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US stocks drifting lower midday as US continues insisting on "significant structural changes" from China

Feb 27, 2019

 

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Market data as of 12:15pm EST

US Market Snapshot

  • US stocks are drifting lower, oscillating between positive and negative territory during the morning, in a day of largely directionless trading thus far
  • US trade negotiators are insisting on "significant structural changes" from China as part of any trade deal, saying buying more US agricultural goods is not sufficient
  • The S&P 500 is currently down 0.25%, Nasdaq Composite is down 0.13%, and Russell 2000 is down 0.01%
  • Tensions continue to rise between India and Pakistan.  The Pakistani government claims to have downed 2 Indian fighters while the Indian government confirms it has lost one MIG 21 jet with a pilot missing in action (MIA).  Analysts are suggesting the current escalation between the two countries is the worst it has been since the Indo-Pakistani War of 1971 (the War of Bangladeshi Independence).  The Pakistani government has formally extended an offer to the Indian government to de-escalate the current conflagration between the two neighbors. 
  • Today is the second day of US Federal Reserve Chairman Jerome Powell's 2-day testimony to the US Congress. US Fed Chairman Powell is speaking to the House Financial Services Committee. 
  • Chairman Powell said the loss of manufacturing jobs hurts rural US, adding the there is "clearly we have a problem with labor force participation" and "there are some disincentives to work"
  • US wholesale inventories rose 1.1% in December, above the 0.4% consensus and matching January
  • US retail inventories rose 0.9% in December, well above the 0.2% consensus and below the 1.1% in January
  • US pending home sales rose 4.6% in January, well above 1.0% consensus and well above the 2.2% drop in December
  • US factory orders rose just 0.1% in December, below the 0.6% expected and better than the 0.6% drop in November
  • The S&P 500 is on pace to start 2019 with 2 straight months of gains, the 28th time since 1950.  According to analysis by LPL strategists, every time the S&P 500 has started the first 2 months of the year positive, it rose over the next 10 months 26 times.  The only 2 times it didn’t rise was in 1987 and 2011. 
  • Macro-economic data points such as jobless claims, ISM readings, etc have been supporting the rally in US stocks since the last week of December 2018.  However, the volatility in the releases of jobless claims and ISM readings could cause material risks to a continuation in the current rally in US stocks. 
  • While news headlines continue to pound the idea that active managers continue to lose to passive funds, since the start of 2019, more than half of actively managed US mutual funds are outperforming their benchmarks.  Assuming the current trend holds for the entirety of CY2019, it would be the best year for the US mutual fund industry (in terms of performance) in a decade according to analysis by Goldman Sachs.
  • Energy (+0.69%), Financials (+0.19%), and Utilities (-0.06%) stocks are the top performers in the S&P 500 today
  • Healthcare (-0.34%), Telecom (-0.57%), and Real Estate (-0.91%) 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 0.66x
  • 51 stocks in the S&P500 are at 4-week highs while 6 stocks are at 4-week lows
  • 93 stocks in the S&P 500 are overbought while 2 stocks are oversold according to the 16-day RSI Measure
  • 330 stocks in the Nasdaq Composite are at 4-week highs while 35 stocks are at 4-week lows
  • 335 stocks in the Nasdaq Composite are overbought while 166 stocks are oversold according to the 16-day RSI Measure
  • The VIX is currently  moving down at 13.74 from yesterday's close of 15.17

Stocks Trending in the News

Click name for Q-Factor rating and financials data.
 

  • ABN Amro (ENXTAM: ABN) took investors by surprise after it quietly purchased 680mm euros (USD$775mm) worth of Air France-KLM (ENXTPA: AF) shares over just 5 trading sessions. Over the period that ABN Amro accumulated Air France shares, the latter’s stock appreciated 23%. State-controlled ABN Amro began to purchase Air France shares on behalf of the Dutch government on February 20th. ABN Amro is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. Air France is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Adyen (ENXTAM:ADYEN) reported second half 2018 adjusted ebitda of 111.7 million euros beating consensus of 88.6 million euros.  Adyen reported fourth quarter adjusted revenue of 192.5 million euros beating consensus of 182.9 million euros.  Adyen saw 60% revenue growth in the second half, well above the 40% guidance given at the start of the year.  Adyen gave revenue growth guidance of mid-twenties to mid-thirties for the coming years.  Adyen is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Bank of East Asia (SEHK: 23) shares fell the most in 6 months after the company declared a smaller-than-expected special dividend payment in its FY2018 annual report. Bank of East Asia shares rallied leading up to the special dividend declaration on rumors that the bank would announce a big special dividend for its 100-year anniversary. Bank of East Asia is rated “Neutral” in our China All-Cap Global Top Stock Ideas.
  • Bayer AG (DB: BAYN) shares edged slightly lower after the company reported CY4Q2018 adjusted Ebitda in line with the average analyst estimate. Bayer AG generated an adjusted Ebitda of 2.07bn euros in CY4Q2018 while analysts expected 2.04bn euros. Bayer also maintained FY2019 earnings guidance for 6.80 euros/share, which is slightly below consensus of 6.88 euros/share. Bayer AG is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Beiersdorf AG (XTRA: BEI) shares slumped to a 2-year low after the company announced a profit warning for FY2019. Beiersdorf cut its FY2019 margin guidance while telling investors that the company plans to invest more to reach growth targets. The profit warning triggered a slew of analyst downgrades for Beiersdorf stock. Beiersdorf is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Best Buy Co. (BBY) shares soared by double-digits after the technology retailer announced stronger-than-expected CY4Q2018 financial results, citing battle royale video game Fortnite as a sales driver. Best Buy reported comparable sales growth of 3.0% for CY4Q2018, beating the average analyst estimate for 1.8% growth. Best Buy also announced a new USD$3bn share buyback plan. Best Buy is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Dycom Industries Inc. (DY) shares tanked after the company announced guidance for CY1Q2019 that missed the lowest analyst estimate. “The biggest issued continues to be gross margin pressure, both in the reported and in DY’s guidance,” said Wells Fargo analyst Jennifer Fritzsche. Fritzsche did highlight, however, that Dycom’s CY4Q2018 financial results did show accelerated organic revenue growth. Dycom Industries is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Top Short” in our US Industrials Global Top Stock Ideas.  
  • eBay (EBAY) and its activist shareholders are nearing an agreement to give them board seats at eBay.  Elliott Management and Starboard Value LP would.  The deal being described in the press would see the funds receive multiple board seats and have eBay perform an operational and strategic review of the company.  The review could include considering breaking up the company to maximize profitability.  eBay is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • GCP Applied Technologies (GCP) shares spiked after the company told investors that it is reviewing all options, including a possible sale of the company. Additionally, GCP Applied Technologies is restructuring its global supply chain strategy. GCP Applied Technologies is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas.  
  • ITV Plc (LSE: ITV) shares slipped after the company reported lower than expected advertising revenue. ITV attributed slumping advertising revenue to Brexit and companies bracing for the event. “Most people in Britain in business thought there would be a withdrawal agreement by now,” said CEO Carolyn McCall, adding, “I’m afraid companies have to look at their bottom line and be more cautious,”. ITV Plc is rated “Unattractive” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Kuehne + Nagel International AG (SWX: KNIN) shares fell the most in more than a year after the company reported a CY4Q2018 profit miss and disappointed investors with FY2019 guidance. Kuehne + Nagel reported CY4Q2018 Ebit that was about 7% below the average analyst estimate. Kuehne + Nagel also pulled back its FY2019 guidance as the company, “seemingly failed to appreciate the degree of market slowdown,” said RBC. Kuehne + Nagel is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Lowe’s (LOW) reported fourth quarter adjusted EPS of USD$0.80 beating consensus of USD$0.79.  Lowe’s reported fourth quarter adjusted revenue of USD$15.65 billion in line with consensus of USD$15.74 billion.  Lowe’s CEO said he is happy with the quarter with the company reaping the benefits of much of its hard work over the past 6 months.  Lowe’s is rated “Unattractive” in our Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Metro Bank Plc (LSE: MTRO) shares plummeted to a record low after the lender disclosed that British regulators are probing how the company misclassified assets. The UK Financial Conduct Authority and Prudential Regulation Authority will, “investigate the circumstances and events,” that led Metro Bank to adjust the risk-weightings of its assets last month. Metro Bank is rated “Unattractive” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Mylan (MYL) shares dove the most in 3 years after the generic drug maker offered FY2019 guidance that missed the average analyst estimate. As a result of the disappointing guidance, Bernstein downgraded Mylan shares, further driving the selloff. Analysts are also highlighting that Mylan continues to face manufacturing issues. Mylan is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.  
  • Papa John’s Pizza (PZZA) reported fourth quarter loss of USD$0.44 per share missing consensus of EPS of USD$0.18.  Papa John’s Pizza reported fourth quarter adjusted revenue of USD$374 million missing consensus of USD$393.2 million.  Papa John’s Pizza gave same store sales guidance of -1% to -5%.  Papa John’s Pizza is rated “Top Short” in our Large-Cap Global Top Stock Ideas and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Ted Baker (LSE:TED) updated guidance for its fiscal year that is about to end January 26th, saying pretax profit will be about 63 million pounds, below the 74 million pounds consensus.  Ted Baker said currency movements and other factors weighed on its performance.  Ted Baker is in the middle of an investigation of alleged sexual misconduct by its founder, but this warning was related to inventory and product costs.  Ted Baker is not rated in our Global Top Stock Ideas.
  • Toll Brothers (TOL) reported fourth quarter adjusted EPS of USD$0.76 beating consensus of USD$0.61.  Toll Brothers reported fourth quarter adjusted revenue of USD$1.36 billion beating consensus of USD$1.26 billion.  Toll Brothers gave second quarter delivery guidance of 1,650 to 1,850 homes.  Toll Brothers backlog stands at USD$5.37 billion.  Toll Brothers is rated “Unattractive” in our Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • TJX Companies (TJX) shares moved higher after the discount retailer announced positive CY4Q2018 financial results, driven by a strong holiday season, and a planned stock buyback. TJX Companies reported comparable same-store sales growth of 6.0% for CY4Q2018, blowing past consensus of 3.5%. TJX Companies also plans to buyback as much as USD$2.25bn in FY2019. TJX Companies is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Walmart (WMT) wants to become a bigger player in online advertising.  Walmart is bringing its advertising business in-house after a third-party contract is set to expire soon.  Walmart is looking to build additional sources of revenue and sees advertising as a promising avenue.   Walmart will offer its deep customer activity database to help advertisers target their ads.  Walmart is rated “Attractive” in our Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • Weight Watchers (WTW) reported fourth quarter adjusted EPS of USD$0.63 beating consensus of USD$0.60.  Weight Watchers reported fourth quarter adjusted revenue of USD$330 million missing consensus of USD$346.4 million.  Weight Watchers gave 2019 EPS guidance of USD$1.25-1.50.  Weight Watchers is rated “Neutral” in our Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Staples Global Top Stock Ideas.
  • Wynn Resorts (WYNN) has been fined USD$20 million over sexual misconduct complaints by the Nevada Gaming Authority.  Wynn’s CEO was accused of multiple assaults on employees, allegations that were first reported in the Wall Street Journal.  Wynn will not lose its gaming license as part of the fine and the fine closes the matter for the state of Nevada.  Wynn Resorts is rated “Top Short” in our 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 lower with yields up 2.01 basis points to 2.50%
  • US 5-Year Treasury Bonds are lower with yields up 3.35 basis points to 2.47%
  • US 10-Year Treasury Bonds are lower with yields up 4.13 basis points to 2.67%
  • The US Treasury 2s-5s Spread has widened 1.34 basis points to -0.02%
  • The US Treasury 2s-10s Spread has widened 2.12 basis points to 0.18%
  • US Treasury 5s-10s Spread has widened 0.78 basis points to 0.2%

Currencies

  • EUR€ is currently down 0.176% against the USD$ to 1.1369
  • GBP£ is currently up 0.468% against the USD$ to 1.3314
  • CHF is currently little changed against the USD$ at 0.9994
  • JPY¥ is currently up 0.326% against the USD$ to 110.95

Commodities

  • WTI Crude is currently up 2.94% to USD$57.13/bbl with the Brent-WTI spread down USD$-1.44 to USD$8.98/bbl
  • Gold is currently down -0.64% to USD$1320.49/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
Best Buy Co Inc Consumer Discretionary 56.7 16.95%            1,529,119
Campbell Soup Co Consumer Staples 35.5 7.63%                698,370
Under Armour Inc Consumer Discretionary 19.8 4.14%                531,916
Under Armour Inc Consumer Discretionary 17.9 4.13%                412,020
Concho Resources Inc Energy 122 2.95%                103,466
 
Underperformers Sector Price 1D % Chg Volume
Mylan NV Health Care 29.3 -12.02%            3,178,903
Brighthouse Financial Inc Financials 34.2 -4.86%                309,685
WellCare Health Plans Inc Health Care 256 -4.68%                  38,505
UnitedHealth Group Inc Health Care 256 -4.43%                505,995
Humana Inc Health Care 288 -4.17%                  65,123
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