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US stocks close higher, off session highs; strong bank earnings boosting risk-on sentiment

Jan 16, 2019

 

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US Markets End of Day Snapshot

  • US stocks close higher with strong bank earnings fueling risk-on sentiment, stocks close off session highs
  • The S&P 500 finished up 0.24%, Nasdaq Composite up 0.26%, and Russell 2000 up 0.51%
  • The S&P 500 closes higher but remains just below its 50-day moving average, the S&P 500 has not traded above that average since early December
  • Bank of America's (BAC) CEO said on the company's earnings call that he sees no signs of an economic slow down
  • UK stocks dropped today after UK Prime Minister Theresa May’s BREXIT plan was voted down in the UK Parliament, she survived a no-confidence vote in Parliament this afternoon 
  • European Central Bank regulators are said to prefer to see Deutsche Bank (DB: DBK) merge with a European bank outside of Germany as opposed to Commerzbank (DB:CMK)the Germany government would prefer a domestic merge
  • Oil is little changed with WTI crude staying just above the $52 mark, trading at $52.07
  • FAANG stocks, led by Netflix (NFLX), have been leading a post-Christmas rally in the S&P 500. In addition to Netflix (NFLX), Facebook (FB) and Amazon.com (AMZN) have also outpaced the S&P500; Alphabet (GOOG.L) has been more or less in-line with the return on the S&P 500 
  • There has been increased flows into leveraged ETFs that benefit when the S&P 500 drops – USD$380 million has flowed into the ProShares Short S&P 500 ETF (SH) over the past 2 weeks, the biggest inflow since CY2010
  • In contrast, the US Financial Conditions index has moved back into positive territory and points to a brightening outlook for US and global stocks – the bounce-back in investor sentiment is the primary driver of the move in the index
  • Financials (+2.25%), Materials (+0.63%), and Tech (+0.16%) stocks were the top performers in the S&P 500 today
  • Energy (-0.05%), Telecom (-0.12%), and Consumer Staples (-0.77%) 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 1.22x
  • 160 stocks in the S&P 500 hit 4-week highs while 5 stocks reached 4-week lows
  • 3 stocks in the S&P 500 closed overbought while 2 stocks closed oversold according to the 16-day RSI Measure
  • 79 stocks in the Nasdaq Composite hit 4-week highs while 20 stocks reached 4-week lows
  • 513 stocks in the Nasdaq Composite closed overbought while 38 stocks closed oversold according to the 16-day RSI Measure
  • The VIX closed little at 19.04 after closing at 18.6 yesterday
     

Stocks Trending in the News

Click name for Q-Factor rating and financials data.
 

  • Alcoa (AA) reported 4Q18 EPS of 66 cents while 58 cents was consensus.  Alcoa adjusted ebitda of USD$749 million topped USD$717 million consensus.  Alcoa sees a deficit in aluminum continuing in 2019, with a 1.7-2.1 million ton deficit estimated while a surplus of alumina is expected driven by China.  Alcoa is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Anheuser-Busch InBev SA (ENXTBR: ABI) shares were downgraded to underperform from hold at Jefferies. Anheuser-Busch maintains 26 buy recommendations, 7 hold recommendations, and 2 sell recommendations across industry forecasts. Additionally, analysts have lowered the consensus price target for Anheuser-Busch by 15% over the last 3 months. Anheuser-Busch is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.  
  • Bank of America (BAC) reported CY4Q2018 earnings that broadly beat analysts’ consensus estimates led by the bank’s retail business. Bank of America generated EPS of USD$0.70/share in CY4Q2018 while analysts expected USD$0.63/share. Bank of America also increased its efficiency ratio from 58% a year ago to 65% in CY4Q2018. Bank of America is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Bank of New York Mellon Corporation (BK) reported FY4Q2018 financials that mostly surpass analyst expectations. Bank of New York generated an adjusted EPS of USD$0.99/share in FY4Q2018 while analysts expected USD$0.93/share. Bank of New York’s net interest margin of 1.24% in FY4Q2018 slightly missed analysts’ consensus forecast of 1.28%. Bank of New York is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.  
  • BlackRock (BLK) reported 4Q18 EPS of USD$6.08 versus USD$6.28 consensus.  4Q18 revenue of USD$3.43 billion came in-line with consensus.  BlackRock increased quarterly dividend 5% to USD$3.30.  BlackRock is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Bovis Homes (LSE: BVS) shares are trading higher after the company reported that it sees FY2018 profit ahead of analyst expectations. Additionally, Canaccord Genuity analyst Aynsley Lammin, who maintains a buy recommendation for Bovis Homes, said that the company’s valuation looks attractive against its peers. Bovis Homes is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas. 
  • The Charles Schwab Corporation (SCHW) reported FY4Q2018 earnings and revenue that edged past analysts’ consensus estimates. Schwab generated a FY4Q2018 EPS of USD$0.65/share while analysts expected USD$0.64/share. Schwab also beat analysts’ consensus revenue estimate of USD$2.64bn in reporting its FY4Q2018 revenue of USD$2.67bn. Schwab is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.  
  • Comerica (CMA) reported FY4Q2018 financials that matched the highest analyst estimate and beat analysts’ consensus estimate. Comerica generated an adjusted EPS of USD$1.95/share in CY4Q2018 while analysts’ consensus called for USD$1.88/share. Comerica also reported that it sees a common equity tier 1 capital ratio between 9.5% and 10% in FY2019. Comerica is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.  
  • CSX (CSX) reported 4Q18 EPS of USD$1.01 while 99 cents was consensus.  CSX 4Q18 revenue of USD$3.14 billion came in line with USD$3.12 billion consensus.  CSX operating margin this quarter was 60.3% and CSX expects that to improve in 2020.  CSX completed its USD$5 billion share buyback and authorized another USD$5 billion buyback.  CSX is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas.
  • Deutsche Bank AG (DB: DBK) Chief Executive Officer Christian Sewing detailed on Tuesday that the bank launched a further internal investigation into its role as a correspondent bank for Danske Bank’s (CPSE: DANSKE) Estonian unit. At an event in Berlin on Tuesday, Sewing said that Deutsche Bank probed its role in Danske Bank’s tax evasion scheme, “long before the cases became public.” Deutsche Bank is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. Danske Bank is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
  • DSV A/S (CPSE:DSV), the Danish freight concern, is bidding USD$4 billion for Panalpina Welttransport Holding (SWX:PWTN), its Swiss rival.  DSV is looking to create a shipping concern that would be #4 in global logistics.  This is DSV’s second bid for a sector player in the last 6 months.  DSV is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas.  Panalpina Welttransport Holdings is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.
  • Embraer (ERJ) provided 2019 revenue guidance, expecting USD$5.3-5.7 billion in revenue.  Embraer expects to deliver 85-95 commercial jets, 90-110 executive jets, 10 Super Tucano military aircraft and 2 KC-390 cargo aircraft.   Guidance includes costs associated with setting up its JV with Boeing (BA).  Embraer is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.  Boeing is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • Fiserv (FISV) reports preliminary financials for CY4Q2018 while announcing the all-stock acquisition of First Data Corporation (FDC). The acquisition by Fiserv values First Data at an about USD$22bn. Additionally, Fiserv reported that it expects CY4Q2018 EPS between USD$0.84/share and USD$0.85/share while analysts’ consensus calls for USD$0.87/share. Fiserv is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas. First Data is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Ford (F) reported a preliminary 2018 profit of USD$1.30, a touch below USD$1.32 consensus.  CFO Bob Shanks said he expects 2019 to see an improvement in ebitda, though that cannot be guaranteed.  Ford is entering 2019 with plans to abandon the sedan market, focusing mostly on SUVs.  Ford is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Goldman Sachs (GS) reports CY4Q2018 financials that largely please investors and analysts. Goldman Sachs generated an EPS of USD$6.04/share in CY4Q2018 while analysts’ consensus called for USD$5.30/share. Goldman Sachs’ revenue fell 0.5% y/y to USD$8.08bn although it still beat analysts’ consensus by USD$580mm. Goldman Sachs is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Kinder Morgan (KMI) reported 4Q18 EPS of 23 cents while 25 cents was consensus.  Kinder Morgan 4Q18 revenue of USD$1.96 billion came in line with USD$1.94 billion consensus.  Backlog fell to USD$5.7 billion.  Kinder Morgan is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • McDonald’s (MCD) lost a case in the EU that cost it its right to the trademark for the term “Big Mac”.   The EU Intellectual Property Office ruled McDonald’s does not have the right to the name, instead granting that right to Ireland’s Supermac chain.  McDonald’s is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Nordstrom (JWN) was downgraded to market perform from outperform at Telsey Advisory Group.  Telsey cut Nordstrom price target to USD$56 to USD$72, an 18% upside from last close.  Nordstrom is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Norsk Hydro (OB: NHY) shares are reacting positively after regulators said it can reopen its Alunorte mine.  Brazilian environmental regulators said Norsk Hydro can resume production at the mine, removing the embargo that was in place.  Norsk Hydro is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • PNC Financial Services Group (PNC) reported FY4Q2018 financials that disappoint investors and analyst expectations. PNC saw an EPS of USD$2.75/share in FY4Q2018 while analysts expected USD$2.80/share. PNC’s net interest margin of 2.96% in FY4Q2018 also missed analysts’ consensus estimate of 3.01%. PNC is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.  
  • Reckitt Benckiser Group’s (LSE: RB) Chief Executive Officer, Rakesh Kapoor, is planning to step down after 8 years in the position. Kapoor’s stint as CEO was plagued by setbacks, including a cyber attack, manufacturing glitches, and investor criticisms over his substantial compensation package. Reckitt is rated “Top Buy” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Snap Inc. (SNAP) shares are falling after an SEC filing revealed the resignation of Chief Financial Officer Tim Stone. The Snap SEC filing details that the CFO’s resignation is not related to, “any disagreement with us on any matter relating to our accounting, strategy, management, operations, policies, regulatory matters, or practices (financial or otherwise).” Snap is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • United Continental (UAL) reported 4Q18 EPS of USD$2.41, well above consensus of USD$2.04.  4Q18 revenue grew 11% to USD$10.49 billion, also ahead of USD$10.377 billion.  4Q18 PRASM grew by 5%.  United Continental expects 1Q19 capacity to grow 5-6%.  United Continental is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
  • US Bancorp (USB) shares are trading higher after reporting FY4Q2018 earnings that beat the highest analyst estimates. US Bancorp’s EPS of USD$1.10/share in FY4Q2018 surpassed analyst estimates that ranged between USD$1.02/share and USD$1.08/share. US Bancorp’s net interest margin of 3.15% was just lower than analysts’ consensus forecast of 3.16%. US Bancorp is rated “Neutral” in our US Large-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 1.24 basis points to 2.54%
  • US 5-Year Treasury Bonds are lower with yields up 1.84 basis points to 2.54%
  • US 10-Year Treasury Bonds are lower with yields up 1.42 basis points to 2.72%
  • The US Treasury 2s-5s Spread has widened 0.6 basis points to 0%
  • The US Treasury 2s-10s Spread has widened 0.18 basis points to 0.18%
  • US Treasury 5s-10s Spread has narrowed 0.42 basis points to 0.18%
     

Currencies

  • EUR€ is little changed 0.07% against the USD$ in after hours to 1.1405
  • GBP£ is little changed 0.054% against the USD$ in after hours to 1.2854
  • CHF is down 0.237% against the USD$ in after hours to 1.0099
  • JPY¥ is little changed 0.147% against the USD$ in after hours to 108.84
     

Commodities

  • WTI Crude is little changed +0.48% to USD$52.38/bbl with the Brent-WTI spread up USD$0.83 to USD$8.1/bbl
  • Gold is up 0.39% to USD$1294.53/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
Goldman Sachs Group Inc/The Financials 180 8.09%            2,495,553
Bank of America Corp Financials 26.6 7.27%          34,830,500
United Continental Holdings Inc Industrials 81 6.38%            3,077,645
Wynn Resorts Ltd Consumer Discretionary 108 5.29%                857,523
Comerica Inc Financials 74 5.21%                710,302
 
Underformers Sector Price 1D % Chg Volume
PG&E Corp Utilities 6.95 -7.81%            2,358,127
Nordstrom Inc Consumer Discretionary 47.3 -6.26%                665,078
Fiserv Inc Information Technology 75.1 -5.08%            6,558,571
Ford Motor Co Consumer Discretionary 8.85 -4.86%            5,924,329
Fortinet Inc Information Technology 74.6 -3.56%                175,938

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