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The bulls are back as US stocks surge on jobs, Powell and prospects for trade progress

Jan 04, 2019

 

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US Markets End of Day Snapshot

  • The bulls are back!  US stocks rose sharply today with strong job growth, market friendly comments from Fed President Powell and news of US-China trade meetings next week driving risk-on sentiment for the entire session
  • The S&P 500 finished up 3.43%, Nasdaq Composite up 4.26%, and Russell 2000 up 3.75%
  • The yield on US 10-year bonds rose 11 basis point to 2.66% from 2.55% during today's trading
  • US change in non-farm payrolls for December came at 312k, well above the 184k consensus; also, November data was raised to 176k from 154k originally reported 
  • US average hourly earnings rose 0.4% m/m, above the 0.3% consensus
  • Federal President Jerome Powell said the Fed's policy is flexible and that the Fed is "listening carefully" to the markets, animating investors who fear an overly agressive Fed
  • Chinese trade officials confirm that US Deputy Trade Representative Jeffrey Gerrish (and other trade officials) will meet his Chinese counterparts in Beijing next Monday
  • Tech (+4.4%), Telecom (+4.06%), and Materials (+3.91%) stocks were the top performers in the S&P 500 today
  • Consumer Staples (+2.15%), Utilities (+1.48%), and Real Estate (+1.03%) 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 40.67x
  • 6 stocks in the S&P 500 hit 4-week highs while 24 stocks reached 4-week lows
  • 1 stocks in the S&P 500 closed overbought while 24 stocks closed oversold according to the 16-day RSI Measure
  • 17 stocks in the Nasdaq Composite hit 4-week highs while 84 stocks reached 4-week lows
  • 114 stocks in the Nasdaq Composite closed overbought while 110 stocks closed oversold according to the 16-day RSI Measure
  • The VIX closed  down -25.45 points today  to 0 after closing at 25.45 yesterday
     

Stocks Trending in the News

Click name for Q-Factor rating and financials data.
 

  • Alphabet’s (GOOGL) Verily division, formerly known as Google Life Sciences, has raised USD$ 1 billion in funding to grow its business.  This round of funding was led by Silver Lake, an investment fund backed by a host of large international companies.  Verily is involved in a number of projects including glucose monitoring contact lenses and a medical monitoring smart watch for older adults.  Alphabet 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) shares fell 10% yesterday in the wake of its guidance cut for 1Q revenue.  Apple’s action sent global markets lower yesterday.  Apple is now the 5th largest seller of mobile phones in China now, with 4 local players selling more phones and often at a price point well below what Apple sells its iPhones for and now with most if the same features.  Analysts say many local players are more in tune with the tastes of Chinese consumers than Apple.  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.
  • Bayer (DB: BAYN) are trading higher after receiving a favorable ruling in its Roundup case.  The judge has limited the evidence that can be presented by the plaintiffs, a ruing that could potentially benefit Bayer.  Plaintiffs will not be able to allege that Bayer’s Monsanto unit tried to influence regulators who were overseeing its use in agriculture.  Bayer is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Cal-Maine (CALM) reports FY2Q2019 financials that miss the lowest analyst estimates. Cal-Maine generated EPS of USD$0.45/share in FY2Q2019 while analyst estimates ranged between USD$0.50/share and USD$0.55/share. Additionally, Cal-Maine’s sales of USD$356mm missed analyst estimates that ranged between USD$357mm and USD$369mm. Cal-Maine is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas and “Unattractive” in our US Consumer Staples Global Top Stock Ideas.
  • Daimler AG (XTRA: DAI) investors are launching a class action lawsuit in Germany against the company over its diesel engines scandal.  Daimler was late to inform clients too late about its use of defeat devices in its diesel vehicles.  The case has been filed in Stuttgart.  Daimler is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • GameStop (GME) shares are rising after a Wall Street Journal report late Thursday night said that private equity firms Sycamore Partners and Apollo Global are both bidding for a company. A potential deal could be announced as soon as mid-February, the report details. Both Sycamore and Apollo did not comment on the story. GameStop is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas. 
  • Hudson Bay Company (TSX: HBC), owner of Sak’s 5th Avenue, is one step closer to going private, according to a report in the NY Post today.  The executive chairman, Richard Baker, acquired a block of shares from Ontario Teachers Pension Fund in a deal valued at USD$126 million.  The acquisition takes he and his partners to a stake of over 70% of Hudson Bay.  Hudson Bay Company is rated “attractive” in our Canada All-Cap Global Top Stock Ideas.
  • Intel Corporation (INTC) has been upgraded to buy from neutral at Bank of America Merril Lynch. Bank of America also raised its price target for Intel from USD$52/share to USD$50/share. In a note to clients, Bank of America cited that Intel, “provides attractive exposure to growth trends in cloud computing, AI, advanced autos, and 5G.” Intel is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Lamb Weston (LW) reported adjusted EPS for FY2Q2019 that surpassed analysts’ consensus estimates. Lamb Weston generated an adjusted EPS of USD$0.80/share in FY2Q2019 while analysts expected just USD$0.72/share. Lamb Weston’s FY2Q2019 sales of USD$911.4mm also beat analysts’ consensus of USD$897.2mm. Lamb Weston is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas. 
  • Marriott International (MAR) lowered the estimate of the number of people affected by the data breach it recently disclosed.  It is now estimated hackers got access to the personal data of up to 383 million people.  Original estimates from Marriott International were that over 500 million people had been affected.  Marriott International still has not disclosed how hackers got access to its systems.  Marriott International is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • NEXON Co. Ltd. (TSE: 3659) founder Kim Jung-ju said in a statement that he is considering ways to make the company more competitive. Kim detailed further that he will announce when detailed measures are decided. Nexon is not rated in our Global Top Stock Ideas. 
  • PG&E (PCG) is being sued by California power generator Calpine (CPN) blaming PG&E for the Camp Fire.  Calpine is seeking USD$20mn for damages its Geysers Power generating plant suffered in the fire.  Calpine is alleging PG&E’s equipment was to blame for starting the fire.  PG&E is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.  Calpine is not rated in our Global Top Stock Ideas.
  • ProSiebenSat.1 Media SE (XTRA: PSM) shares are falling, touching their lowest intraday price since December 2011, after analysts slashed the traditional television operator’s price target. Analysts at Independent Research GmbH and Morgan Stanley cut ProSiebenSat.1’s price target, citing lack of momentum for the classical TV business in the medium-term. Analysts are also concerned about the advertising trend from traditional TV to streaming. ProSiebenSat.1 is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. 
  • Qualcomm’s (QCOM) trial against the US Federal Trade Commission began today in California.  The US Federal Trade Commission alleges that Qualcomm abused its monopoly on mobile chips.  The case is being closely watched by a host of technology companies as the outcome of the 10-day, no jury trial could have widespread effects on the technology industry.  Qualcomm derives more revenue from licensing its patents than it does from selling actual chips.  Qualcomm is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Rite-Aid (RAD) has been notified by the New York Stock Exchange that it is no longer in compliance with USD$1 minimum listing price.  Rite-Aid is trading at 76 cents.  Rite-Aid has six months to remedy the situation and had said it is likely to seek a reverse split at the next shareholders meeting.  Rite-Aid is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas and “Unattractive” in our US Consumer Staples Global Top Stock Ideas.
  • Snap (SNAP) was downgraded at Goldman Sachs today to neutral from buy.  Snap's price target was reduced to USD$6 from USD$10. Goldman's target for Snap implies just 5.6% upside to last close.  Snap is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Swiss Re AG (SWX: SREN) has reportedly been approached by British insurer Rothesay Life about a potential acquisition. The acquisition would reportedly be for Swiss Re AG’s ReAssure unit for about 3.5bn pounds (USD$4.4bn). Swiss Re AG is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.  
  • Investors suing Tesla (TSLA) over its CEO’s tweets are attempting to drag his girlfriend at the time into the case.  Plaintiffs say Tesla CEO Elon Musk was with his girlfriend when he sent the texts about taking Tesla private that are the source of the case and that she may have relevant information about the case.  Musk is vehemently against her being subpoenaed.  Tesla is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Texas Instruments (TXN) has been downgraded from buy to neutral at Bank of America Merril Lynch. Additionally, Texas Instruments has its price target lowered from USD$117/share to USD$105/share, implying an 18% upside from Thursday’s close. Texas Instruments 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.
  • United Continental (UAL) is starting its new rules for support animals on its flights today.  United Continental is limiting emotional support animals on flights to only dogs and cats, with no animals less than 4 months old.  United Continental has seen an increase in incidents on longer flights where, it says, animals are not accustomed to being for so long.  United Continental is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Volvo’s (OM: VOLV B) SEK7bn provision, equal to SEK3.50/share, related to its emissions-control component flaw is better than the SEK10bn, or SEK5/share, that Citi included it its price target. The news is a relief for investors as the company will reportedly consider paying an extra dividend. Volvo is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas.

 

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US Treasuries

  • US 2-Year Treasury Notes are lower with yields up 11.72 basis points to 2.49%
  • US 5-Year Treasury Bonds are lower with yields up 13.78 basis points to 2.49%
  • US 10-Year Treasury Bonds are lower with yields up 11.06 basis points to 2.66%
  • The US Treasury 2s-5s Spread has widened 2.06 basis points to 0%
  • The US Treasury 2s-10s Spread has narrowed 0.66 basis points to 0.17%
  • US Treasury 5s-10s Spread has narrowed 2.72 basis points to 0.17%

Currencies

  • EUR€ is little changed 0.044% against the USD$ in after hours to 1.1399
  • GBP£ is up 0.831% against the USD$ in after hours to 1.2733
  • CHF is little changed 0.03% against the USD$ in after hours to 1.0137
  • JPY¥ is up 0.762% against the USD$ in after hours to 108.5

Commodities

  • WTI Crude is up 1.85% to USD$47.96/bbl with the Brent-WTI spread up USD$1.5 to USD$8.48/bbl
  • Gold is down -0.73% to USD$1284.89/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

 

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S&P 500 Movers

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Outperformers Sector Price 1D % Chg Volume
Mattel Inc Health Care 9.98 12.30%            2,586,760
Advanced Micro Devices Inc Health Care 17.5 11.44%          24,072,672
Netflix Inc Real Estate 256 9.72%            4,189,262
CF Industries Holdings Inc Consumer Discretionary 43.2 8.36%                777,728
Varian Medical Systems Inc Industrials 112 8.06%                637,718
 
Underformers Sector Price 1D % Chg Volume
Advance Auto Parts Inc Communication Services 155 -2.48%                285,577
Gap Inc/The Industrials 26.1 -1.51%            1,575,020
Macy's Inc Health Care 30 -1.28%            1,870,983
O'Reilly Automotive Inc Information Technology 343 -1.25%                331,835
AutoZone Inc Materials 843 -1.18%                  79,707

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