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US stocks plunge as investor shed risk assets going into weekend

Dec 07, 2018

 

US Markets End of Day Snapshot

  • US stocks plunged today, closing sharply lower across the board, as investors fled risk assets going into the weekend with, trade and growth concerns weighing on sentiment
  • The CFO of Huawei, Meng Wanzhou, was charged today with conspiracy to defraud banks by Canada, and no bail was reccomended, with Canada citing her flight risk
  • The S&P 500 finished down 2.33%, Nasdaq Composite is down 3.05%, and Russell 2000 is down 1.98%
  • The S&P500 saw its worst week since march, losing 4.6% this week
  • OPEC+ agreed to a production cut of 1.2 million bpd, above the 1 million expected; WTI traded up 1.5% in afternoon trading
  • Utilities (+0.4%), Energy (-0.64%), and Consumer Staples (-1.29%) stocks were the top performers in the S&P 500 today
  • Industrials (-2.62%), Consumer Discretionary (-3.08%), and Tech (-3.53%) 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 0.1x
  • 22 stocks in the S&P 500 hit 4-week highs while 215 stocks reached 4-week lows
  • 14 stocks in the S&P 500 closed overbought while 11 stocks closed oversold according to the 16-day RSI Measure
  • 39 stocks in the Nasdaq Composite hit 4-week highs while 207 stocks reached 4-week lows
  • 85 stocks in the Nasdaq Composite closed overbought while 949 stocks closed oversold according to the 16-day RSI Measure
  • The VIX finished higher at 23.23 after closing at 20.98 yesterday
     

Stocks Trending in the News

Click name for Q-Factor rating and financials data.
 

  • Airbus (AIR FP) confirmed an order for 100 single-aisle aircraft from Avalon, the Chinese aircraft leasing company owned by China’s HNA Group.  The order is valued at USD$11.5 billion before any discounts.  The planes are due to be delivered starting in 2023.  Airbus is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Akorn Inc. (AKRX) shares are falling after the Delaware Supreme Court ruled that a cancelled merger with Fresenius SE (DB: FRE) will not have to be consummated. The Delaware Supreme Court found that, prior to the deal’s closing, Akorn suffered a rapid downturn in its business, which triggered Fresenius to cancel the deal. Akorn is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.  Fresenius is rated “Neutral” in our European Large-Cap Global Top Stock Ideas
  • Altria Group (MO) has announced the purchase of a 45% equity stake in Canadian cannabis company Cronos (TSX: CRON) for USD$1.8bn. The USD$1.8bn price tag for a 45% equity stake in Cronos represents a per share price of CAD$19.00. Altria will be allowed to nominate four directors to Cronos’ board while Altria maintains an option to increase its stake in Cronos to 55%. As part of the deal, Altria will make Cronos its exclusive partner for pursuing cannabis ventures across the globe. Shares of other cannabis companies like Aurora Cannabis (TSX: ACB) and Tilray (TLRY) are trading higher on the news. Altria is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Staples Global Top Stock Ideas. Cronos, Aurora Cannabis, and Tilray are not rated in our Global Top Stock Ideas.
  • Amer Sports Corporation (HLSE: AMEAS), the Finland-based maker of Wilson tennis rackets and Louisville Slugger baseball bats, is being acquired by a group of Chinese investors led by Anta Sports Products Ltd. (SEHK: 2020) for 4.6bn euros (USD$5.2bn). The 4.6bn euro offer equates to 40 euros/share and is an all cash transaction. Amr Sports is rated “Attractive” in our European SMID-Cap Global Top Stock Ideas. Anta Sports is rated “Attractive” in our China All-Cap Global Top Stock Ideas. 
  • Associated British Foods (LSE: ABF) shares are trading lower after reporting that the performance of its Primark clothing chain in November was negatively impacted by a generally tough retail market. Management cited, “very mild weather,” this Autumn as reasoning for the tough broader retail market. Associated British Foods is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas. 
  • Big Lots (BIG) provided guidance well below consensus and below the lowest estimate.  Big Lots see 4Q EPS USD$2.20-3.40 while present consensus is in a range of USD$2.87-2.96.  Big Lots sees comparable sales growth of 0-2%.  Full year EPS is expected to come USD$3.55-3.75.  Big Lots is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Boeing (BA) and Brazil’s Embraer (ERJ) had their deal halted by a federal judge in Sao Paulo.  The injunction was a surprise to both parties.  The judge said no deal can be finalized during the judicial recess in Brazil around the year-end holidays.  The ruling does not kill the deal between Boeing and Embraer, it just does not allow it to be concluded until the courts reopen in Brazil after the year-end recess.  Boeing is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.  Embraer is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.
  • Broadcom (AVGO) gave the market something it hasn’t seen much from a tech company-guidance above estimates.  Broadcom’s fiscal 2019 forecast of revenue is ~USD$24.5 billion, present consensus is for USD$22.45 billion.  Broadcom did not provide updated guidance for fiscal 2018.  Broadcom is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Chevron (CVX) announced it is increasing its spending budget by 9.3%, its first hike since 2014.  Chevron is hiking spending even in the face of falling oil prices.  Chevron will spend USD$20 billion this coming year as it doubles down on shale.  Chevron will increase its footprint in the Permian Basin in the coming year.  Chevron is the first of the supermajor oil producers to provide spending guidance.  Chevron is rated “Attractive” in our US Large-Cap Global Top Stock Ideas
  • Duke Energy (DUK) is warning customers of potential power outages this weekend as North Carolina is due to get hit with up to 16 inches of snow.   The western region of North Carolina normally gets 10 inches of snow per year and this weekend may see up to 16 inches.  Duke Energy is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas. 
  • Fresenius Medical Care (FME GR) issued its second profit warning in the last 2 months.  Fresenius said it will not meet its previously provided guidance until at least 2020.  Fresenius said it will increase investments in its domestic hospital division in Germany, where growth has been sluggish.  Fresenius said it is “cautious” on growth prospects for its Kabi unit, which it sees as one of its main growth drivers.  Fresenius is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Graco (GGG) announced today a new share repurchase plan of up to 18 million shares of outstanding common stock.  This is in addition to the 3.3 million shares remaining in its last share repurchase plan of April 2015.  The new plan is valid indefinitely.  Graco also declared a quarterly dividend of 16 cents per shares, above the 14.75 cents expected by the market.  Graco is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
  • Halkbank (IBSE: HALKB) shares are trading higher after a US attorney from the US Attorney’s Office for the Southern District of New York withdrew an application to appeal the length of a prison sentence for Turkish banker Mehmet Hakan Atilla. Atilla was charged with aiding a plot by Iran to avoid sanctions. Halkbank is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
  • Lululemon (LULU) posted strong same store sales growth but indicated it expects growth to slow.  Lululemon saw 3Q same store sales growth of 18%, well above 13.6 % consensus.  Lululemon said it expects growth to slow to high to middle single-digit growth.  Lululemon saw e=commerce sales rise 46%.  Lululemon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • Momo Inc. (MOMO) is being downgraded at Morgan Stanley from overweight to equal-weight. In a note to clients, Morgan Stanley cited that Momo faces slowed economic growth from its top customers and intense competition as reasons for the downgrade. Additionally, Morgan Stanley slashed its price target for Momo by more than half, from USD$61/share to USD$30/share. Momo is rated “Neutral” in our China All-Cap Global Top Stock Ideas.
  • Sino Biopharmaceutical’s (SEHK: 1177) is down nearly 30% over the last two days, its largest two-day slide since 2005, as investors are concerned that the Chinese government is driving generic drug prices lower through its centralized procurement program. Sino Biopharmaceutical is one of the most affected companies in the sector by this, with 31 of their drugs seeing an average price decrease of 45%. In the last two days, the MSCI China Health Care Index is down 16% while CSPC Pharmaceuticals (SEHK: 1093) is down nearly 20%. Sino Biopharmaceutical is rated “Top Buy” in our China All-Cap Global Top Stock Ideas. CSPC Pharmaceuticals is rated “Top Buy” in our China All-Cap Global Top Stock Ideas. 
  • Softbank (9984 JP), in the middle of the IPO of its telecom unit, had its cellular network go down overnight.  Softbank has previously said the entire USD$23 billion it is seeking to sell had already been sold.  Softbank is holding an emergency meeting with IPO buyers to explain what is happening with its network.  Softbank is rated “Neutral” in our Japan Large-Cap Global Top Stock Ideas. 
  • Tesla (TSLA) CEO Elon Musk said he may be willing to buy one of the 5 plants General Motors (GM) plans to idle next year.  The Tesla CEO made the statements in an interview with 60 Minutes that is to air this weekend.  General Motors previously announced it will idle 5 factories and lay off 14,700 workers in North America.  Telsa is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  General Motors is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Ulta Beauty (ULTA) shares are sliding after reporting FY3Q2018 financial results that contained unexpected margin pressures. In what was otherwise an in-line earnings call (according to analysts), Ulta’s weaker than expected margins overshadowed, causing its stock to drop. Ulta cited salon investments, drag from a new distribution center, and channel/category poduct mix as reasons for the margin shortfall. Ulta 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. 
  • United Natural Foods (UNFI) lost over 20% today after reporting results below consensus.  United Natural Foods provided “murky” guidance, according to a report from Jefferies today.  United Natural Foods saw its price target cut by Jefferies to USD$20 from USD$36.  Jefferies sees United Natural Foods’ challenges post-SuperValu merger as significant and cited this as a prime reason for the lower price target.   United Natural Foods is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Consumer Staples Global Top Stock Ideas.
  • Vail Resorts (MTN) shares are spiraling lower after reporting a deeper-than-expected loss in FY1Q2019. Vail Resorts observed a loss per share of USD$2.66 in FY1Q2019 while analysts expected a loss of USD$2.46/share. Driving Vail Resorts’ negative net income was its top-line sales of USD$220mm, which missed analysts’ consensus of USD$235mm. Vail Resorts is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.

 

US Treasuries

  • US 2-Year Treasury Notes are higher with yields down -4.51 basis points to 2.71%
  • US 5-Year Treasury Bonds are higher with yields down -5.58 basis points to 2.69%
  • US 10-Year Treasury Bonds are higher with yields down -4.33 basis points to 2.85%
  • The US Treasury 2s-5s Spread has narrowed 1.07 basis points to -0.02%
  • The US Treasury 2s-10s Spread has widened 0.18 basis points to 0.14%
  • US Treasury 5s-10s Spread has widened 1.25 basis points to 0.15%

Currencies

  • EUR€ is up 0.299% against the USD$ in after hours to 1.1408
  • GBP£ is down 0.266% against the USD$ in after hours to 1.2747
  • CHF is up 0.328% against the USD$ in after hours to 1.0106
  • JPY¥ is little changed 0% against the USD$ in after hours to 112.68

Commodities

  • WTI Crude is up 2.18% to USD$52.61/bbl with the Brent-WTI spread down USD$-0.41 to USD$7.66/bbl
  • Gold is up 0.83% to USD$1248.1/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
PPL Corp Utilities 30.7 2.81%            1,600,491
Newmont Mining Corp Materials 32.3 2.24%            1,982,322
Schlumberger Ltd Energy 45.9 1.70%            3,039,064
Edison International Utilities 54.7 1.69%                569,232
Everest Re Group Ltd Financials 220 1.52%                133,738
 
Underformers Sector Price 1D % Chg Volume
Ulta Beauty Inc Consumer Discretionary 300 -13.13%            1,278,990
Cooper Cos Inc/The Health Care 277 -12.28%                249,978
American Airlines Group Inc Industrials 38.4 -9.12%            4,065,790
Advanced Micro Devices Inc Information Technology 21.4 -8.64%          21,381,971
Hewlett Packard Enterprise Co Information Technology 15.1 -8.18%            4,707,342