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Some of the stocks that may grab investor focus today are:
- Wall Street expects Michael Kors Holdings LtdKORS to report quarterly earnings at $0.7 per share on revenue of $1.05 billion before the opening bell. Michael Kors shares slipped 0.47 percent to $36.10 in after-hours trading.
- Analysts expect Hewlett Packard Enterprise CoHPE to post quarterly earnings at $0.36 per share on revenue of $9.63 billion after the closing bell. Hewlett Packard Enterprise shares rose 0.16 percent to $18.88 in after-hours trading.
- Danaos CorporationDAC reported stronger-than-expected results for its first quarter on Tuesday. Danaos shares surged 18.52 percent to $1.60 in the after-hours trading session.
- After the markets close, Palo Alto Networks IncPANW is estimated to post quarterly earnings at $0.55 per share on revenue of $412.02 million. Palo Alto shares declined 0.91 percent to close at $117.00 on Tuesday.
- Analysts are expecting Analog Devices, Inc. ADIto have earned $0.84 per share on revenue of $1.10 billion in the latest quarter. Analog Devices will release earnings before the markets open. Analog Devices shares rose 0.35 percent to $85.10 in after-hours trading.
- Quanex Building Products CorporationNX reported upbeat earnings for its second quarter on Tuesday. Quanex shares climbed 4.90 percent to $20.35 in the after-hours trading session.
- Before the opening bell, RBC Bearings IncorporatedROLL is projected to report quarterly earnings at $0.89 per share on revenue of $161.08 million. RBC Bearings shares slipped 0.15 percent to close at $99.45 on Tuesday.
The United States Oil Fund USO plunged 5.3 percent Thursday, bringing its year-to-date decline to 14.3 percent. USO, the most heavily traded oil exchange-traded product in the U.S., is now almost 20 percent below its 52-week high, putting it dangerously close to officially being in a bear market.
The Organization of Petroleum Exporting Countries is again confounding energy investors. On Thursday, the cartel and other major oil-producing countries extended a production cut that has done little to bolster crude prices.
“OPEC announced it would extend cuts in oil output by nine months to March 2018 on Thursday, after November’s landmark deal failed to clear a global supply overhang,” reported CNBC. “The move, which was then ratified by non-OPEC producers, was the base-case scenario for the market and means the 1.8 million barrel per day supply cut will roll over until the first-quarter of 2018.”
Year to date, USO has added more than $125 million in new assets, but there are some signs traders are growing tired of the fund from the long side as USO lost nearly $15 million in assets since the start of the current quarter.
Making the long oil trade all the more difficult is that high U.S. oil inventories mute the impact of output reductions by OPEC and other countries, indicating that oil bulls need to focus on other factors.
“Chinese demand in addition to U.S. production (including Trump’s export policy,) is probably more critical to oil price formation so is likely keeping oil range-bound, even if the possible range is wide,” said S&P Dow Jones Indices in a recent note. “According to index history, oil could reach between $25–$85 dollars before setting record moves. As OPEC cuts and if U.S. inventories decline to low levels, oil prices may increase, so China may use their own reserves or shop around rather than purchase oil at a higher price, capping the high end of the price range.”
Capitulation And Rebalancing
Some oil market observers may argue that capitulation is near and that the market has digested most of the readily available bad news, but there are other factors that need to come into play to help oil rebound.
“In this period of market rebalancing, it seems opportunities are hard to find but the good news possibly is there seems to be more stability from the lower volatility, higher correlation and tight term structures. If it is underpinned by the fundamentals of a recovering oil market, there could be more upside than downside,” said S&P Dow Jones.
U.S. stock futures traded lower in early pre-market trade. Data on durable goods orders for April and Gross Domestic Product for the first quarter will be released at 8:30 a.m. ET. The University of Michigan’s consumer sentiment index for May is schedule for release at 10:00 a.m. ET. U.S. markets will be closed Monday for the Memorial Day holiday.
Futures for the Dow Jones Industrial Average dropped 38 points to 21,025.00, while the Standard & Poor’s 500 index futures fell 4.75 points to 2,408.75. Futures for the Nasdaq 100 index declined 8.25 points to 5,773.75.
Oil prices traded lower as Brent crude futures fell 0.37 percent to trade at $51.27 per barrel, while US WTI crude futures dropped 0.27 percent to trade at $48.77 a barrel. The Baker Hughes North American rig count report for the latest week is schedule for release at 1:00 p.m. ET.
A Peek Into Global Markets
European markets were lower today, with the Spanish Ibex Index dropping 1.01 percent, STOXX Europe 600 Index falling 0.52 percent and German DAX 30 index dropping 0.52 percent. The UK’s FTSE index was trading lower by 0.02 percent, while French CAC 40 Index declined 0.77 percent.
In Asian markets, Japan’s Nikkei Stock Average fell 0.64 percent, Hong Kong’s Hang Seng Index rose 0.03 percent, China’s Shanghai Composite Index gained 0.07 percent and India’s BSE Sensex rose 0.90 percent.
Analysts at JP Morgan upgraded Ecolab Inc. ECL from Neutral to Overweight.
Ecolab shares rose 0.77 percent to close at $130.31 on Thursday.
- Big Lots, Inc. BIG reported better-than-expected earnings for its first quarter and raised its FY17 outlook.
- GameStop Corp. GME reported stronger-than-expected results for its first quarter. However, the company reaffirmed its FY17 earnings outlook.
- Costco Wholesale Corporation COST reported better-than-expected earnings for its third quarter.
- Ulta Beauty Inc ULTA reported upbeat results for its first quarter and raised its FY17 outlook.
Wednesday, May 24, 2017
Jay Pelosky, the founder of Pelosky Global Strategies, highlighted something about the stock market’s 2017 performance that may be flying under the radar: It isn’t as great as it seems.
Speaking as a guest on “Bloomberg Daybreak: Americas” on Monday, Pelosky explained that the developed markets excluding the U.S. have seen their stock markets gain 15 percent since the start of 2017, which is even short of the 18-percent return emerging markets have shown. Meanwhile, the S&P 500 index is up just 6 percent — at time of publication, the SPDR S&P 500 ETF Trust SPY was up 7.15 percent year to date.
“The real question is not why has the S&P 500 held up so well, the real question is: Is the rest of the world starting to take the leadership baton away from U.S. equities?” Pelosky asked. “And that’s a big deal because these moves tend to last for years — not quarters, not months.”
Pelosky isn’t necessary optimistic that U.S. markets can regain its leadership position as a home for stock market outperformance, especially under the current political climate, which he dubbed “Trump troubles.”
Pelosky believes the current “Trump troubles” will first lead to “policy inertia,” which then leads to weak growth. As such, earnings strength will shift from one of the best in years to questionable at best and ultimately present a poor risk-to-reward profile for U.S. equities.
Pelosky continued that a poor risk to reward profile for U.S. equities could further emphasize America’s status as a market laggard, not a market outperformer.
Terrorism struck yet again in the United Kingdom. Two months after a terrorist drove a car into pedestrians on the iconic Westminster Bridge in London, authorities are saying a suicide bomber blew himself up at the conclusion of an Ariana Grande concert in Manchester.
22 Dead, 59 Injured, 13 Missing
According to the UK-based Telegraph, children are among the 22 people killed and 59 injured. The publication noted that the first confirmed fatality was an 18-year old Ariana Grande “superfan” who met the pop star in 2015.
Another 13 people remained missing when Telegraph’s report was published.
British Prime Minister Theresa May confirmed the terrorist nature of the attack and said, “All acts of terrorism are cowardly attacks on innocent people, but this attack stands out for its appalling, sickening cowardice — deliberately targeting innocent defenceless children and young people who should have been enjoying one of the most memorable nights of their lives.”
Monday’s attack marks the country’s worst terror attack since multiple bombs across central London killed 52 people.
ISIS To Blame?
Authorities have yet to confirm the identify the suicide bomber and any possible links to terrorist groups, including ISIS. But what is known is that the terrorist was not acting alone as a 23-year old man was arrested in South Manchester in connection with the bombing. According to a Times report at 8:09 a.m. ET, ISIS has claimed responsibility for the atrocity.