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US stocks close lower, but off session lows, after White House adviser Larry Kudlow denies US cancelled meeting with China

Jan 22, 2019

 

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US Markets End of Day Snapshot

  • US stocks close lower today, but off the lows of the day; stocks traded lower on news the US has cancelled a meeting with China, that report was denied by White House adviser Larry Kudlow
  • Stocks were also lower today with investor concerns focused on growth and trade worries
  • The S&P 500 finished down 1.42%, Nasdaq Composite is down 1.91%, and Russell 2000 is down 1.69%
  • Semiconductor stocks fell sharply today with every member of the Philadelphia Semiconductor Index lower at the close
  • US existing home sales fell 6.4% m/m in December to 4.99 million units, coming much worse than the 1.5% fall expected 
  • Yesterday’s release by China’s National Bureau of Statistics that shows China 4Q GDP slowing to 6.4% in CY2018 vs 6.8% in CY2017 has rekindled worries about a deceleration in global growth 
  • Global growth will be in focus this week as the 2019 Annual World Economic Forum in Davos begins today, the IMF expects global growth of 3.5% in 2019, down from 3.7% previously
  • UK opposition leader Jeremy Corbyn is supporting holding a number of votes on how to move forward on Brexit, one of which is holding a second referendum
  • The EU said it is waiting for UK PM Theresa May to make the next move and present a new offer after the Brexit vote failure
  • The S&P 500 is on pace to enter an “earnings recession” with expectations for earnings growth for 1Q falling to 5.9% and forecasted 2Q earnings growth falling to 3.6% 
  • Analysis by Bloomberg, Dealogic and Goldman Sachs suggests IPOs as a percentage of the S&P 500 market capitalization is set to double the rolling 5-year average with several maturing unicorns expected to come to market over the next few years.  The expected increase would be the largest increase since 19945 when IPOs spike to more than 3 times the annual average change. 
  • 55 members of the S&P 500 has reported 4Q earnings so far with 76.4% beating estimates, for a more complete recap of S&P500 earnings so far check out our blog post Where Does the S&P 500 Stand a Week Into Earnings 
  • Utilities (+0.14%), Real Estate (-0.16%), and Healthcare (-0.72%) stocks were the top performers in the S&P 500 today
  • Telecom (-1.95%), Industrials (-2.07%), and Energy (-2.2%) stocks were the worst performers in the S&P 500 today
  • Investor sentiment for US stocks finished negative with the advance/decline ratio for the S&P 500 closing at 0.19x
  • 361 stocks in the S&P 500 hit 4-week highs while 0 stocks reached 4-week lows
  • 32 stocks in the S&P 500 closed overbought while 0 stocks closed oversold according to the 16-day RSI Measure
  • 152 stocks in the Nasdaq Composite hit 4-week highs while 20 stocks reached 4-week lows
  • 912 stocks in the Nasdaq Composite closed overbought while 57 stocks closed oversold according to the 16-day RSI Measure
  • The VIX closed up 3.0 points today to 20.80 after closing at 17.80 last week

Stocks Trending in the News

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  • Allegheny Technologies Inc. (ATI) reported CY4Q2018 earnings that fell short of analyst estimates despite reporting sales that beat the highest analyst estimate. Allegheny generated USD$1.04bn of sales in CY4Q2018 while analyst estimates ranged between USD$956.0mm and USD$1.03bn. Allegheny’s CY4Q2018 EPS of USD$0.30/share missed analysts’ consensus of USD$0.34/share. Allegheny is rated “Neutral” in our US Large-Cap Global Top Stock Ideas. 
  • Arconic Inc. (ARNC) surprised investors and analysts after the board of directors decided not to sell the company. Arconic fell the most intraday in eight months on the news after the manufacturer said that it, “did not receive a proposal for a full-company transaction that we believe would be in the best interest of Arconic’s shareholders and other stakeholders.” Arconic is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas. 
  • Capital One (COF) reported fourth quarter adjusted EPS of USD$1.87 well below consensus of USD$2.38.   Capital One reported 4Q18 revenue of USD$7 billion while consensus was for USD$7.07 billion.  Capital One is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • eBay Inc. (EBAY) activist investor Starboard sent a letter to management urging the company to part ways with StubHub (TCK). Additionally, activist investor Elliott Management Corp sent a letter to management that outlines a five-step plan to review eBay’s portfolio of companies (including StubHub), revitalize its marketplace, and buyback shares. eBay is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Fifth Third Bancorp (FITB) reported fourth quarter adjusted EPS of 69 cents while consensus was for 66 cents.   Fifth Third Bancorp fourth quarter loan loss provisions came at USD$95 million, up from USD$84 million a year earlier.  Fifth Third Bancorp is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Halliburton (HAL) reported fourth quarter EPS from continuing operations of 41 cents while consensus was for 37 cents.  Halliburton fourth quarter revenue came at USD$5.9 billion while USD$5.87 billion was consensus.  Halliburton is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Henkel (XTRA: HEN3) shares were downgraded to sell from hold at Independent Research GmbH.  Henkel’s price target was also lowered from 110 euros/share to 84 euros/share at Independent Research GmbH, implying a 3.5% downside from Monday’s closing price. Over the last 3 months, analysts’ consensus price target for Henkel has fallen 12%. Henkel is rated “Attractive” in our European Large-Cap Global Top Stock Ideas.  
  • Hugo Boss AG (DB: BOSS) announced CY4Q2018 financials that largely surpassed analyst estimates. Hugo Boss reported CY4Q2018 sales of 783.0mm euros, beating the highest analyst estimates that ranged between 744.0mm euros and 775.0mm euros. Hugo Boss is rated “Attractive” in our European SMID-Cap Global Top Stock Ideas.
  • IBM (IBM) reported fourth quarter adjusted EPS of USD$4.87 while consensus was for USD$4.81.   IBM reported 4Q18 revenue of USD$21.8 billion while consensus was for USD$21.7 billion.  IBM gave 2019 operating EPS guidance of at least USD$13.90.  IBM 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.
  • IG Group (LSE: IGG) reports 1FH2019 financials that are mostly in-line with analyst expectations. IG Group reported 1FH2019 EPS of GBP0.25/share while analysts expected GBP0.25/share. IG Group’s top line revenue in 1FH2019 of GBP251.0mm slightly missed analysts’ consensus of GBP252.4mm. IG Group is rated “Unattractive” in our United Kingdom All-Cap Global Top Stock Ideas.  
  • Interactive Brokers (IBKR) reported fourth quarter adjusted EPS of 56 cents while consensus was for 61 cents.   Interactive Brokers reported 4Q18 revenue of USD$492 million while consensus was for USD$511 million.  Revenue of USD$492 million was below the lowest analyst estimate.  Interactive Brokers is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas.
  • Johnson & Johnson (JNJ) reported adjusted fourth quarter EPS of USD$1.97 while consensus was for USD$1.95.  Johnson & Johnson fourth quarter revenue came at USD$20.4 billion while USD$20.2 was consensus.  Johnson & Johnson is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Pekao (WSE: PEO) shares fell after stricter stress-test capital buffers will require Poland’s second-largest lender to cut its maximum possible payout ratio for CY2018 from an expected 90% to 75%. MBank analysts wrote in a note to clients that, “The reduction in dividends is a disappointing development given Pekao’s excellent stress test results during the recent EBA exercise, where the bank placed in the top three.” Pekao is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas. 
  • Prologis (PLD) reported CY4Q2018 financials that mostly surpassed analyst expectations. Prologis generated funds from operations of USD$0.80/share in CY4Q2018 while analyst expectations called for USD$0.79/share. Prologis is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • SGS SA (SWX: SGSN) reported full-year adjusted operating income that came in-line with the average analyst estimate. SGS generated adjusted operating income of 1.05bn Swiss francs in its fiscal year while analyst estimates called for 1.06bn Swiss francs. SGS’ full-year revenue of 6.71bn Swiss francs fell slightly short of analysts’ consensus, which called for 6.75bn Swiss francs. SGS is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Soitec SA (ENXTPA: SOI) reported revenue growth guidance that surprised investors amid a weaker broad semiconductor industry. Soitec raised its revenue growth outlook to 40%, guidance that Jefferies analysts believe is, “reasonable.” Jefferies cited overwhelming content per device/use cases as the driver for Soitec’s projected revenue growth. Soitec is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.
  • Stanley Black & Decker (SWK) reported fourth quarter EPS of USD$2.11 while consensus was for USD$2.10.  Stanley Black & Decker fourth quarter revenue came at USD$3.63 billion versus USD$3.62 billion expected.  Stanley Black & Decker sees 2019 EPS coming at USD$8.45-8.65.  Stanley Black & Decker is rated “Attractive” in our US Large-Cap Global Top Stock Ideas. a
  • Steel Dynamics (STLD) reported fourth quarter EPS of USD$1.31 while consensus was for USD$1.21.  Steel Dynamics fourth quarter revenue came at USD$2.9 billion while USD$2.93 billion was consensus.  Steel Dynamics is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Tesla (TSLA) plans acquire batteries for its new China factory from Panasonic (TSE: 6752), according to Nikkan Kogyo.  The new arrangement will be an expansion of their existing relationship.  Presently, Panasonic is the main supplier of batteries to Telsa.  Tesla is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  Panasonic Tesla is rated “Top Buy” in our Japan Large-Cap Global Top Stock Ideas 
  • Travelers (TRV) reported fourth quarter EPS of USD$2.13 while consensus was for USD$2.08.  Travelers fourth quarter revenue came at USD$7.8 billion while USD$7.7 billion consensus.  Travelers return on equity in the fourth quarter was 10.9%.  Travelers is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Tryg A/S (CPSE: TRYG) reported a CY4Q2018 combined ratio of 88.2% that missed analysts’ consensus of 87.6%. Tryg CEO Morten Hubbe informed that the company’s CY2018 results were hindered by, “tough weather and large claims.” Goldman Sachs and Citi analysts are warning investors of limited potential for dividend growth. Tryg is rated “Attractive” in our European SMID-Cap Global Top Stock Ideas.  
  • UBS (SWX: UBS) reported USD$13 billion withdrawals by its customers.  UBS said it saw USD$8 billion withdrawn from its wealth management unit while USD$5 billion was withdrawn from its asset management unit.  UBS comments that it does not believe the weakness of the fourth quarter has completely passed.  UBS Travelers is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.

 

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US Treasuries

  • US 2-Year Treasury Notes are higher with yields down -2.9 basis points to 2.58%
  • US 5-Year Treasury Bonds are higher with yields down -4.58 basis points to 2.57%
  • US 10-Year Treasury Bonds are higher with yields down -4.5 basis points to 2.73%
  • The US Treasury 2s-5s Spread has narrowed 1.68 basis points to -0.01%
  • The US Treasury 2s-10s Spread has narrowed 1.6 basis points to 0.15%
  • US Treasury 5s-10s Spread has widened 0.08 basis points to 0.16%

Currencies

  • EUR€ is little changed 0.035% against the USD$ in after hours to 1.1361
  • GBP£ is up 0.504% against the USD$ in after hours to 1.2957
  • CHF is little changed 0.03% against the USD$ in after hours to 1.0025
  • JPY¥ is down 0.283% against the USD$ in after hours to 109.36

Commodities

  • WTI Crude is down -2.29% to USD$52.57/bbl with the Brent-WTI spread little changed USD$0.06 to USD$8.41/bbl
  • Gold is up 0.35% to USD$1284.95/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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Get Unbiased Quantitative Investment Research from Advanced AI Machine Learning Technology and Maximize your ReturnsGet Unbiased Quantitative Investment Research from Advanced AI Machine Learning Technology and Maximize your Returns

S&P 500 Movers

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Outperformers Sector Price 1D % Chg Volume
PG&E Corp Utilities 6.95 6.50%      8,499,111.00
eBay Inc Consumer Discretionary 30.7 6.13%          12,724,469
Cboe Global Markets Inc Financials 92.9 2.28%                274,650
Fifth Third Bancorp Financials 25.4 2.07%            3,709,039
CME Group Inc Financials 182 1.58%                575,880
 
Underformers Sector Price 1D % Chg Volume
Arconic Inc Industrials 20.1 -15.98%            3,938,836
Stanley Black & Decker Inc Industrials 129 -15.48%            1,440,758
Altria Group Inc Consumer Staples 47.9 -6.91%            5,386,570
TripAdvisor Inc Communication Services 56.6 -6.32%                904,119
Micron Technology Inc Information Technology 33.9 -5.29%            9,298,673

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