Morning Minutes 5/1/2020

Morning Minutes

Stocks slide into May Amid Another Flurry of Earnings Reports

May 1, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

Coming off of a month that saw the S&P 500 rally 12.7%, its best single month return since January of 1987, perhaps it’s not so surprising to see indices slip back a bit this morning, particularly with several European and Asia Pacific markets closed for a holiday.

US index futures are down 2.0% to 2.5% this morning with Dow futures falling about 480 points and adding to yesterday’s 288-point drop. Overseas, the FTSE is down 1.9%, Sydney fell 5.0%, and the Nikkei dropped 2.8% while the Dax and Hang Seng were closed for holidays.

The main focus of economic news today is on Manufacturing PMI reports. The UK appears to be stabilizing at a low level, reporting a reading of 32.6, slightly below last month’s 32.9. Canadian Manufacturing PMI is due at 9:30 am EDT today (street 41.5 vs previous 46.1). US ISM Manufacturing PMI is due at 10:00 am EDT. The street is expecting a drop to 36.9 from 49.1 last month which would be similar to the drop in Chicago PMI to 35.4 from 47.8 announced yesterday.  US construction spending for March is also due at 10:00 with the street expecting a 3.5% decline.

Currency trading suggests investors taking a bit more of a defensive stance with the Japanese Yen top dog and the US Dollar posting posting gains of 0.25% to 0.50% against the Euro, British Pound, Canadian Dollar and Gold.

Energy commodities are mixed today with WTI crude oil up 0.1% and Brent Crude down 1.0%. ExxonMobil announced this morning cuts of 30% to capital spending this year and 15% to exploration spending, while Chevron announced additional cuts to capital spending with more possible as it takes steps to preserve its dividend.  Oil could remain active through the day with the weekly Baker Hughes US drill rig count due at 1:00 pm EDT.

A number of companies have reported results overnight and this morning. Highlights include:

Restaurant Brands International, missed expectations on earnings ($0.45 vs street $0.48) as same store sales at Tim Hortons plunged 10.3%.

Apple* beat the street on earnings ($2.55 vs street $2.26). Management raised the dividend by 6% but pulled guidance.* earnings were short of expectations ($5.01 vs street $6.25) and management indicted it could lose money in the current quarter due to higher spending as it deals with the current pandemic.

Gilead Sciences beat expectations ($1.68 vs street $1.57) and announced plans to ramp up production of its Remdesivir coronavirus treatment following recent encouraging clinical trial results.

Amgen* posted EPS above expectations ($4.17 vs street $3.76).

Appliance producer Whirlpool beat expectations on earnings ($2.82 vs street $2.48), but management guided sales declines of more than 10% for this year.

*Shares of Apple, and Amgen are held in some portfolios managed by SIA Wealth Management.

New Video: Relative Strength Update – April 30, 2020

With Jeremy Fehr – Founder and CEO.

A new webinar video of Jeremy Fehr, founder of SIA Charts and SIA Wealth, discussing current trends in world markets, and recent changes to the SIA Charts Asset Class Rankings is now available.

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