Morning Call: Optimism a trade deal with Canada can be reached lifts U.S. stocks; Sep E-mini S&Ps up +0.06%; Oct WTI crude oil up +0.88% at a 1-week high.
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 ESU18 - S&P 500 E-Mini
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Overnight Markets and News

Sep E-mini S&Ps (ESU18 -0.03%) this morning are up +0.06% on strength in energy stocks and optimism a trade deal with Canada can be reached. Energy stocks rose with Oct WTI crude oil (CLV18 +0.81%) up +0.88% at a 1-week high on signs of tighter supplies after API data late Tuesday showed U.S. crude inventories fell -8.64 million bbl last week. Positive trade news also bolstered stocks after Reuters reported that Canada is ready to offer the U.S. limited access to Canada's dairy markets, one of the current sticking points in trade negotiations, in order to help forge a new NAFTA deal. European stocks are up +0.20%, although gains were limited after people with knowledge of the matter said the ECB will lower its Eurozone economic growth forecasts for this year at tomorrow's ECB meeting. Asian stocks settled mostly lower: Japan -0.27%, Hong Kong -0.29%, China -0.33%, Taiwan -0.28%, Australia -0.06%, Singapore +0.47%, South Korea -0.04%, India +0.81%. China's Shanghai Composite fell to a new 2-1/2 year low as trade concerns continue to weigh on Chinese stocks. Also, the government's push to cut leverage in the financial system has triggered higher default rates and tighter liquidity, which is seen is today's credit data that shows China Aug new yuan loans rose less than expected.

The dollar index (DXY00 -0.01%) is down -0.03%. EUR/USD (^EURUSD -0.19%) is down -0.19%. USD/JPY (^USDJPY -0.10%) is down -0.11%.

Dec 10-year T-note prices (ZNZ18 +0-030) are up +2.5 ticks.

Eurozone Jul industrial production fell -0.8% m/m, weaker than expectations of -0.5% m/m.

China Aug new yuan loans increased by +1.28 trillion yuan, weaker than expectations of +1.40 trillion yuan. Aug aggregate financing rose +1.52 trillion yuan, stronger than expectations of +1.30 trillion yuan.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous -0.1% to 343.5 with purchase sub-index up +0.6% to 231.4 and refi sub-index down -1.4% to 940.0), (2) Aug PPI final demand (expected +0.2% m/m and +3.2% y/y, Jul unch m/m and +3.3% y/y) and Aug PPI ex food & energy (expected +0.2% m/m and +2.7% y/y, Jul +0.1% m/m and +2.7% y/y), (3) St. Louis Fed President James Bullard (non-voter) speaks to the CFA Society of Chicago, (4) EIA weekly Petroleum Status Report, (5) Fed Governor Lael Brainard speaks at the Detroit Economic Club Luncheon about the economy and monetary policy, (6) Treasury auctions $23 billion 10-year T-notes, (7) Fed Beige Book.

Notable Russell 2000 earnings reports today include: none.

U.S. IPO's scheduled to price today: none.

Equity conferences during the remainder of this week: Credit Suisse Basic Materials Conference on Tue-Thu, Bank of America Merrill Lynch Global Health Care Conference on Wed-Thu, CL King & Associates Best Ideas Conference on Wed-Thu, Deutsche Bank Technology Conference on Wed-Thu, Goldman Sachs Communacopia Conference on Wed-Thu, Barclays Global Financial Services Conference on Wed-Fri, Morgan Stanley Global Health Care Conference on Wed-Fri, Morgan Stanley Laguna Conference on Wed-Fri, BMO Capital Markets Back to School Conference on Thu.

Market Comments

Sep S&P 500 E-minis (ESU18 -0.03%) this morning are up +1.75 points (+0.06%). Tuesday's closes: S&P 500 +0.37%, Dow Jones +0.44%, Nasdaq 100 +0.81%. The S&P 500 on Tuesday closed higher on the U.S. Jul JOLTS job openings report of +117,000 to a record 6.939 million, stronger than expectations of +13,000 to 6.675 million. Energy stocks rallied as crude oil prices surged +2.53%. Technology stocks were led higher by a +2.5% gain in Apple ahead of the unveiling of new iPhones on Wednesday. Stocks were undercut by continued trade tensions after the World Trade Organization said China asked permission to retaliate against the U.S. due to its failure to modify its anti-dumping methodologies.

Dec 10-year T-notes (ZNZ18 +0-030) this morning are up +2.5 ticks. Tuesday's closes: TYZ8 -10.5, FVZ8 -6.50. Dec 10-year T-notes on Tuesday tumbled to a 1-month low and closed lower on the rise in the U.S. Jul JOLTS job openings report to a new all-time high, which bolsters the outlook for two more Fed rate hikes this year. T-notes were also undercut by supply pressures with the Treasury auctioning $73 billion of T-notes and T-bonds this week.

The dollar index (DXY00 -0.01%) this morning is down -0.029 (-0.03%), EUR/USD (^EURUSD -0.19%) is -0.0022 (-0.19%), and USD/JPY (^USDJPY -0.10%) is -0.12 (-0.11%). Tuesday's closes: Dollar Index +0.099 (+0.10%), EUR/USD +0.0012 (+0.10%), USD/JPY +0.50 (+0.45%). The dollar index on Tuesday closed higher on the stronger-than-expected U.S. Jul JOLTS job openings report, which was hawkish for Fed policy. The dollar was also supported by the jump in the 10-year T-note yield to a 1-month high, which boosts the dollar's interest rate differentials.

Metals prices this morning are mixed with Dec gold (GCZ18 -0.24%) -1.7 (-0.14%), Dec silver (SIZ18 +0.05%) +0.017 (+0.12%) and Dec copper (HGZ18 +0.67%) +0.023 (+0.88%). Tuesday's closes: Dec gold +2.4 (+0.20%), Dec silver -0.028 (-0.20), Dec copper -0.65 (-0.25%). Metals on Tuesday settled mixed with Dec silver at a contract low. Metals prices were undercut by a stronger dollar and the rise in U.S. Jul JOLTS job openings to an all-time high, which bolsters the case for a Fed rate hike. Gold moved higher on an increase in inflation expectations after the 10-year T-note breakeven inflation rate rose to a 1-week high, which boosted demand for gold as a hedge against inflation.

Oct WTI crude oil prices (CLV18 +0.81%) this morning are up +61 cents (+0.88%) at a 1-week high and Oct gasoline (RBV18 +0.36%) is +0.74 (+0.37%) at a 1-week high. Tuesday's closes: Oct crude oil +1.71 (+2.53%), Oct gasoline +5.50 (+2.81%). Oct crude oil and gasoline on Tuesday closed higher on concern that East Coast fuel supplies could be disrupted from Hurricane Florence. Crude oil prices were also boosted by the increase in the crack spread to a 3-week high and by expectations for Wednesday's weekly EIA crude inventories to fall by -2.O million bbl.

Overnight U.S. Stock Movers

Chevron (CVX +0.47%) was upgraded to 'Buy' from 'Hold' at HSBC with a price target of $139.

Tiffany (TIF -0.76%) was upgraded to 'Outperform' from 'Market Perform' at Oppenheimer with a price target of $152.

Acuity Brands (AYI +2.10%) was downgraded to 'Sell' from 'Neutral' at Goldman Sachs with a price target of $126.

NXP Semiconductors NV (NXPI -4.39%) was downgraded to 'Sell' rom 'Hold' at Stifel.

Alcoa (AA -2.71%) was upgraded to 'Buy' from 'Neutral' at B Riley FBR with a price target of $50.

Intuit (INTU +0.58%) was rated a new 'Buy' at William O'Neill & Co Incorporated.

Gilead Sciences (GILD -0.39%) gained almost 3% in after-hours trading after it announced along with Galapagos NV that its Filgotinib drug met primary and all key secondary endpoints in a Phase 3 study of patients with Rheumatoid Arthritis.

WellCare Health Plans (WCG +0.52%) may initially open higher this morning when it was announced in after-hours trading Tuesday that it will replace XL Group in the S&P 500 prior to the open of trading on Monday, September 17.

First Republic Bank (FRC +0.63%) may initially open lower this morning after it announced in after-hours trading Tuesday that it will sell 2.0 million shares of its common stock in an underwritten public offering.

Cadence Bancorp (CADE -0.65%) lost 1% in after-hours trading after it announced the commencement of a registered public secondary offering of 12.1 million shares of its Class A common stock.

Farmer Brothers (FARM +1.25%) fell nearly 4% in after-hours trading after it reported Q4 net sales of $149.5 million, weaker than consensus of $152.7 million.

PGT Innovations (PGTI -0.57%) dropped 5% in after-hours trading after it filed a shelf registration to sell its common stock at any time in one or more offerings.

U.S. Silica Holdings (@symbolPercentChange(SLCA rose more than 3% in after-hours trading after it announced a supply accord with Pioneer Natural Resources where Pioneer will purchase an interest in U.S. Silica's sand reserves at its Lamesa, TX mine and U.S. Silica will process and supply sand to Pioneer for 15 years.

Annaly Capital Management (NLY -0.29%) slid more than 2% in after-hours trading after it announced that it intends to make a public offering of 75 million shares of its common stock.