

Technology, Media & Telecom

  • The FCC’s chairman has weighed in on a major T-Mobile (TMUS) outage affecting its network nationwide. “The T-Mobile network outage is unacceptable,” FCC Chairman Ajit Pai said on Twitter. “The FCC is launching an investigation. We’re demanding answers — and so are American consumers.”
  • European Union antitrust authorities launched two probes into whether Apple Inc. (AAPL) violated competition laws through its Apple Pay service and its App Store for software that runs on its mobile devices.
  • Nokia (NOK) to provide optical data center interconnect (DCI) networks to Tencent (TCEHY) and Baidu (BIDU).
Disclosure: The Hammerstone Report

The content of this post was created by the Hammerstone Group. The Hammerstone Institutional Forum, a chat-based platform for traders, provides subscribers with up-to-the-minute breaking news headlines and instant analysis that drive the market. For more information please visit www.thehammerstone.com. For more information on the stocks mentioned in the Hammerstone Recap, please contact Brian Ducey at brian@thehammerstone.com.

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