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US stocks and WTI crude plummet today as market expects rate hike Wednesday

Dec 17, 2018

 

US Markets End of Day Snapshot

  • US stocks and WTI crude plunged today with losses accelerating through the afternoon; the market expects a 25 basis point hike by the Federal Reserve Wednesday and fears of higher rates drove the risk-off sentiment today
  • WTI is trading at USD$49.15 at 4:30pm EST, falling 4% today; this is its first close below USD$50 in over a year
  • The Federal Reserve's FOMC will meet this week and announce its rate hike decision Wednesday afternoon, President Trump complained in a tweet that it's "incredible" that the Fed is considering raising interest rates
  • The Russell 2000 has entered bear market territory while the S&P500 closed at its lowest level since October 2017
  • The S&P 500 finished down 2.08%, Nasdaq Composite is down 2.27%, and Russell 2000 is down 2.32%
  • Emerging markets stocks ETFs experienced net fund flows of +USD$948.1 million last week – the 9th straight week of positive fund flows
  • Financials (-0.97%), Industrials (-1.72%), and Energy (-1.86%) stocks were the top performers in the S&P 500 today
  • Consumer Discretionary (-2.82%), Utilities (-3.27%), and Real Estate (-3.72%) 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 0.08x
  • 12 stocks in the S&P 500 hit 4-week highs while 186 stocks reached 4-week lows
  • 4 stocks in the S&P 500 closed overbought while 71 stocks closed oversold according to the 16-day RSI Measure
  • 20 stocks in the Nasdaq Composite hit 4-week highs while 405 stocks reached 4-week lows
  • 62 stocks in the Nasdaq Composite closed overbought while 914 stocks closed oversold according to the 16-day RSI Measure
  • The VIX finished up at 24.52 after closing at 21.63 last week
     

Stocks Trending in the News

Click name for Q-Factor rating and financials data.
 

  • Alphabet’s (GOOGL) Google announced a USD$1 billion expansion in New York City.  Google will establish a new NYC campus called Google Hudson Square which will be in addition to its Google Chelsea campus.  Google will double the number of employees in NYC post-expansion.  Alphabet is rated “Neutral” in both our US Large-Cap and US Information Technology Global Top Stock Ideas.   
  • Amazon.com Inc. (AMZN) is stressing to investors that strikes at two of its German logistics sites will not impact holiday deliveries in Germany. Roughly 350 Amazon employees are striking for better pay and working conditions. Germany is Amazon’s second-largest market outside of the US. Amazon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Asos Plc (AIM: ASC), the e-commerce retailer, has said the holiday shopping season has gotten off to a horrible start for the company.  Asos said its Christmas season got off to poorly with a “significant deterioration” in November.  Asos cut its full-year forecast as it has been discounting in-stock merchandise to lower inventory.  Asos is rated “Neutral” in our United Kingdom Global Top Stock Ideas.
  • Best Buy (BBY) is the seller of 2 of the 5 best selling TVs on Amazon (AMZN) as of today, according to a report in Bloomberg today.  Best Buy opened its Amazon storefront over the summer and the TVs it sells come with Amazon’s Fire TV platform preinstalled.   Best Buy sells its wares on Amazon while Amazon sells its in Best Buy stores.  Best Buy is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  Amazon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • BHP Group (ASX: BHP) declared a special dividend of USD$1.02 per shares to be pain January 30th for holders January 11th.  BHP’ special dividend represents the USD$5.2 billion residual balance after selling onshore US assets and buying back shares.  After the dividend payout BHP will have returned USD$21 billion over the last 2 years.  BHP Group is rated “Attractive” in our Australia Large-Cap Global Top Stock Ideas.
  • Bristol-Myers Squibb Co. (BMY) is reportedly nearing a deal to sell its over-the-counter unit to Taisho Pharmaceutical Holdings Co. (TSE: 4581), according to people familiar with the matter. The deal is reportedly valued at about USD$1.6bn. Bristol-Myers is rated “Neutral” in our US Large-Cap Global Top Stock Ideas. Taisho Pharmaceutical Holdings is not rated in our Global Top Stock Ideas.
  • Embraer’s (ERJ) approved its Commercial Aviation JV with Boeing (BA), it announced.  Embraer said the value attributed by the parties to the JV is USD$5.2 billion.  The new JV will hold 100% of the commercial aviation business.  The deal still needs to be approved by the Brazilian government.  Embraer is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.  Boeing is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Globalstar (GSAT) shares are soaring after announcing that it settled its outstanding litigation. Additionally, Globalstar received approval for its 2.4GHz terrestrial spectrum by Third Generation Partnership Project (3GPP). “3GPP standardization represents an important milestone in the company’s spectrum efforts,” said Globalstar executive chairman Jay Monroe. Globalstar is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas. 
  • Goldman Sachs (GS) is facing its first charges in Malaysia in the 1MDB scandal.  Authorities are alleging that Goldman Sachs misled investors when it sold 1MDB bonds since it knew the proceeds would be misappropriated.  Authorities are seeking fines well above the USD$2.7 billion of misused funds and USD$600mn is fees generated on the transaction.  Goldman Sachs blames the scandal on “rogue employees”.  Goldman Sachs is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Hennes & Mauritz (OM: HM B) reported sales figures that as it reduces its large inventory.  H&M said sales rose 12% to 56.4 billion kroner (USD$6.2 billion) while consensus was for 56.1 billion kronor.  H&M did not report profitability and analysts are questioning how much discounting H&M had to do in order to move the inventory.  H&M will report full results on January 31st.   Hennes & Mauritz is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Hitachi Ltd. (TSE: 6501) will acquire ABB Ltd.’s (SWX: ABBN) power grid division for USD$6.4bn in what is the Japanese conglomerate’s largest deal ever. Hitachi will acquire about 80.1% of the ABB’s power grid business, which maintains a total enterprise value of USD$11bn including net debt. The acquisition comes amid Hitachi’s shift from nuclear plants to the higher-growth market for electricity networks. Hitachi is rated “Top Buy” in our Japan Large-Cap Global Top Stock Ideas. ABB is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Ingenico Group (ENXTPA: ING) shares are falling after the company, who has been the subject of takeover discussions, said that it ended deal discussions. Ingenico Group is now focusing on preparing a plan for next year. Ingenico Group is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.  
  • JD.com (JD) coverage was reinstated today at GF Securities will an accumulate rating.  JD.com’s price target was set at USD$27.75 implying 25% upside to its last closing price.  JD.com is rated “Top Short” in our China All-Cap Global Top Stock Ideas.
  • Johnson & Johnson (JNJ) shares gave up roughly USD$40bn in market value last week after Reuters reported that the consumer brands group knew its baby powder could contain traces of asbestos for at least 40 years. Reuters cites documents from a Missouri court case that awarded USD$4.7bn to 22 women who developed ovarian cancer from Johnson & Johnson products. Johnson & Johnson has since called the story, “an absurd conspiracy theory.” Johnson & Johnson is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Lululemon Athletica (LULU) was upgraded today at Stifel to buy from hold.  Lululemon Athletica’s price target of USD$151 was maintained.  Stifel expects Lululemon Athletica double-digit sales growth to continue and sees upside to consensus estimates for 2019.  Lululemon Athletica’s revenue targets are “low hurdles”, according to the report.  Lululemon Athletica is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Madison Square Garden Corp (MSG) CEO James Dolan said today the Knicks basketball could be sold some day.  Dolan said Madison Square Garden has received “feelers” about the team in the realm of USD$5 billion.  The New York Knicks are in their sixth losing season in a row.  Dolan commented he personally does not want to sell the team but needs to do what’s best for Madison Square Garden.  Madison Square Garden is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Molina Health Inc. (MOH) and Centene Corp (CNC) shares are seeing sharp losses after a December 14th court ruling may result in Obamacare being overturned. Ana Gupte, a health-care analyst with Leerink, said that these two companies would be the hardest hit if the court ruling stands. Molina Health is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas. Centene Corp is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas. 
  • Netflix Inc. (NFLX) shares still have strong upside potential, according to MKM Partners. In a note to clients, MKM Partners said that Netflix’s fundamentals and earnings are, “as strong as ever,” while reaffirming its buy rating and USD$415/share price target. As of Friday’s close, Netflix shares are down more than 30% since October. Netflix is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Oracle (ORCL) reported 2Q adjusted revenue of USD$9.57 billion, beating consensus of USD$9.52 billion.  Oracle 2Q adjusted EPS of 80 cents came above 78 cents consensus.  2Q cloud revenue was USD$6.64 billion while service revenue was 817mn.  Oracle 2Q operating margin was 43%.  Oracle is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Overstock.com (OSTK) said today that private equity firm GSR Capital did not complete the deal to invest USD$270mn in its tZERO unit.  Overstock.com had extended the deadline to complete the deal until February 28. 2019.  The firms both said they are working to complete a deal, but a completion is not certain.  Overtstock.com is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Top Short” in our US Consumer Discretionary Global Top Stock Ideas.
  • Packaging Corporation (PKG)Westrock Company (WRK), and International Paper Company (IP) shares are all falling today after November data signaled headwinds for the packaging industry, even with the upcoming busy holiday season. Box shipments in November were nearly flat y/y while data also signaled a larger-than-normal inventory increase. Packaging Corporation is rated “Neutral” in our US Large-Cap Global Top Stock Ideas. Westrock is rated “Neutral” in our US Large-Cap Global Top Stock Ideas. International Paper is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Sopra Steria Group (ENXTPA: SOP) shares are trading lower after being downgraded by Morgan Stanley from equal-weight to underweight. Morgan Stanley also lowered its price target for Sopra Steria Group from 152 euros/share to 75 euros/share, implying a 14% downside from Friday’s close. Sopra Steria maintains an average price target of 132.36 euros/share across 12 different estimates. Sopra Steria is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas. 
  • WellCare Health Plans (WCG) reports guidance for FY2019 and the remainder of FY2018 that slightly misses analysts’ consensus. WellCare forecasts adjusted EPS of between USD$13.15/share and USD$13.40/share, the midpoint of which misses analysts’ consensus of USD$13.36/share. WellCare also reaffirmed adjusted EPS guidance of between USD$10.90/share and USD$11.00/share for FY2018 while analysts’ consensus is USD$11.00/share. WellCare is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.

 

US Treasuries

  • US 2-Year Treasury Notes are higher with yields down -3.93 basis points to 2.69%
  • US 5-Year Treasury Bonds are higher with yields down -3.9 basis points to 2.69%
  • US 10-Year Treasury Bonds are higher with yields down -3.25 basis points to 2.85%
  • The US Treasury 2s-5s Spread has widened 0.03 basis points to 0%
  • The US Treasury 2s-10s Spread has widened 0.68 basis points to 0.16%
  • US Treasury 5s-10s Spread has widened 0.65 basis points to 0.17%

Currencies

  • EUR€ is up 0.354% against the USD$ in after hours to 1.1346
  • GBP£ is up 0.254% against the USD$ in after hours to 1.2615
  • CHF is up 0.519% against the USD$ in after hours to 1.007
  • JPY¥ is down 0.494% against the USD$ in after hours to 112.83
     

Commodities

  • WTI Crude is down -2.58% to USD$49.88/bbl with the Brent-WTI spread little changed USD$0.15 to USD$8/bbl
  • Gold is up 0.55% to USD$1245.89/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
AO Smith Corp Industrials 46.8 2.34%                513,840
Stanley Black & Decker Inc Industrials 127 1.37%                407,429
Hartford Financial Services Group Inc/Th Financials 44.3 1.26%            1,273,405
Everest Re Group Ltd Financials 220 1.15%                136,899
Humana Inc Health Care 330 1.10%                420,541
 
Underformers Sector Price 1D % Chg Volume
Xerox Corp Information Technology 26.9 -12.92%            2,770,795
Westrock Co Materials 46.4 -9.42%            1,196,197
Packaging Corp of America Materials 96.5 -7.17%                420,860
Alliance Data Systems Corp Information Technology 197 -6.93%                221,481
Twitter Inc Communication Services 31.3 -6.80%            4,271,246