Stock Futures Up on China Trade Exemptions

Japan’s Nikkei was up almost 1.1%, hitting a four-month high on big gains for Yahoo Japan and SoftBank Group, while Hong Kong’s Hang Seng …

Dow Jones Industrial Average (DJI) futures are signaling a higher start, building on the momentum that sent the blue-chip index to its longest winning streak in 16 months yesterday. Upbeat trade headlines continue to drive the positive price action, with China’s Commerce Ministry saying earlier it will add pork and soybeans to a list of U.S. products exempt from additional tariffs. Wall Street is also digesting this morning’s retail sales data, which rose a more-than-expected 0.4% in August on robust auto sales. Futures on the S&P 500 Index (SPX) and Nasdaq-100 Index (NDX) are up, too, with stocks poised to close in on new record highs.

Continue reading for more on today’s market, including:

  • Caterpillar stock flashes warning signs.
  • RH call traders won big on a pre-earnings rally.
  • Plus, a bouncing drug stock; Etsy gets a big upgrade; and Baker Hughes is indicted.

us premarket trading on sept 13

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw 1.10 million call contracts traded on Thursday, compared to 610,116 put contracts. The single-session equity put/call ratio rose to 0.55, while the 21-day moving average remained at 0.67.
  2. Catalyst Pharmaceuticals Inc (NASDAQ:CPRX) withdrew its plan for an eight-million share offering, representing around 8% of the drugmaker’s float, saying the “current market price of the common stock is not in the best interest of the company and its stockholders.” Initial news of the offering had CPRX stock settling at $6.13 on Thursday — down 20% from Wednesday’s record high of $7.67 — but the shares are up 10.6% ahead of the bell today.
  3. Wedbush upgraded Etsy Inc (NASDAQ:ETSY) to “outperform” from “neutral,” with the brokerage firm waxing optimistic over the online marketplace’s pre-holiday season launches of Etsy Ads and free shipping. ETSY stock is 3.8% higher in electronic trading, set to open around the $57 per-share mark — just below its Aug. 2 bear gap.
  4. Baker Hughes A GE Co (NYSE:BHGE) was indicted by a grand jury in Alaska on allegations the energy firm exposed workers to toxic chemicals, though the company denied the charges. BHGE stock closed last night at $22.64, off 8.5% since a recent rejection at its 200-day moving average.
  5. Import and export prices, consumer sentiment, and business inventories are due. This busy batch of economic data comes ahead of next week’s Fed meeting.

buzz stocks sept 13

U.K. Stocks Struggle as Pound Strengthens

The stimulus deal in Europe and easing tensions between the U.S. and China sent stocks in Asia higher today. Japan’s Nikkei was up almost 1.1%, hitting a four-month high on big gains for Yahoo Japan and SoftBank Group, while Hong Kong’s Hang Seng nearly eked out a 1% win on a boost from life insurance issue AIA. China’s Shanghai Composite and South Korea’s Kospi were both closed for holiday.

Stocks in Europe are mostly higher at midday, as bank stocks advance following yesterday’s European Central Bank (ECB) stimulus announcement. The French CAC 40 is up 0.3%, while the German DAX has added 0.6%. London’s FTSE 100 is hovering right below breakeven, however, off 0.03% as blue-chip stocks falter in the face of a strengthening pound.

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Wall Street Edges Higher Wednesday

On the other hand, Lee Ainslie (Trades, Portfolio) and Jim Simons (Trades, Portfolio)’ Renaissance Technologies sold out of the stock. Gainers.

U.S. stocks were in the green on Wednesday after China announced it will be suspending additional tariffs on some U.S. products. The Dow Jones Industrial Average gained 0.50% to 27,045, the S&P 500 Index rose 0.49% to 2,993 and the Nasdaq Composite Index swelled 0.81% to 8,149.

Shares of Dave & Buster’s Entertainment Inc. (NASDAQ:PLAY) fell more than 5% after announcing second-quarter results. The company posted earnings of 90 cents per share on revenue of $344.59 million. The company beat earnings estimates by 6 cents, but revenue was in line with expectations.

“We continue to deliver strong revenue and earnings per share growth – including record second quarter sales, Ebitda and EPS – while investing for the future and returning substantial capital to shareholders through dividends and share repurchases,” CEO Brian Jenkins said.

During the quarter, comparable store sales declined 1.8%, compared a decrease of 2.4% in the prior-year quarter, due to a 2% decrease in walk-in sales. Further, operating income rose 0.6% from the year-ago quarter to $46.2 million. As a percentage of total revenue, it decreased 100 basis points to 13.4%.

The earnings before interest, taxes, depreciation and amortization inched up 5.3% to $79 million from $75 million last year. As a percentage of total revenue, Ebitda decreased 60 basis points to 22.9%. The adjusted Ebitda increased 4.4% to $86 million. As a percentage of total revenue, it decreased 80 basis points to 25%.

Moreover, during the quarter, the company repurchased 3.4 million shares for $137 million.

Looking ahead to full fiscal 2019, the company expects total revenue to be between $1.338 billion and $1.359 billion and net income to range from $91 million to $100 million.

During the quarter ended June 30, Paul Tudor Jones (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio) established new positions in the stock. Steven Cohen (Trades, Portfolio) boosted his holding by 275% to 117,896 shares. On the other hand, Lee Ainslie (Trades, Portfolio) and Jim Simons (Trades, Portfolio)’ Renaissance Technologies sold out of the stock.

Gainers

  • CenturyLink Inc. (NYSE:CTL) + 4.7%

  • TripAdvisor Inc. (NASDAQ:TRIP) + 4.4%

  • Waters Corp. (NYSE:WAT) + 3.3%

  • Western Digital Corp. (NASDAQ:WDC) +2.6%

  • Newmont Goldcorp Corp. (NYSE:NEM) +1.9%

Losers

  • DaVita Inc. (NYSE:DVA) -3.6%

  • Take-Two Interactive Software Inc. (NASDAQ:TTWO) -2.9%

  • Cigna Corp. (NYSE:CI) -2.2%

  • Monster Beverage Corp. (NASDAQ:MNST) -1.9%

  • Xerox Holdings Corp. (NYSE:XRX) -1.2%

Global markets

The main European stock markets traded in the green. The U.K.’s FTSE 100 advanced 0.96%, France’s CAC 40 rose 0.44%, Germany’s Dax swelled 0.74% and Spain’s IBEX 35 dipped 0.21%.

In Asia, Japan’s Nikkei 225 gained 0.96%, India’s BSE Sensex rose 0.34%, Hong Kong’s Hang Seng climbed 1.78% and China’s Shanghai Composite slid 0.41%.

Disclosure:The author holds no positions in any stocks mentioned.

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Wall Street Posts Losses on Tuesday

… Portfolio) reduced his holding by 17% to 57,961 shares and Jim Simons (Trades, Portfolio)’ Renaissance Technologies curbed its position by 20% to …

U.S. stocks were in the red on Tuesday, with electronic tech and commercial services stocks leading the decline. The Dow Jones Industrial Average fell 0.13% to 26,800, the S&P 500 index dipped 0.39% to 2,966 and the Nasdaq Composite Index slid 0.50% to 8,046.

Shares of Casey’s General Stores Inc. (NASDAQ:CASY) gained about 1.5% after announcing firstquarter results. The company posted earnings of $2.31 per share on $2.63 billion in revenue. The company beat earnings estimates by 25 cents and revenue expectations by $40 million.

“Quarterly results were positively impacted by our fuel price optimization initiative, store growth and a continued focus on controlling operating expenses,” President and CEO Darren Rebelez said.

For the quarter, the gross profit was $565.7 million, up 840 basis points year over year, and the gross margin expanded 130 points to 21.5%. Operating expenses increased 5.7% as a result of 76 more stores opened from the prior-year quarter.

By segment, grocery and other merchandise sales grew 6.7% to $687.9 million and same-store sales rose 3.2%. In the prepared food and fountain division, sales rose 5.3% to $295.9 million, while same-store sales jumped 1.6%.

Looking ahead, the company maintained its fiscal 2020 guidance.

During the quarter ended June 30, Mario Gabelli (Trades, Portfolio) reduced his holding by 17% to 57,961 shares and Jim Simons (Trades, Portfolio)’ Renaissance Technologies curbed its position by 20% to 24,472 shares. Robert Olstein (Trades, Portfolio) sold out of the stock and Joel Greenblatt (Trades, Portfolio) boosted his position by 53% to 11,561 shares.

Gainers

  • Nektar Therapeutics Inc. (NASDAQ:NKTR) +10.5%
  • LKQ Corp. (LKQ) +4.9%
  • Sealed Air Corp. (NYSE:SEE) +5.5%
  • Mosaic Co. (NYSE:MOS) +6.2%
  • Albemarle Corp. (NYSE:ALB) +4.5%

Losers

  • Chipotle Mexican Grill Inc. (NYSE:CMG) -7.0%
  • SBA Communications Corp. (NASDAQ:SBAC) -5.0%
  • Starbucks Corp. (NASDAQ:SBUX) -4.9%
  • Aon PLC (NYSE:AON) -3.9%

Global markets

The main European stock markets traded in the green. The U.K.’s FTSE 100 advanced 0.44%, France’s CAC 40 swelled 0.08%, Germany’s Dax rose 0.35% and Spain’s IBEX 35 advanced 0.75%.

In Asia, Japan’s Nikkei 225 gained 0.35%, India’s BSE Sensex climbed 0.44%, Hong Kong’s Hang Seng rose 0.01% and China’s Shanghai Composite slid 0.12%.

Disclosure:The author holds no positions in any stocks mentioned.

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This article first appeared on GuruFocus.

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SoftBank and WeWork discuss shelving coworking firm’s IPO

SoftBank Group and its affiliates hold about 29 per cent of WeWork stock, Bloomberg reported last week, which is even more than co-founder and chief …

Executives of WeWork and its largest investor, SoftBank, are discussing whether to shelve plans for an initial public offering of the money-losing co-working company, said people with knowledge of the talks.

SoftBank is pressing WeWork to postpone the stock offering after investors expressed serious concerns about the business and its corporate governance, said the people, who asked not to be identified because the discussions are private.

WeWork, which owns or leases office space and then rents it to companies typically needing short-term space, had planned to hold a roadshow to promote the offering as soon as this week, an executive told analysts last week. Representatives for SoftBank and We Co, the parent of WeWork, declined to comment.

In the space of a few months, WeWork has gone from one of America’s most valuable unicorn startups to a punchline in investment circles. Early this year, Goldman Sachs Group pitched WeWork as a $65 billion business.

But when the company filed a preliminary prospectus last month it revealed the company had racked up billions in losses, was burning cash and had an arcane corporate structure riddled with potential conflicts. In just the first six months of 2019, WeWork lost $690 million, bringing its total losses to almost $3bn in the past three years, the filing showed. Now WeWork advisers are estimating the company is worth less than a third of Goldman’s figure.

SoftBank Group and its affiliates hold about 29 per cent of WeWork stock, Bloomberg reported last week, which is even more than co-founder and chief executive Adam Neumann, though he maintains effective voting control through a three-class share structure.

SoftBank has invested a total of about $10.65bn into the New York-based company, but that has been at a range of valuations. SoftBank’s Vision Fund invested just once at about a $20bn valuation in early 2017, while SoftBank Group kept pouring money into WeWork, most recently in January at a $47bn valuation.

An IPO at a $15bn valuation would result in a $4bn writedown for the Japanese conglomerate and a $5bn loss from the latest reported fair value for the Vision Fund, while a debut at $25bn isn’t likely to result in losses, Chris Lane, an analyst at Sanford C. Bernstein & Co wrote in a report. Lane estimates that WeWork is worth about $24bn, with SoftBank holding a roughly 31 per cent stake.

“If correct this would not imply significant losses on the investment made to date, but would still be a blow to an investment team which is targeting a 40 per cent annual IRR,” Lane wrote. “With investor concern regarding the mid-to-near term outlook for the global economy the timing for this IPO isn’t ideal.”

WeWork needs $7.2bn over the next four years to see the company through its cashflow negative period, but the total cash needs swell to $9.8bn if there is a recession in 2022, Lane wrote. Despite the investor concerns, Bernstein remains upbeat on WeWork’s long-term growth prospects and sees it as “fundamentally an attractive business.”

SoftBank’s shares rose as much as 4.3 per cent in Tokyo on Tuesday, while the Nikkei 225 stock average was little changed. The Financial Times reported on SoftBank’s position earlier Monday.

Neumann has been the subject of scrutiny from investors over disclosures in WeWork’s IPO paperwork. The company paid Neumann rent and spent $5.9m to acquire a trademark he owned, as it lent him money.

In recent months, WeWork has sought to address some of its governance issues.

Updated: September 10, 2019 06:32 PM

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SoftBank and WeWork discuss shelving coworking firm’s IPO

SoftBank Group and its affiliates hold about 29 per cent of WeWork stock, Bloomberg reported last week, which is even more than co-founder and chief …

Executives of WeWork and its largest investor, SoftBank, are discussing whether to shelve plans for an initial public offering of the money-losing co-working company, said people with knowledge of the talks.

SoftBank is pressing WeWork to postpone the stock offering after investors expressed serious concerns about the business and its corporate governance, said the people, who asked not to be identified because the discussions are private.

WeWork, which owns or leases office space and then rents it to companies typically needing short-term space, had planned to hold a roadshow to promote the offering as soon as this week, an executive told analysts last week. Representatives for SoftBank and We Co, the parent of WeWork, declined to comment.

In the space of a few months, WeWork has gone from one of America’s most valuable unicorn startups to a punchline in investment circles. Early this year, Goldman Sachs Group pitched WeWork as a $65 billion business.

But when the company filed a preliminary prospectus last month it revealed the company had racked up billions in losses, was burning cash and had an arcane corporate structure riddled with potential conflicts. In just the first six months of 2019, WeWork lost $690 million, bringing its total losses to almost $3bn in the past three years, the filing showed. Now WeWork advisers are estimating the company is worth less than a third of Goldman’s figure.

SoftBank Group and its affiliates hold about 29 per cent of WeWork stock, Bloomberg reported last week, which is even more than co-founder and chief executive Adam Neumann, though he maintains effective voting control through a three-class share structure.

SoftBank has invested a total of about $10.65bn into the New York-based company, but that has been at a range of valuations. SoftBank’s Vision Fund invested just once at about a $20bn valuation in early 2017, while SoftBank Group kept pouring money into WeWork, most recently in January at a $47bn valuation.

An IPO at a $15bn valuation would result in a $4bn writedown for the Japanese conglomerate and a $5bn loss from the latest reported fair value for the Vision Fund, while a debut at $25bn isn’t likely to result in losses, Chris Lane, an analyst at Sanford C. Bernstein & Co wrote in a report. Lane estimates that WeWork is worth about $24bn, with SoftBank holding a roughly 31 per cent stake.

“If correct this would not imply significant losses on the investment made to date, but would still be a blow to an investment team which is targeting a 40 per cent annual IRR,” Lane wrote. “With investor concern regarding the mid-to-near term outlook for the global economy the timing for this IPO isn’t ideal.”

WeWork needs $7.2bn over the next four years to see the company through its cashflow negative period, but the total cash needs swell to $9.8bn if there is a recession in 2022, Lane wrote. Despite the investor concerns, Bernstein remains upbeat on WeWork’s long-term growth prospects and sees it as “fundamentally an attractive business.”

SoftBank’s shares rose as much as 4.3 per cent in Tokyo on Tuesday, while the Nikkei 225 stock average was little changed. The Financial Times reported on SoftBank’s position earlier Monday.

Neumann has been the subject of scrutiny from investors over disclosures in WeWork’s IPO paperwork. The company paid Neumann rent and spent $5.9m to acquire a trademark he owned, as it lent him money.

In recent months, WeWork has sought to address some of its governance issues.

Updated: September 10, 2019 06:32 PM

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