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Small caps lead US stocks higher as growth and trade fears ease, risk appetite grows

Jan 07, 2019

 

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US Markets End of Day Snapshot

  • US stocks were led by small caps today, with stocks building on Friday's gains today; growth and trade fears are easing and risk appetite growing
  • The S&P 500 finished up 0.7%, Nasdaq Composite up 1.26%, and Russell 2000 up 1.78%
  • According to Fundstrat’s Tom Lee, the number of stocks in the S&P 500 with P/Es south of 15.0x outnumbers those that are valued more than 25.0x with the spreading have increased nearly 15 points since the end of CY2017 – Lee suggests that US stocks are offering “real value” for investors for the first time in years 
  • Strategists at French investment bank SocGen believe earnings growth in the US and Europe will be flat in CY2019 with risks coming from semiconductors and capital goods stocks.  SocGen favors pharmaceutical and HPC stocks within the “defensive” healthcare and consumer staples sectors. 
  • JP Morgan stock strategists disagree with strategists at SocGen and suggest record levels for stocks buybacks, best in world earnings growth, and an acceleration in top-line growth point to continued support for US stocks valuation  
  • German factory orders fell in November 1%, well above the 0.1% fall that was expected; European shares closed lower today on the news
  • Consumer Discretionary (+2.36%), Energy (+1.29%), and Tech (+0.86%) stocks were the top performers in the S&P 500 today
  • Financials (+0.23%), Consumer Staples (-0.28%), and Utilities (-0.71%) 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 3.59x
  • 24 stocks in the S&P 500 hit 4-week highs while 3 stocks reached 4-week lows
  • 1 stock in the S&P 500 closed overbought while 3 stocks closed oversold according to the 16-day RSI Measure
  • 28 stocks in the Nasdaq Composite hit 4-week highs while 31 stocks reached 4-week lows
  • 285 stocks in the Nasdaq Composite closed overbought while 46 stocks closed oversold according to the 16-day RSI Measure
  • The VIX closed flat today at 21.40 after closing at 21.38 last week
     

Stocks Trending in the News

Click name for Q-Factor rating and financials data.
 

  • Adyen (ENXTAM: ADYEN) shares are soaring after Bank of America Merrill Lynch upgraded the company’s stock from neutral to buy. Bank of America Merrill Lynch cited that previous Adyen share prices were not accounting for any, “material growth contribution,” from potential future merchant wins. Adyen is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
  • Alphabet Inc. (GOOGL) was upgraded to buy from hold at Pivotal Research Group while its price target for the tech giant was raised from USD$1,010/share to USD$1,240/share. Pivotal cited that Google’s parent company, “remains the dominant player in digital advertising,” as reasoning for the upgrade. Alphabet is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Alstom SA (ENXTPA: ALO) shares are trading lower after Les Echos reported that the European Union (EU) is unlikely to approve the rail business’ merger with Siemens AG (DB: SIE). The merger will reportedly not be approved because of a competitive threat from China. Alstom is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas. Siemens is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Anheuser-Busch InBev (BUD) was downgraded by Goldman Sachs today to neutral from buy.  Anheuser-Busch InBev, like a number of players in the sector, is likely to have a tough 2019 as demand is expected to be less than originally expected.  Anheuser-Busch InBev is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
  • Apple Inc. (AAPL) and Samsung (KOSE: A005930) have announced a deal that will see the iPhone maker offer iTunes movies and TV shows on its rival’s TV sets. The move by Apple displays a shift towards developing its tech and media services business as product sales continue to wane for the company. 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. Samsung is not rated in our Global Top Stock Ideas. 
  • Apollo Capital (APO) is considering a bid for General Electric’s (GE) jet-leasing unit, according to a story from Bloomberg today.  Apollo Management is trying to arrange financing for a bid that could reach USD$40 billion.  Discussions are in the preliminary stage and a deal is not assured.  Apollo Management is rated “Top Short” in our US Large-Cap Global Top Stock Ideas.  General Electric is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and is rated “Top Short” in our US Industrials Global Top Stock Ideas.
  • Six current and former BASF SE (DB: BAS) engineers have been arrested in Taiwan for allegedly accepting bribes and sharing the German company’s technology with China’s Jiangyin Jianghua Microelectronics Materials Co. (SHSE: 603078). The employees were reportedly offered 40mm yuan (USD$5.8mm).  BASF SE is rated “Top Short” in our European Large-Cap Global Top Stock Ideas. Jiangyin Jianghua Microelectronics Materials is not rated in our Global Top Stock Ideas.
  • British American Tobacco (LSE: BATS) shares are falling after Cowen warned investors to be cautious of the impact of higher e-cigarette usage on US combustible cigarette volumes. While cutting its rating for British American Tobacco, Cowen also slashed the rating for Imperial Brands (LSE: IMB) and Altria (MO). British American Tobacco is rated “Top Buy” in our United Kingdom All-Cap Global Top Stock Ideas. Imperial Brands is rated “Attractive” in our United Kingdom All-Cap Global Top Stock Ideas. Altria is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Staples Global Top Stock Ideas. 
  • CBS News  (CBS) has named its first female president of the company.  CBS News named Susan Zirinsky, the producer of “48 Hours”, as its new president.  CBS news has suffered ratings weakness and the loss of key anchors and its new president will be tasked with turning the division around.  CBS Corp. is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Dollar Tree (DLTR) has Starboard Value as a shareholder, with a 1.7% stake, according to the Wall Street Journal.  Dollar Tree is being pushed to sell its Family Dollar division and to make changes to its pricing model.  Starboard Value has also named seven candidates for Dollar Tree’s board.  Dollar Tree is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • DXC Technology (DXC) has agreed on final details of its acquisition of Luxoft Holdings (LXFT).  DXC Technology will pay USD$59 per share for all Class A and Class B shares of Luxoft Holdings.  The deal values Luxoft at an 86% premium to Friday’s close.  DXC is paying cash for Luxoft in a deal valued at USD$2 billion.  DXC Technology is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas  Luxoft is not rated in our Global Top Stock ideas.
  • Eli Lilly (LLY) is acquiring Loxo Oncology (LOXO) for USD$235 per shares, or about USD$8 billion.  Eli Lilly is expanding its cancer treatment business with the acquisition.  The companies will hold a press conference this morning to go over the details of the deal.  Eli Lilly is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.  Loxo Oncology Nvidia is rated “Top Short” in our US Large-Cap Global Top Stock Ideas.
  • General Motors Company (GM) was upgraded to outperform from market perform by GMO while its price target for the automobile manufacturer was raised from USD$38/share to USD$41/share. BMO cited a strong outlook and better catalysts from GM in 2019 for the upgrade. GM is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Nvidia (NVDA) introduced a new gaming chip, the GeForce RTX 2060 chip, last night at a CES event.  The RTX 2060 is 60% faster than prior generation chips and according to the company, puts Turing architecture within reach of many more PC gamers worldwide.  Nvidia is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Norwegian Air Shuttle ASA (OB: NAS) shares are gaining after Pareto said that the firm’s December yield was ahead of its estimate while the firm’s load factor was below its estimate. Additionally, Pareto said that, while Norwegian Air’s hedging loss of NOK2bn adds pressure on its book equity, there is no covenant breach expected in FY4Q2018. Norwegian Air is rated “Top Short” in our European SMID-Cap Global Top Stock Ideas.
  • NuVasive (NUVA) shares are trading lower after reporting financials that missed analyst expectations. NuVasive reported preliminary revenue of USD$1.10bn in FY2018 while analysts expected USD$1.11bn. NuVasive’s FY4Q2018 revenue of USD$288mm missed analysts’ consensus of USD$294.4mm. NuVasive is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
    QEP Resources (QEP) has received an offer from Elliott  Management for the rest of the company it does not already own.  Elliott  Management offered USD$8.75 per share for oil driller QEP Resources, a 44% premium to Friday’s close.  Elliott said the deal is subject to due diligence.  Elliott has been engaged with QEP Resources since early 2018 on how to improve performance.  QEP Resources is rated “Top Short” in our US Large-Cap Global Top Stock Ideas.
  • PF Chang’s (PFCB) is close to being sold, according to a Bloomberg report today.  PF Chang’s owner Triartisan Capital is in talks for a sale of the chain to Centerbridge Partners, according to the report.  The deal could close for as much as USD$700 million though no final deal has been reached.  PF Chang’s has 220 restaurants in the US and international locations.  PF Chang’s is not rated in our Global Top Stock ideas.
  • PG&E (PCG) is considering whether to file bankruptcy protection, according to a report in Bloomberg.  PG&E is looking to the state of California to help it with legislation as it faces billions and billions of dollars in liabilities over the fire.  PG&E has not made any decision yet as to how it will proceed.  PG&E is rated is “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Petroleum Geo-Services ASA (OB: PGS) shares are trading higher after issuing a FY4Q update indicating a stronger-than-expected quarter. PGS reported that it expects segment EBITDA of about USD$145mm for FY4Q2018 while citing, “strong customer interest and momentum,” in the quarter. Petroleum Geo-Services is rated “Attractive” in our European SMID-Cap Global Top Stock Ideas. 
  • Sage Therapeutics Inc. (SAGE) shares surged higher after announcing that their experimental antidepressant was successful in treating women’s postpartum depression symptoms. After two weeks of treatment, 45% of women were in remission compared to 23% of women on the placebo. Sage is rated “Top Short” in our US Large-Cap Global Top Stock Ideas.
  • Tesla (TSLA) today broke ground on its new factory in China.  Tesla calls the newest factory Gigafactory 3 and is located in Shanghai.  Tesla’s factory will be the first production facility of its type that is fully owned by a foreign company.  Tesla expects to build the factory in record time.  Tesla is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.

 

Actionable and Transparent Quantitative ResearchActionable and Transparent Quantitative Research

US Treasuries

  • US 2-Year Treasury Notes are lower with yields up 4.48 basis points to 2.51%
  • US 5-Year Treasury Bonds are lower with yields up 3.51 basis points to 2.51%
  • US 10-Year Treasury Bonds are lower with yields up 2.83 basis points to 2.68%
  • The US Treasury 2s-5s Spread has narrowed 0.97 basis points to 0%
  • The US Treasury 2s-10s Spread has narrowed 1.65 basis points to 0.16%
  • US Treasury 5s-10s Spread has narrowed 0.68 basis points to 0.16%
     

Currencies

  • EUR€ is up 0.702% against the USD$ in after hours to 1.1475
  • GBP£ is up 0.385% against the USD$ in after hours to 1.2772
  • CHF is up 0.78% against the USD$ in after hours to 1.0209
  • JPY¥ is up 0.212% against the USD$ in after hours to 108.74
     

Commodities

  • WTI Crude is up 1.17% to USD$48.52/bbl with the Brent-WTI spread down USD$-0.73 to USD$8.31/bbl
  • Gold is little changed 0.2% to USD$1288.64/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
Advanced Micro Devices Inc Health Care 17.5 8.26%          21,281,151
Nektar Therapeutics Real Estate 33.2 7.83%                635,128
Mattel Inc Health Care 9.98 7.68%            2,244,698
Chipotle Mexican Grill Inc Real Estate 415 6.63%                180,438
Ulta Beauty Inc Utilities 242 6.26%                475,098
 
Underformers Sector Price 1D % Chg Volume
PG&E Corp Information Technology 23.6 -22.34%            5,344,546
Lamb Weston Holdings Inc Health Care 73.7 -6.66%            1,014,087
Medtronic PLC Consumer Discretionary 89.7 -6.45%            3,504,521
Philip Morris International Inc Real Estate 66.7 -3.06%            2,451,953
Intercontinental Exchange Inc Consumer Staples 74.3 -3.03%            1,265,896

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