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Tech share lead US stocks higher, with positive market sentiment driven by China's stimulus announcement

Jan 15, 2019

 

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US Markets End of Day Snapshot

  • Tech shares led US stocks to a higher close, with China's announcement of stimulus driving risk-on today
  • The S&P 500 finished up 0.98%, Nasdaq Composite up 1.71%, and Russell 2000 up 0.75%
  • China said it is considering tax cuts on a “large scale” to stimulate economic growth
  • The US has shipped the third soybean shipment over the last month with China's resumption of US purchases
  • The Empire Manufacturing Index for December came at an anemic 3.9, well below 10.0 expected
  • UK Prime Minister Theresa May lost the Brexit vote in a landslide and will not face a no-confidence vote in Parliament
  • European Central Bank President Mario Draghi said that Europe's economy is weaker than expected, saying to members of the European Parliament,  "Recent economic developments have been weaker than expected and uncertainties, notably related to global factors, remain prominent"
  • German GDP Growth expanded 1.5% in CY2018, the slowest pace in 5 years and compares to 2.2% growth in CY2017
  • Healthcare (+1.74%), Telecom (+1.74%), and Tech (+1.48%) stocks were the top performers in the S&P 500 today
  • Energy (+0.3%), Industrials (-0.32%), and Materials (-0.65%) 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 2.79x
  • 107 stocks in the S&P 500 hit 4-week highs while 9 stocks reached 4-week lows
  • 2 stocks in the S&P 500 closed overbought while 2 stocks closed oversold according to the 16-day RSI Measure
  • 68 stocks in the Nasdaq Composite hit 4-week highs while 20 stocks reached 4-week lows
  • 473 stocks in the Nasdaq Composite closed overbought while 51 stocks closed oversold according to the 16-day RSI Measure
  • The VIX closed  down 0.47 points today to 18.60 after closing at 19.07 yesterday
     

Stocks Trending in the News

Click name for Q-Factor rating and financials data.
 

  • 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.
  • Bayer (DB: BAYN) shares suffered after a French court ruled that its weed killer RoundUp causes cancer.  The ruling caused Bernstein to reiterate its buy on Bayer, saying the ruling will have minimal financial impact on results and any weakness should be used as an opportunity to buy.  Bayer is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Boohoo Group (LSE: BOO) increased full-year guidance after a strong holiday season.  Boohoo as previously said revenue would rise 38-43%, now it has upped that to 43-45% growth.  Boohoo’s social media strategy has paid off handsomely.  Boohoo is rated “Attractive” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Boston Scientific (BSX) and Edwards Lifesciences (EW) agreed to settle all patent claims between them.  Edwards Lifesciences will make a one-time payment to Boston Scientific of USD$180 million to settle all claims with no further royalties due.  Both companies agreed to not litigate any further.  Boston Scientific is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.  Edwards Lifesciences is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas.
  • Bristol-Meyers Squibb (BMY) was upgraded at SocGen to buy from sell.  SocGen’s double upgrade comes as it looks favorably on Bristol-Myers Squibb’s takeover of Celgene (CELG).  SocGen sees an 80% probability of the deal closing as hiked its price target to USD$60 from USD$47.  Upon closing of the deal, the target will jump to USD$64.  Bristol-Meyers Squibb 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 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 its 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.
  • Marks & Spencer (LSE: MKS) has announced the next 17 store closures and the elimination of 1,045 jobs.  Marks & Spencer previously announced 100 stores will be closing, it has thus far announced 48 before today’s 17 closures.  The closures are part of a radical restructuring of Marks & Spencer’s retails operations.  Marks & Spencer is rated “Neutral” in our European 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.  
  • PG&E (PCG) confirmed it has secured USD$5.5 billion in debtor-in-possession financing for its imminent bankruptcy filing.  PG&E skipped a USD$26 million interest payment on bonds from its gas and electric unit, as expected, given its coming bankruptcy.  The San Francisco Public Utilities Commission will study the potential purchase of some of PG&E’s asset to assure supply for the city.  PG&E is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Sage Group (LSE: SGE) said it will post a profit of 23 million pounds on the sale of iSolved HCM, its payroll outsourcing operations.  Upon the sale closing, Sage will receive 73 million pounds in cash with 5 million pounds additional as a contingency payment.  Sage is rated “Attractive” in our United Kingdom All-Cap 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 its 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.
  • Walgreens Boots-Alliance (WBA) is joining forces with Microsoft (MSFT) to create “digital health corners” in Walgreens stores.  The “digital health corners” will promote the sale of personal health devices.  Walgreens will move its data operation to the Microsoft Azure cloud.  Walgreens Boots-Alliance is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.  Microsoft is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology 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 higher with yields down -0.41 basis points to 2.53%
  • US 5-Year Treasury Bonds are lower with yields up 0.33 basis points to 2.52%
  • US 10-Year Treasury Bonds are lower with yields up 0.88 basis points to 2.71%
  • The US Treasury 2s-5s Spread has widened 0.74 basis points to 0%
  • The US Treasury 2s-10s Spread has widened 1.29 basis points to 0.18%
  • US Treasury 5s-10s Spread has widened 0.55 basis points to 0.18%
     

Currencies

  • EUR€ is down 0.532% against the USD$ in after hours to 1.1408
  • GBP£ is little changed 0.086% against the USD$ in after hours to 1.2875
  • CHF is down 0.667% against the USD$ in after hours to 1.0126
  • JPY¥ is up 0.49% against the USD$ in after hours to 108.69
     

Commodities

  • WTI Crude is up 3.17% to USD$52.11/bbl with the Brent-WTI spread down USD$-1 to USD$7.63/bbl
  • Gold is little changed -0.19% to USD$1289.32/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
First Republic Bank/CA Financials 94.5 12.01%          732,066.00
Edwards Lifesciences Corp Health Care 162 8.51%                368,818
Nektar Therapeutics Health Care 44.5 7.11%                652,632
Incyte Corp Health Care 78.6 6.85%                662,735
Netflix Inc Communication Services 354 6.39%            4,416,783
 
Underformers Sector Price 1D % Chg Volume
PG&E Corp Utilities 6.95 -17.42%          18,444,225
Goodyear Tire & Rubber Co/The Consumer Discretionary 19 -13.07%            3,952,245
Edison International Utilities 55 -5.43%                617,151
Albemarle Corp Materials 73.5 -4.48%                246,391
Sherwin-Williams Co/The Materials 381 -4.26%                319,209

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