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Risk-on strong midday with US stocks rising as tech leads gains, investors welcome Chinese stimulus

Jan 15, 2019

 

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Market data as of 12:30pm EST

US Market Snapshot

  • US stocks are rising midday with risk-on sentiment strong as investors welcome Chinese announcement of stimulus for its economy
  • China said it is considering tax cuts on a “large scale” to stimulate economic growth
  • The S&P 500 is currently up 1.13%, Nasdaq Composite is up 1.64%, and Russell 2000 is up 0.64%
  • Stocks strategists at the Capital Group, an investment management firm with USD$1.8 trillion in assets, argue we are in the late stages of an economic cycle and that this period should last anywhere from 1 to 3 years – US corporate earnings should grow in the range of 10% in CY2019 before decelerating in CY2020
  • European Central Bank President Mario Draghi said that Europe's economy is weaker than expected saying,  "Recent economic developments have been weaker than expected and uncertainties, notably related to global factors, remain prominent"
  • NYMEX gasoline crack spreads, a measure of profitability for US refiners, is trading at lowest levels in 3 years with rising domestic stockpiles weigh downstream products prices
  • Members of Parliament was expected to vote down UK Prime Minister Theresa May’s BREXIT plan later today (in the evening London time)
  • Telecom (+1.82%), Healthcare (+1.58%), and Tech (+1.49%) stocks are the top performers in the S&P 500 today
  • Energy (+0.43%), Industrials (-0.2%), and Materials (-0.78%) stocks are the worst performers in the S&P 500 today
  • Investor sentiment for US stocks is positive with the advance/decline ratio for the S&P 500 currently at 3.76x
  • 107 stocks in the S&P500 are at 4-week highs while 9 stocks are at 4-week lows
  • 2 stocks in the S&P 500 are overbought while 2 stocks are oversold according to the 16-day RSI Measure
  • 68 stocks in the Nasdaq Composite are at 4-week highs while 20 stocks are at 4-week lows
  • 473 stocks in the Nasdaq Composite are overbought while 51 stocks are oversold according to the 16-day RSI Measure
  • The VIX is currently moving down at 18.11 from yesterday's close of 19.07
     

Stocks Trending in the News

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  • Ablemarle (ALB) was downgraded today to neutral from buy at Nomura Instinet.  Ablemarle’s price target was lowered to USD$85 from USD$90.  Nomura Instinet is at the low end of consensus, with the average price target USD$113.50 for Ablemarle.  Ablemarle is rated is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Bytedance is launching a new chat service in China to take on Tencent’s (TCEHY, SEHK: 700) WeChat.  The new service was launched today in a live-streamed event in Beijing and is called “Duoshan”.  Bytedance wants to grab some of the 1 billion users that WeChat presently has.  Tencent is rated “Attractive” in our China All-Cap Global Top Stock Ideas.
  • Delta Airlines (DAL) reported 4Q EPS of USD$1.30, a touch above USD$1.28 expected.  For the coming quarter, Delta Airlines sees revenue growing 4-6% while expecting costs to grow below inflation.  Delta expects 1Q revenue of USD$10.4 billion, up 5% y/y.  For full-year 2019, Delta Airlines expects EPS of USD$6-7.  Delta Airlines is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas.
  • Facebook (FB) said it is going to invest USD$300 million in local news over the next 3 years.  Facebook will offer grants to local newsrooms and invest in local news non-profits.  Facebook is making the efforts as local news programs continue to suffer.  Facebook is rated is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and is rated “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Glencore (LSE: GLEN) is being described as “Far, far too cheap” by Bernstein in a note.  Bernstein says the stock is trading at 4.8x EV/ebitda versus its historical average of 8.0x.  Bernstein reiterates it outperform rating at 500 pence price target.  Glencore is rated is rated “Neutral” in our European Large-Cap Global Top Stock Ideas and is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • JP Morgan (JPM) reported 4Q results that missed estimates, with fixed income trading revenue missing estimates significantly.  4Q EPS of USD$1.98 was well below USD$2.21 and came below the lowest estimate.  Fixed income trading revenue of USD$1.86 billion was well below USD$2.29 billion expected.  Equity sales and trading revenue of USD$1.32 billion was in-line.  JP Morgan reported USD$2 trillion in assets under management.  JP Morgan is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Neflix (NFLX) raised prices for its subscriptions for the first time since 2017 and the stock has been reacting positively.   Netflix said its most popular plan would rise to USD$13 from USD$11.  Netflix has risen 40% since Christmas Eve before today’s news and the stock keep climbing.  Netflix is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  
  • United Healthcare (UNH) reported fourth quarter results that beat estimates.  Adjusted earnings came at USD$3.28, beating the USD$3.21 average consensus.  United Healthcare saw it medical care ratio decline 50 basis points to 81.6%.  United Healthcare maintained 2019 revenue guidance of USD$243-245 billion.  United Healthcare is rated is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Walmart (WMT) will no longer participate in CVS’ (CVS) pharmacy network after the two could not come to an agreement on pricing.  Walmart was demanding higher reimbursements from CVS in their negotiations and CVS refused.   Walmart ended their pharmacy arrangement shortly thereafter.  Walmart is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Consumer Staples” in our US Consumer Discretionary Global Top Stock Ideas.   CVS is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Wells Fargo (WFC) said it will operate under a Federal Reserve asset cap until the end of 2019, longer than anticipated; the cap was due to end in the middle of 2019.  Wells Fargo needs more time to fully correct the problems in its consumer business that led to the cap.   The Federal Reserve rejected parts of the turnaround plan Wells Fargo presented last year, also contributing to the additional time of the cap.  Wells Fargo is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Zix Corp (ZIXI) has agreed to acquire AppRiver in an effort to create a cloud-based email security provider to small and medium-sized businesses.  Zix secured a total of USD$300 million in convertible financing to complete the deal.  The new combined company will have ~USD$180 million in revenue.  Zix is rated is rated “Attractive” in our US SMID-Cap Global Top Stock Ideas and is rated “Neutral” in our US Information Technology Global Top Stock Ideas.

 

 

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US Treasuries

  • US 2-Year Treasury Notes are lower with yields up 0.41 basis points to 2.53%
  • US 5-Year Treasury Bonds are lower with yields up 1 basis points to 2.53%
  • US 10-Year Treasury Bonds are lower with yields up 1.24 basis points to 2.71%
  • The US Treasury 2s-5s Spread has widened 0.59 basis points to -0.01%
  • The US Treasury 2s-10s Spread has widened 0.83 basis points to 0.18%
  • US Treasury 5s-10s Spread has widened 0.24 basis points to 0.18%
     

Currencies

  • EUR€ is currently down 0.706% against the USD$ to 1.1388
  • GBP£ is currently down 1.018% against the USD$ to 1.2733
  • CHF is currently down 0.824% against the USD$ to 1.011
  • JPY¥ is currently up 0.444% against the USD$ to 108.64
     

Commodities

  • WTI Crude is currently up 2.38% to USD$51.71/bbl with the Brent-WTI spread down USD$-0.87 to USD$7.64/bbl
  • Gold is currently down -0.28% to USD$1288.07/oz
     

 

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

S&P 500 Sector ETFs - Intraday

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

Russell 1000 Factor ETFs - Intraday

*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
Edwards Lifesciences Corp Real Estate 150 7.79%                198,088
Netflix Inc Real Estate 256 6.54%            2,842,918
Incyte Corp Consumer Staples 62.3 6.40%                322,914
Nektar Therapeutics Real Estate 33.2 5.52%                330,124
WW Grainger Inc Information Technology 282 4.56%                  42,545
 
Underperformers Sector Price 1D % Chg Volume
PG&E Corp Information Technology 23.6 -19.39%          13,028,401
Sherwin-Williams Co/The Financials 391 -4.47%                188,322
Edison International Industrials 57 -4.35%                275,363
Albemarle Corp Communication Services 77.2 -3.98%                120,904
Goodyear Tire & Rubber Co/The Consumer Staples 20.2 -3.57%                933,479

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