Day Traders Diary

4/23/18

The stock market enters the week on a two-session skid, hoping that some good earnings news can lure buyers away from the sidelines. Equity futures are currently pointing towards a flat open, with the S&P 500 futures trading just one point above fair value.

More than one third of S&P 500 companies are set to report their quarterly results this week, making it the busiest week of the first quarter earnings season. There are quite a few tech-related names on the calendar, including Alphabet (GOOG) -- which will report tonight -- Facebook (FB), Qualcomm (QCOM), Visa (V), PayPal (PYPL), eBay (EBAY), and Twitter (TWTR) -- which will report on Wednesday -- and Amazon (AMZN), Microsoft (MSFT), and Intel (INTC) -- which will report on Thursday.

As for non-tech names, Caterpillar (CAT), 3M (MMM), and Coca-Cola (KO) will report on Tuesday, Boeing (BA), Chipotle Mexican Grill (CMG), and Ford (F) will report on Wednesday, UPS (UPS) and Starbucks (SBUX) will report on Thursday, and energy giants Exxon Mobil (XOM) and Chevron (CVX) will report on Friday.

There's also several notable pieces of economic data due out this week, including Existing Home Sales for March (Briefing.com consensus 5.57 million) -- which will be released at 10:00 AM ET this morning -- New Home Sales for March (Briefing.com consensus 631K) -- which will be released on Tuesday -- Durable Orders for March (Briefing.com consensus 1.9%) -- which will be released on Thursday -- and the advance reading of first quarter GDP (Briefing.com consensus 2.1%) -- which will be released on Friday.

U.S. Treasuries are under pressure this morning, sending yields to multi-year highs across the curve. The benchmark 10-yr yield, for instance, is currently up three basis points at 2.98%, which is its highest level since January 2014. Meanwhile, the 2-yr yield is up three basis points at 2.47% -- its highest level since August 2008.

In currencies, the U.S. Dollar Index is up 0.4% at 90.47 -- its best level in more than seven weeks.

In U.S. corporate news:

• Caterpillar (CAT 155.39, +2.14): +1.4% after shares were upgraded to 'Buy' from 'Neutral' at Citigroup.
• Merck (MRK 60.03, +1.20): +2.0% after shares were upgrade to 'Buy' from 'Neutral' at Goldman; added to 'Conviction Buy List'.
• Kimberly-Clark (KMB 101.97, +1.94): +1.9% after reporting better-than-expected earnings and revenues for Q1 and raising its sales guidance for FY18.
• Hasbro (HAS 72.26, -6.55): -7.9% after missing earnings and revenue estimates for the first quarter.

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region began the week on a modestly lower note while markets in Southeast Asia underperformed as U.S. Treasury yields continued climbing. Japan's Nikkei -0.3%, Hong Kong's Hang Seng -0.5%, China's Shanghai Composite -0.1%, India's Sensex +0.1%.
  • In economic data:
    • Japan's April Manufacturing PMI 53.3 (expected 53.4; last 53.1)
    • Singapore's March CPI +0.2% year-over-year (expected 0.5%; last 0.5%)
    • Hong Kong's March CPI +2.6% year-over-year (last 3.1%)
  • In news:
    • Over the weekend, North Korea announced that it will stop nuclear and ICBM testing. While the news represents a positive turn, it should be noted North Korea is claiming that recent tests were sufficient to prove the effectiveness of its weapons. Furthermore, the pledge to cease testing is contingent on the removal of U.S. nuclear forces from the Korean peninsula.
    • China's Defense Minister Wei Fenghe said that Beijing is ready to provide security guarantees for the One Belt, One Road project. China's Ministry of Commerce acknowledged that U.S. Treasury Secretary Steven Mnuchin expressed desire to travel to Beijing to negotiate trade issues.

• Major European indices trade little changed. UK's FTSE -0.1%, Germany's DAX -0.1%, France's CAC -0.1%.
  • In economic data:
    • Eurozone April Manufacturing PMI 56.0 (expected 56.6; last 56.6) and Services PMI 55.0 (expected 54.8; last 54.9)
    • Germany's April Manufacturing PMI 58.1 (expected 57.6; last 58.2) and Services PMI 54.1 (expected 53.9; last 53.9)
    • France's April Manufacturing PMI 53.4, as expected (last 53.7) and Services PMI 57.4 (expected 56.6; last 56.9)
  • In news:
    • French President Emmanuel Macron is making an official State visit to Washington. The two leaders will dine at George Washington's Mount Vernon estate tonight.
    • European Commission Vice President Vadis Dombrovskis said that eurozone creditors are preparing a debt relief offer for Greece. Mr. Dombrovskis added that some relief might be offered up front with other relief measures would be unlocked after a delay.
    • In Italy, the center-right alliance won a small regional vote in Molise. Keep in mind that a coalition deal at the national level remains elusive.