Morning Call: U.S. and European stocks climb ahead of the start of the 2-day FOMC meeting; Dec E-mini S&Ps up +0.26%; Dec 10-year T-notes down -8.5 ticks to a 4-1/4 month nearest-futures low.
Related Stocks
 ESZ18 - S&P 500 E-Mini
SymLastChgPct
ESZ182,767.50s-4.75-0.17%
CLX1869.12s+0.47+0.68%
DXY0095.713s-0.187-0.19%
ZNZ18117-305s-0-060-0.16%
GCZ181,228.7s-1.4-0.11%
SIZ1814.650s+0.046+0.31%
HGZ182.7780s+0.0315+1.15%
RBX181.9139s+0.0228+1.21%
CXO147.54-0.41-0.28%
SAIC71.33+0.27+0.38%
SEND32.24-2.44-7.04%
PETQ33.54-0.14-0.42%
ARNA39.99-0.54-1.33%
TSRO41.75-1.23-2.86%
CNP28.12+0.36+1.30%
DCPH22.26-4.97-18.25%
BJ22.80-0.55-2.36%
CWEN19.78+0.16+0.82%
OPNT17.21+0.21+1.24%
SNDX7.29+0.06+0.83%
LGCY5.00-0.01-0.20%
ASNA3.63-0.27-6.92%

Overnight Markets and News

Dec E-mini S&Ps (ESZ18 +0.18%) this morning are up +0.26% and European stocks are up +0.33% as strength in energy stocks leads the overall market higher. Energy stocks were underpinned with Nov WTI crude oil (CLX18 +0.36%) up +0.71% on positive carry-over from Monday's rally in oil prices to a 2-1/2 month high after OPEC and non-OPEC producers stopped short of promising an increase in output after Sunday's meeting in Algiers. The upside in stocks was contained due to an increase in interest rates rose as the 10-year German bund yield climbed to a 4-month high of 0.543% and the 10-year T-note yield rose to a 4-1/4 month high of 3.107%. Interest rates are on the rise ahead of today's start to the 2-day FOMC meeting where the Fed is expected to increase the fed funds target range by 25 bp, along with carry-over from Monday's hawkish comments from ECB President Draghi who said he sees a "relatively vigorous" pickup in underlying inflation. Asian stocks settled mixed: Japan +0.29%, Hong Kong and South Korea closed for holidays, China -0.58%, Taiwan +0.06%, Australia -0.02%, Singapore +0.53%, India +0.96%. Chinese stocks retreated, and the yuan fell to a 1-month low against the dollar as the trade spat with the U.S. deepened after the U.S. went ahead with its 10% tariff on $200 billion of Chinese goods on Monday, which prompted Chine to cancel scheduled trade talks this week with the U.S. Japanese equities moved higher, led by a rally in exporter stocks, as USD/JPY climbed to a 2-month high, which improves the earnings prospects for exporters.

The dollar index (DXY00 -0.11%) is down -0.01%. EUR/USD (^EURUSD +0.26%) is up +0.10%. USD/JPY (^USDJPY -0.01%) is up +0.08% at a fresh 2-month high on divergent central bank policies with the Fed expected to raise interest rates Wednesday while the BOJ maintains its QE program.

Dec 10-year T-note prices (ZNZ18 -0-055) are down -8.5 ticks at a 4-1/4 month nearest-futures low.

The German Aug wholesale price index rose +0.3% m/m and +3.8% y/y with the +3.8% y/y gain the largest year-on-year increase in 16 months.

Japan Aug PPI services prices rose +1.3% y/y, stronger than expectations of +1.1% y/y and the fastest pace of increase in 3-1/3 years.

U.S. Stock Preview

Key U.S. news today includes: (1) Jul FHFA house price index (expected +0.3% m/m, Jun +0.2% m/m), (2) Jul S&P CoreLogic composite-20 home price index (expected +0.1% m/m and +6.2% y/y, Jun +0.11% m/m and +6.31% y/y), (3) FOMC begins 2-day policy meeting, (4) Sep Richmond Fed manufacturing survey (expected -3 to 21, Aug +4 to 24), (5) Sep Conference Board U.S. consumer confidence (expected -1.4 to 132.0, Aug +5.5 to 133.4), (6) Treasury auctions $17 billion of 2-year floating-rate notes and $38 billion of 5-year T-notes.

Notable Russell 2000 earnings reports today include: Nike (consensus $0.63), Cintas (1.80), FactSet Research (2.22), IHS Markit (0.55), Jubil (0.67).

U.S. IPO's scheduled to price today: CooTek Cayman (CTK), Capital Bancorp (CBNK), Entasis Therapeutics Holdings (ETTX), SVMK (SVMK), Arco Platform (ARCE).

Equity conferences during the remainder of this week: Denver Gold Forum on Mon-Tue, International Association for the Study of Lung Cancer Conference on Mon-Tue, Bank of America Merrill Lynch Real Estate Conference on Mon-Wed, Credit Suisse 4th Annual Oil & Gas “Non-Bus Tour” on Tue, Johnson Rice Energy Conference on Tue, Waters Informatics Seminar 2018 on Tue, Deutsche Bank Retail One-on-One Day on Tue, Capital Link Shipping, Marine Services & Offshore Forum on Tue, APEX Expo on Tue, Credit and Equities Emerging Markets Conference on Tue, Dreamforce Conference on Tue-Wed, Bernstein Strategic Decisions CEO Conference on Wed, MUFG Utilities Corporate Access Day on Wed, Bloomberg Global Business Forum on Wed, Barrington Research Fall Investment Conference on Thu, Contracting & Outsourcing Conference on Thu, Wells Fargo Securities Consumer Forum & Beauty Day on Thu.

Market Comments

Dec S&P 500 E-minis (ESZ18 +0.18%) this morning are up +7.50 points (+0.26%). Monday's closes: S&P 500 -0.35%, Dow Jones -0.68%, Nasdaq 100 +0.23%. The S&P 500 on Monday closed lower on an escalation of US/Chinese trade tensions after China over the weekend canceled tentative trade talks that were scheduled for this week and as reciprocal tariffs on $200 billion of Chinese goods and $60 billion of U.S. goods went into effect today. Stocks were also undercut by U.S. political turmoil after reports that Deputy Attorney General Rosenstein would either quit or get fired from his post, neither of which ended up happening. A rally in energy stocks lifted the S&P 500 from its worst levels after crude oil prices jumped +1.84% to a 2-1/2 month high.

Dec 10-year T-notes (ZNZ18 -0-055) this morning are down -8.5 ticks at a 4-1/4 month nearest-futures low. Monday's closes: TYZ8 -1.50, FVZ8 -0.50. Dec 10-year T-notes on Monday closed lower on negative carry-over from a slump in 10-year German bunds to a 3-1/4 month low and on increased inflation expectations after the 10-year T-note breakeven inflation expectations rate rose to a 3-1/2 month high.

The dollar index (DXY00 -0.11%) this morning is down -0.005 (-0.01%), EUR/USD (^EURUSD +0.26%) is up +0.0012 (+1.10%), and USD/JPY (^USDJPY -0.01%) is up +0.09 (+0.08%) at a new 2-month high. Monday's closes: Dollar Index -0.035 (-0.04%), EUR/USD -0.0001 (-0.01%), USD/JPY +0.21 (+0.19%). The dollar index on Monday closed lower on an escalation of trade US/Chinese tensions after China canceled trade talks, which could be negative for the world economy and dovish for Fed policy. There was also strength in EUR/USD which jumped to a 3-1/4 month high on hawkish comments from ECB President Draghi who said he sees a "relatively vigorous" pickup in underlying Eurozone inflation. The dollar recovered most of its losses after T-note yields moved higher, which improved the dollar's interest rate differentials.

Metals prices this morning are mixed with Dec gold (GCZ18 +0.12%) +0.1 (+0.01%), Dec silver (SIZ18 +0.31%) -0.021 (-0.15%) and Dec copper (HGZ18 +0.05%) -0.016 (-0.56%). Monday's closes: Dec gold +3.1 (+0.26%), Dec silver -0.018 (-0.13%), Dec copper -2.15 (-0.75%). Metals on Monday settled mixed. Metals prices were boosted by dollar weakness and by comments from ECB President Drahi that boosted demand for gold as an inflation hedge when he said he sees a "relatively vigorous" pickup in underlying Eurozone inflation. Copper prices were undercut by U.S./Chinese trade tensions after China canceled trade talks scheduled with the U.S. for this week.

Nov WTI crude oil prices (CLX18 +0.36%) this morning are up +51 cents (+0.71%) and Nov gasoline (RBX18 +0.34%) is +1.39 (+0.68%). Monday's closes: Nov crude oil +1.30 (+1.84%), Nov gasoline +4.00 (+2.00%). Nov crude oil and gasoline on Monday closed higher with Nov crude at a 2-1/2 month high. Crude oil prices were boosted by a weaker dollar and by data that showed OPEC+ compliance with crude oil production cuts rose to 129% in August from 109% in July. Crude oil prices were also supported by comments from Saudi Energy Minister Khalid Al-Falih that signaled OPEC may not boost its output when he said "Our plan is to meet demand and that the reason Saudi Arabia does not increase oil production more is because our customers are receiving all of the barrels they want."

Overnight U.S. Stock Movers

Concho Resurces (CXO +2.93%) was upgraded to 'Buy' from 'Hold' at SunTrust Robinson Humphrey with a price target of $170.

Saic (SAIC -0.73%) was upgraded to 'Buy' from 'Hold' at Jeffries with a price target of $97.

SendGrip (SEND -0.14%) was rated a new 'Strong Buy' at First Analysis with a price target of $45.

PetIQ (PETQ -1.27%) slid almost 4% in after-hours trading after it announced the commencement of an underwritten public offering of 2 million shares of its common stock, and that certain selling stockholders intend to offer 3 million shares of the company's common stock.

Arena Pharmaceuticals (ARNA -2.06%) climbed almost 3% in after-hours trading after a Phase 2a study showed 11 of 13 patients that used its Olorinab drug cut stomach pain for people with Crohn's disease.

Tesaro (TSRO -3.34%) was rated a new 'Outperform' at Leerink Partners LLC with a price target of $48.

CenterPoint Energy (CNP -0.75%) fell 2% in after-hours trading after it announced the commencement of an underwritten public offering of $1.5 billion worth of shares of its common stock in an underwritten public offering.

Deciphera Pharmaceuticals (DCPH +2.44%) slid 2% in after-hours trading after it was rated a new 'Underperform' at Leerink Partners LLC.

BJ's Wholesale Club Holdings (BJ -2.37%) lost more than 2% in after-hours trading after it announced the commencement of an underwritten public offering of 28 million shares of its common stock by certain selling stockholders.

Clearway Energy (CWEN -0.75%) dropped 4% in after-hours trading after it announced the commencement of an underwritten public offering of 3.92 million shares of its common stock.

Opiant Pharmaceuticals (OPNT -2.38%) fell 6% in after-hours trading after it announced that it intends to sell $10 million worth of shares of its common stock in an underwritten public offering.

Syndax Pharmaceuticals (SNDX +6.79%) tumbled 10% in after-hours trading after results from a Phase 2 trial of its Entinostat in combination with Keytruda missed its endpoint in treatment of patients with non-small cell lung cancer.

Legacy Reserves (LGCY -1.89%) fell nearly 5% in after-hours trading after certain selling stockholders intend to offer 1.52 million shares of the company's common stock.

Ascena Retail Group (ASNA -4.98%) rallied nearly 10% in after-hours trading after it reported Q4 adjusted EPS of 7 cents, well above consensus of 2 cents.