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US stocks rise though close off session highs, positive trade sentiment continues

Dec 12, 2018

 

US Markets End of Day Snapshot

  • US stocks surged early in the day, only to give back half of the gains by the close, with investors selling into the rally again; this is the fourth day in a row market strength has attracted sellers to a rally
  • While President Trump said that he would intervene in the Huawei CFO case to get a trade deal with China, China continues to detain a Canadian ex-diplomat without providing much detail as to why
  • WSJ is reporting China is drafting a replacement for its "Made in China 2025" plan, in an effort to make access for US companies easier
  • UK Prime Minister Theresa May defeated a challenge to her leadership in a confidence vote, winning 200 to 117
  • Italy is proposing a 2% budget deficit to the EU, bringing it within EU budget rules, according to press reports today
  • 2 German leading economic institutes note the German economic boom has passed, but forward growth will be moderate with low risk of recession
  • WTI fell 0.91% to USD$51.17 as reports emerge of deep discord among OPEC members ahead of planned cuts
  • The S&P 500 finished up 0.54%, Nasdaq Composite up 0.95%, and Russell 2000 up 1.05%
  • Consumer Discretionary (+1.05%), Materials (+0.95%), and Healthcare (+0.86%) stocks were the top performers in the S&P 500 today
  • Consumer Staples (-0.16%), Utilities (-0.58%), and Real Estate (-1.89%) stocks were the worst performers in the S&P 500 today
  • Investor sentiment for US stocks finished positive with the advance/decline ratio for the S&P 500 closing at 2.65x
  • 32 stocks in the S&P 500 hit 4-week highs while 55 stocks reached 4-week lows
  • 12 stocks in the S&P 500 closed overbought while 57 stocks closed oversold according to the 16-day RSI Measure
  • 32 stocks in the Nasdaq Composite hit 4-week highs while 315 stocks reached 4-week lows
  • 114 stocks in the Nasdaq Composite closed overbought while 573 stocks closed oversold according to the 16-day RSI Measure
  • The VIX finished little changed at 21.52 after closing at 21.76 yesterday
     

Stocks Trending in the News

Click name for Q-Factor rating and financials data.
 

  • ABB Ltd. (SWX: ABBN) and Hitachi Ltd. (TSE: 6501) are reportedly in talks to partner on a deal relating to power grids after ABB reportedly considered putting its power grid division on the block earlier in 2018. According to a report by Nikkei, Hitachi is preparing to purchase the business from ABB for up to 800bn yen (USD$7bn). Upon completion of the deal, ABB will spin-off its power grid business into a separate company, after which Hitachi will purchase a 50% stake in the spun-off company before turning into a subsidiary. ABB is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. Hitachi is rated “Top Buy” in our Japan Large-Cap Global Top Stock Ideas.
  • American Airlines (AAL) is being sued by its retirees over the way it calculates pensions.  The lawsuit claims American Airlines is calculating spousal benefits using mortality tables that have not been updated in 30 years.  The lawsuit claims America Airlines’ practices are “inherently unfair”.  American Airlines is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.
  • Apple (AAPL) is considering moving iPhone production out of China is tariffs become onerous, according to a Bloomberg story today.  Apple, for now, will maintain its current setup but will reassess its situation if tariffs rise more than 10%.  Up until now, iPhones have not been targeted for tariffs, but Apple will continue monitoring developments.  Apple is rated “Top Buy” in our US Large-Cap and US Information Technology Global Top Stock Ideas.
  • Boeing (BA) will see its USD$22 billion order for jets canceled by Lion Air in the wake of its 737 Max crash.  Lion Air’s owner is angry at Boeing and said he feels betrayed in an interview with Bloomberg.  The order has not been formally canceled but he is preparing to do so. Boeing is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • British American Tobacco (LSE: BATS) released a trading update that maintains its financials guidance for the second half of its fiscal year. In the trading update, British American Tobacco said that it expects to surpass its, “high single-figure constant-currency adjusted diluted EPS growth target,” for the year. British American Tobacco also highlighted strong growth in its combustibles and tobacco heating products, vapor, and oral business segments in the trading update. British American Tobacco is rated “Attractive” in our United Kingdom All-Cap Global Top Stock Ideas. 
  • Commerzbank AG (DB: CBK) shares are trading higher on reports that the German government is ramping up efforts to merge Commerzbank and Deutsche Bank AG (DB: DBK). Discussions have reportedly been had between Finance Minister Olaf Scholz and Deutsche Bank CEO Christian Sewing. The alleged talks involve changing existing laws and regulation to make the merger less costly. Commerzbank is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas. Deutsche Bank is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Dave & Buster’s (PLAY) was reiterated as outperform today at Piper Jaffray in the wake if its disappointing same store sales report.  Dave & Buster’s saw same store sales fall 1.3%, more than the 0.7% fall that was consensus.  Dave & Buster’s share fell over 7% today.  Dave & Buster’s is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Distribuidora Internacional de Alimentacion SA (BME: DIA) shares are soaring on news that it is mulling a capital increase after entering a stand-by underwriting commitment with Morgan Stanley for 600mm euros (USD$680mm). The underwriting commitment is more than double DIA’s current capitalization, which has plunged to just 260mm euros amid its turbulent year. DIA is rated “Top Short” in our European SMID-Cap Global Top Stock Ideas. 
  • Facebook Inc. (FB) evacuated its employees from buildings in its Silicon Valley headquarters following a bomb threat late yesterday afternoon. Genevieve Grinda, a Facebook spokesperson, said on the matter, “We are working closely with local authorities to investigate this threat and further monitor the situation.” Facebook is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas. 
  • Inditex (BME: ITX) reported results that were below expectations as the company resisted price cuts to drive sales, as has been the case with many other players.  Inditex saw same store sales rise 3% which came below its target range for sales growth.  Inditex did not cut prices as it is confident in its coming collection, expecting it to sell well and rekindle sales growth.  Inditex is rated “Attractive” in our European Large-Cap Global Top Stock Ideas. 
  • John Woods Group (LSE: WG) is reporting that it expects to deliver at least 10% full-year revenue growth after observing above-average growth in the first half of its fiscal year. For the full-year, John Woods Group forecasted revenue between USD$10.9bn and USD$11.1bn while projecting ebitda to come between USD$620mm and USD$630mm. The company cited increased cost synergies, successful projects, and wider market recovery as reasons for its strong performance.  John Woods Group is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas. 
  • Lowes (LOW) announced a new USD$10 billion share buyback plan.  The new plan from Lowes is in addition to its present plan which has USD$4.5 billion still to repurchase.  Lowes sees 2019 same store sales growth of around 2% with total sales growing about 3%.  Lowes’full year EPS is expected to be USD$6-6.10.  Lowes is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Marshalls (LSE MSLH) recent acquisition of Edenhall makes both financial and strategic sense, according to a note from Canaccord Genuity.  The notes highlight an expectation that consensus estimates will rise in the wake of the acquisition as it exposes the company to the new housing market.  Marshalls is not rated in our Global Top Stock Ideas.
  • Pandora A/S (CPSE: PNDORA) shares are falling the most in a month after Carnegie slashed its price target for the global jewelry maker from DKK375/share to DKK350/share. Carnegie cited lower estimates and weak like-for-like momentum as reasons for the price target cut, although it did maintain its “Hold” recommendation for the stock. Pandora is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Parker Drilling (PKD) filed for bankruptcy protection today.  Parker Drilling indicated the rebound in the price of oil was not high enough to maintain its off-shore operations profitable.  Parker Driling’s Chapter 11 filing comes with a turnaround plan supported by a significant number of stakeholders.  Parker Drilling is rated “Neutral” in our US Micro-Cap Global Top Stock Ideas.
  • Pernod Ricard SA (ENXTPA:RI) now has activist hedge fund Elliot Management as a shareholder, with the fund having built a stake of more than 2.5% in Pernod Ricard thus far.   Elliot Management is known to boost returns and improve governance in the companies in which it takes a position.  The same is expected to occur with Pernod Ricard.  Pernod Ricard is rated “Attractive” in our European Large-Cap Global Top Stock Ideas.
  • PG&E (PCG) confirmed its workers saw damage to one of its transmission towers on the day the Camp Fire began.  The tower it mentioned is at the same location regulators have identified as that of the fire’s origin.  PG&E has lost 47% of its market cap since the fire.  PG&E is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Tencent (TCEHY, HK 700) priced its Tencent Music (TME) IPO at USD$13, the bottom of the IPO price range.  Tencent sold 82 million shares in the IPO and the company will debut with a valuation of just over USD$23 billion.  Tencent raised USD$1.1 billion in the offering.  Tencent is rated “Attractive” in our China All-Cap Global Top Stock Ideas.  Tencent Music is not rated in our Global Top Picks.
  • Under Armour Inc. (UAA) shares are trading lower after saying that it expects annual revenue growth for its North America region in the low single-digits from 2020 through 2023. Under Armour provided this guidance at the company’s first investors day since 2015. Under Armour is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas. 
  • United Rentals (URI) shares are trading notably higher after the company dismissed fears of slowed growth in reporting FY2019 guidance. United Rental forecasts revenue for FY2019 to fall between USD$9.15bn and USD$9.55bn while the average analyst estimate is for USD$8.94bn. Additionally, United Rental sees FY2019 ebitda between USD$4.35bn and USD$4.55bn while analysts’ consensus calls for USD$4.34bn. United Rentals is rated “Attractive” in our US large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
  • Uniti Group Inc. (UNIT) shares are falling after Morgan Stanley downgraded the stock from equal-weight to underweight while slashing its price target from USD$24/share to USD$16/share. In a note to clients, Morgan Stanley cited that increased capital costs, elevated leverage, and Windstream uncertainty all pose a risk to the company’s dividend. Uniti Group is rated “Neutral” in our US Large-Cap Global Top Stock Ideas. 

 

US Treasuries

  • US 2-Year Treasury Notes are lower with yields up 0.61 basis points to 2.77%
  • US 5-Year Treasury Bonds are lower with yields up 2.7 basis points to 2.76%
  • US 10-Year Treasury Bonds are lower with yields up 3.06 basis points to 2.90%
  • The US Treasury 2s-5s Spread has widened 2.09 basis points to 0%
  • The US Treasury 2s-10s Spread has widened 2.45 basis points to 0.14%
  • US Treasury 5s-10s Spread has widened 0.36 basis points to 0.14%
     

Currencies

  • EUR€ is up 0.389% against the USD$ in after hours to 1.1361
  • GBP£ is up 0.961% against the USD$ in after hours to 1.2607
  • CHF is little changed 0.05% against the USD$ in after hours to 1.0063
  • JPY¥ is little changed 0.106% against the USD$ in after hours to 113.26

Commodities

  • WTI Crude is down -0.97% to USD$51.15/bbl with the Brent-WTI spread up USD$0.42 to USD$8.06/bbl
  • Gold is little changed 0.17% to USD$1245.36/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
United Rentals Inc Industrials 116 6.32%                619,458
Twitter Inc Communication Services 31.3 5.22%            5,972,383
MGM Resorts International Consumer Discretionary 27.3 4.84%            2,195,899
Interpublic Group of Cos Inc/The Communication Services 24.4 4.27%            1,793,890
Wynn Resorts Ltd Consumer Discretionary 108 3.66%                833,551
 
Underformers Sector Price 1D % Chg Volume
Under Armour Inc Consumer Discretionary 23.1 -10.44%            2,705,020
Under Armour Inc Class C Consumer Discretionary 21.8 -8.91%            1,698,445
Mosaic Co/The Materials 36.2 -6.33%            1,660,580
Macerich Co/The Real Estate 50.1 -4.48%            1,311,326
Public Storage Real Estate 212 -3.06%                385,295