Morning Call: Optimism in S&P 500 Q2 earnings lifts stocks; Sep E-mini S&Ps up +0.13% at a 3-3/4 month high; USD/JPY up +0.43% at a 1-1/2 month high.
Barchart.com - Tue Jul 10, 6:41AM CDT
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 ESU18 - S&P 500 E-Mini
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CLQ1870.46s+1.00+1.44%
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GCQ181,204.5s-2.9-0.24%
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WYNN136.73-0.58-0.42%
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NTRS106.35-0.36-0.34%
INSP44.50-0.58-1.29%
WHD36.70+0.42+1.16%
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Overnight Markets and News

Sep E-mini S&Ps (ESU18 +0.22%) this morning are up +0.13% at a 3-3/4 month high on optimism for strong Q2 S&P 500 company earnings that will begin to be released later this week. A +0.42% rally in Aug WTI crude oil (CLQ18 +0.46%) is also giving energy stocks a boost. European stocks are up +0.32% at a 3-week high, but gains are limited after the German Jul ZEW expectations of economic growth fell -8.6 to a 5-3/4 year low of -24.7 as trade tensions weighed on sentiment. Asian stocks settled mostly higher: Japan +0.66%, Hong Kong-0.02%, China +0.44%, Taiwan +0.34%, Australia -0.44%, Singapore +1.42%, South Korea +0.34%, India +0.85%. An increase in Chinese wholesale prices is positive for economic growth prospects and gave Chinese stocks a boost after China Jun PPI rose +4.7% y/y, the biggest increase in 6 months. Strength in exporters fueled a rally in Japan's Nikkei Stock Index to a 1-week high as USD/JPY rose to a 1-1/2 month high, which boosts the earnings prospects of Japanese exporters.

The dollar index (DXY00 +0.33%) is up +0.35%. EUR/USD (^EURUSD -0.39%) is down -0.50% after the German Jul ZEW expectations of economic growth fell more than expected to a 5-3/4 year low. USD/JPY (^USDJPY +0.41%) is up +0.43% at a 1-1/2 month high.

Sep 10-year T-note prices (ZNU18 -0-020) are down -1.5 ticks.

The German Jul ZEW expectations of economic growth fell -8.6 to a 5-3/4 year low of -24.7, weaker than expectations of -2.8 to -18.9.

UK May manufacturing production rose +0.4% m/m, weaker than expectations of +0.7% m/m. May industrial production fell -0.4% m/m, weaker than expectations of +0.5% m/m.

China Jun CPI rose +1.9% y/y, right on expectations. Jun PPI rose +4.7% y/y, stronger than expectations of +4.5% y/y and the biggest increase in 6 months.

U.S. Stock Preview

Key U.S. news today includes: (1) May JOLTS job openings (expected -43,000 to 6.655 million, Apr +65,000 to 6.698 million), (2) Treasury auctions $33 billion of 3-year T-notes.

Notable Russell 1000 earnings reports today include: PepsiCo (consensus $1.52).

U.S. IPO's scheduled to price today: none.

Equity conferences this week: SEMICON West Conference on Tue, CJS Securities Summer Conference on Tue.


Market Comments

Sep S&P 500 E-minis (ESU18 +0.22%) this morning are up +3.50 points (+0.13%) at a 3-3/4 month high. Monday's closes: S&P 500 +0.88%, Dow Jones +1.31%, Nasdaq 100 +0.95%. The S&P 500 on Monday climbed to a 3-week high and settled higher on carry-over support from a 2.5% rally in China's Shanghai Composite after the yuan strengthened versus the dollar,. There was also carry-over support from a rally in European stocks to a 3-week high on stronger-than-expected German May trade data and the unexpected increase in Eurozone Jul Sentix investor confidence. U.S. stocks were also boosted by expectations for strong Q2 S&P 500 company earnings results, which will begin to be reported later this week.

Sep 10-year T-notes (ZNU18 -0-020) this morning are down -1.5 ticks. Monday's closes: TYU8 -7.00, FVU8 -4.25. Sep 10-year T-notes on Monday closed lower on reduced safe-haven demand for T-notes after global stocks rallied and on supply pressures as the Treasury auctions $69 billion of T-notes and T-bonds this week.

The dollar index (DXY00 +0.33%) this morning is up +0.328 (+0.35%), EUR/USD (^EURUSD -0.39%) is down -0.0059 (-0.50%) and USD/JPY (^USDJPY +0.41%) is up +0.48 (+0.43%) at a 1-1/2 month high. Monday's closes: Dollar Index +0.042 (+0.04%), EUR/USD +0.0005 (+0.04%), USD/JPY +0.38 (+0.34%). The dollar index on Monday rebounded from a 3-week low and closed higher on improved dollar interest rate differentials afer T-note yields rose. There was weakness in GBP/USD after UK Foreign Secretary Johnson resigned from the cabinet and attacked Prime Minister May's Brexit strategy.

Metals this morning are weaker with Aug gold (GCQ18 -0.89%) -9.3 (-0.74%), Sep silver (SIU18 -1.14%) -0.184 (-1.14%), and Sep copper (HGU18 -1.04%) -0.031 (-1.07%). Monday's closes: Aug gold +3.80 (+0.30%), Sep silver +0.070 (+0.44%), Sep copper +0.0260 (+0.92%). Metals on Monday closed higher with Aug gold at a 1-1/2 week high and Sep silver at a 1-week high. Metals prices were boosted by the stronger-than-expected German May trade data that was supportive for industrial metals demand, and by the -4,925 MT drop in LME copper inventories to a 5-1/2 month low of 270,550 MT.

Aug WTI crude oil prices (CLQ18 +0.46%) this morning are up +31 cents (+0.42%) and Aug gasoline (RBQ18 +1.03%) is up +1.66 cents (+0.77%). Monday's closes: Aug crude +0.05 (+0.07%), Aug gasoline +4.00 (+1.90%). Aug crude oil and gasoline on Monday closed higher on comments from UAE Energy Minister Suhail Al Mazrouei who said OPEC is doing what it can to offset crude output shortfalls but "does not want to overdo efforts to boost supplies." Crude oil prices were also boosted by expectations for Wednesday's EIA weekly crude oil inventories to fall -3.5 million bbl. Crude oil prices were undercut by the recovery in the dollar index from a 3-week low.

Overnight U.S. Stock Movers

Weight Watchers International (WTW -4.49%) was rated a new 'Overweight' at KeyBanc Capital Markets with a price target of $115.

JPMorgan Chase (JPM +3.09%) was upgraded to 'Strong Buy' from 'Outperform' at Vining Sparks with a price target of $125.

Carnival (CCL +0.68%) fell 2% in pre-market trading after Goldman Sachs cut the company's earnings estimates citing "incremental fuel/FX headwinds offsetting ongoing demand strength."

Wynn Resorts Ltd (WYNN +2.08%) was upgraded to 'Buy' from 'Hold' at Stifel with a price target of $207.

Cboe Global Markets (CBOE +2.40%) was rated a new 'Buy' at Compass Point with a price target of $115.

Cerner (CERN +1.19%) was downgraded to 'Underperform' from 'In-line' at Evercore ISI with a price target of $55.

Northern Trust (NTRS +2.92%) was upgraded to 'Strong Buy' from 'Outperform' at Vining Sparks with a price target of $125.

Inspire Medical Systems (INSP -0.38%) jumped 7% in after-hours trading after it said Aetna will provide coverage for its Inspire therapy for patients with obstructive sleep apnea, effective immediately.

Cactus (WHD +4.46%) fell 4% in after-hours trading after it filed to sell 10 million shares of its stock via Citigroup and Credit Suisse.

Southern Co (SO -2.91%) was rated 'Overweight' at Barclays with a price target of $51.

Capstead Mortgage (CMO -0.32%) was downgraded to 'Market Perform' from 'Outperform' at Keefe, Bruyette & Woods with a price target of $9.

American Renal Associates Holdings (ARA +2.61%) gained more than 3% in after-hours trading after it reached a settlement with and will enter into a 3-year network agreement with UnitedHealthcare effective August 1, 2018.

Spero Therapeutics (SPRO +2.96%) fell more than 4% in after-hours trading after it announced that it had commenced an underwritten public offering of 4.5 million shares of its common stock.

OncoCyte (OCX +3.39%) soared more than 55% in after-hours trading after it reported the company's most recent study of clinical samples in the development of its DertermaVu, its lung cancer diagnostic blood test, has produced encouraging results.