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US stocks turn negative and tumble in wake of Fed raising rates 25 basis points

Dec 19, 2018

 

US Markets End of Day Snapshot

  • US stocks were rising earlier in the session but the announcement of a rate hike by the Fed caused the market to turn, with US stocks tumbling across the board
  • The Federal Reserve raised the Fed Funds rate 25 basis points to 2.5% and indicated a slower pace of hikes in 2019
  • The Federal Reserve now expects 2 hikes in 2019, down from 3
  • According to US Treasury Secretary Steven Mnuchin, US and Chinese trade officials will meet in January  
  • WTI crude oil is 1.7% higher at $47.42 after its biggest three day loss since mid-2016
  • The S&P 500 finished down 1.54%, Nasdaq Composite is down 2.17%, and Russell 2000 is down 2.03%
  • Utilities (-0.22%), Real Estate (-0.91%), and Consumer Staples (-1.05%) stocks were the top performers in the S&P 500 today
  • Industrials (-1.91%), Tech (-1.94%), and Consumer Discretionary (-2.23%) 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 0.14x
  • 1 stock in the S&P 500 hit 4-week highs while 220 stocks reached 4-week lows
  • 0 stocks in the S&P 500 closed overbought while 105 stocks closed oversold according to the 16-day RSI Measure
  • 15 stocks in the Nasdaq Composite hit 4-week highs while 576 stocks reached 4-week lows
  • 51 stocks in the Nasdaq Composite closed overbought while 1086 stocks closed oversold according to the 16-day RSI Measure
  • The VIX closed flat today at 25.58 after closing at 25.58 yesterday

Stocks Trending in the News

Click name for Q-Factor rating and financials data.
 

  • Allergan plc (AGN) shares are falling after the company suspended the sale of its textured breast implants and tissue expanders in European markets. Allergan is also withdrawing any of its remaining supply from European markets as the result of a compulsory recall request from French regulator, Agence Nationale de Securite du Medicament. Allergan is rated “Neutral” in our US Large-Cap Global Top Stock Ideas. 
  • Brazil’s Finance Minister said he sees no restrictions to get in the way of the Boeing (BA) / Embraer (ERJ) joint venture in commercial aviation.  This comes in the wake of a labor court judge removing an injunction and sending the case back to standard courts.  The companies are close to completing the commercial aviation deal they have been working on.  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.  
  • Burford Capital Limited (AIM: BUR) shares are trading higher after announcing that it secured its next USD$1.6bn in funding for litigation finance investments. To receive the funding, Burford entered a strategic relationship with a sovereign wealth fund. Burford Capital is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas. 
  • Citigroup Inc. (C) reportedly may face as much as USD$180mm in losses from loans made to an Asian hedge fund. A hedge fund managed by a unit of GF Holdings lost significant funds in foreign currency investments and it will not be able to pay back the loan made by Citigroup. The situation has prompted board-level discussions at Citigroup and is resulting in more oversight in the firm’s FX prime brokerage unit. Citigroup is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Deutsche Bank (DB: DBK) and JPMorgan Chase & Co. (JPM) lost a trial in a criminal case related to losses from financial products sold to the German city of Pforzheim. Pforzheim lost millions of euros related to swaps sold by Deutsche Bank and JPMorgan in 2004 and 2008, prompting the city to sue for 12mm euro (USD$13.7mm) in losses. Deutsche Bank is rated “Neutral” in our Europea Large-Cap Global Top Stock Ideas. JPMorgan is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Embraer S.A. (BOVESPA: EMBR3) and Azul S.A. (BOVESPA: AZUL4) have signed a contract pertaining to a previously announced order of 21 E195-E2 jets. The contract is valued at USD$1.4bn and will be listed in Embraer’s 2018 4Q backlog. Embraer is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas. Azul is rated “Top Buy” in our Brazil All-Cap Global Top Stock Ideas.
  • FedEx (FDX) said demand for shipping services outside the US has been weak.  As a result, FedEx cut its profit forecast and is trimming international air freight capacity.  FedEx said adjusted earnings for 2019 no greater than USD$16.60 a share.  FedEx increased its profit outlook 3 months ago only to cut it yesterday.  FedEx is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.  
  • General Electric (GE) has reportedly filed for an initial public offering (IPO) of its health-care unit in an effort to spin-off the business unit. The health care unit of General Electric is the conglomerate’s second-most profitable. The spin-off would follow a similar move by Germany-based Siemens AG (DB: SIE), which spun-off its Healthineers business in March -- Siemens Healthineers AG (XTRA: SHL) is up 32% since its IPO with a market capitalization of 37bn euro (USD$42bn). General Electric is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas. Siemens AG is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas. Siemens Healthineers AG is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • GlaxoSmithKline (LSE: GSK) will combine its consumer business with that of Pfizer (PFE) to create a consumer products giant.  In the new company, GlaxoSmithKline will hold 68% and Pfizer will hold 32%.   The new company will have US$12.7 billion in annual sales.  The deal is expected to close in the second half of 2019.  Within 3 years the company is expected to be listed on the stock market.   GlaxoSmithKline is rated “Attractive” in our United Kingdom All-Cap Global Top Stock Ideas.  Pfizer is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.  
  • Jabil (JBL) shares rose sharply today after reporting results with fiscal 1Q core EPS of 90 cents, above 88 cents consensus.  Fiscal 1Q revenue for Jabil came at USD$6.51 billion while consensus was USD$ 6.1 billion.  Jabil is “firing on all cylinders”, according to a note from RBC Capital today.  Jabil is rated “Neutral” in our Large-Cap Global Top Stock Ideas.
  • Japan Post (TSE: 6178) will take a 7% stake in US insurer Aflac (AFL).  Aflac’s biggest market is Japan.  The 7% stake is valued at USD$2.4 billion with the total investment said to be USD$2.7 billion.  The shares will be bought in the open market or via private block trades.  Japan Post is rated “Neutral” in our Japan Large-Cap Global Top Stock Ideas.  Aflac is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Johnson & Johnson (JNJ) shares suffered today after a federal judge refused to throw out the USD$4.69 billion verdict against Johnson & Johnson.  The judge denied Johnson & Johnson’s request for a new trial as well.  Johnson & Johnson’s legal team said it is confident the verdict will be overturned.  Johnson & Johnson is rated “Attractive” in our Large-Cap Global Top Stock Ideas.
  • Micron (MU) provided a sales forecast that disappointed investors yesterday post-market.  Micron sees revenue in the present quarter coming USD$5.7-6.2 billion, well below consensus of USD$7.32 billion.   Micron cut its capex budget by USD$1.25 billion to USD$9-9.5 billion.  Analysts warn of further price competition that could weigh on the stock in the coming quarter.  Micron is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Microsoft (MSFT) is reportedly in talks with JPMorgan, who represents Mellanox Technologies, Ltd. (MLNX), to acquire the chipmaker. Prior reports have indicated that Xilinx (TCK) was in talks to acquire Mellanox. Microsoft is rated “Neutral” in our US Large-Cap Global Top Stock Ideas. Mellanox is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas. Xilinx is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas. 
  • Natixis SA (ENXTPA: KN) shares are falling after reporting that it booked an unexpected 260mm euro (USD$296mm) loss in 4Q2018 from its Asia business. A model that Natixis uses to hedge some structured products traded with clients in Asia reportedly backfired and proved deficient in current market conditions. Natixis is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas. 
  • P/F Bakkafrost (OB: BAKKA) shares are trading higher after being upgraded by Nordea from hold to buy. Additionally, Nordea raised its price target to 500 kroner/share, implying a 15% upside from yesterday’s closing price. Bakkafrost maintains an average price target of 495 kroner/share across 11 analyst forecasts. Bakkfrost is rated “Top Buy” in our European SMID-Cap Global Top Stock Ideas.
  • Siemens AG (DB: SIE) and Alstom S.A. (ENXTPA: ALO) have reportedly agreed to sell-off some of their older high-speed train and signaling technology in an effort to secure EU approval for their merger. The agreement concerns four specific sets of assets although the two companies warned that there is, “no certainty that the content of this package will be sufficient.” Siemens AG is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas. Alstom is rated “Attractive” in our European SMID-Cap Global Top Stock Ideas. 
  • Softbank Corp (TSE: 9434), the telecom spin-off from Softbank Group (TSE: 9984), shares debuted overnight after closing its IPO and promptly fell over 14%.  Concerns over a telecom price war weighed on the shares.  Softbank Group raised USD$23.6 billion with the IPO of Softbank Corp.  Softbank Group is rated “Neutral” in our Japan Large-Cap Global Top Stock Ideas.  Softbank Corp is not rated in our Global Top Stock Ideas.
  • Tallgrass Energy (TGE) has held talks with a consortium of private equity investors considering an acquisition of the oil pipeline operator, according to a Bloomberg article today.  Tallgrass said it does not respond to speculation when asked about the story which reports that talks are presently underway.  Tallgrass was up strongly today on the news.  Tallgrass Energy is rated “Attractive” in our SMID-Cap Global Top Stock Ideas.
  • Twitter (TWTR) shows a bias towards Democrats, according to an allegation from President Trump.  The President complained about US tech companies overall and singled out Twitter in his complaint.  He said Twitter makes it hard for people to follow him, without offering specifics.  Twitter is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas

 

US Treasuries

  • US 2-Year Treasury Notes are lower with yields up 0.19 basis points to 2.64%
  • US 5-Year Treasury Bonds are higher with yields down -1.7 basis points to 2.62%
  • US 10-Year Treasury Bonds are higher with yields down -5.73 basis points to 2.76%
  • The US Treasury 2s-5s Spread has narrowed 1.89 basis points to -0.02%
  • The US Treasury 2s-10s Spread has narrowed 5.92 basis points to 0.11%
  • US Treasury 5s-10s Spread has narrowed 4.03 basis points to 0.13%

Currencies

  • EUR€ is little changed 0.15% against the USD$ in after hours to 1.1378
  • GBP£ is down 0.182% against the USD$ in after hours to 1.2616
  • CHF is down 0.208% against the USD$ in after hours to 1.0053
  • JPY¥ is little changed 0.053% against the USD$ in after hours to 112.58

Commodities

  • WTI Crude is up 2.08% to USD$47.2/bbl with the Brent-WTI spread down USD$-0.97 to USD$8.56/bbl
  • Gold is down -0.52% to USD$1242.97/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
General Electric Co Industrials 7.94 5.36%          41,572,241
General Mills Inc Consumer Staples 42.2 5.04%            2,539,572
American International Group Inc Financials 43.4 4.74%            4,637,918
PG&E Corp Utilities 26.8 3.17%            4,774,962
Newfield Exploration Co Energy 17.6 2.92%            2,061,067
 
Underformers Sector Price 1D % Chg Volume
FedEx Corp Industrials 228 -12.16%            2,478,721
Micron Technology Inc Information Technology 37.9 -7.92%          21,917,577
Facebook Inc Communication Services 139 -7.25%          14,122,569
Allergan PLC Health Care 155 -6.95%            1,684,877
Advanced Micro Devices Inc Information Technology 21.4 -6.87%          23,072,038