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US stocks fall as Caterpillar (CAT), Nvidia (NVDA) and now Whirlpool (WHR) point to lower growth ahead

Jan 28, 2019

 

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US Markets End of Day Snapshot

  • US stocks close lower today with news from Caterpillar (CAT)Nvidia (NVDA) and Whirlpool (WHR) all pointing to slower growth in 2019, the news weighed on investor sentiment in today's session
  • The S&P 500 finished down 0.79%, Nasdaq Composite is down 1.11%, and Russell 2000 is down 0.63%
  • The US announced enforcement action against China's Huawei, calling its actions "brazen and persistent" violations
  • Morgan Stanley told clients in a strategy report today that the run-up in US equities has run its course at this point and they should take profits at these levels
  • European Central Bank President Mario Draghi said today incoming economic data at the ECB continues to come weaker than expected, reiterating his warnings of last week
  • The UK Parliament will vote on a revised Brexit proposal on Tuesday
  • The US Federal Reserve will announce its decision on interest rates this Wednesday following a two-day meeting.  Fed Funds Futures imply no increase interest rates. 
  • US-China trade negotiations are expected to continue this week with Chinese Vice Premier Liu He set to meet with US Trade Representative Robert Lighthizer for 2 days in Washington starting on Wednesday
  • Real Estate (+0.96%), Consumer Staples (+0.46%), and Materials (-0.08%) stocks were the top performers in the S&P 500 today
  • Healthcare (-1.14%), Telecom (-1.15%), and Tech (-1.4%) 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 0.58x
  • 231 stocks in the S&P 500 hit 4-week highs while 10 stocks reached 4-week lows
  • 29 stocks in the S&P 500 closed overbought while 3 stocks closed oversold according to the 16-day RSI Measure
  • 154 stocks in the Nasdaq Composite hit 4-week highs while 24 stocks reached 4-week lows
  • 606 stocks in the Nasdaq Composite closed overbought while 81 stocks closed oversold according to the 16-day RSI Measure
  • The VIX closed up 1.49 points today to 18.91 after closing at 17.42 last week

Stocks Trending in the News

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  • AbbVie (ABBV) saw its price target cut at Merrill Lynch to USD$87 from USD$95 while maintaining its neutral rating.  AbbVie’s results included a 17.5% drop in international sales for Humira, its blockbuster drug and the best-selling drug in the world.  AbbVie is facing competition from biosimilars in Europe for the first time and the news sent the stock lower.  AbbVie is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas
  • AK Steel (AKS) reported fourth quarter adjusted EPS of 16 cents beating consensus of 11 cents.  AK Steel fourth quarter revenue came at USD$1.68 billion, in line with consensus of USD$1.7 billion.  AK Steel gave 2019 EPS guidance of 51-57 cents.  AK Steel is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • BT Group (LSE: BT.A, formerly British Telecom) is the first foreign company be granted a nationwide operating license in China.  BT’s new company in China is called BT China Communications Limited and is able to offer services directly to customers and bill then in the local currency.  BT is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Caterpillar (CAT) reported fourth quarter adjusted EPS of USD$2.55 while consensus was for USD$2.99.  Caterpillar fourth quarter revenue came at USD$14.3bn, missing consensus of USD$14.36bn.  Caterpillar said that it sees CY2019 adjusted EPS between USD$11.75 and USD$12.75 while consensus USD$12.72. Caterpillar is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • Deere & Co (DE) shares are falling after Caterpillar (CAT) reported its biggest earnings miss in 10 years.  Investors fear the same fate may befall Deere’s earnings but analysts are quick to point out that the weakness Caterpillar saw in Chinese construction is not a market Deere competes in at all.  Deere is  rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.  Caterpillar is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • Deutsche Bank AG (DB: DBK) was awarded a commitment for new investment from Qatar, likely through the Qatar Investment Authority, amid the company’s continued attempt to merge with Commerzbank AG (DB: CBK). Neither Deutsche Bank nor the Qatar Investment Authority commented on the news. Deutsche Bank is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. Commerzbank is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Eni SpA (BTI: ENI) and OMV AG (WBAG: OMV) will pay USD$5.8bn for a combined 35% stake in Abu Dhabi’s state oil company’s refinancing unit. The deal values Abu Dhabi National Oil Co. at USD$19.3bn. In addition to the acquisition, the companies will partner to form a trading unit selling refined products to international buyers. Eni is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. OMV is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.
  • Integrated Device Technology (IDTI) reported fiscal third quarter 2019 EPS of 50 cents that beat consensus of 46 cents.  Integrated Device Technology fiscal third quarter revenue came at USD$240.6 million, beating consensus of USD$235.6 million.  Integrated Device Technology is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Kering (ENXTPA:KER) owes the Italian government 1.4 billion euros in back taxes.  The Italian government probed its Swiss subsidiary between 2011 and 2017.  The fine was expected and came within the range of analysts’ estimates.  Kering is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Marathon Petroleum (MPC) announced a dividend increase of 15% to USD$0.53/share. The dividend will be paid on March 11th to shareholders as of February 20th's close. Marathon is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Nike (NKE) won a 10-year contact to supply Major League Baseball with apparel, a contract that was originally awarded to Under Armour (UAA).  The contract begins in 2020 and Under Armour backed out after originally wining in December 2016.  Nike is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  Under Armour is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Nissan (TSE: 7201) is being investigated by the SEC over its pay practices and disclosures, according to a report in Bloomberg today.  The SEC is looking at controls in place to prevent improper payments and whether they are sufficient.     Nissan has confirmed the existence of the probe but has not confirmed specifics.  Nissan is rated “Top Buy” in our Japan Large-Cap Global Top Stock Ideas.
  • Nvidia (NVDA) cut guidance for fourth quarter revenue today.  Nvidia said it is seeing less growth in revenues than it has expected with less sales of gaming and data center platforms in China.  Nvidia sees fourth quarter revenue around USD$2.2 billion, down from USD$2.7 billion.  Nvidia is rated is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Ocado (LSE: OCDO) and Marks & Spencer (LSE: MKS) shares are both higher today on news of a potential tie-up.  The Daily Telegraph is reporting there are talks underway about a tie-up in supermarket operation.  There have been no comments from the companies as of yet.  Ocado is rated “Top Short” in our United Kingdom All-Cap Global Top Stock Ideas.  Marks & Spencer is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.  
  • S&P Global (SPGI) has been approved to establish a wholly-owned unit in Beijing, as per a statement by the People’s Bank of China. S&P Global was also approved to enter the Chinese bond rating market. The People’s Bank of China stressed that it will support more foreign agencies entering its credit rating market in the announcement. S&P Global is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas.
  • Schindler Holding AG (SWX: SCHN) was upgraded at HSBC from reduce to buy. In addition to the upgrade, HSBC increased its price target for Schindler from 190 franc/share to 255 franc/share, implying a 25% upside from Friday’s closing price.  Schindler is not rated in our Global Top Stock Ideas.
  • Siemens (DB: SIE) and Alstom (ENXTPA:ALO) are making changes to their plans to merge their rail operation to gain EU approval but have yet to assuage all the regulator’s concerns, according to Bloomberg.  The companies offered new concessions on January 25th and all indications are that they were not enough.  Alstom is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas.  Siemens rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Tesco (LSE:TSCO) announced it is cutting 9,000 jobs as it continues to pare its workforce.  Media reports over the weekend had a number much higher than what was announced today.  Tesco still has about 300,000 employees.  Tesco is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Vale (VALE) has seen the death toll from its tallying dam break at one of its mines in the state of Minas Gerais in Brazil grow to 58 people.  Over 200 people are still missing after a wall of mud leveled buildings and made roads in the area impassable.  Among the missing are many Vale employees who were in a building that was leveled by mud. Vale voted over the weekend to suspend its dividend in the wake of the disaster.  Vale is rated “Top Buy” in our Brazil All-Cap Global Top Stock Ideas.
  • Versum Material Inc (VSM) announced it is merging with Entegris Inc (ENTG) combing 2 key makers of semiconductor parts.  Versum shareholders will receive 1.12 shares of Entegris in the transaction.  The new company with have a USD$9 billion market cap and USD$3 billion in revenue.  Versum is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  Entegris is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Whirlpool (WHR) reported fourth quarter EPS of USD$4.75 while consensus was for USD$4.23.  Whirlpool fourth quarter revenue came at USD$5.66 billion, missing consensus of USD$5.75 billion.  Whirlpool gave guidance for ongoing EPS of USD$14-15 well below consensus that is presently USD$15.98.  Whirlpool sees a softer 2019.  Whirlpool is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
     

 

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US Treasuries

  • US 2-Year Treasury Notes are higher with yields down -1.66 basis points to 2.58%
  • US 5-Year Treasury Bonds are higher with yields down -1.87 basis points to 2.58%
  • US 10-Year Treasury Bonds are higher with yields down -1.45 basis points to 2.74%
  • The US Treasury 2s-5s Spread has narrowed 0.21 basis points to -0.01%
  • The US Treasury 2s-10s Spread has widened 0.21 basis points to 0.15%
  • US Treasury 5s-10s Spread has widened 0.42 basis points to 0.16%

Currencies

  • EUR€ is up 0.193% against the USD$ in after hours to 1.1428
  • GBP£ is down 0.258% against the USD$ in after hours to 1.3162
  • CHF is little changed 0.139% against the USD$ in after hours to 1.0082
  • JPY¥ is down 0.155% against the USD$ in after hours to 109.3

Commodities

  • WTI Crude is down -2.8% to USD$51.99/bbl with the Brent-WTI spread little changed USD$0.13 to USD$7.54/bbl
  • Gold is little changed -0.08% to USD$1304.16/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
American Airlines Group Inc Industrials 32.1 4.55%      4,755,524.00
Estee Lauder Cos Inc/The Consumer Staples 125 3.05%                595,276
Altria Group Inc Consumer Staples 47.9 2.40%            3,503,498
Symantec Corp Information Technology 19.7 2.31%            3,311,827
Martin Marietta Materials Inc Materials 176 2.23%                125,478
 
Underformers Sector Price 1D % Chg Volume
NVIDIA Corp Information Technology 150 -13.82%          17,150,713
Caterpillar Inc Industrials 131 -9.13%            2,675,335
Freeport-McMoRan Inc Materials 11.6 -8.54%          11,988,056
Advanced Micro Devices Inc Information Technology 20.4 -7.98%          26,133,747
Arista Networks Inc Information Technology 223 -5.25%                298,643