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US stocks flat midday as investors parse Fed Chairman Powell's testimony for clues on rates

Feb 26, 2019

 

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Market data as of 12:30pm EST

US Market Snapshot

  • US stocks are flat midday as Fed President Jerome Powell starts his first of 2 days of bi-annual testimony before Congress
  • Powell said inflation pressures are "muted" while commenting that recent economic and political developments "warranted taking a patient approach with regard to future policy changes"
  • The S&P 500 is currently down 0.03%, Nasdaq Composite is down 0.01%, and Russell 2000 is down 0.45%
  • US housing starts fell 11.2% in December, well below the 0.1% drop expected and below the 3.2% increase in November
  • US building permits increased 0.3% in December, below the 0.4% growth expected and below the 0.4% rise in November
  • Richmond Fed Manufacturing Index for February came at 16, well above 5 expected
  • The Conference Board Consumer Confidence Index was 131.4, well above 124.9 expected and 120.2 in January
  • Indian fighter jets have destroyed an alleged terrorist camp in Pakistan, the biggest escalation between the two nuclear-armed rivals since 2001 
  • Stifel strategists argue that a rotation to value stocks will first start with a sell-off in overall stocks.  According to their analysis, the ratio of the Russell 1000 Value to Russell 1000 Growth first fell to an 18-year low back in September before Value large-cap stocks began to outperform in 4Q.  YTD, Growth stocks have outperformed Value stocks according to Stifel. 
  • Bloomberg highlights that cyclical stocks and corporate profits have been moving in opposite directions to start the year.  Cyclical sectors like industrials, banks, energy, consumer discretionary, etc have been some of the best performers this year while the market braces for a weak 1Q earnings season.  Though, on an NTM PE basis, cyclical stocks are still below last year’s peak valuation and still below the NTM PE of defensive sectors.  The disconnect between markets and corporate earnings could be a worrying development if the rally in cyclical continues.   
  • The S&P 500 broke above the 2800 technical psychological level in yesterday’s trade only to finish below the technical resistance level.  After gapping up on the market open, the S&P 500 slowly trended down for most of the day.  The inability for the S&P 500 to hold above 2800 is raising questions about whether the current rally in US stocks will continue or needs to take a breather.  Just as a point of reference, the S&P 500 is already up +11.89% YTD. 
  • Tech (+0.34%), Financials (+0.32%), and Consumer Staples (+0.13%) stocks are the top performers in the S&P 500 today
  • Healthcare (-0.19%), Real Estate (-0.21%), and Utilities (-0.4%) stocks are the worst performers in the S&P 500 today
  • Investor sentiment for US stocks is negative with the advance/decline ratio for the S&P 500 currently at 0.99x
  • 227 stocks in the S&P500 are at 4-week highs while 7 stocks are at 4-week lows
  • 127 stocks in the S&P 500 are overbought while 2 stocks are oversold according to the 16-day RSI Measure
  • 453 stocks in the Nasdaq Composite are at 4-week highs while 24 stocks are at 4-week lows
  • 840 stocks in the Nasdaq Composite are overbought while 117 stocks are oversold according to the 16-day RSI Measure
  • The VIX is currently moving down at 13.74 from yesterday's close of 14.85

Stocks Trending in the News

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  • Aixtron SE (DB: AIXA) shares fell after the company reported a revenue forecast for FY2019 that was 1.1% below the average analyst estimate. Aixtron expects revenue between 260mm euros and 290mm euros in FY2019 while analyst consensus was for 278.1mm euros. For CY4Q2018, Aixtron generated revenue of 87.9mm euros, surpassing consensus of 81.9mm euros. Aixtron is rated “Attractive” in our European SMID-Cap Global Top Stock Ideas.
  • Apple (AAPL) will reportedly include a sleep monitor feature on its next Apple Watch.  Apple is presently testing the feature at its headquarters in California.  If testing goes as planned the feature will be added to the Apple Watch in 2020.  The feature will give Apple the ability to better compete with other wearable health devices.  Apple is rated “Neutral” in our Large-Cap Global Top Stock Ideas and “Neutral” in our Information Technology Global Top Stock Ideas.
  • AutoZone (AZO) reported second quarter 2019 quarter adjusted EPS of USD$11.49 which is not comparable with consensus of USD$9.80.  AutoZone reported second quarter 2019 adjusted revenue of USD$2.45 billion matching consensus of USD$2.45 billion.  AutoZone reported fourth quarter same store sales growth of 2.6% beating consensus of 2.1%.  AutoZone is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Bank of America (BAC) announced it will drop the Merrill Lynch name from its investment bank.  Bank of America acquired Merrill Lynch at the height of the financial crisis and has told employees it will remove  “Merrill Lynch” from the investment bank completely and rebrand its wealth management unit businesses with the “Merrill” name.  An era has ended.  Bank of America is rated “Attractive” in our SMID-Cap Global Top Stock Ideas.
  • Etsy (ETSY) reported fourth quarter EPS of USD$0.32 well above consensus of USD$0.25.  Etsy reported fourth quarter adjusted revenue of USD$200 million beating consensus of USD$194.9 million.  Etsy reported fourth quarter adjusted ebitda of USD$51.4 million.  Etsy sees 2019 revenue growth of 29-32% while consensus is 30%. Etsy is rated “Top Short” in our Large-Cap Global Top Stock Ideas and “Neutral” in our Information Technology Global Top Stock Ideas.
  • Fresnillo PLC (LSE: FRES) shares fell by double-digits after the company reported CY2H2018 revenue that missed consensus due to lower revenue and higher costs. Fresnillo’s costs increased 14% y/y in CY2H2018 while its Ebitda came 9% below consensus. Citi noted that Fresnillo’s EPS was offset by a lower tax rate. Fresnillo is rated “Unattractive” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Hertz (HTZ) reported fourth quarter loss of 53 cents per share beating consensus of an 82 cents per share loss.  Hertz reported fourth quarter adjusted revenue of USD$2.3 billion beating consensus of USD$2.1 billion.  Hertz posted 10% revenue growth in the fourth quarter.  Hertz is rated “Unattractive” in our Large-Cap Global Top Stock Ideas and “Unattractive” in our Industrials Global Top Stock Ideas.
  • Home Depot (HD) reported fourth quarter adjusted EPS of USD$2.22 beating consensus of USD$2.16.  Home Depot reported fourth quarter adjusted revenue of USD$26.49 billion in line with consensus of USD$26.58 billion.  Home Depot reported fourth quarter same store sales growth of 3.2% while consensus was for a 4.5% rise.  Home Depot gave same store sales growth guidance in 2019 of 5% with revenue growth of 3.3%.  Home Depot is rated “Unattractive” in our Large-Cap Global Top Stock Ideas and “Neutral” in our Consumer Discretionary Global Top Stock Ideas.  Home Depot is rated “Attractive” in our Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • The J. M. Smucker Company (SJM) reported third quarter 2019 adjusted EPS of USD2.26 beating consensus of USD$2.01.  J. M. Smucker reported third quarter adjusted revenue of USD$2.01 billion matching consensus of USD$1.99 billion.  J. M. Smucker gave full year 2019 EPS guidance of USD$8.00-8.20 while present consensus is USD$8.01.  J. M. Smucker is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Staples Global Top Stock Ideas.
  • Macy’s (M) reported fourth quarter EPS of USD$2.73 well above consensus of USD$2.53.  Macy’s reported fourth quarter adjusted sales of USD$8.46 billion in line with consensus of USD$8.45 billion.  Macy’s reported fourth quarter same store sales growth of 0.7% below consensus of 0.9%.  Macy’s gave 2019 EPS guidance of USD$3.05-3.25.  Macy’s announced a management streamline effort to improve efficiency.  Macy’s is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Shake Shack (SHAK) reported fourth quarter adjusted EPS of USD$0.06 beating consensus of USD$0.03.  Shake Shack reported fourth quarter adjusted revenue of USD$124.3 million beating consensus of USD$119.2 million.  Shake Shack reported fourth quarter same store sales growth of 2.3% while consensus was for a drop of 1.2%.  Shake Shack is rated “Unattractive” in our Large-Cap Global Top Stock Ideas and “Neutral” in our Consumer Discretionary Global Top Stock Ideas.
  • Standard Chartered Plc (LSE: STAN) CFO Andy Halford confirmed in an interview that the bank will push forward with plans to create two new hubs for its Asian operations in Singapore and Hong Kong. Halford discussed that the move will save Standard Chartered in the “low” hundreds of millions of dollars in costs. Standard Chartered is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Sykes Enterprises (SYKE) reported fourth quarter adjusted EPS of USD$0.58 missing consensus of USD$0.66.  Sykes Enterprises reported fourth quarter adjusted revenue of USD$415.2 million missing consensus of USD$417.5 million.  Sykes Enterprises gave first quarter 2019 revenue guidance of USD$403-408 million, below present consensus of USD$.  Sykes Enterprises is rated “Attractive” in our SMID-Cap Global Top Stock Ideas and “Neutral” in our Information Technology Global Top Stock Ideas.
  • Tesla (TSLA) CEO Elon Musk should be held in contempt of court, according to the Securities and Exchange Commission (SEC).  The SEC has asked a judge to hold Mr. Musk in contempt for tweets he recently sent that the SEC claims breached the agreement he has signed.  The tweet in questions said Tesla would reach production of 500,000 cars in 2019, a tweet that was quickly corrected to say daily production at the annual rate of 500,000 cars.  The tweet was not approved beforehand, violating the agreement with the SEC.  Tesla is rated “Top Short” in our Large-Cap Global Top Stock Ideas and “Neutral” in our Consumer Discretionary Global Top Stock Ideas. 
  • Travis Perkins (LSE: TPK) shares rose the most intraday since 2009 after the company announced FY2018 pretax profit of 348mm pounds, notably beating the consensus estimate of 327mm pounds. Travis Perkins generated y/y revenue of 6.9% for CY4Q2018 and 4.9% revenue growth for the full year. Travis Perkins is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Vitamin Shoppe (VSI) reported fourth quarter adjusted loss of 19 cents per share beating consensus of 25 cents loss per share.  Vitamin Shoppe reported fourth quarter adjusted revenue of USD$248.5 million missing consensus of USD$254.5 million with same store sales dropping 5.4% in the quarter.  Vitamin Shoppe expects to close 60-80 stores in 2019.  Vitamin Shoppe is rated “Unattractive” in our SMID-Cap Global Top Stock Ideas and “Top Short” 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 -1.59 basis points to 2.48%
  • US 5-Year Treasury Bonds are higher with yields down -1.93 basis points to 2.45%
  • US 10-Year Treasury Bonds are higher with yields down -1.43 basis points to 2.64%
  • The US Treasury 2s-5s Spread has narrowed 0.34 basis points to -0.03%
  • The US Treasury 2s-10s Spread has widened 0.16 basis points to 0.16%
  • US Treasury 5s-10s Spread has widened 0.5 basis points to 0.19%

Currencies

  • EUR€ is currently little changed against the USD$ at 1.1374
  • GBP£ is currently up 1.138% against the USD$ to 1.3246
  • CHF is currently little changed against the USD$ at 0.9997
  • JPY¥ is currently down 0.234% against the USD$ to 110.8

Commodities

  • WTI Crude is currently up 0.94% to USD$55.85/bbl with the Brent-WTI spread little changed USD$0.01 to USD$9.07/bbl
  • Gold is currently little changed -0.17% to USD$1325.33/oz

 

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

S&P 500 Sector ETFs - Intraday

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

Russell 1000 Factor ETFs - Intraday

*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
AutoZone Inc Consumer Discretionary 829 5.00%                  65,436
JM Smucker Co/The Consumer Staples 103 4.44%                247,002
Advance Auto Parts Inc Consumer Discretionary 160 2.97%                135,221
Mattel Inc Consumer Discretionary 12.6 2.93%                644,878
Campbell Soup Co Consumer Staples 35.5 2.08%                349,384
 
Underperformers Sector Price 1D % Chg Volume
Discovery Inc Class A Communication Services 25.1 -7.15%                415,400
Discovery Inc Class C Communication Services 27.1 -7.12%            1,288,482
ABIOMED Inc Health Care 325 -3.67%                  45,157
Newmont Mining Corp Materials 31 -3.19%            1,114,258
Caterpillar Inc Industrials 131 -2.88%                824,536
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