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Stocks Sweet Spot - Strong Labor Market with Muted Inflation drives risk appetite today, sending US stocks close to record

Apr 05, 2019

 

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Market data as of 12:15pm EST

US Market Snapshot

  • US stocks are posting gains midday with a strong jobs report in an environment of muted inflation, sending stocks close to record levels
  • The S&P 500 is currently up 0.38%, Nasdaq Composite is up 0.56%, and Russell 2000 is up 0.77%
  • President Trump urged the Federal Reserve to cut interest rates in comments he made this morning
  • Change in Nonfarm Payrolls for March was 196k, beating 177,000 expectation of jobs to be added compared to just 20,000 in the prior period.
  • Average Hourly Earnings rose just 0.1% in March, below the 0.3% consensus and 0.4% in February
  • US Unemployment rate held steady at 3.8% as expected
  • Both the US and China reported progress in trade talks with President Trump mentioning a potentially "monumental" deal being considered and China calling it a "new consensus"
  • President Trump said "we still have a ways to go" and said a deal is likely still weeks away
  • Read more on US-China trade talks in our blog post: Let's make a deal! China looking to close a trade deal with US as negotiators arrive in Washington
  • The ratio between US consumer discretionary and consumer staples stocks has bounced back from its 2H2018 slump and is coming back closer to its 18-year high.  Technical analysts are taking this as a positive sign for US stocks as it suggests there is increasing demand for the %higher beta stock found in consumer discretionary.  For the year, S&P 500 Consumer Discretionary is +18.7% while S&P 500 Consumer Staples is +10.6%. 
  • A JP Morgan survey of institutional money managers with over $700 billion among them showed 54% are seeking fee reductions from the hedge funds where they have investments, this following a ddisastrous2018 for hedge fund performance
  • UK PM Theresa May has requested an extension from the EU of Brexit until June 30th, with France already saying it's "premature" to talk about an extension
  • Check out these Tech Top Picks: Forget the FANGs, THESE Titans of Techs are what your portfolio NEEDS NOW!
  • We highlight ETFs in this post today: Could ingrained beliefs about low-cost ETFs be mistaken? A new study suggests perhaps so
  • Energy (+1.3%), Healthcare (+0.7%), and Consumer Discretionary (+0.59%) stocks are the top performers in the S&P 500 today
  • Materials (+0.09%), Consumer Staples (+0.05%), and Telecom (-0.01%) 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 4x
  • 111 stocks in the S&P500 are at 4-week highs while 12 stocks are at 4-week lows
  • 53 stocks in the S&P 500 are overbought while 1 stock is oversold according to the 16-day RSI Measure
  • 132 stocks in the Nasdaq Composite are at 4-week highs while 69 stocks are at 4-week lows
  • 310 stocks in the Nasdaq Composite are overbought while 162 stocks are oversold according to the 16-day RSI Measure
  • The VIX is currently little changed at 13.48 from yesterday's close of 13.58

Stocks Trending in the News

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Global Consumer Stocks Trending in the News

  • Amazon (AMZN) is set to enter the generic drug market as soon as October, according to a note from Cleveland Research.  The note comments that Amazon will likely make a “more meaningful move” into the pharmacy business over the next 12 months.  Amazon also announced it has added some health-related functions to Alexa, including scheduling doctor visits and checking prescriptions.  Amazon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas. 
  • Boston Beer (SAM) shares tumbled by the most in more than 6 months after Goldman Sachs downgraded the stock from neutral to sell. Goldman Sachs also slashed its price target for Boston Beer from USD$270/share to USD$245/share, implying a 7% downside as of Thursday’s close. Goldman explained that Boston Beer’s sales growth will likely deaccelerate as the company’s Twisted Tea brand observes slower growth. Boston Beer is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Consumer Staples Global Top Stock Ideas.
  • Nike (NKE) snagged tennis start Naomi Osaka from Adidas (DB:ADS), in a surprise move.  Osaka was expected to sign with Adidas for a record sum, reported to be $8.5 million.  Nike then announced it signed #1 ranked Osaka for an undisclosed amount.  Osaka will wear Nike clothing for the first time later this month.  Nike is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  Adidas is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Roku (ROKU) was downgraded at Guggenheim to neutral from buy.  Roku also saw its price target trimmed to $72 from $77.  Roku is facing competition from a number of large players making its platform vulnerable.  Free content from bigger players on their own platforms is threatening Rolu’s growth outlook, Guggenheim notes, saying Roku is fairly valued at these levels.  Roku is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Snap Inc. (SNAP) shares rallied after the company hosted an event and announced several new products, one of which includes a video game business. The suite of new products unveiled by the social media company instituted a slew of upgrades from analysts covering the stock. Snap Inc. is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Information Technology Global Top Stock Ideas.

Global Information Technology and Communication Services Stocks Trending in the News

  • Boston Beer (SAM) was forced to scrap its outside council that was set up to advise it on complicated ethical issues related to artificial intelligence.  The council, called the Advanced Technology External Advisory Council, became the focus on complaints for the members Google chose for it.  “It became clear that in the current environment, ATEAC could not function as intended,” Google said, so it disbanded the council and will try again.  Alphabet is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  
  • Facebook (FB) and other social media executives could be held personally liable for harmful content on their platforms in the UK, according to a report from Bloomberg.  Legislation may be presented as early as Monday with those provisions, the report notes.  UK ministers are unhappy with the rate of progress on self-regulation and are ready to craft government regulations for the space.  The recent massacre in New Zealand and the use of the Facebook platform before and during that incident gave new impetus for the regulations.  Facebook is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Intel (INTC) was downgraded to market perform from outperform at Wells Fargo Securities.  Intel’s price target was raised to $60 from $55.  Wells writes that the downgrade “reflects a more cautious view on the current semi demand and data points” with the close of the first quarter.  Wells is cautious about 2H19 demand with the potential for further weakness, seeing downside to its current expectations.  Intel is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • SAP (DB:SAP) was downgraded to reduce from neutral at Oddo BHF.  SAP saw its price target  cut to 84 euros from 90 euros.  Oddo cut SAP’s target to well below the market average of 107.47 euros.  SAP is trading above 102 euros so Oddo sees significant downside from present levels.  SAP is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • SES SA (BDL: SESGL) shares rose by the most in 9 months after FCC Commissioner Michael O’Reilly made supportive comments in regards to C-band. O’Reilly discussed that the FCC needs to adopt an order within the, “coming months,” on C-band to get spectrum for 5G technology. The comments from O’Reilly, however, did not confirm that the FCC will follow through with its C-Band Alliance (CBA) to run the auction. SES is not rated in our Global Top Stock Ideas.
  • Snap (SNAP) is getting into gaming on its platform as it tried to edge into the gaming market.  Snap said its platform will launch multi-player games with its first called Botmoji Party.  Snap is seeking to have users spend more time on its platform and a slew of new games with be launched with development partners.  Snap is further blurring the line between social network and gaming.  Snap is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Information Technology Global Top Stock Ideas.  

Global Industrials Stocks Trending in the News

  • Boeing (BA) has accepted that its flight control systems was to blame for the crash of Ethiopian Airlines.  Boeing’s CEO said “We own it and we know how to fix I,” in a statement following a preliminary report on the crash.   Pilots on the doomed flight followed Boeing’s instructions when problems began, them shut off the system.  Pilots then turned that system back on and the plane crashed.  All 737 Max jets are grounded and it is not clear when they will fly again.  Boeing is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas
  • SNC-Lavalin Group Inc. (TSX: SNC) will sell a 10% stake in its Toronto-area toll highway for up to CAD$3.25bn as the engineering firm ramps up efforts to bolster its balance sheet. SNC-Lavalin will sell the highway stake to OMERS Infrastructure pension fund, reducing the engineering firm’s stake to just 6.8% from 17%. Since January, SNC has lost nearly a third of its value as the company has issued 2 profit warnings. SNC-Lavalin Group is rated “Top Buy” in our Canada All-Cap Global Top Stock Ideas.

Global Financial Stocks Trending in the News

  • JP Morgan (JPM) CEO Jamie Dimon commented on banks’ potentially limited ability to help during the next crisis situation.  He commented in his letter to shareholders that new regulations and liquidity requirements will not allow banks to respond as they did during the crisis.  JP Morgan is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • Societe Generale SA (ENXTPA: GLE) shares edged lower after the company announced plans to cut up to 700 jobs in Paris and to eliminate 100s more at its London and New York locations. The slew of job cuts at Societe Generale comes after the firm’s investment bank observed a difficult CY1Q2019. Societe Generale is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • TradeWeb Markets (TW) placed its IPO and started trading Thursday.  Share were priced at $27 and the shares opened the day 27% higher at $34.26.  TradeWeb sold 40 million shares raising $1.1 billion in the sale and twice increased the size of the offering due to demand.  The IPO values TradeWed at $7.9 billion.  TradeWeb is not yet rated in our Global Top Stock Ideas.

Global Healthcare Stocks Trending in the News

  • Canopy Growth Corp (TSX:WEED) started trading 5 years ago this week as the first listed pot stock.  Canopy Growth has risen 2,159% since going public, rising higher in a cloud of smoke.  What started as a listing on the Toronto Exchange’s Venture Market with a stock a bot over $1, is now a $15 billion company.   Canopy Growth is rated “Unattractive” in our Canada All-Cap Global Top Stock Ideas  

 

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US Treasuries

  • US 2-Year Treasury Notes are lower with yields up 0.64 basis points to 2.34%
  • US 5-Year Treasury Bonds are higher with yields down -0.81 basis points to 2.31%
  • US 10-Year Treasury Bonds are higher with yields down -1.44 basis points to 2.50%
  • The US Treasury 2s-5s Spread has narrowed 1.45 basis points to -0.03%
  • The US Treasury 2s-10s Spread has narrowed 2.08 basis points to 0.16%
  • US Treasury 5s-10s Spread has narrowed 0.63 basis points to 0.19%

Currencies

  • EUR€ is currently little changed against the USD$ at 1.1219
  • GBP£ is currently down 0.566% against the USD$ to 1.3003
  • CHF is currently little changed against the USD$ at 0.9999
  • JPY¥ is currently little changed against the USD$ at 111.74

Commodities

  • WTI Crude is currently little changed 0.16% to USD$62.2/bbl with the Brent-WTI spread up USD$0.64 to USD$7.21/bbl
  • Gold is currently little changed 0.01% to USD$1292.36/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
Apache Corp Energy 31.7 5.06%                477,984
Align Technology Inc Health Care 195 4.09%                342,473
Anadarko Petroleum Corp Energy 47.5 3.93%                621,937
EOG Resources Inc Energy 98.6 3.65%                193,481
TechnipFMC PLC Energy 22.7 3.64%                312,776
 
Underperformers Sector Price 1D % Chg Volume
Capri Holdings Ltd Consumer Discretionary 40.4 -1.56%                145,800
LyondellBasell Industries NV Materials 84.4 -1.36%                121,518
Intel Corp Information Technology 48.6 -1.07%            2,245,518
Under Armour Inc Consumer Discretionary 19.8 -1.00%                204,897
Boeing Co/The Industrials 352 -0.96%                443,370
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