Wall Street Breakfast: Gearing Up For March After A Rough February
S&P 500, Dow and Nasdaq futures were all drifting lower this morning after two days of losses, which came amid uncertainty around what moves the market can expect from the Fed. Wednesday's slide snapped the Dow and S&P 500's 10-month winning streaks, and all three major indices posted big declines for February. Later today, traders will have more economic data to work with as they find their footing, including the ISM Manufacturing Index, which is expected to slip to 58.6 from the prior 59.1; the Manufacturing PMI; construction spending; and personal income and outlays.
Reuters reports the Trump administration is considering harder-hitting sanctions against Venezuela's oil sector than in the past ahead of the country's April presidential election, according to an unnamed U.S. official. President Nicolas Maduro's two main challengers have been banned from running in the election. The official said the U.S. may sanction Venezuelan military-run oil services firm Camimpeg, and "would not rule out" an eventual total ban on Venezuelan oil shipments to the U.S.
Amid new Fed chief Jerome Powell's positive comments on the U.S. economy, the USD index reached a six-week high in early action Thursday. The market is now betting that the Fed will raise interest rates four times this year - one more hike than the prior expectation. The dollar index remains in the red for the year, however.
The largest energy ETF fell 2.3% in Wednesday’s action to cap off a 10.8% plunge for February, its worst monthly showing since December 2015. The Energy Select Sector SPDR ETF (XLE) turned negative after crude inventories rose by a larger-than-expected 3M barrels in the latest week, which sent WTI April crude oil futures 2.2% lower at $61.64/bbl.
Exxon Mobil says it will withdraw from exploration and research joint ventures with Rosneft (OTC:RNFTF) because of U.S. and European Union sanctions against Russia. In its latest 10-K form, Exxon (XOM) says the exit will result in a $200M after-tax loss. XOM and Rosneft, in 2012, detailed an exploration partnership with plans to invest as much as $500B in developing Russia’s Arctic and Black Sea oil reserves, and further deals were signed in 2014.
Verizon and its newly incorporated Straight Path (STRP) wireless unit have paid a $614M civil penalty in an FCC settlement - the largest such penalty ever paid. That resolves a probe into allegations that Straight Path violated FCC rules by failing to use spectrum it was awarded, conduct that came before Verizon (VZ) announced its acquisition. The resolution called for Straight Path to sell about 1,000 licenses in question and remit 20% of overall proceeds.
Walmart is raising the age requirement to buy firearms and ammunition in its stores to 21, Reuters says. Walmart (WMT) is also taking items off its website that look like "assault-style" rifles - including nonlethal airsoft guns and toys. The company says it's taken an opportunity to review its policy on firearm sales after recent events.
The SEC has issued scores of subpoenas and information requests in a sweeping probe of technology companies and advisers involved in the booming market for digital tokens, the Wall Street Journal reports. The investigation significantly ratchets up the regulatory pressure on the booming U.S. market for raising funds in cryptocurrencies. Coin offerings raised $6.5B in 2017 and more than $1.6B so far this year despite a crash in the price of Bitcoin and other cryptocurrencies.
Malaysia-based budget airline AirAsia (OTC:AIABF) has agreed to sell up to 182 Airbus (OTCPK:EADSY, OTCPK:EADSF) jets to a group of firms managed by aircraft manager BBM, including Ireland-based Fly Leasing (FLY). The deal, which comes amid larger restructuring efforts at AirAsia, is one of the biggest ever aircraft finance transactions. AirAsia expects the pact to result in a profit of some $246 million, and it intends to lease back nearly all of the jets from the group.
Best Buy is shuttering 250 small mobile phone stores as it pursues a turnaround. The mall stores are around 1,400 square feet each, compared to the 40,000 square feet of a typical big-box Best Buy (BBY) - which will continue to sell mobile phones. The small stores, to be closed as of May 31, contributed just 1% to overall revenue and 1% to square footage.
With Spotify having filed to go public via direct listing, Sony Music (SNE) is ready to cash in alongside the company's founders. Sony Music has 5.7% of Spotify's (SPOT) shares; at a recent valuation of around $20B, that would make Sony's stake worth $1.1B - not that much smaller than those of founders Daniel Ek ($1.9B at that valuation) and Martin Lorentzon ($2.5B). Sony is the only music label among the stock’s 5%-plus holders.
Oil States International has agreed to acquire Falcon Flowback Services from Argonaut Private Equity for $85M. Falcon Flowback provides flowback and well testing services for the separation and recovery of fluids, solid debris and proppant used during hydraulic fracturing operations. OIS (OIS) says Falcon will provide additional scale and diversity to its Completion Services well testing operations in key U.S. shale plays.
3D Systems Corp. (DDD) +15% AH on better-than-expected preliminary Q4 results.
Salesforce.com (CRM) +1.9% AH on strong earnings, upside guidance.
Mylan (MYL) -3.1% AH on Q4 revenue miss.
Ballard Power Systems (BLDP) -1.6% AH on Q4 earnings miss.
Halcon Resources (HK) -4.1% on Q4 earnings miss.
L Brands (LB) -9% AH on Q1 guidance below consensus.
Portola Pharmaceuticals (PTLA) -23% AH on FDA communication about possible additional study for Andexa.
Monster Beverage (MNST) -4.3% AH on Q4 earnings miss.
Box (BOX) -13% AH on downside guidance.
In Asia, Japan -1.56%. Hong Kong +0.65%. China +0.44%. India -0.40%.
In Europe, at midday, London -0.50%. Paris -0.92%. Frankfurt -1.44%.
Futures at 6:20, Dow -0.16%. S&P -0.10%. Nasdaq -0.02%. Crude -0.57% to $61.30. Gold -0.49% to $1,311.50.
Ten-year Treasury Yield -3 bps to 2.842%
8:30 Personal Income and Outlays
8:30 Initial Jobless Claims
9:45 PMI Manufacturing Index
9:45 Bloomberg Consumer Comfort Index
10:00 Jerome Powell delivers semi-annual monetary policy testimony
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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