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Small-caps again lead US stocks higher on growing trade optimism, WTI rallies 2.6%

Jan 08, 2019

 

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US Markets End of Day Snapshot

  • US stocks rose today, led by small-cap stocks, with optimism growing that US-China trade negotiations will yield positive results
  • US-China trade talks are extending into Wednesday, with both sides signaling progress and President Trump tweeting "going great", after earlier encouraging words from US Commerce Secretary Wilbur Ross
  • The S&P 500 finished up 0.97%, Nasdaq Composite up 1.08%, and Russell 2000 up 1.51%
  • President Trump will give a prime-time national address this evening focused on his plan to end the US government shutdown
  • WTO crude is trading 2.6% higher at USD$49.80, extending its recent gains 
  • The EU and UK have discussed the possibility of extending the exit day deadline, according to a report in the Telegraph today; Brexit will be voted on in the UK Parliment on January 15th as PM Theresa continues to seek concessions from the EU
  • Materials (+1.02%), Telecom (+1.58%), and Consumer Discretionary (+1.14%) stocks were the top performers in the S&P 500 today
  • Healthcare (+0.95%), Tech (+0.9%), and Energy (+0.83%) 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 4.68x
  • 66 stocks in the S&P 500 hit 4-week highs while 3 stocks reached 4-week lows
  • 4 stocks in the S&P 500 closed overbought while 2 stocks closed oversold according to the 16-day RSI Measure
  • 44 stocks in the Nasdaq Composite hit 4-week highs while 29 stocks reached 4-week lows
  • 484 stocks in the Nasdaq Composite closed overbought while 36 stocks closed oversold according to the 16-day RSI Measure
  • The VIX closed down 0.93 points today to 20.47 after closing at 21.4 yesterday

Stocks Trending in the News

Click name for Q-Factor rating and financials data.
 

  • AutoNation Inc (AN) announced cost-cutting plans that include shrinking its 3 regions into 2.  AutoNation expects a challenging year and announced a plan to cut USD$50 million in costs.  AutoNation has lost a number of key executives and will not replace all of them as part of its cost-cutting measures.  AutoNation is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Capital One Financial’s (COF) rating of hold was reaffirmed at Morgan Stanley today.  Morgan Stanley also reaffirmed its USD$100 price target on Capital One Financial in a note to clients today.  Capital One Financial is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Danaher Corp. (DHR) Chief Executive Officer Thomas Joyce, Jr. is set to comment on the company’s performance at the J.P. Morgan Healthcare Conference in San Francisco today. Ahead of the conference, Danaher sees its FY4Q core revenue growth above its prior forecasts with its adjusted EPS expected to be, “at or near the high-end,” of previously announced guidance. Danaher is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Duerr AG (DB: DUE) shares are trading lower after being downgraded to underperform from neutral at Bank of America Merrill Lynch. Bank of America Merrill Lynch cited slowing momentum in the company’s HOMAG unit as demand slows in China as a reason for the downgrade. Additionally, the company lacks an M&A catalyst and auto exposure. Duerr is rated “Unattractive” in our European SMID-Cap Global Top Stock Ideas. 
  • Frontier Communications (FTR) was downgraded by Wells Fargo Securities to underperform from market perform.  Frontier Communications also saw its price target cut to USD$1.75 from USD$5.  Frontier Communications is working on a plan to deal with its upcoming debt maturities.  Frontier Communications is rated “Unattractive” in our US SMID-Cap Global Top Stock Ideas.
  • Geely Automotive (SEHK: 175) provided guidance that implies its challenges will continue.  Geely sees sales growth in 2019 of just 1% while many analysts are expecting double-digit sales growth.  Merrill Lynch cut its price target to HK$10 from HK$19.  Credit Suisse cut its target to HK$11 from HK$29.  Geely Automotive is rated “Neutral” in our China All-Cap Global Top Stock Ideas.
  • General Dynamics (GD) had its shares downgraded at Jefferies to hold from buy.  Jefferies cut the price target of General Dynamics to USD$164 from USD$197.  General Dynamics won a USD$898 million cyber engineering contract for the US Navy, it also announced.  General Dynamics is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
  • Hornbeck Offshore Services (HOS) shares are trading notably higher after drawing on its remaining USD$136.68mm available under the company’s first-lien delayed-draw term loan credit facility. The company’s term loan is now fully funded at USD$300mm, according to the company. Hornbeck is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas. 
  • Illumina Inc. (ILMN) shares are slipping lower after reporting preliminary FY4Q2018 financials that Goldman Sachs thinks are, “somewhat underwhelming,” considering that the company usually beats sales estimates by roughly USD$35mm. Illumina generated USD$865mm of sales in FY4Q2018 while analysts’ consesnus called for USD$861.2mm. Illumina is rated “Attractive” in our US Large-Cap Global Top Stock Ideas. 
  • Mattel (MAT) is finally making a live-action Barbie movie.  Mattel created a Mattel Films division over the last year and has been trying for some time to make a Barbie movie, with multiple attempts ending in frustration.  The film will start Margot Robbie.  Mattel is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Maxar Technologies (MAXR) reported the failure of its Worldview-4 global imaging satellite.  It appears its gyroscopes have failed at making it remain stable on an axis.  Maxar was downgraded by Credit Suisse to underperform from neutral on the news.  Maxar Technologies is rated “Unattractive” in our US SMID-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.
  • Nissan (TSE: 7201) CEO Hiroto Saikawa said on Monday that he wants to, “discuss whether there need to be some sorts of initiatives or changes,” as the company continues its partnership with Renault (ENXTPA: RNO). Saikawa also stressed that the alliance itself is, “not in danger.” Nissan is rated “Top Buy” in our Japan Large-Cap Global Top Stock Ideas. Renault is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Orange S.A. (ENXTPA: ORA) is being fined 14mm euros (USD$16mm) by Romania’s Competition Council for abuse of its dominant position. The Competition Council said that Orange restricted access to its network from 2011 through 2015 in order to deny local companies access to sending commercial text messages to Orange clients. Orange is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. 
  • PG&E (PCG) shares fell sharply yesterday on new it is exploring bankruptcy.  PG&E is considering bankruptcy because liabilities from wildfires has reached a potential USD$30 billion for the company with USD$10 billion in market cap.  The company is seeking help from the state of California for a potential bailout, though no specifics have been mentioned.  PG&E is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Samsung (KOSE: 005930) reported revenue and operating income for fiscal 4Q that missed estimates.  Samsung revenue came at 59 trillion won, below 63.6 trillion expected, a drop of 11%.  Operating income of 10.8 trillion won came below the 13.8 trillion consensus expectation.  Samsung is feeling the pinch of softer demand in its 2 key export markets of the US and China.  Samsung is not rated in our Global Top Stock Ideas.
  • Sears Holdings (SHLD) has rejected Chairman Eddie Lampert’s bid to save the company, setting the retailer on a path to liquidation after 126 years. Sears rejected a USD$4.4bn bid from Lampert’s ESL Investments as it was deemed insufficient by Sears’ advisors. Sears is rated “Top Short” in our US SMID-Cap Global Top Stock Ideas and “Top Short” in our US Consumer Discretionary Global Top Stock Ideas.
  • Sika AG (SWX: SIKA) will acquire private equity-owned Parex Group for 2.5bn Swiss francs (USD$2.6bn). The acquisition will enable Sika to expand its building materials operations into construction markets from France to China. Sika AG is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Ubisoft Entertainment SA (ENXTPA: UBI) shares are trading notably higher after being upgraded to buy from hold at Kepler Cheuvreux. Additionally, Kepler Cheuvreux raised its price target for Ubisoft from 80 euros/share to 90 euros/share, implying a 27% upside from Monday’s closing price. Ubisoft is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. 
  • Union Pacific Corp (UNP) was upgraded at Seaport Securities to buy from neutral.  Seaport Securities raised the Union Pacific Corp price target to USD$165, implying a 19 upside to yesterday’s close.  Union Pacific is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
  • Verizon Communications (VZ) announced it added 1.2 million new wireless subscribers in its fiscal 4Q.  This is Verizon Communications’ seventh straight quarter of strong additions.  This is preliminary data and matched gains from a year ago.  Verizon Communications’ CEO commented that the company has “seen continued momentum, with an outstanding fourth quarter”.  Verizon Communications is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Billions of Xiaomi Corp. (SEHK: 1810) shares will be free of their six-month lock lockup period on Wednesday, causing investors to question if it will exacerbate the stock’s drop from a listing price of HK$17/share to HK$11.10/share as of its last close. More than 3bn shares accounting for about 19% of shares outstanding will be unlocked Wednesday. JPMorgan Chase & Co. also cut its buy recommendation for Xiamoi today. Xiaomi is rated “Neutral” in our China All-Cap 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 4.7 basis points to 2.54%
  • US 5-Year Treasury Bonds are lower with yields up 4.53 basis points to 2.54%
  • US 10-Year Treasury Bonds are lower with yields up 3.38 basis points to 2.69%
  • The US Treasury 2s-5s Spread has narrowed 0.17 basis points to -0.01%
  • The US Treasury 2s-10s Spread has narrowed 1.32 basis points to 0.14%
  • US Treasury 5s-10s Spread has narrowed 1.15 basis points to 0.15%
     

Currencies

  • EUR€ is down 0.288% against the USD$ in after hours to 1.1441
  • GBP£ is down 0.462% against the USD$ in after hours to 1.2718
  • CHF is down 0.206% against the USD$ in after hours to 1.0187
  • JPY¥ is little changed 0.064% against the USD$ in after hours to 108.79

Commodities

  • WTI Crude is up 2.6% to USD$49.78/bbl with the Brent-WTI spread down USD$-1.14 to USD$7.98/bbl
  • Gold is down -0.31% to USD$1285.27/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
Nektar Therapeutics Real Estate 33.2 11.09%            1,735,374
Union Pacific Corp Utilities 137 8.73%            1,875,887
Monster Beverage Corp Information Technology 49.4 6.23%            1,923,948
Aptiv PLC Industrials 62 5.41%                588,075
Mattel Inc Health Care 9.98 4.73%            2,805,200
 
Underformers Sector Price 1D % Chg Volume
PG&E Corp Information Technology 23.6 -7.34%            5,635,551
Illumina Inc Industrials 300 -4.59%                822,903
Gap Inc/The Industrials 26.1 -4.21%            2,318,114
Applied Materials Inc Financials 31.6 -4.05%            3,806,012
Conagra Brands Inc Financials 21.2 -3.90%            3,105,051

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