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US stocks fall across the board as likelihood of US government shutdown grows

Dec 20, 2018

 

US Markets End of Day Snapshot

  • US stocks trade lower through the entire session, with President Trump's unwillingness to sign a spending bill adding to investors' list of woes, weighing heavily on sentiment
  • President Trump is not budging in the budget showdown, saying today he will not sign any funding bill that does not include funding for a border wall; a spending bill must be signed by midnight Friday to avoid a US government shutdown
  • Small-cap stocks are well into bear market territory with the Russell 2000 down over 23% (price return) from its high in early September
  • With yesterday’s sell-off plus losses today, the S&P 500 is barreling towards its first formal “bear market” in a decade with the benchmark US index down 15.8% (price return) since reaching its high in September 2018
  • The S&P 500 finished down 1.58%, Nasdaq Composite is down 1.63%, and Russell 2000 is down 1.72%
  • Oil was weak again today with WTI down 4.1% to $46.20
  • The US Justice Department has indicted 2 Chinese nationals and alleges they waged a decades-long economic espionage campaign, coordinating with Chinese state security agencies, infiltrating 45 US companies and government agencies
  • The Bank of England did not raise interest rates, saying the uncertainty around Brexit is intensifying
  • The European Union is investigating banks' trading in US dollar national and supranational bonds, alleging they exchanged "commercially sensitive information and coordinated on prices" without mentioning which banks, press reports say Credit Suisse and Deutsche Bank are targets of the probe
  • Japanese stocks sold off overnight in the wake of the Fed rate hike, with stocks entering bear market territory, having fallen 21% since January
  • Utilities (+0.27%), Financials (-0.78%), and Real Estate (-1.21%) stocks were the top performers in the S&P 500 today
  • Tech (-1.88%), Consumer Discretionary (-2.25%), and Energy (-2.79%) 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 341 stocks reached 4-week lows
  • 0 stocks in the S&P 500 closed overbought while 146 stocks closed oversold according to the 16-day RSI Measure
  • 14 stocks in the Nasdaq Composite hit 4-week highs while 740 stocks reached 4-week lows
  • 62 stocks in the Nasdaq Composite closed overbought while 1304 stocks closed oversold according to the 16-day RSI Measure
  • The VIX closed up 2.80 points today to 28.38 after closing at 25.58 yesterday

Stocks Trending in the News

Click name for Q-Factor rating and financials data.
 

  • Accenture (ACN) reports an earnings beat and a revenue forecast with a midpoint that misses the average analyst estimate. Accenture generated an EPS of USD$1.96 in FY1Q2019 while analysts expected USD$1.85. Accenture sees FY2Q2019 revenue between USD$10.1bn and USD$10.4bn while analysts’ consensus calls for USD$10.31bn. Accenture is not rated in our Global Top Stock Ideas. 
  • Agenus (AGEN) and Gilead (GILD) announced they will form a partnership to work on immune-oncology therapies.  Agenus and Gilead said they will work together on up to 5 novel therapies, focused on the development and commercialization of them.  Agenus will receive USD$150mn when the deal closes and there is the potential for up to USD$1.7 billion in future fees.  Agenus is rated “Top Short” in our US SMID-Cap Global Top Stock Ideas.  Gilead is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Airbus (ENXTPA:AIR) is being investigated by the US Justice Department, according to a report in the French press.  The investigation would parallel investigations in France and England.  The press report said the company could face billions in fines as a result of the investigations.  Airbus is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Altria (MO) is in talks to acquire a stake in e-cigarette maker Juul, according to a report in Bloomberg.  Altria is going to buy a stake valued at USD$12.8 billion, the article reports.  If the investment is competed, it will value Juul at USD$38 billion making it the second most valuable private company behind Uber.  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.
  • Amazon (AMZN) has seen the number of Prime members who buy groceries with Amazon decline in 2018 compared with 2017 in the wake of its acquisition of Whole Foods.  This comes from a UBS survey of consumers.  UBS commented that this was surprising given the USD$13.7 billion it spent to acquire Whole Foods.  Amazon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Apple (AAPL) is tweaking the software in its iPhones in Germany in an effort to head of a legal challenge from Qualcomm (QCOM), according to a report in the Financial Times.  Apple is making the move ahead of a ruling expected today in Munich.  Apple and Qualcomm are locked in a global legal battle over the royalties Apple pays Qualcomm for the use of its chips.  Apple 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.  Qualcomm is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Bank of America Corp. (BAC) Chairman and CEO Brian Monynihan appeared on Bloomberg Television on Wednesday and admitted, “We got a little too careful,” in reference to the company’s capital markets business, adding, “We lost some share in mid-size client M&A deals in the United States.” In response, Bank of America is giving its capital markets dealmakers to set out in search of opportunities to regain market share. Bank of America is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Carnival Corp. (CCL) shares are falling after the world’s largest cruise line provided disappointed guidance for its upcoming fiscal year. Carnival sees adjusted EPS for FY2019 of between USD$4.50 and USD$4.80, the midpoint of which misses analysts’ consensus estimates of USD$4.69. Carnival also estimated that it sees adjusted EPS of between USD$0.40 and USD$0.44 while analysts expect USD$0.44. Carnival is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas. 
  • Cigna (CIG) today closed its USD$67 billion acquisition of Express Scripts.  Cigna announced the deal in March and it has taken until now to get approval from all the relevant authorities.  Cigna is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.  
  • Congara Brands Inc. (CAG) shares are plummeting the most in intraday trading in 15 years after reporting financials that largely missed slightly expectations. Congara reported revenue of USD$2.38bn in FY2Q2019 while analysts expected USD$2.41bn. Despite the sales miss, Congara reported adjusted EPS in FY2Q2019 of USD$0.67 while analysts expected just USD$0.56. Congara is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Large-Cap Global Top Stock Ideas. 
  • Embraer (ERJ) finalized an order with Republic Airways (RJETQ) for 100 E175s.  The order has previously been announced and now the details have been completed.  As part of the deal Republic Airways can convert any number of the planes to Embraer’s E2 platform.  Embraer is rated “Neutral” in our Brazil All-Cap Global Top Picks.  Republic Airways is not rated in our Global Top Stock Ideas.
  • Facebook (FB) is being sued by Washington, DC over its privacy policies.  Facebook violated DC’s Consumer Protection regulations the suit alleges.  Facebook was lax in the oversight of third-party applications, according to the allegations.  Facebook is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Funding Circle Holdings Plc (LSE: FCH) shares are trading at all-time low levels after Citigroup analysts cut their recommendation for the stock from neutral to sell. In a note to clients, Citigroup cited that, “There’s evidence of credit deterioration,” while attributing the deterioration to the performance of the Funding Circle SME Income Fund. Funding Circle Holdings Plc is rated “Top Short” in our United Kingdom All-Cap Global Top Stock Ideas. 
  • Hutchison China Meditech Limited (AIM: HCM) shares are trading lower today after amending an agreement to acquire the rights to an Eli Lilly (LLY) license agreement. Hutchison China will receive an increase in all milestone and royalty payments from Eli Lily in exchange for assuming all costs associated with life cycle indications in China. Hutchison China is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas. Eli Lilly is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Netflix (NFLX) had its price target cut to USD$382 from USD$406 at Buckingham Research today.   The cut in Netflix’s target was the result of updated assumptions and not a change in the case for the stock.  Buckingham says of Netflix, they are “especially constructive on Netflix’s pricing power”.  Netflix is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Nike (NKE) is set to report earnings after the close today as the company’s stock nears bear market territory. Nike shares are down 19.8% since their YTD high of USD$86.04 on September 21st. Analysts expect Nike to report earnings between USD$0.45/share and USD$0.50/share. Nike is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Pier 1 (PIR) shares are tanking more than 30% after reporting comparable sales growth and financials that largely missed analyst expectations. Comparable sales in FY3Q2018 fell 10.5% while analysts expected comparable sales to fall just 2.9%. Lagging comparable sales growth drove Pier 1’s loss per share of USD$0.62 to substantially miss expectations of a USD$0.06 loss per share. Pier 1 is rated “Attractive” in our US SMID-Cap Global Top Stock Ideas and “Top Short” in our US Consumer Discretionary Global Top Stock Ideas.
  • Softbank Corp (TSE: 9434), the telecom spin-off of the Softbank Group (TSE: 9984), fell 14.5% in its first day of trading.  Softbank Group raised almost USD$24 billion and the stock lost a historic USD$3.5 billion in its first day of trading, a record.  No other IPO has ever lost that much rain in its first day of trading.  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.
  • Tencent (TCEHY, SEHK: 700) will invest USD$1 billion in Indian food-delivery service Swiggy.  This is Swiggy’s third round of funding in 2018 and includes a number of investment firms as well.  Since its last round of funding Swiggy has expanded to 42 additional cities and seeks to keep expanding at a torrid pace.  Tencent is rated “Attractive” in our China All-Cap Global Top Stock Ideas.
  • Twitter (TWTR) shares dropped over 10% today after Citron Research published a report calling Twitter “the Harvey Weinstein of social media.  Most analysts, though, said today’s sell-off was overdone.  Morgan Stanley hiked its Twitter price target to USD$33 from USD$31 today.  JP Morgan reiterated its overweight rating on Twitter, naming it one of its top picks for all of 2019.  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.
  • UBS Group AG (SWX: UBSG) is intensifying its succession planning for CEO Sergio Ermotti. Switzerland’s largest bank is reportedly considering external candidates for the role. Reports stress that a change is not imminent and that Ermotti could remain CEO for up to two years. UBS Group is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. 
  • Walgreens Boots Alliance, Inc. (WBA) reports stronger-than-expected FY1Q2019 earnings, posting adjusted EPS of USD$1.46/share while Street consensus called for USD$1.43/share. Walgreens total group revenues rose slightly under 10% y/y to USD$33.8bn in FY1Q2019 while management guided fiscal year earnings growth of between 7% and 12%. Additionally, management discussed a plan to, “aggressively cut costs,” that will save the company USD$1bn/year within three years. Walgreens is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.

 

US Treasuries

  • US 2-Year Treasury Notes are lower with yields up 2.27 basis points to 2.66%
  • US 5-Year Treasury Bonds are lower with yields up 4.88 basis points to 2.66%
  • US 10-Year Treasury Bonds are lower with yields up 5 basis points to 2.80%
  • The US Treasury 2s-5s Spread has widened 2.61 basis points to 0%
  • The US Treasury 2s-10s Spread has widened 2.73 basis points to 0.14%
  • US Treasury 5s-10s Spread has widened 0.12 basis points to 0.14%

Currencies

  • EUR€ is up 0.694% against the USD$ in after hours to 1.1455
  • GBP£ is up 0.428% against the USD$ in after hours to 1.2664
  • CHF is up 0.696% against the USD$ in after hours to 1.0124
  • JPY¥ is down 1.12% against the USD$ in after hours to 111.22

Commodities

  • WTI Crude is down -3.33% to USD$45.63/bbl with the Brent-WTI spread little changed USD$0.23 to USD$8.38/bbl
  • Gold is up 1.4% to USD$1260.48/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
Newmont Mining Corp Materials 32.3 6.23%            2,543,662
AbbVie Inc Health Care 89.9 2.22%            2,753,852
PPL Corp Utilities 30.7 1.66%            2,217,441
Vertex Pharmaceuticals Inc Health Care 179 1.66%                850,208
Activision Blizzard Inc Communication Services 52.6 1.55%            3,854,914
 
Underformers Sector Price 1D % Chg Volume
Conagra Brands Inc Consumer Staples 32.3 -16.53%            3,354,149
Twitter Inc Communication Services 31.3 -11.05%            7,163,573
Carnival Corp Consumer Discretionary 60.7 -9.49%            1,800,958
Helmerich & Payne Inc Energy 61.2 -7.11%                721,238
Cigna Corp Health Care 223 -6.98%            1,744,396