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US stocks sink on signs of economic cooling, glum sentiment fuels strong risk-off today

Jan 03, 2019

 

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US Markets End of Day Snapshot

  • US stocks plunged as more signs of economic weakness appear and drive the glum sentiment in the market today
  • Apple (AAPL) closed 10% down today after cutting guidance after the close yesterday, closing at $142.19
  • The S&P 500 finished down 2.4%, Nasdaq Composite is down 3.04%, and Russell 2000 is down 1.74%
  • WTI crude rose today rose 1.4% and is trading at $47.14
  • US ISM Manufacturing reading for December came at 54.1, well below 57.5 expected; the biggest one month drop in 10 years
  • ADP Employment report for December showed 271k jobs added, above 180k consensus
  • US Initial jobless claims for December 29th came at 231k, a touch above 220k consensus
  • Citigroup highlights the decline in forecasted S&P 500 EPS growth for CY2019 over the past 12-weeks (going back to early October) -- Citigroup cites this as a factor in the cut to its S&P 500 CY2019 year-end target from 3,100 to 2,850
  • Real Estate (+0.49%), Utilities (+0.08%), and Consumer Staples (-0.73%) stocks were the top performers in the S&P 500 today
  • Materials (-2.76%), Industrials (-2.96%), and Tech (-5.07%) 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 0.23x
  • 5 stocks in the S&P 500 hit 4-week highs while 14 stocks reached 4-week lows
  • 0 stocks in the S&P 500 closed overbought while 14 stocks closed oversold according to the 16-day RSI Measure
  • 23 stocks in the Nasdaq Composite hit 4-week highs while 83 stocks reached 4-week lows
  • 156 stocks in the Nasdaq Composite closed overbought while 109 stocks closed oversold according to the 16-day RSI Measure
  • The VIX closed up 2.04 points today to 25.26 after closing at 23.22 yesterday
     

Stocks Trending in the News

Click name for Q-Factor rating and financials data.
 

  • American Airlines (AAL) shares were down sharply after one of its jet made an emergency landing due to a smoke condition.  Flight AA10 from Los Angeles to New York was diverted to Phoenix after reports of smoke in the cabin.  American Airlines confirmed the diverted flight but has not released details yet.  American Airlines is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • American Electric Power (AEP) was downgraded by Mizuho Securities to neutral from buy.  American Electric Power had its price target cut to USD$70 from USD$76.  American Electric Power’s target implies 4% downside from its last close.  American Electric Power consensus target is USD$78.94.  American Electric Power is rated “Attractive” in our US Large-Cap Global Top Stock Ideas
  • AMS AG (SWX: AMS) shares are tanking after Apple (AAPL) cut its revenue guidance for the first time in two decades. Neil Campling, an analyst at Mirabaud, warned, “expect a ton of Apple supplier warnings in coming days.” AMS AG is rated “Top Short” in our European Large-Cap Global Top Stock Ideas. 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. 
  • Apple (AAPL) cut its revenue forecast for fiscal 1Q19, its first guidance cut in close to 20 years.  Apple said unexpected weakness in China demand caused it to cut guidance, with USD$84 billion now expected, down from USD$89-93 billion originally expected.   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.
  • Bristol-Myers Squibb (BMY) will acquire Celgene (CELG) in a deal the values the biopharmaceutical company at USD$74bn. Celgene shareholders will receive USD$50 and one Bristol-Myers share for each Celgene share owned. Bristol-Myers is rated “Neutral” in our US Large-Cap Global Top Stock Ideas. Celgene is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Delta Air Lines Inc. (DAL) shares plunged the most in 3 years after cutting revenue guidance for the second time in two months, citing lower ticket prices. Other airline companies are falling in sympathy with Delta, including American Airlines (AAL), which is down the most in 5 years. Delta is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” US Industrials Global Top Stock Ideas. American Airlines is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • DNO ASA (OB: DNO) has extended a hostile bid to Faroe Petroleum Plc (AIM: FPM) after unsuccessfully convincing shareholders to sell their stock. Of late, DNO has criticized Faroe management in an attempt to convince shareholders they are better off selling. Faroe shareholders recently voted down a USD$713mm acquisition offer by DNO -- the offer only received 43% of votes despite DNO owning 30% of Faroe. DNO is rated “Unattractive” in our European SMID-Cap Global Top Stock Ideas. Faroe is not rated in our Global Top Stock Ideas.
  • Elbit Systems of America (TASE: ESLT) has been awarded a contract by Raytheon (RTN) to develop the Two Color Laser System (TCLS) for the Multi-Spectral Targeting System. The contract concerns development in 2019. Additionally, Elbit said that its IMI Systems unit will no longer continue its cluster munitions activities. Elbit is not rated in our Global Top Stock Ideas. Raytheon is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
  • Equity Bancshares (EQBK) saw its shares downgraded to market perform from outperform at Keefe, Brunette & Woods.  Equity Bancshares had its price target lowered to USD$45 from USD$47.  Equity Bancshares shares are fully valued at this level, which was cited as the main reason for the rating cut.  Equity Bancshares Apple is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas.
  • Ford (F) reported December light-vehicles sales that were worse than expected.  Ford reported light-vehicle sales that fell 8.8% while consensus was for a 6.2% drop. Ford branded vehicles dropped while Lincoln sales rose.  Ford is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • First Solar (FSLR) was upgraded to buy from neutral at Goldman Sachs.   First Solar’s price target was hiked to USD$57, up from USD$48.  Goldman Sachs says it sees “green shoots” in the solar industry with a better 2019 likely.  First Solar is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Geely Automotive (SEHK: 175) was downgraded to underweight from equal weight at Morgan Stanley.  Geely Automotive had its price target slashed to USD$8 from USD$15.  Geely’s price target implies 38% downside from its last close.  Geely Automotive is rated “Neutral” in our China All-Cap Global Top Stock Ideas.
  • Jet Blue (JBLU) initiated the first fare sale of the new year, offering fares as low as $44 one-way.  Most fares deals are centered on the Long Beach and Boston region.  No response from any other airlines yet.  Jet Blue is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • Johnson & Johnson (JNJ) saw its sales in India fall 3% in 2018.  Total sales in India were USD$829mm, according to a regulatory filing from Johnson & Johnson.  Johnson & Johnson’s sales fell after the Indian government decided to cap price for medical devices.  Johnson & Johnson is rated “Attractive” in our US Large-Cap Global Top Stock Ideas
  • Lumber Liquidators (LL) had its price target cut by Loop Capital, it was slashed to USD$10 from USD$24.  Lumber Liquidators rating was cut to hold from buy.  Loop Capital expects lower sales and margins for Lumber Liquidators in 2019, the main reason for the downgrade.  Lumber Liquidators is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Short” in our US Consumer Discretionary Global Top Stock Ideas.
  • Lumentum Holdings (LITE) shares are falling along with other Apple (AAPL) suppliers today, however, analysts are noting the selling is overdone. B. Riley FBR analyst Dave Kang is recommending “aggressive” buying of Lumentum on the weakness, citing that estimates already reflect weakness in Apple guidance. DA Davidson analyst Mark Kelleher, meanwhile, defended his buy recommendation on Lumentum. Lumentum is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Mellanox Technologies (MLNX) fell the most intraday in since April 2017 after naming Doug Ahrens as the company’s new Chief Financial Officer. According to Piper Jaffray’s James Fish, the hire coupled with reports of a slowdown, “is a potential indicator that Mellanox is not selling itself.” 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. 
  • MGM Resorts International (MGM) announced “MGM 2020” plan, its new strategy to reduce costs and improve margin.  MGM Resorts International expects to increase ebitda by USD$300 million across its resorts.  MGM Resorts International will look to improve operational efficiencies, especially using digital technology.  MGM Resorts International is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Next Plc (LSE: NXT) reported sales growth during the holiday season.  Next reported a 1% rise in sales in the properties it manages, surprising most investors.  Analysts called the holiday sales data “excellent”.  Next is rated “Top Buy” in our United Kingdom Global Top Stock Ideas.
  • UBS Group AG (SWX: UBSG) Chairman Axel Weber said that European banks need to get bigger in order to compete with US banks. “What Europe needs in order to catch up with American firms is European champions, banks that are larger in size.” Weber went on to call for consolidation among European banks. UBS Group is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Zalando SE (XTRA: ZAL) shares are trading notably higher after Marcel Muench, founder of German-Chinese trading start-up DONGXii, said in an interview that the company could be an acquisition target of Alibaba Group Holding Limited (BABA). Muench said, “I assume that Alibaba will soon invest in companies in Europe. Zalando is a takeover candidate.” Zalando is rated “Top Short” in our European SMID-Cap Global Top Stock Ideas. Alibaba is rated “Unattractive” in our China All-Cap Global Top Stock Ideas. 

 

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US Treasuries

  • US 2-Year Treasury Notes are higher with yields down -8.3 basis points to 2.38%
  • US 5-Year Treasury Bonds are higher with yields down -9.32 basis points to 2.36%
  • US 10-Year Treasury Bonds are higher with yields down -5.99 basis points to 2.56%
  • The US Treasury 2s-5s Spread has narrowed 1.02 basis points to -0.02%
  • The US Treasury 2s-10s Spread has widened 2.31 basis points to 0.18%
  • US Treasury 5s-10s Spread has widened 3.33 basis points to 0.2%

Currencies

  • EUR€ is up 0.476% against the USD$ in after hours to 1.1398
  • GBP£ is up 0.238% against the USD$ in after hours to 1.2637
  • CHF is up 0.307% against the USD$ in after hours to 1.0131
  • JPY¥ is down 1.258% against the USD$ in after hours to 107.51
     

Commodities

  • WTI Crude is up 1.18% to USD$47.09/bbl with the Brent-WTI spread up USD$0.71 to USD$7.76/bbl
  • Gold is up 0.75% to USD$1294.18/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

 

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S&P 500 Movers

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Outperformers Sector Price 1D % Chg Volume
Celgene Corp Consumer Discretionary 62.8 21.59%          20,652,918
Incyte Corp Consumer Staples 62.3 7.14%            1,205,184
HCP Inc Utilities 27.8 3.47%            1,467,313
Weyerhaeuser Co Consumer Discretionary 21.5 3.37%            2,534,986
Advance Auto Parts Inc Communication Services 155 3.23%                203,468
 
Underformers Sector Price 1D % Chg Volume
Bristol-Myers Squibb Co Industrials 50.4 -13.46%            9,113,995
Skyworks Solutions Inc Communication Services 67.7 -10.61%            1,440,009
Apple Inc Information Technology 156 -9.96%          24,615,313
Advanced Micro Devices Inc Health Care 17.5 -9.29%          23,517,408
Delta Air Lines Inc Financials 50.5 -9.10%            3,777,976

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