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Correction or bear market? Retail sector hammered

Nov 20, 2018

 

 

US Markets End of Day Snapshot

  • US stocks fall again across the board with falling oil, weak tech outlook and soft retail results all driving risk-off sentiment
  • Retail sector hammered, XRT, (Retail ETF) down 3.32%, Target (TGT) down 11% on disappointing outlook and high inventories
  • Tech sector down 2.14% with Apple (AAPL) leading the way, -4.8% 
  • The S&P 500 finished down 1.82%, Nasdaq Composite is down 1.7%, and Russell 2000 is down 1.84%
  • The Nasdaq has fallen 14% from its August high
  • Utilities (-0.51%), Healthcare (-0.97%), and Telecom (-1.26%) stocks were the top performers in the S&P 500 today
  • Tech (-2.14%), Consumer Discretionary (-2.18%), and Energy (-3.29%) 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 0.17x
  • 71 stocks in the S&P 500 hit 4-week highs while 50 stocks reached 4-week lows
  • 23 stocks in the S&P 500 closed overbought while 31 stocks closed oversold according to the 16-day RSI Measure
  • 46 stocks in the Nasdaq Composite hit 4-week highs while 235 stocks reached 4-week lows
  • 146 stocks in the Nasdaq Composite closed overbought while 432 stocks closed oversold according to the 16-day RSI Measure
  • The VIX closed  up 2.38 points today to 22.48 after closing at 20.10 yesterday

Stocks Trending in the News

Click name for Q-Factor rating and financials data.
 

  • Amazon (AMZN) will bid for Fox Regional Sports Networks according to a report from CNBC today.  A bid from Amazon could value the asset up to USD$20 billion.   According to the report, the 22 networks have USD$3.6 billion of annual revenue.  These assets are parts of those that Disney (DIS) must sell as part of its USD$71.1 billion acquisition of most of 21st Century Fox (FOX).  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.  21st Century Fox is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.   Disney is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Apple (AAPL) stock continues to suffer as stories of production cuts from Apple suppliers keep swirling in the market.  Many suppliers are lowering outlooks in the wake of Apple’s cuts.  Apple itself has fallen almost 20% since October 3rd, almost entering bear market territory.  Analysts expect Apple focus on charging higher prices per phone to make up for slower growth expected going forward.  Apple is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Barnes & Nobles (BKS) reported FY2Q comparable sales declined 1.4% with total sales declining 2.5% to USD$771mn, in line with consensus.  This was the best sales performance for Barnes & Noble since the fourth quarter of fiscal 2016.  Barnes & Noble consolidated net loss for the quarter was USD$0.38 per share.  Barnes & Noble is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • BASF (BAS GR) is targeting a boost to profit of USD$2.3 billion as a goal of its reorganization.  BASF will simplify its structure to 6 units as it seeks to challenge smaller competitors.  BASF is targeting 3-5% growth in ebitda over the coming years as part of its plans.  BASF expects the profit boost from 2021 and beyond.  BASF is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Beacon Roofing (BECN) was downgraded by Evercore to in-line from outperform today.  Evercore downgraded Beacon Roofing citing its “disappointing 4Q and an underwhelming 2019 guide”.  Beacon Roofing guidance of low single digit organic sales decline is disappointing, Evercore highlights.  Evercore says it also expects investor concern with Beacon Roofing’s market share loss in the residential division.  Beacon Roofing is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
  • Best Buy (BBY) shares are slightly lower in pre-market trading despite boosting full-year adjusted EPS forecasts and beating analyst estimates for FY3Q2018. Best Buy generated adjusted EPS of USD$0.93/share in FY3Q2018 while analysts’ consensus called for USD$0.85/share. Best Buy also raised its full-year adjusted EPS guidance from between USD$4.95/share and USD$5.10/share to between USD$5.09/share and USD$5.19/share. Likely driving shares to trade lower is Best Buy’s FY3Q2018 international comparable sales growth of 3.7%, which missed consensus estimates of 3.9%. Best Buy is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Boston Scientific (BSX) agreed to buy its competitor BTG Corp (BTG LN) in an effort to expand its medical devices offerings.  Boston Scientific, the maker of stents for blood vessels, will be adding medical technology products with the acquisition of BTG Corp.  The deal will be financed with cash and debt as Boston Scientific offers a 50% premium over the 90-day average price of BTG.  Boston Scientific is rated “Neutral” in our US Large-Cap Global top Stock Ideas.  BTG Corp is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Campbell Soup (CPB) shares are higher in pre-market trading after reporting FY1Q2018 adjusted EPS that beat the highest analyst estimate. Campbell reported FY1Q2018 adjusted EPS of USD$0.79 while analyst estimates ranged between USD$0.65 and USD$0.76. Campbell also reported FY1Q2018 net sales of USD$2.69bn while analyst estimates ranged between USD$2.52bn and USD$2.76bn. Campbell is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Staples Global Top Stock Ideas.
  • Compass Group PLC (LSE: CPG) shares are trading higher after reporting full-year operating profit in-line with analyst consensus. Compass Group generated adjusted operating profit of 1.74bn pounds while analyst consensus called for 1.74bn pounds. Compass Group also reported FY2018 EPS that beat consensus by 1% while announcing a dividend of 0.377 pounds/share. Compass Group is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • CYBG Plc (LSE: CYBG) shares are sliding the most since its IPO after the firm increased its MIs-Sold Insurance Provisions by USD$193mm. CYBG’s statutory pretax loss in FY2018 of 164mm pounds largely missed Shore Capital’s estimate of 53mm pounds. CYBG is rated “Top Short” in our United Kingdom All-Cap Global Top Stock Ideas. 
  • Inogen (INGN) was upgraded to strong buy from buy at Needham.  Inogen’s price target of USD$280 was reiterated.  Needham said Inogen can deliver “meaningful upside to consensus” as it enters a new product cycle with its new G5 portable oxygen generator.  Inogen should see accelerating sales in 2019 with easy comps for sales.   Inogen is rated “Attractive” in our US Large-Cap Global top Stock Ideas
  • Intuit (INTU) reported FY2Q guidance for adjusted EPS that beat consensus.  Intuit sees FY2Q adjusted EPS of 85-88 cents while consensus is 79 cents.  Intuit sees FY2Q revenue of USD$1.47-1.49 billion.  Intuit sees full year EPS of USD$6.40-6.50.  Intuit reported FY1Q adjusted EPS of 29 cents, well above consensus of 11 cents.  Intuit is rated “Neutral” in our US Large-Cap Global top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Jacobs Engineering (JEC) shares are flat in pre-market trading after announcing financial results for FY4Q2018. Jacobs Engineering reports FY4Q2018 y/y revenue growth of 56% to USD$4.1bn while analyst consensus called for USD$4.3bn. Jacobs Engineering’s adjusted EPS, however, beat consensus analyst estimates of USD$1.239, reporting FY4Q2018 EPS of USD$1.310. Jacobs Engineering is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Staples Global Top Stock Ideas.
  • Julius Baer Group Ltd. (SWX: BAER) shares are trading notably lower after missing a key productivity target and the firm saw assets under management fall. In the most recent quarter, Julius Baer saw the firm’s capital ratio fall to 13% compared to 13.5% at the end of 2017. Assets under management for the Swiss wealth manager fell to 395bn francs from 400bn francs in the previous quarter. Julius Baer is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas. 
  • Kohl’s (KSS) shares are sliding despite reporting FY3Q2018 financials that showed promising growth. Kohl’s saw comparable same-store sales growth of 2.5% in FY3Q2018 while analysts expected just 1.5%. Kohl’s also raised the lower end of its full-year earnings guidance, forecasting full-year EPS of between USD$5.35/share and USD$5.55/share while analyst consensus mid-point EPS forecasts call for USD$5.49. Kohl’s is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • L Brands (LB) provided guidance that beat average consensus.  L Brands sees CY4Q EPS of USD$1.90-2.10 while it sees full year EPS of USD$2.60-2.80, up from USD$2.45-2.70.  L Brands sees direct and comparable sales growth of 4%.  L Brands is rated is rated “Neutral” in our US Large-Cap Global top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Lowes Corp (LOW) announced it will be expandingretail operations in Mexico.  Lowes also announced it will be exiting Alacrity Renovation Services and Iris Smart Home.  Lowes sees full year EPS of USD$4.08-4.24 with comparable sales growing ~2.5% and total sales growing 4%.  CY3Q adjusted EPS came at USD$1.04, above 98 cents consensus.  Lowes is rated is rated “Attractive” in our US Large-Cap Global top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Paycom (PAYC) announced a share buyback of USD$150mn.  This announcement brings the total buybacks approved by Paycom to USD$425mn since May 2016.  Paycom is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Spectris (LSE: SXS) shares are seeing their largest intraday gains in 6 years as analysts are praising the firm’s strength in Asia. On a constant currency basis, Spectris generated overall top-line sales growth of 8% driven by sales growth of 16% in the company’s Asia business. Jefferies analyst Andy Douglas, who maintains a “Buy” recommendation for Spectris, said the growth in the firm’s Asia business was “particularly stellar”. Spectris is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Target (TGT) reported 3Q comparable sales growth of 5.1%, missing the 5.2% consensus.  Target 3Q adjusted EPS of USD$1.09 came below USD$1.12 consensus.  Target 3Q sales came at USD$17.82 billion.  Target sees full year adjusted EPS of USD$5.30-5.50.  Target is rated is rated “Top Buy” in our US Large-Cap Global top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • TJX Companies (TJX) shares are trading lower as retail pessimism and an EPS miss are overshadowing its FY3Q2018 sales that beat the highest analyst estimate. TJX generated USD$0.83bn of sales in FY3Q2018 while analyst estimates ranged between USD$9.30bn and USD$9.69bn. Despite its sales beat, TJX’s adjusted EPS of USD$0.54/share fell short of analyst consensus which called for USD$0.61/share. Driving TJX’s lagged adjusted EPS in FY3Q2018 was its gross margin, which was 28.9% for the quarter while analysts expected 29.2%. TJX is rated as “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Wirecard AG (XTRA: WDI) shares are trading lower after reporting FY2019 guidance. Wirecard sees FY2019 EBITDA of between 740mm euros and 800mm euros while analyst consensus called for 766mm euros.  Wirecard is trading lower primarily due to the global rout in technology stocks. Meanwhile, HSBC analyst Antonin Baudry reiterated a “Buy” recommendation for Wirecard with a price target of 240 euros. Wirecard is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas.

 

US Treasuries

 

  • US 2-Year Treasury Notes are lower with yields up 1.23 basis points to 2.80%
  • US 5-Year Treasury Bonds are lower with yields up 1.36 basis points to 2.88%
  • 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 0.13 basis points to 0.08%
  • The US Treasury 2s-10s Spread has narrowed 1.41 basis points to 0.26%
  • US Treasury 5s-10s Spread has narrowed 1.54 basis points to 0.18%

Currencies

  • EUR€ is down 0.733% against the USD$ in after hours to 1.137
  • GBP£ is down 0.521% against the USD$ in after hours to 1.2787
  • CHF is little changed 0.139% against the USD$ in after hours to 1.005
  • JPY¥ is up 0.169% against the USD$ in after hours to 112.74

Commodities

  • WTI Crude is down -6.04% to USD$53.33/bbl with the Brent-WTI spread down USD$-1 to USD$8.32/bbl
  • Gold is little changed -0.18% to USD$1221.92/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
Agilent Technologies Inc Health Care 67.52 7.84%            1,326,887
Campbell Soup Co Consumer Staples 40.55 5.46%            1,176,142
Analog Devices Inc Information Technology 89.02 4.09%            2,454,768
Applied Materials Inc Information Technology 35.77 3.92%            6,711,000
NVIDIA Corp Information Technology 149.08 3.02%          11,559,482
 
Underformers Sector Price 1D % Chg Volume
L Brands Inc Consumer Discretionary 28.43 -17.71%            3,971,063
Jacobs Engineering Group Inc Industrials 65.05 -10.80%            1,117,067
Target Corp Consumer Discretionary 69.03 -10.52%            3,090,856
Ross Stores Inc Consumer Discretionary 82.64 -9.38%            2,217,083
Kohl's Corp Consumer Discretionary 64.45 -9.23%            1,806,821