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Tech losses lead US stocks lower with Nasdaq down over 3% as the tech wreck continues

Nov 19, 2018

 

US Markets End of Day Snapshot

  • US stocks closed broadly lower with the continued collapse in tech shares, led by the software sector, pushed the market sharply down.  Persistent trade war rhetoric puts a focus on possible slower global growth and significant supply chain disruptions
  • The biggest drop in the homebuilder sentmiment index since 2014 roiled the already choppy housing market, and hammered the broader market with fears of slower economic growth if the housing market weakens
  • The S&P 500 finished down 1.66%, Nasdaq Composite is down 3.03%, and Russell 2000 is down 2.03%
  • Utilities (+0.52%), Real Estate (+0.36%), and Financials (-0.03%) stocks were the top performers in the S&P 500 today
  • Telecom (-2.6%), Consumer Discretionary (-2.71%), and Tech (-3.79%) stocks were the worst performers in the S&P 500 today
  • Investor sentiment for US stocks finished negative with the advance/decline ratio for the S&P 500 closing at 0.41x
  • 85 stocks in the S&P 500 hit 4-week highs while 21 stocks reached 4-week lows
  • 16 stocks in the S&P 500 closed overbought while 16 stocks closed oversold according to the 16-day RSI Measure
  • 54 stocks in the Nasdaq Composite hit 4-week highs while 177 stocks reached 4-week lows
  • 160 stocks in the Nasdaq Composite closed overbought while 264 stocks closed oversold according to the 16-day RSI Measure
  • The VIX closed  down 1.96 points today to 20.10 after closing at 18.14 yesterday
     

Stocks Trending in the News

Click name for Q-Factor rating and financials data.
 

  • Amazon (AMZN) is planning to be your last minute savior at Thanksgiving this year, offering last minute delivery of groceries until 2pm.  Amazon is looking to gain an edge helping customers with last minute meal prep.  Amazon is experimenting with this service as it seeks to gain an edge.  It is trying build on its success in last minute delivery for Christmas last year.  Amazon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Cimarex Energy Co. (XEC) has announced the acquisition of Resolute Energy Corporation (REN) for roughly USD$811mm, combining two of the largest US oil producers. Of late, activist shareholders have pressured Resolute to sell itself. The acquisition is a cash-and-stock purchase. Cimarex CEO Tom Jorden said on a call with analysts that Resolute’s assets fit, “like a glove.” Cimarex is rated as “Unattractive’ in our US Large-Cap Global Top Stock Ideas. Resolute is rated as “Top Short” in our US SMID-Cap Global Top Stock Ideas. 
  • Charles Schwab (SCHW) was downgraded at UBS today.  UBS cut the stock to neutral from buy.  UBS also cut the price target of Charles Schwab to USD$51 from USD$57.  UBS comments that while Charles Schwab is growing faster than traditional asset managers UBS sees “compression on market sensitive revenues” going forward which contributed to the downgrade.  Charles Schwab is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • An article by the Financial Times questions whether USD$40bn of asset sales will be enough to sustain General Electric (GE), discussing a potential long-term bear case for the US-based conglomerate. The article cites a note published by JPMorgan analyst Stephen Tusa, which argues that a “real bear case” is longer-term, noting that General Electric has USD$100bn in liabilities and zero enterprise free cash flow despite cutting its quarterly dividend from USD$0.12/share to USD$0.01/share. In a CNBC interview, CEO Larry Culp said he has, “no higher priority right now,” than cutting GE’s debts by raising cash through the selling of assets. General Electric is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.
  • Colfax (CFX) shares are falling significantly after announcing an expansion into orthopedics through the USD$3.15bn acquisition of DJO Global Inc.  The acquisition will be financed by USD$100mm of cash from Colfax’s balance sheet with the remainder of funds being raised through a debt offering. The acquisition comes as the medical industry is observing an uptick in consolidation -- recently, major medical players Medtronic Plc and Abbott Labotories have made large acquisitions. Colfax is rated as “Attractive” in our US SMID-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas. 
  • An article by the Financial Times questions whether USD$40bn of asset sales will be enough to sustain General Electric (GE), discussing a potential long-term bear case for the US-based conglomerate. The article cites a note published by JPMorgan analyst Stephen Tusa, which argues that a “real bear case” is longer-term, noting that General Electric has USD$100bn in liabilities and zero enterprise free cash flow despite cutting its quarterly dividend from USD$0.12/share to USD$0.01/share. In a CNBC interview, CEO Larry Culp said he has, “no higher priority right now,” than cutting GE’s debts by raising cash through the selling of assets. General Electric is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.
  • Diploma PLC (LSE: DPLM) shares are trading higher after reporting FY2018 results that were ahead of analyst expectations. Diploma delivered FY2018 revenue that increased 7% from the prior year and operating profit that increased 9% from the prior year. Diploma also raised its FY2018 dividend by 11% to 25.5 pounds/share. Diploma is not rated in our Global Top Stock Ideas.
  • JD.com (JD) shares are lower in pre-market trading after posting lower-than-expected revenue for FY3Q2018 and recording its first q/q drop in annual active users since initially listing. JD.com reported FY3Q2018 revenue of 104.8bn yuan while analysts’ consensus called for 105.7bn yuan.  Annual active users, meanwhile, grew 15% y/y to 305.2mm, although it fell 2.74% q/q from 313.8mm in FY2Q2018. JD.com is rated “Top Short” in our China All-Cap Global Top Stock Ideas.
  • NextEra Energy (NEE) announced its intent to purchase an underwater transmission line that supplies roughly 40% of the San Francisco Bay area electric.  NextEra Energy will pay USD$1 billion for the line and it will immediately be accretive to earnings.  The transmission line is 53 miles long and continues NextEra’s strategy of focusing on regulated assets.  NextEra Energy is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • The CEO of Renault-Nissan-Mitsubishi, Carlos Ghosn, has been arrested in Japan for financial improprieties, according to the Japanese press.  Nissan (7201 JP) confirmed he had underreported income “over many years” and he was taken into custody overnight.  Renault (RNO FP) and Mitsubishi (7011 JP) have yet to make a statement on the matter.  Nissan also said it will remove him as chairman.  Nissan is rated is rated “Attractive” in our Japan Large-Cap Global Top Stock Ideas.    Mitsubishi is rated “Top Buy” in our Japan Large-Cap Global Top Stock Ideas.  Renault is rated “neutral” in our European Large-Cap Global Top Stock Ideas.
  • Novo Nordisk (NOVOB DC) was upgraded to overweight from neutral by JP Morgan today.  Novo Nordisk has its price target hiked to 340 kroner from 290 kroner.  Novo Nordisk is entering “a new period of sustainable growth” well into 2019 and is expected to drive outperformance, according to JP Morgan’s report.    Novo Nordisk is rated “neutral” in our European Large-Cap Global Top Stock Ideas.
  • NVIDIA Corporation (NVDA) shares plummeted on Friday and are slightly negative in pre-market trading after the chip-maker gave a disappointing forecast for its current quarter and faced issues with its cryptocurrency mining business segment. A Wall Street Journal article discusses that NVIDIA’s decline will take time to recover, citing analyst forecasts the project NVIDIA’s revenue to fall over the next three quarters. Two-thirds of analysts, however, maintain a “Buy” rating on Nvidia. NVIDIA is rated “Attractive’ in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • PG&E (PCG) shares are falling today on the disclosure that a second power line failed the morning that California’s deadliest fire began.  PG&E said a circuit failed in Concow at around 6:45am on November 8th in a filing today.  The California Department of Fire and Forest Protection has secured equipment at the site of the circuit failure as part of its investigation.  PG&E rallied last Friday after a regulator ruled out bankruptcy though regulators have mentioned the possible breakup of the company.  PG&E is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Salvatore Ferragamo (BIT: SFER) shares are trading lower after Bank of America Merrill Lynch downgraded the Italian shoemaker from “Neutral” to “Underperform”.  Bank of America Merrill Lynch cited a slowdown of demand in the luxury goods sector as reasoning for the downgrade. Salvatore Ferragamo is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas. 
  • Spectrum Brands (SPB) shares are sinking after announcing FY4Q2018 financials that disappointed investors. Spectrum Brands reports FY4Q2018 adjusted EPS of USD$0.79/share while analyst consensus called for USD$1.03/share. Spectrum’s FY4Q2018 gross margin of 36.8% also missed consensus expectations of 38.6%. Spectrum is rated as “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Short” in our US Consumer Staples Global Top Stock Ideas.  
  • TD Ameritrade (AMTD) was upgraded at UBS today.  UBS hiked the TD Ameritrade rating on the stock to buy from neutral.  TD Ameritrade saw its price target raised to USD$60 from USD$58.  UBS said it believes there is “misperceptions about risk” with TD Ameritrade and the present level would be an attractive entry point.  TD Ameritrade is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • The Swatch Group AG (SWX: UHR) shares are sliding after a team of analysts from Ashley Wallace cited “particularly weak” demand for watches in China. Ashley Wallace analysts went on to discuss that they have met with other watch retailers who have observed similar declines in demand, saying, “the risk is to the downside.” Last week, Mainfirst cut Swatch’s price target from 500 Swiss francs to 340 Swiss francs. Swatch is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. 
  • Vallourec (VK FP) shares have fallen to the lowest level in a year after 2 downgrades to the stock.  Vallourec was downgraded at SocGen to sell from hold with its price target lowered to 2.28 euros.  Kepler Cheuvreux cut Vallourec to hold from buy while cutting the price target to 3.40 euros.  The downgrades come in the wake of Vallourec reporting cash outflows in 3Q, igniting concern among investors.  Vallourec is rated “neutral” in our European SMID-Cap Global Top Stock Ideas.
  • Xiaomi (1810 HK) reported a 49% jump in 3Q revenue, above expectations, on the strength of sales in emerging markets.  Xiaomi reported revenue of 50.85 billion yuan compared with 50.4 billion expected.  Xiaomi net income of 2.48 billion yuan compared with 1.45 billion expected.  Xiaomi is rated “Neutral” in our China All-Cap Global Top Stock Ideas.
  • Yeti (YETI) has received 10 buy ratings on the first 10 initiations of coverage since it went public.  Yeti, however, is still trading below its IPO price of USD$18.  Analysts have generally been very positive, with Baird saying it could be a USD$1 billion company in a few years.  Yeti posted USD$3mn in revenue in 2008 and consensus revenue for 2020 is USD$961mn with most reports highlighting expected strong growth in the coming years.  Yeti is not rated in our Global Top Stock Ideas.
  • Zayo Group Holdings (ZAYO) shares are trading notably higher after reports broke that the network infrastructure company is attracting takeover interest. Reports detail that Zayo is attracting interest from groups of investors from notable funds managed by Blackstone Group LP and Stonepeak Partners LP. Zayo initially went public in 2014 and recently announced intentions to spinoff into two separate publicly traded companies: one focused on communications infrastructure and the other on enterprise services. Zayo is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.

 

US Treasuries

 

  • US 2-Year Treasury Notes are higher with yields down -1.05 basis points to 2.78%
  • US 5-Year Treasury Bonds are higher with yields down -0.85 basis points to 2.86%
  • US 10-Year Treasury Bonds are higher with yields down -0.18 basis points to 3.06%
  • The US Treasury 2s-5s Spread has widened 0.2 basis points to 0.08%
  • The US Treasury 2s-10s Spread has widened 0.87 basis points to 0.27%
  • US Treasury 5s-10s Spread has widened 0.67 basis points to 0.19%
     

Currencies

  • EUR€ is up 0.333% against the USD$ in after hours to 1.1453
  • GBP£ is little changed 0.14% against the USD$ in after hours to 1.2852
  • CHF is up 0.6% against the USD$ in after hours to 1.0062
  • JPY¥ is down 0.248% against the USD$ in after hours to 112.55

Commodities

  • WTI Crude is up 0.53% to USD$56.76/bbl with the Brent-WTI spread down USD$-0.76 to USD$9.41/bbl
  • Gold is little changed 0.05% to USD$1223.94/oz

 

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

S&P 500 Sector ETFs - End of Day

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

Russell 1000 Factor ETFs - End of Day

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

 

S&P 500 Movers

On Mobile/Tablet scroll to the right.

Outperformers Sector Price 1D % Chg Volume
Helmerich & Payne Inc Energy 64.36 2.82%                298,443
EQT Corp Energy 17.1 2.82%            1,810,390
Molson Coors Brewing Co Consumer Staples 66.39 2.54%                437,367
AmerisourceBergen Corp Health Care 90.82 2.33%                345,717
Monster Beverage Corp Consumer Staples 57.04 2.27%            1,474,128
 
Underformers Sector Price 1D % Chg Volume
NVIDIA Corp Information Technology 144.7 -12.00%          10,990,958
Align Technology Inc Health Care 204.43 -9.31%                519,388
salesforce.com Inc Information Technology 121.01 -8.71%            1,974,768
Adobe Systems Inc Information Technology 219.69 -8.04%            2,627,140
Advanced Micro Devices Inc Information Technology 19.11 -7.50%          18,683,525