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Weak data on US economy brings growth concerns to the fore, sending US stocks lower

Feb 21, 2019

 

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US Markets End of Day Snapshot

  • US stocks close lower with weak US economic data bringing growth fears back to the fore for investors
  • The S&P 500 finished down 0.35%, Nasdaq Composite is down 0.39%, and Russell 2000 is down 0.39%
  • US Durable Goods orders rose 1.2% in December, well below 1.7% expected and above November's 0.7%
  • US Capital Goods orders fell 0.7% in December, while consensus was for a 0.2% rise
  • Markit US Manufacturing PMI came at 53.7. below consensus of 54.8
  • Markit US Services PMI came at 56.2. above consensus of 54.8
  • Philadelphia Fed Business Outlook for February came at -4.1, well below 14 expected
  • US Initial Jobless Claims for the week of February 16th came at 216,000, below 228,000 consensus and down from 239,000 last week
  • BlackRock strategists are out arguing this morning that US stocks are poised to rally in CY2019 while also arguing that emerging markets valuations are “attractive”. 
  • Since hitting its low on Christmas Eve, the S&P500 has rallied 18%, staging one of the fastest recoveries on record and has already recovered the majority of December’s losses.  Strategists at investment banks suggest the S&P 500 will surge another 10% if the US and China can properly negotiate a trade deal. 
  • While earnings growth for US stocks is expected to drop significantly in CY2019, something to consider is that stocks typically rally when investors believe earnings growth troughs.  According to an analysis by Bloomberg, since the 1950s, US stocks have averaged double-digit gains in years where earnings growth troughs and are up 85% of the time.   
  • The Nasdaq Composite has closed up for 8 straight days but that might be coming to an end.  According to the GTI Global Strength Indicator, a technical indicator measures the upward and downward movements of closing prices to determine whether an asset is overbought/oversold, the Nasdaq Composite is entering overbought territory.   The S&P 500 and Dow Jones Industrial Average both entered overbought territory on Wednesday. 
  • Stocks listed on the New York Stock Exchange (NYSE) have recovered to their mid-September peak valuation.  The S&P 500 still hasn’t caught up but according to the cumulative advance-decline line, after yesterday’s rally, stocks listed on the NYSE have broken above their September 20 peak and point to higher stock prices in the near-term. 
  • In contrast to the positive commentary about US stocks above, the trailing 12-month P/E for the S&P 500 plus inflation suggests the US benchmark index is fairly valued.  Popularized by the legendary investor Peter Lynch, the metric has normally hovered around 20x going back to 1954.  It is currently, sitting at 20x. 
  • Utilities (+0.75%), Consumer Staples (+0.28%), and Tech (+0.05%) stocks were the top performers in the S&P 500 today
  • Materials (-0.41%), Healthcare (-0.88%), and Energy (-1.55%) 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 0.61x
  • 196 stocks in the S&P 500 hit 4-week highs while 4 stocks reached 4-week lows
  • 136 stocks in the S&P 500 closed overbought while 1 stocks closed oversold according to the 16-day RSI Measure
  • 478 stocks in the Nasdaq Composite hit 4-week highs while 26 stocks reached 4-week lows
  • 761 stocks in the Nasdaq Composite closed overbought while 128 stocks closed oversold according to the 16-day RSI Measure
  • The VIX finished flat at 14.09 after closing at 14.02 yesterday

Stocks Trending in the News

Click name for Q-Factor rating and financials data.
 

  • Agilent Technology (A) reported first quarter 2019 core EPS of USD$0.76 beating consensus of USD$0.73. Agilent Technology reported first quarter 2019 sales of USD$1.28 billion matching consensus of USD$1.27 billion.  Agilent Technology gave 2Q 2019 EPS guidance of USD$0.70-0.72.  Agilent Technology is rated “Neutral” in our Large-Cap Global Top Stock Ideas.
  • Albemarle Corp. (ALB) shares traded at their highest level in 2019 after the company announced better-than-expected earnings guidance for FY2019. Albemarle told investors that it expects FY2019 adjusted EPS between USD$6.10 and USD$6.50, the midpoint of which surpasses consensus of USD$6.14. Albemarle is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.  
  • Altice USA (ATUS) reported fourth quarter EPS of USD$0.30.  Altice USA reported fourth quarter adjusted revenue of USD$2.45 billion in line with consensus of USD$2.46 billion.  Altice USA gave 2019 revenue growth guidance of 2.5-3%.  Altice USA is rated “Top Short” in our Large-Cap Global Top Stock Ideas.
  • Ardagh Group SA (ARD) shares edged slightly lower after the company announced FY2019 guidance that missed the average analyst estimate. Ardagh said on a conference call that it expects FY2019 adjusted EPS between USD$1.60 and USD$1.75, the midpoint of which is slightly lower than consensus of USD$1.81. Ardagh also announced CY4Q2018 adjusted EPS of USD$0.33 that surpassed consensus of USD$0.28. Ardagh is not rated in our Global Top Stock Ideas.  
  • Arris International PLC (ARRS) announced CY4Q2018 adjusted EPS of USD$0.76 while consensus was for USD$0.74. Arris International PLC reported net sales of USD$1.79bn in CY4Q2018 while analysts expected USD$1.78bn. Arris International PLC told investors, “We anticipate 2019 to be a stronger year than 2018, with the first quarter expected to be the lowest quarter of the year.” Arris International PLC is rated "Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Attunity (ATTU) shares soared following reports that Qlik (QLIK) agreed to purchase the Big Data software solutions company for USD$560mm in cash. Attunity shareholders will received USD$23.50/share owned, indicating an 18% premium paid by Qlik compared to Attunity’s closing price on Wednesday. Attunity is not rated in our Global Top Stock Ideas. Qlik is not rated in our Global Top Stock Ideas.  
  • Avis Budget Group (CAR) reported fourth quarter adjusted EPS of USD$0.53 beating consensus of USD$0.37.  Avis Budget Group reported fourth quarter sales of USD$2.1 billion matching consensus of USD$2.05 billion.   Avis Budget Group is rated “Neutral” in our Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.
  • BAE Systems Plc (LSE: BA.) shares dropped after saying that German limits on arms exports to Saudi Arabia will impact its business with the country. BAE Systems told investors that Germany’s current position on export licensing, “may affect the group’s ability to provide the required capability.” BAE Systems is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Bunge (BG) reported fourth quarter EPS of USD$0.08 well below consensus of USD$0.20.  Bunge reported fourth quarter adjusted revenue of USD$11.54 billion is in line with consensus of USD$11.66 billion.  Bunge said its strategic review and CEO search are progressing well.  Bunge is rated “Neutral” in our Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • Caesars Entertainment (CZR) reported fourth quarter EPS of USD$0.25 well above consensus of 9 cents per share loss.  Caesars Entertainment reported fourth quarter adjusted revenue of USD$2.12 billion in line with consensus of USD$2.11 billion.  Caesars Entertainment is rated “Unattractive” in our Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Centrica Plc (LSE: CNA) shares plunged to their lowest levels in nearly two decades after the company announced a bleak outlook for FY2019. Centrica attributed tougher trading conditions in the UK energy market as reasoning for the outlook. Centrica also explained that its average adjusted operating cash low, “is under some pressure.” Centrica is rated “Unattractive” in our United Kingdom All-Cap Global Top Stock Ideas.
  • CommScope (COMM) reported fourth quarter EPS of USD$0.51 above consensus of USD$0.43.  CommScope reported fourth quarter adjusted revenue of USD$1.06 billion in line with consensus of USD$1.06 billion.  CommScopegave first quarter 2019 EPS guidance of 41-46 cents.  CommScope is rated “Neutral” in our Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Domino's Pizza Inc. (DPZ) shares plunged after reporting CY4Q2018 adjusted EPS of USD$2.62 while analysts expected USD$2.69. Domino's Pizza observed total system-wide domestic comparable sales growth of 5.6% in CY4Q2018, missing consensus of 7.2%. Domino’s Pizza generated domestic company-owned sales growth of 3.6% in CY4Q2018, missing consensus of 6.6%. Domino's Pizza is rated "Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Fuchs Petrolub (DB: FPE3) shares fell notably lower after the company announced a FY2019 Ebit forecast of 371mm euros that missed consensus for 397mme euros. Lambe analyst Heiko Feber wrote in a note to clients that Fuchs Petrolub intends to increase investments into plants, IT, R&D, and employees in the next fiscal year. Fuchs Petrolub is rated “Top Buy” in our European SMID-Cap Global Top Stock Ideas.  
  • Hewlett Packard Enterprise (HPE) reported first quarter 2019 adjusted EPS of USD$0.42 beating consensus of USD$0.35.  Hewlett Packard Enterprise reported first quarter sales of USD$7.55 billion matching consensus of USD$7.6 billion.  Hewlett Packard Enterprise gave full year EPS guidance of USD$1.56-1.66.  Hewlett Packard Enterprise is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Hormel Foods Corp. (HRL) announced FY1Q2019 adjusted EPS of USD$0.44, matching consensus of USD$0.44. Hormel Foods Corp. reported net sales of USD$2.36bn in FY1Q2019 while analysts expected USD$2.39bn. Hormel Foods Corp. also reaffirmed its FY2019 guidance. Hormel Foods Corp. is rated "Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • Jack in the Box (JACK) reported fourth quarter adjusted operating EPS of USD$1.35 beating consensus of USD$1.28.  Jack in the Box reported fourth quarter sales of USD$290.8 million matching consensus of USD$286 million.  Same store sales fell 0.1% in the quarter.  Jack in the Box is rated “Neutral” in our Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Johnson & Johnson (JNJ) said it has received subpoenas and inquiries from the US Justice Department and Securities and Exchange Commission relating to its talc baby-powder products.  Some allege there is asbestos in the talc powder that can cause cancer.  Johnson & Johnson faces 13,000 claims alleging the baby powder causes cancer.  Johnson & Johnson is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Newmont Mining (NEM) reported fourth quarter adjusted operating EPS of USD$1.35 beating consensus of USD$1.28.  Newmont Mining reported fourth quarter sales of USD$290.8 million matching consensus of USD$286 million.  Same store sales fell 0.1% in the quarter.  Newmont Mining is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Nike (NKE) has been the subject of ridicule in the social media realm after a basketball player sprained his knee after his Nike sneakers split open in the middle of a game.  The player from Duke University limped off the court and immediately Nike became the butt of endless jokes about the poor quality of its products.  Nike is rated “Unattractive” in our Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Staples Global Top Stock Ideas.
  • Norwegian Cruise Line Holdings (NCLH) reported CY4Q2018 adjusted EPS of USD$0.85, surpassing consensus of USD$0.79. Norwegian Cruise Line Holdings generated net sales of USD$1.38bn in CY4Q2018, slightly missing consensus of USD$1.40bn. Norwegian Cruise Line Holdings expects FY2019 adjusted EPS between USD$5.20 and USD$5.30, the midpoint of which beats consensus of USD$5.15. Norwegian Cruise Line Holdings is rated "Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • Prysmian (BIT: PRY) shares fell the most intraday in more than 6 months after the company announced a system failure detected in WesternLink Interconnection, leading to its UK undersea power line to temporarily shutdown. Mediobanca cut its recommendation for Prysmian shares from outperform to neutral on the news. Prysmian is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.  
  • Realty Income Corp. (O) reported fourth quarter FFO of USD$0.73 per share in line with consensus of USD$0.74.  Realty Income Corp reported fourth quarter adjusted revenue of USD$344.4 million in line with consensus of USD$342 million.  Realty Income Corp sees 2019 FFO of USD$3.23-3.29 per share.  Realty Income Corp is rated “Attractive” in our Large-Cap Global Top Stock Ideas.
  • Roku (ROKU) reported fourth quarter pro-forma EPS of USD$0.05 above consensus of USD$0.03.  Roku reported fourth quarter adjusted revenue of USD$275.7 million beating consensus of USD$262.4 million.  Roku gave first quarter 2019 revenue guidance of USD$185-190 million.  Roku is rated “Top Short” in our Large-Cap Global Top Stock Ideas.
  • Scientific Games Corp. (SGMS) reported CY4Q2018 adjusted EPS of USD$0.30 blowing past consensus of USD$0.08. Scientific Games Corp. generated net sales of USD$885.70mm in CY4Q2018, beating consensus of USD$871.95mm. Scientific Games Corp. is rated "Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Swiss RE (SWX: SREN) shares edged higher after a proposed CHF2bn buyback program offset a FY2018 net income miss. Swiss RE proposed a buyback program spanning two separate tranches, each worth up to CHF1bn, to be executed prior to the 2020 AGM. Swiss RE also announced FY net income of USD$421mm, largely missing consensus of USD$788.7mm. Swiss RE is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Vereit Inc. (VER) reported CY4Q2018 adjusted funds from operations per share of USD$0.156 while analysts expected USD$0.171. Vereit Inc. expects FY2019 adjusted funds from operations per share between USD$0.68 and USD$0.70, the midpoint of which edges past consensus of USD$0.68. Vereit Inc. is rated "Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Visteon (VC) shares popped after the company announced CY4Q2018 adjusted EPS of USD$1.52 while analysts expected just USD$1.03. Visteon reported CY4Q2018 sales of USD$718.5mm. Visteon is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.  

 

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US Treasuries

  • US 2-Year Treasury Notes are lower with yields up 2.91 basis points to 2.52%
  • US 5-Year Treasury Bonds are lower with yields up 4.23 basis points to 2.51%
  • US 10-Year Treasury Bonds are lower with yields up 4.67 basis points to 2.69%
  • The US Treasury 2s-5s Spread has widened 1.32 basis points to -0.02%
  • The US Treasury 2s-10s Spread has widened 1.76 basis points to 0.16%
  • US Treasury 5s-10s Spread has widened 0.44 basis points to 0.18%

Currencies

  • EUR€ is little changed 0.044% against the USD$ in after hours to 1.1335
  • GBP£ is little changed 0.115% against the USD$ in after hours to 1.3035
  • CHF is little changed 0.03% against the USD$ in after hours to 0.9986
  • JPY¥ is little changed 0.126% against the USD$ in after hours to 110.71

Commodities

  • WTI Crude is down -0.3% to USD$56.75/bbl with the Brent-WTI spread little changed USD$-0.03 to USD$9.69/bbl
  • Gold is down -1.17% to USD$1322.84/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
Albemarle Corp Materials 73.5 7.79%                891,338
PG&E Corp Utilities 6.95 6.53%            2,790,914
Copart Inc Industrials 49.4 5.70%            1,077,369
Norwegian Cruise Line Holdings Ltd Consumer Discretionary 46.1 3.39%                216,985
Mattel Inc Consumer Discretionary 12.6 3.08%            2,263,223
 
Underformers Sector Price 1D % Chg Volume
TechnipFMC PLC Energy 22.7 -7.89%                574,301
Concho Resources Inc Energy 122 -7.78%                710,413
Nektar Therapeutics Health Care 44.5 -6.44%                645,292
Biogen Inc Health Care 337 -4.17%                560,041
CenturyLink Inc Communication Services 16.2 -4.10%            3,446,154
Morning BriefA quick GLOBAL RECAP TO START YOUR DAY
Morning BriefA quick GLOBAL RECAP TO START YOUR DAY