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US stocks close little change, tread water all session, as investors seek drivers to move market higher

Mar 05, 2019

 

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US Markets End of Day Snapshot

  • US stocks close little changed, basically treading water all day, as investors seek further driver to push the markets higher after the torrid run for stocks since Christmas
  • The S&P 500 finished down 0.11%, Nasdaq Composite is down 0.02%, and Russell 2000 is down 0.45%
  • Volume on US stock exchanges today is 10% below the average of the last 30 days
  • Investors continue to seek concrete details on trade progress between the US and China, none have been put forward yet
  • Markit US Services PMI was 56.0 in February, in line with consensus of 56.2 and 56.2 in January
  • ISM Non-Manufacturing Index was 59.7 in February, beating consensuof 57.4 and 56.7 in January
  • US new home sales grew at a 3.7% rate in December, well above the 8.7% drop expected and down from the 16.9% growth seen in November
  • The SPDR S&P 500 ETF Trust (SPY) saw positive net inflows of USD$1.47 billion yesterday.  Total assets under management (AUM) is now up to USD$263.8 billion, the highest levels since November 30, 2018. 
  • Bloomberg analysts are warning that the write-down at Kraft Heinz (KHC) is a sign that there may be growing risks associated with intangible assets at S&P 500 companies.  According to Bloomberg analysis, goodwill now represents a third of assets for 20% of constituents in the S&P 500.  Additional write-downs to intangible assets could be a threat to the outlook for S&P 500 earnings. 
  • According to strategists at Credit Suisse, lower stock market volatility is the primary driver in the post-Christmas rally in the S&P 500.  The VIX, a measure of options-based volatility, closed at 14.65 yesterday after peaking at 36.07 on December 24, 2018. 
  • The UK is not expecting a breakthrough at its coming meeting with EU negotiators, according to press reports
  • Markit Eurozone Composite PMI (final reading) came in at 51.9 versus a forecast of 51.4 and 51.4 in January. 
  • Chinese officials lowered their target for economic growth.  In Premier Li Keqiang’s annual report to the National People’s Congress, the target range for CY2019 GDP was set to 6.0% to 6.5% vs. 6.5% in CY2018. 
  • In addition to a lower GDP target for CY2019 (vs. CY2018), Chinese officials also announced a major tax cut.  The top bracket of the value-added tax (VAT) rate was dropped 3 percentages points, in an attempt to help the manufacturing sector.  The VAT cut translates to approximately RMB800 billion or USD$119 billion
  • Telecom (+0.73%), Real Estate (+0.26%), and Consumer Discretionary (+0.2%) stocks were the top performers in the S&P 500 today
  • Financials (-0.33%), Materials (-0.51%), and Industrials (-0.64%) 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 0.57x
  • 128 stocks in the S&P 500 hit 4-week highs while 34 stocks reached 4-week lows
  • 65 stocks in the S&P 500 closed overbought while 7 stocks closed oversold according to the 16-day RSI Measure
  • 249 stocks in the Nasdaq Composite hit 4-week highs while 56 stocks reached 4-week lows
  • 440 stocks in the Nasdaq Composite closed overbought while 223 stocks closed oversold according to the 16-day RSI Measure
  • The VIX finished flat at 14.37 after closing at 14.63 yesterday

Stocks Trending in the News

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Global Consumer Stocks Trending in the News

  • Anheuser-Busch Inbev (ENXTBR:ABI) CEO Oliver Goudet will soon, an unexpected development.  Mr. Goudet will assume the top spot at JAB Holdings Ltd. (AIM:JBH), the consumer goods giant.  Anheuser-Busch Inbev said it will announce succession plans in due course with Mr Goudet pledging to assist however possible.  He will leave right after the company’s annual shareholders meeting on April 24th.  Anheuser-Busch Inbev is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas
  • Bed, Bath & Beyond (BBBY) was downgraded today by Barclay’s to underweight from equal-weight.  Barclay’s cut its price target for Bed, Bath & Beyond to USD$13 from USD$15, implying it sees 22% downside for the stock.  Barclay’s no longer believes in the turnaround plans of Bed, Bath & Beyond.  Bed, Bath & Beyond is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Kohl’s (KSS) fourth quarter EPS of USD$2.24 beating consensus of USD$2.18.  Kohl’s delivered same store sales growth of 1.0%, beating consensus of 0.2%.  Target fourth quarter revenue of USD$6.54 in line with consensus of USD$6.56.  Target affirmed 2019 EPS guidance of USD$5.80-6.15.  Kohl’s is rated “Attractive” in our US Large-Cap and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Harley-Davidson (HOG) announced the acquisition of StaCyc Inc, a maker of electric powered two-wheelers for children.  Harley-Davidson said the acquisition reinforces its “commitment to lead in the electrification of motorcycling”.   Harley-Davidson has been seeking to expand its electric portfolio and is likely to make other acquisitions along the same line.  Harley-Davidson is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutal” in our US Consumer Discretionary Global Top Stock Ideas.    
  • Revlon (REV) share are lower after Jefferies highlights Nielsen data showing recent weak sales of its products.  Nielsen shows a drop in sales of over 15% over the last 4 weeks.  Jefferies cites ongoing challenges for Revlon with the recent deceleration in sales chief among them.  Revlon is rated “Top Buy” in our US SMID-Cap Global Top Stock Ideas and “Top Short” in our US Consumer Staples Global Top Stock Ideas.  
  • Softbank (TSE:9984) has raised a USD$3 billion loan to cover commitments as Softbank waits for funds committed to its Vision Fund.  Softbank has raised over USD$100 billion in what it calls the world’s largest pool of money to fund tech investments.  Softbank’s Vision Fund has stakes in over 70 tech companies worldwide.  Softbank is rated “Neutral” in our Japan Large-Cap Global Top Stock Ideas. 
  • Target (TGT) fourth quarter EPS of USD$1.53 matches consensus of USD$1.53.  Target delivered same store sales growth of 5.3%, beating consensus of 5.1%.  Target fourth quarter revenue of USD$22.98 matched consensus of USD$22.96.  Target affirmed 2019 EPS guidance of USD$5.75-6.05.  Target is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas
  • The Children's Place (PLCE) had its price target cut today at B. Riley to USD$122 from USD$167 while maintaining its buy rating.  B Riley sees the heavy promotional and sales initiatives that weighed on results continuing into 2019 and likely to further weigh on financial performance.  Children’s Place is rated “Neutral” in our US Large-Cap and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.  

Global Information Technology & Communication Services Stocks Trending in the News

  • Align Technology (ALGN) shares rebounded following Pipper Jaffray’s analyst Matt O’Brien defense of the stock in a note to clients. O’Brien told investors to, “buy the pullback,” that resulted from news that Align Technology will close its Invisalign Stores by April 3, 2019. Align Technology is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.  
  • Altice Europe NV (ENXTAM: ATC) shares fell after they were downgraded from equal-weight to underweight at Barclays. Barclays also slashed its price target for Altice Europe NV shares from 2.80 euros/share to 1.50 euros/share, which implies a 27% downside from Monday’s closing price. Altice Europe NV is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.  
  • Juniper Networks (JNPR) announced its intent to buy Mist Systems for USD$405 million.  Mist Systems is a leader in the use of AI in the management of wireless cloud networks.  Juniper has made expansion into cloud-management of wireless network a priority.  Juniper expects the deal to close in the second quarter.  Juniper Network is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Ctrip.com International (CTRP) shares posted their largest intraday gains in over three years after reporting stronger-than-expected CY4Q2018 results. Six analysts, including Citigroup, upgraded Ctrip.com shares on the news. Ctrip.com is rated “Neutral” in our China All-Cap Global Top Stock Ideas.  
  • Papa John’s Pizza (PZZA) announced that its founder, Joh Schnatter, will be quitting the board as part of his settlement with the company he founded.  Papa John’s said Schnatter will help the board find a suitable replacement for him on the board.  The recent tension comes after Starboard Value LP mounted an activist campaign to improve performance along with its USD$200 million investment in the company.  Papa John’s Pizza is rated “Top Short” in our US Large-Cap and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.   
  • Salesforce.com (CRM) reported fourth quarter adjusted EPS of USD$0.70 beating consensus of USD$0.55.  Salesforce.com reported first quarter 2019 adjusted revenue of USD$3.6 billion in line with consensus of USD$3.54 billion.  Salesforce.com Inc gave first quarter EPS guidance of 60-61 cents per share.  Salesforce.com Inc is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas. 
  • YY (YY) reported fourth quarter EPS of 12.86 yuan beating consensus of 12.66 yuan.  YY delivered fourth quarter gross margin of 35.1%, a touch better than 35.0% expected.  YY fourth quarter revenue of 4.64 billion yuan a touch better than consensus of 4.47 billion yuan.  YY affirmed first quarter revenue guidance of 4.01-4.16 billion yuan.  YY is rated “Neutral” in our China All-Cap Global Top Stock Ideas. 

Global Industrials Stocks Trending in the News

  • Alaska Air (ALK) has lowered revenue guidance for the first quarter.  Alaska Air see revenue growing just 1-2% in the first quarter, down from 3-4% earlier.  Poor winter weather has dampened demand early in the quarter and is the main reason for the cut to guidance.  Alaska Air is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Industrials Global Top Stock Ideas 
  • General Electric (GE) CEO Larry Culp said today the power unit will continue to burn through cash in 2019 and the company will post a negative cash flow, a surprise to investors.  General Electric’s cash burn will be mainly from the power unit and “other operational pressures”.  He added that deleveraging GE Capital “is key to reducing its risk profile.  Culp highlighted that General Electric’s turnaround is a multi-year effort and that the company must “pay the piper” in the ongoing revamp.  General Electric is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.
  • Hertz Global Holdings Inc. (HTZ) shares tumbled after top shareholder Carl Icahn slashed his holdings overnight. Icahn sold about 5mm Hertz shares at about USD$19.60/share yesterday, nearly a 2% discount to the last closing price of Hertz. Icahn still, however, owns about 24mm Hertz shares. Hertz is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.  
  • JetBlue (JBLU) has improved guidance somewhat, now seeing RASM down 1.5% to 3.5%, an improvement over previous guidance of a 2% to 4% drop.  JetBlue also cut its capacity growth guidance to 6.5%, down 0.5%   JetBlue affirmed 2019 EPS guidance of USD$2.50-3.00.  JetBlue is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas.  

Global Financials Stocks Trending in the News

  • Aon Plc (AON) is considering the acquisition of rival insurance brokerage Willis Towers Watson Plc (TCK), according to sources familiar with the matter. According to the sources, Aon will submit a bid in the coming weeks with the two companies having already help preliminary talks. Aon declined to comment on the report. Aon is not rated in our Global Top Stock Ideas.  
  • Raiffeisen Bank International (WBAG: RBI) shares slid following news that is predecessor, RZB, helped to launder money associated with Russian tax fraud. According to an article published on Addendum.org, a report filed by Hermitage Fund contains evidence of links to the laundered money. Raiffeisen Bank is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.  
  • Societe Generale SA (ENXTPA: GLE) analysts Thomas Swoboda and Peter Clark cut their recommendation for Wacker Chemie (XTRA: WCH) from buy to hold just hours before a weaker-than-expected earnings announcement sent the stock tumbling as much as 11%. Wacker Chemie cited lower average prices for polysilicon as reasoning for the earnings slump. Societe Generale is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas. Wacker Chemie is rated “Top Short” in our European SMID-Cap Global Top Stock Ideas. 

Global Commodities & Power Stocks Trending in the News

  • Vale (VALE) changed the inspection company that was inspecting the dam that collapsed after the initial inspectors would not affirm the dam was safe, according to the Wall Street Journal today.  Vale rehired a past inspection company that gave the dam a passing grade, the dam that eventually collapsed killing 186 people, mostly Vale employees.  There are still 122 people missing.  Vale is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.

Global Health Care Stock Trending in the News

  • Eli Lilly (LLY) announced it is launching an authorized generic version of its best-selling insulin Humalog that will have a list-price of 50% below Humalog.  Insulin prices have soared and have been the spotlight of much negative press for drug makers.  Humalog is a 20-year old drug and critics complain its price has only continued to rise.  Eli Lilly is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Eurofins Scientific SE (ENXTPA: ERF) shares slipped amid pressure from short sellers and reports that it pays annual rent to its founding family for laboratory space. Eurofins, which paid 26mm euros (USD$29.5mm) in rent last year to affiliates of Analytical Bioventures SCA, publicly defended its practice. Eurofins is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.  

 

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US Treasuries

 

  • US 2-Year Treasury Notes are lower with yields up 0.41 basis points to 2.54%
  • US 5-Year Treasury Bonds are lower with yields up 0.18 basis points to 2.52%
  • US 10-Year Treasury Bonds are higher with yields down -0.36 basis points to 2.71%
  • The US Treasury 2s-5s Spread has narrowed 0.23 basis points to -0.02%
  • The US Treasury 2s-10s Spread has narrowed 0.77 basis points to 0.17%
  • US Treasury 5s-10s Spread has narrowed 0.54 basis points to 0.19%

Currencies

  • EUR€ is down 0.291% against the USD$ in after hours to 1.1307
  • GBP£ is little changed 0.03% against the USD$ in after hours to 1.3176
  • CHF is down 0.539% against the USD$ in after hours to 0.9956
  • JPY¥ is little changed 0.125% against the USD$ in after hours to 111.89

Commodities

  • WTI Crude is little changed -0.05% to USD$56.56/bbl with the Brent-WTI spread little changed USD$0 to USD$8.23/bbl
  • Gold is little changed 0.06% to USD$1287.46/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
Kohl's Corp Consumer Discretionary 67.3 7.31%                627,623
Willis Towers Watson PLC Financials 155 5.20%                419,554
Target Corp Consumer Discretionary 68.2 4.58%            1,372,780
Harley-Davidson Inc Consumer Discretionary 37.1 3.36%                744,068
Tyson Foods Inc Consumer Staples 58.6 2.75%                768,919
 
Underformers Sector Price 1D % Chg Volume
Aon PLC Financials 149 -7.84%                889,326
DISH Network Corp Communication Services 28.2 -6.96%                365,374
Align Technology Inc Health Care 195 -6.67%            1,318,328
General Electric Co Industrials 8.72 -4.72%          30,759,747
DaVita Inc Health Care 56.7 -4.22%                892,395
Morning BriefA quick GLOBAL RECAP TO START YOUR DAY
Morning BriefA quick GLOBAL RECAP TO START YOUR DAY