Early Look

Monday, September 28, 2020

Futures	Up/Down	%	Last
DJ Industrials	345.00	1.28%	27,389
S&P 500	42.50	1.29%	3,329
Nasdaq	185.50	1.67%	11,322

 

 

Stock futures in the U.S. are pointing to a strong open, looking to add to the big gains last Friday though still ended the week mixed as the S&P suffered its 4th straight weekly decline, though the Nasdaq Composite gained for the first time in 5 weeks. In Asian markets, The Nikkei Index jumped 307 points to 23,511, the Shanghai Index slipped -1 points to 3,217 and the Hang Seng Index rose 240 points to 23,476. In Europe, the German DAX is surging around 350 points (2.75%) to 12,814, while the FTSE 100 gains over 80 points to 5,930. Asian markets taking their cue after better China industrial profit took some of the investor focus off the resurgence of COVID-19 cases across the globe. Markets are also hopeful of a new stimulus deal after reports late last week Mnuchin and Pelosi were looking to resume talks. On the data front this week, the September jobs report is expected later this week with the unemployment rate expected to land at 8.2% and 880K jobs added vs. the 1.37M job adds in August. ON the IPO front, the highly anticipated debut of software/analytics company Palantir Technologies (PLTR) is expected mid-week in a direct listing on the NYSE on September 30 (along with another nine IPOs potentially on tap this week). Earnings and economic data remain light again this week.

 

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 51.87 points, or 1,60%, to 3,298.46

·     The Dow Jones Industrial Average rose 358.52 points, or 1.34%, to 27,173.96

·     The Nasdaq Composite jumped 241.30 points, or 2.26%, to 10,913.56

·     The Russell 2000 Index advanced 23.09 points, or 1.59% to 1,474.91

 

Economic Calendar for Today

·     10:30 AM EST    Dallas Fed Manufacturing for September

 

Earnings Calendar:

·     Earnings Before the Open: CALM, FLUX, PRCP, THO

·     Earnings After the Close: PCYG, UNFI

 

 

Macro	Up/Down	Last
WTI Crude	0.18	40.43
Brent	0.14	42.06
Gold	-3.60	1,857.75
EUR/USD	0.0033	1.1664
JPY/USD	-0.26	105.32
10-Year Note	+0.017	0.67%

 

 

World News

·     President Trump formally nominated Amy Coney Barrett on Saturday to fill the vacant Supreme Court seat left by the late Justice Ruth Bader Ginsburg. She would be the sixth justice on the nine-member court to be appointed by a Republican president, and the third of Trump’s first term in office

·     New York City’s school principal’s union demanded Sunday that Mayor Bill de Blasio and Chancellor Richard Carranza abdicate control of the system to the state

·     Japan reports that the early preliminary reading for the Leading Economic Index for September was 86.9 to match consensus expectations. The broad measure of economic activity rose from a mark of 83.8 in August and 78.4 in July.

 

Sector News Breakdown

Consumer

·     Uber (UBER) shares rise 5% as it won its legal fight in London to keep its license after a judge ruled in its favor today. The company introduced a new system in April to verify drivers’ identities through a mix of facial recognition and human reviewers in an effort to allay concerns of the city’s transport regulator.

·     American Airlines (AAL) closed a $5.48 billion loan with the U.S. Treasury, increasing its pool of cash to help fund operations until travel demand begins to return. Separately, CEO Doug Parker said there’s sufficient time for U.S. Congress to agree on extending $25 billion in federal aid that would prevent layoffs for tens of thousands of airline workers on Oct. 1.

·     Delta Air Lines (DAL) warned it would take a pretax accounting charge of $2 billion to $2.5 billion after deciding to remove three aircraft types from its fleet amid an unprecedented collapse in air travel

·     DraftKings (DKNG) is poised for “hyper growth,” according to Barron’s citing Macquarie’s analyst who has an Outperform rating and a $65 target on the stock, saying DraftKings’ daily fantasy sports games are a way of attracting users to its more lucrative online gambling options

·     CarMax Inc. (KMX) said it has resumed its share buyback program after suspending it in April due to the coronavirus pandemic; KMX said it has $1.51 billion left in its share buyback authorization.

·     Caesars Entertainment (CZR) and William Hill (WIMHY) confirm that they are in advanced discussions concerning a possible cash offer for the entire issued and to be issued share capital of William Hill.

·     Caesars (CZR) files to sell 30M shares of common stock

·     Thor Industries (THO) Q4 EPS $2.14 on revs $2.32B vs. est. $1.34/$2.29B

·     In the electric vehicle space this week: Tesla (TSLA) could post its Q3 deliveries report as early as October 1 and Nio (NIO) may report monthly deliveries report before the weekend.

 

Energy

·     Devon Energy (DVN) and WPX Energy (WPX) are in talks to combine in an all-stock deal that could be completed as soon as this week, the WSJ reported citing people familiar with the matter. Devon has a market value of roughly $3.4B while WPX’s is about $2.5B https://bit.ly/3i9SnmA

·     Chesapeake Utilities (CPK) to replace Momenta (MNTA) in S&P 600 at open on 10/1

·     PG&E (PCG) said it is cutting power to the northern parts of California through an effort that will leave about 267K people in the dark to prevent its electric lines from toppling over and sparking wildfires in high winds

·     ReneSola (SOL) and Vodasun, a Munich, Germany-based project developer specialized in the development and construction of solar parks, have inked a strategic partnership agreement to co-develop and market ready-to-build (RTB) ground-mounted solar projects in Germany.

 

Financials

·     Truist Financial (TFC) is now the sixth largest commercial bank in the U.S. by assets following the BBT/SunTrust merger, with a strong presence in the fast-growing Southeast and Goldman Sachs analyst said given that Truist can earn $5 a share annually when interest rates eventually rise, its stock could be worth closer to $60 at that point

·     HSBC Holdings (HSBC) jumped after China’s Ping An Insurance nudged higher its stake to 8% from 7.95%. Last week, HSBC shares fell to their lowest since 1995, in the wake of a report on alleged money laundering activities at leading banks.

 

Healthcare

·     The World Vaccine Congress runs from September 28-October 1 with Inovio Pharmaceuticals (INO), Novavax (NVAX) and Moderna (MRNA) are among companies due to present.

 

Industrials & Materials

·     ArcelorMittal (MT) said that Cleveland-Cliffs Inc. (CLF) would acquire all of the shares of ArcelorMittal USA LLC for a consideration of approximately $1.4 billion, and added that it would begin a share-buyback program. https://on.mktw.net/2GjctgV

·     Fortive (FTV) positive mention in Barron’s saying the company spun out of Danaher (DHR) in 2016 is now set for a spinoff of its own, as it plans to hive off its transportation business into a new company, Vontier. The stocks has lost 6% since the announcement in January and creates an opportunity to buy Fortive ahead of the spin, and get two great companies once it’s done

·     Lockheed Martin (LMT) announces additional $1.3B share repurchase program and raises its quarterly dividend to $2.60 from $2.40 per share

·     Piedmont Lithium Limited (PLL) said will supply spodumene concentrate from Piedmont’s North Carolina deposit to Tesla (TSLA).

·     UPS (UPS) to Overweight from Sector Weight at KeyBanc with a $190 price target following meetings with management.

·     FedEx (FDX) upgraded to buy from hold at Deutsche Bank

 

Technology, Media & Telecom

·     A federal judge postponed a Trump administration order that would have banned the video sharing app TikTok from U.S. smartphone app stores around midnight. A more comprehensive ban remains scheduled for November, about a week after the presidential election.

·     SINA Corporation (SINA) entered into an agreement and plan of merger with New Wave Holdings Limited and its wholly owned subsidiary, in an all-cash transaction implying an equity value of the company of ~$2.59B for all the ordinary shares, or $43.30 per share (about a 5.6% increase from its $41 going private proposal prior) https://bit.ly/338TBdF Sina also reports Q2 beat with 1% decline in revenue on a constant currency basis.

·     Western Digital (WDC) a positive mention in Barron’s saying the disk-drive and memory chip company has something going for it that red-hot software stocks like Snowflake (SNOW) and Zoom Video (ZM) lack-a bargain-priced stock with real appeal for value investors

·     Microsoft’s (MSFT) source code for Windows XP and Windows Server 2003 has been leaked, as torrent files for both source codes have been published on a number of file sharing sites this week – the Verge reported

·     Google (GOOGL) is expected to hold a launch event on September 30 for its next lineup of products including the Pixel 5, a new Chromecast and a new smart speaker.

·     Apple’s (AAPL) legal fight with Fortnite creator Epic Games kicks into full gear today with decisions that will influence the future of app stores in the U.S. and how the world’s largest technology platforms make money from developers.

·     MobileIron (MOBL) has agreed to be acquired by Ivanti Inc. in an all-cash deal valued at about $872 million. Under the terms of the deal, MobileIron shareholders will receive $7.05 in cash per share, equal to a 27% premium over the closing price on Friday https://on.mktw.net/3iakulM