Morning Call For Tuesday, May 30
OVERNIGHT MARKETS AND NEWS
Jun E-mini S&Ps (ESM17 -0.18%) this morning are down -0.16% and European stocks are down -0.41% on expectations that stronger-than-expected U.S. economic data will allow the Fed to raise interest rates at next month's FOMC meeting. Weakness in commodity prices is also undercutting energy producing stocks and mining companies with Jul WTI crude oil (CLN17 -0.66%) down -0.44% and Jul COMEX copper (HGN17 -0.66%) down -0.55% at a 1-week low. European stocks were also pulled lower after Eurozone May economic confidence unexpectedly fell for the first time this year, and as European banking stocks weakened on concern the ECB may be close to tapering QE after ECB President Draghi said the Eurozone's economic upswing as "increasingly solid" and broadening. Asian stocks settled mixed: Japan -0.02%, Hong Kong, China and Taiwan closed for holiday, Australia +0.19%, Singapore -0.30%, South Korea -0.63%, India +0.16%. Japan's Nikkei Stock Index fell to a 1-week low as a slide in exporter stocks led the overall market lower after USD/JPY fell to a 1-week low, which reduces the earnings prospects of exporters.
The dollar index (DXY00 +0.08%) is up +0.04% at a 1-week high. EUR/USD (^EURUSD) is down -0.13% at a 1-week low after Eurozone May economic confidence unexpectedly declined. USD/JPY (^USDJPY) is down -0.30% at a 1-week low.
Jun 10-year T-note prices (ZNM17 +0.06%) are up +2.5 ticks.
St. Louis Fed President Bullard said that interest rates are already quite close or just a little below where they need to be and that "the first half of 2017 will be relatively ordinary, GDP growth of around 2%."
San Francisco Fed President Williams said in Singapore Monday that "the U.S. economy is about as close to the Fed's dual mandate goals as we've ever been" and that three interest-rate increases this year make sense.
Eurozone May economic confidence unexpectedly fell -0.5 to 109.2, weaker than expectations of +0.4 to 110.0. The May business climate indictor fell -0.20 to 0.90, weaker than expectations of +0.02 to 1.11.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) Apr personal spending (expected +0.4%, Mar unch) and Apr personal income (expected +0.4%, Mar +0.2%), (2) Apr PCE deflator (expected +0.2% m/m and +1.7% y/y, Mar -0.2% m/m and +1.8% y/y) and Apr core PCE deflator (expected +0.1% m/m and +1.5% y/y, Mar -0.1% m/m and +1.6% y/y), (3) Mar S&P CoreLogic composite-20 home Price index (expected +0.8% m/m, Feb +0.69% m/m and +5.85% y/y), (4) May Conference Board U.S. consumer confidence (expected -0.5 to 119.8, Apr -4.6 to 120.3), (5) May Dallas Fed manufacturing activity (expected -1.8 to 15.0, Apr -0.1 to 16.8), (6) Fed Governor Lael Brainard speaks on the economy and monetary policy at a NABE luncheon in New York, (7) USDA weekly grain export inspections, (8) USDA crop conditions and planting progress.
Notable Russell 2000 earnings reports today include: none.
U.S. IPO's scheduled to price today: Liberty Oilfield Services (BDFC), Immuron (IMROY).
Equity conferences: Morgan Stanley China Conference on Tue, Stifel Dental & Veterinary Conference on Wed, Cowen & Co Technology, Media & Telecom Conference on Wed-Thu, RBC Capital Markets Consumer and Retail Conference on Wed-Thu, KeyBanc Capital Markets Industrial, Automotive & Transportation Conference on Wed-Thu, Sanford C. Bernstein & Co. Strategic Decision Conference on Wed-Fri, American Society of Clinical Oncology Meeting on Fri.
OVERNIGHT U.S. STOCK MOVERS
O'Reilly Automotive (ORLY +1.90%) and AutoZone (AZO +1.36%) were both downgraded to 'Neutral' from 'Outperform' at Wedbush.
Caleres (CAL +9.11%) was upgraded to 'Positive' from 'Neutral' at Susquehanna Financial.
Hess (HES +0.71%) was downgraded to 'Neutral' from 'Buy' at Goldman Sachs.
Valero Energy (VLO -1.17%) was downgraded to 'Equal Weight' from 'Overweight' at Morgan Stanley.
Whiting Petroleum (WLL +0.63%) was downgraded to 'Sell' from 'Neutral' at Goldman Sachs.
Symantec (SYMC) was upgraded to 'Overweight' from 'Equalweight' at Barclays with a price target of $38.
Cimarex Energy (XEC -0.03%) was downgraded to 'Neutral' from 'Buy' at Goldman Sachs.
PrivateBancorp (PVTB +0.22%) was downgraded to 'Market Perform' from 'Outperform' at Keefe, Bruyette & Woods.
Sangamo Therapeutics (SGMO -7.05%) slid 1% in after-hours trading after it filed to sell up to $200 million of mixed shelf securities.
TG Therapeutics (TGTX +1.26%) lost over 1% in after-hours trading after it filed to sell up to $300 million of mixed shelf securities.
Rexahn Pharmaceuticals (RNN +2.28%) fell over 3% in after-hours trading after it filed to sell $150 million of mixed shelf securities.
MARKET COMMENTS
June E-mini S&Ps (ESM17 -0.18%) this morning are down -3.75 points (-0.16%). Friday's closes: S&P 500 +0.03%, Dow Jones -0.01%, Nasdaq +0.17%. The S&P 500 on Friday closed slightly higher on the upward revision to U.S. Q1 GDP to 1.2% from +0.7% (stronger than expectations of +0.9%) and on strength in energy stocks as crude oil rose +1.84%. Stocks were undercut by the U.S. Apr capital spending report (capital goods new orders nondefense ex-aircraft report) of unchanged, weaker than expectations of +0.5%, and by the -0.6 point decline in the May University of Michigan U.S. consumer sentiment report (weaker than expectations of -0.2 to 97.5).
June 10-year T-notes (ZNM17 +0.06%) this morning are up +2.5 ticks. Friday's closes: TYM7 +0.50, FVM7 unch. Jun 10-year T-notes on Friday closed little changed. T-notes were boosted by the weaker-than-expected U.S. Apr capital goods orders report of unchanged (vs expectations of +0.5%) and by comments from St. Louis Fed President Bullard who said the Fed is "very close" to where it needs to be on policy rate. Gains were limited after U.S. Q1 GDP was revised higher than expected.
The dollar index (DXY00 +0.08%) this morning is up +0.035 (+0.04%) at a 1-week high. EUR/USD (^EURUSD) is down -0.0014 (-0.13%) at a 1-week low and USD/JPY (^USDJPY) is down -0.33 (-0.30%) at a 1-week low. Friday's closes: Dollar index +0.194 (+0.20%), EUR/USD -0.0027 (-0.24%), USD/JPY -0.51 (-0.46%). The dollar index on Friday closed higher on the larger-than-expected upward revision in U.S. Q1 GDP to +1.2% from +0.7% and by weakness in the British pound as GBP/USD tumbled to a 1-month low after polls showed the Conservative Party's lead over the main opposition Labour Party narrowed to about 6 points, which raises concern about UK Prime Minister May's political support ahead of the Brexit negotiations with Europe.
July WTI crude oil prices (CLN17 -0.66%) this morning are down -22 cents (-0.44%) and July gasoline (RBN17 -0.57%) is -0.0061 (-0.38%). Friday's closes: Jul crude +0.90 (+1.84%), Jul gasoline +0.0291 (+1.82%). Jul crude oil and gasoline on Friday closed higher on the stronger-than-expected U.S. Q1 GDP report of +1.2% and short-covering ahead of the long Memorial Day holiday weekend.
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Disclosure: None.