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To Infinity and Beyond! Strong consumer sentiment and home sales fuel risk appetite, US stocks rising midday

Mar 29, 2019

 

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Market data as of 12:15pm

US Market Snapshot

  • US stocks are rising as strong consumer sentiment data and home sales data fuel risk appetite, US stocks are trading higher midday
  • US treasuries are giving up gains from earlier in the week with the 10-year yield over 2.40%
  • The S&P 500 is currently up 0.56%, Nasdaq Composite is up 0.51%, and Russell 2000 is up 0.42%
  • The University of Michigan Consumer Sentiment Index was 98.4 in March, above the 97.8 consensus
  • US Personal Income grew 0.2% in February,below 0.3% consensus and above the 0.1% drop in January
  • Core PCE rose at a 1.8% y/y rate in January, below the 1.9% consensus
  • New Home Sales rose 4.9% in February, above the 2.1% consensus
  • Former Federal Reserve Chair Janet Yellen commented that she does not expect the US to fall into recession any time soon and sees no need for an interest rate cut
  • Press reports are that the US and China are poring over a trade agreement line by line to assure there are no discrepancies between the US and Chinese language versions; there were perceived discrepancies, especially over the meaning of certain words, so negotiators are triple checking everything  
  • China is keen to appear on equal footing with the US in negotiations and in any final trade deal
  • Read more in our blog postHow about a trade deal while I buzz you with my warships? US-China trade talks intensify
  • The MSCI All World Index is poised for its best performance this quarter since early 2012
  • Things are tight in Turkey, read our post: Hear that crunch? That's lira liquidity amid Turkey's F/X flights of fancy
  • Healthcare (+0.65%), Industrials (+0.62%), and Tech (+0.53%) stocks are the top performers in the S&P 500 today
  • Energy (-0.24%), Materials (-0.32%), and Real Estate (-0.34%) stocks are the worst performers in the S&P 500 today
  • Investor sentiment for US stocks is positive with the advance/decline ratio for the S&P 500 currently at 2.31x
  • 62 stocks in the S&P500 are at 4-week highs while 21 stocks are at 4-week lows
  • 43 stocks in the S&P 500 are overbought while 6 stocks are oversold according to the 16-day RSI Measure
  • 80 stocks in the Nasdaq Composite are at 4-week highs while 96 stocks are at 4-week lows
  • 171 stocks in the Nasdaq Composite are overbought while 227 stocks are oversold according to the 16-day RSI Measure
  • The VIX is currently moving down at 13.98 from yesterday's close of 14.43

Stocks Trending in the News

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Global Consumer Stocks Trending in the News

  • Alibaba (BABA) provided Qutoutiao (QTT) with a convertible loan valued at $171 million.  The loan from Alibaba to the news and video aggregator Qutoutiao makes strong strategic sense, according to analysts.  Citi called the deal a “win-win” as it will help Alibaba penetrate into new users in lower-tier cities,” especially given Qutoutiao’s effective user-acquisition strategy.  Alibaba is rated “Top Buy” in our China All-Cap Global Top Stock Ideas.  Qutoutiao is rated “Top Short” in our China All-Cap Global Top Stock Ideas.
  • CarMax (KMX) reported fourth quarter results that beat consensus.  Fourth quarter EPS of $1.13 beat $1.03 consensus. CarMax fourth quarter revenue of $4.32 billion trailed $4.37 billion consensus.  CarMax plans to have its omni-channel roll-out to the majority of its customers by the end of fiscal 2020.  CarMax will open 13 stores over the coming year.  CarMax is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • H&M ( HMB) reported first quarter pre-tax profit that handily beat consensus, 1.04 billion Swedish kroner came well above consensus of 638 million Swedish kroner.  This was its weakest profit in 18 years.  H&M’s CEO said the company will close “somewhat more” than 50 stores and put some limits on free deliveries.  There will be more closing than openings in 2019.  H&M is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
  • RH (RH) reported fourth quarter EPD of USD$3.00 beating consensus of USD$2.86.  RH gave 2019 guidance that trailed the market by a wide margin-EPS of USD$8.41-9.08 is well below the $10.00 consensus.  Revenue is expected to come in the range of USD$2.59-2.64 billion, well below USD$2.75 billion.  RH expects revenue growth of 3-5%.  RH is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.

Global Information Technology and Communication Services Stocks Trending in the News

  • Altice Europe NV (ENXTAM: ATC) shares traded higher by the most in 10 months after the phone carrier predicted higher growth in France for FY2019. Altice told analysts that it expects to report French revenue of between 4.0bn euros and 4.1bn euros, largely beating consensus for 3.65bn euros. Altice Europe NV is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.
  • BlackBerry (TSX:BB) reported fourth quarter EPS of 11, beating consensus of 6 cents.  BlackBerry reported fourth quarter revenue of $257 million, beating consensus of $252 million.  Revenue grew 8% in the quarter.  BlackBerry results were helped by its recent artificial intelligence acquisition.  BlackBerry is rated “Neutral” in our Canada All-Cap Global Top Stock Ideas.
  • Comcast Corp. (CMCSA) and Charter Communications (CHTR) shares both edged lower after RBC Capital Markets downgraded each stock as the company is, “taking a more cautious view on cable fundamentals.” Comcast saw its price target lowered to USD$42/share from USD$45/share while Charter saw its price target lowered to USD$375/share from USD$400/share. Comcast is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas. Charter is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretinary Global Top Stock Ideas.
  • Deutsche Telekom (DB: DTE) shares edged lower after Credit Suisse analyst Jakob Bluestone downgraded the stock from outperform to neutral. Despite the downgrade, Credit Suisse maintained its price target of 17 euros/share for Deutsche Telekom, implying a 15% upside from the stock’s prior close. Deutsche Telekom currently maintains an average price target of 16.47 euros/share across 19 buy recommendations, 7 hold recommendations, and 3 sell recommendations. Deutsche Telekom is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Wirecard AG (XTRA: WDI) shares slid following reports that Royston Ng, head of Wirecard regulatory compliance in Asia, left the company. Although the exact reasoning behind Ng’s departure is unknown, his resignation comes just days after the company published an external report into fraud allegations that contains several irregularities within the company. Wirecard is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.

Global Financials Stocks Trending in the News

  • China Galaxy Securities (SEHK: 6881) shares traded higher after China International Capital Corporation upgraded the stock from hold to buy. China International Capital Corporation also set a price target of HK$6.31/share, implying a 22% upside from the stock’s prior closing price. China Galaxy Securities currently maintains an average price target of HK$5.05/share across 5 buy recommendations, 6 hold recommendations, and 2 sell recommendations. China Galaxy Securities is rated “Unattractive” in our China All-Cap Global Top Stock Ideas.
  • Jefferies (JEF) reported fiscal first quarter EPS of 14 cents, matching consensus. Jefferies first quarter revenue of USD$828.2 million also matched consensus.  Revenue included a 1% rise in trading revenue which management termed exceptional, given the challenging conditions in January.  Jefferies said in the present quarter business has “resumed its more normal pace.”  Jefferies is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Morgan Stanley's (MS) President Colm Kelleher announced he will be retiring.  Kelleher was one of the key executives that helped Morgan Stanley successfully navigate the financial crisis over 10 years ago.  He was viewed a the company’s next CEO but has decided, at this point, to retire after over three decades at the firm.  He will remain as a senior adviser to the company after retirement.  Morgan Stanley is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Wells Fargo (WFC) announced its CEO Tim Sloan will be exiting the company.   Mr. Sloan spent 31 years at Wells Fargo and spent the last two and a half years trying to get the company back on solid footing.  He has spent most of that time as a punching bag for members of Congress, in the wake of the fake-account scandal that rocked the bank.  Wells Fargo is rated “Neutral” in our US Large-Cap Global Top Stock Ideas

Global Industrials Stocks Trending in the News

  • Boeing’s (BA) suspect flight control feature was activated before the Ethiopian Airline 737 Max crash, Ethiopian investigators are saying.  This is the first finding for the data on the plane’s flight recorder.  The MCAS, as the suspect system is known, was somehow triggered just before the plane went into a nose dive, killing all on board.  An initial report from investigators is due within days.  This information was shared during a briefing at the FAA on Thursday.  is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas
  • Lyft (LYFT) priced its IPO at $72, at the top of its revised pricing range.  The pricing value the company at almost $24 billion.  Lyft raised $2.34 billion in the initial share sale.  Lyft has always played second fiddle to Uber and has had to battle them for fundraising, so this successful IPO is especially satisfying for the company.  Lyft is not yet rated in our Global Top Stock Ideas.

Global Health Care Stocks Trending in the News

  • Astra Zeneca (LSE AZN) has announced a joint venture with Daiichi Sankyo (TSE:4568) to develop new cancer treatments.  Astra Zeneca will pay $1.35 billion up-front to develop and commercialize its trastuzumab deruxtecan drug with Daiichi Sankyo, then up to $5.6 billion over time depending on hitting milestones.  Astra Zeneca is pursuing this deal in its effort to become a global cancer powerhouse.  Astra Zeneca is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.  Daiichi Sankyo is rated “Unattractive” in our Japan Large-Cap Global Top Stock Ideas.
  • Celgene Corp. (CELG) shares jumped after shareholder advisory firms Institutional Shareholder Services Inc. and Glass Lewis & Co. dealt a blow to an activist investor’s efforts to break up a takeover by Bristol-Myers Squibb Co. (NYSE: BMY) of the USD$71mm drugmaker. Both aforementioned shareholder advisory firms came out in public support of the takeover with ISS commenting on its reasonable valuation and Glass Lewis saying the takeover is strategically compelling. Celgene is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas. Bristol-Myers Squibb is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Galapagos NV (ENXTAM: GLPG) shares surged after reporting that its experimental rheumatoid arthritis drug developed in partnership with Gilead Sciences Inc. (GILD) hit its main goal in a late-stage study. The treatment, which combines medicine filgotinib with another drug, methotrexate, showed notably higher response rates relative to the latter treatment by itself. Galapagos is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas. Gilead Sciences is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.

Global Commodities & Power Stocks Trending in the News

  • Vale (VALE) gave the market its much anticipated iron-ore production guidance for 2019, saying it expects to produce between 307 and 322 million tons.  93 million tons of production has been shuttered in the wake of its dam disaster.  Previous estimates were for Vale to produce 382 million tons of iron ore this year.  Vale said it is focused on safety issues now, not on restoring production.  Vale said it could take up to 3 years to reopen some of the shuttered mines, longer for those already closed.  Analysts estimate there is a 29 million ton deficit in the market this year. Vale is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas

 

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US Treasuries

  • US 2-Year Treasury Notes are lower with yields up 3.62 basis points to 2.27%
  • US 5-Year Treasury Bonds are lower with yields up 2.51 basis points to 2.23%
  • US 10-Year Treasury Bonds are lower with yields up 1.93 basis points to 2.41%
  • The US Treasury 2s-5s Spread has narrowed 1.11 basis points to -0.03%
  • The US Treasury 2s-10s Spread has narrowed 1.69 basis points to 0.14%
  • US Treasury 5s-10s Spread has narrowed 0.58 basis points to 0.17%

Currencies

  • EUR€ is currently little changed against the USD$ at 1.1226
  • GBP£ is currently little changed against the USD$ at 1.3026
  • CHF is currently little changed against the USD$ at 1.0044
  • JPY¥ is currently little changed against the USD$ at 110.75

Commodities

  • WTI Crude is currently up 1.25% to USD$60.04/bbl with the Brent-WTI spread down USD$-1.1 to USD$7.22/bbl
  • Gold is currently up 0.41% to USD$1295.79/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
CarMax Inc Consumer Discretionary 64.4 9.64%                703,713
Celgene Corp Health Care 88.1 7.27%            5,004,079
Western Digital Corp Information Technology 37.7 4.83%            1,277,390
Micron Technology Inc Information Technology 33.9 4.40%            5,292,967
Seagate Technology PLC Information Technology 39.6 2.91%                428,725
 
Underperformers Sector Price 1D % Chg Volume
PVH Corp Consumer Discretionary 105 -4.17%                125,528
Helmerich & Payne Inc Energy 53.4 -2.43%                  50,884
Wells Fargo & Co Financials 47.6 -1.87%            3,134,553
Charter Communications Inc Communication Services 294 -1.79%                135,449
Comcast Corp Communication Services 35.8 -1.60%            1,799,912
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