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Melt-up countdown: Second record close in wake of strong consumer spending, upside momentum builds

Apr 29, 2019

 

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US Markets End of Day Snapshot

  • US stocks close at a record level for the second straight day, with strong consumer spending data propelling stocks higher
  • The S&P 500 finished up 0.11%, Nasdaq Composite up 0.19%, and Russell 2000 up 0.41%
  • We are recapping first quarter earnings so far: The Beats Go On! Earnings Continue to Beat Expectations, Consumer Staples Outperform While Utilities Lag
  • The US and China will resume trade negotiations this week in Beijing with a number of issues to still unresolved, including intellectual property protections, forced technology transfers, agriculture, non-tariff barriers and services, among others, according to a White House press release
  • Treasury Secretary Steve Mnuchin said the enforcement part of trade negotiations is close to complete
  • Read more on US-China: US warships in Taiwan Straight can only mean one thing: US-China Trade Negotiations Resume this Week
  • US personal spending in March grew 0.9%, ahead of the 0.7% expected
  • US PCE Core deflator rose 0.2% m/m, in March below 0.3% expected; and 1.5% y/y, below 1.6% expected
  • Crude oil continues its slide, WTI crude traded over $66 not long ago and is trading today close to $63.50
  • Oil continues weak today after President Trump again called for lower prices and Russia said it expects to resolve its supply problem in the coming days
  • Confidence in the EU economy dropped for the 10th month in a row, with the sentiment index falling to 104 from 105.4 
  • This week's Data Daily focuses on India: Macro Monday: Comparing Key Data Points of the India Economy
  • According to Bloomberg, volatility markets may be flashing a warning signal as the five-session correlation between the S&P 500 Index and VIX strengthened to levels not seen since mid-2018 -- the rare dynamic has often preceded a retreat in U.S. equities.
  • Financials (+0.93%), Telecom (+0.85%), and Industrials (+0.27%) stocks were the top performers in the S&P 500 today
  • Consumer Discretionary (-0.35%), Utilities (-0.64%), and Real Estate (-1.06%) 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 0.92x
  • 90 stocks in the S&P 500 hit 4-week highs while 43 stocks reached 4-week lows
  • 82 stocks in the S&P 500 closed overbought while 7 stocks closed oversold according to the 16-day RSI Measure
  • 159 stocks in the Nasdaq Composite hit 4-week highs while 77 stocks reached 4-week lows
  • 371 stocks in the Nasdaq Composite closed overbought while 216 stocks closed oversold according to the 16-day RSI Measure
  • The VIX finished flat at 13.21 after closing at 12.73 last week

Stocks Trending in the News

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Global Consumer Stocks Trending in the News

  • Amazon (AMZN) announced with its results that it will be transitioning its Prime free 2-day shipping to 1-day shipping.  Analysts estimate it will add $800 million in costs to transition to that service completely.  Competitors are moaning as most now match Amazon’s 2-day delivery and few expected the 1-day announcement.  Amazon is targeting many everyday items like toothpaste with its 1-day service, items it has had trouble competing in.  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
  • Fielmann (DB: FIE) shares edged higher after Marc Fielmann, son of the company’s founder who will soon take over as CEO, promised investors to deliver faster growth and a larger market share for prescription glasses. When he takes over as CEO, Marc Fielmann will become the youngest Chief Executive among major German-listed companies. Fielmann intends to sell 12 million pairs of eyeglasses annually be 2025 compared to 8.15 million pairs in 2018. Fielmann is rated “Attractive” in our European SMID-Cap Global Top Stock Ideas.
  • MGM Resorts (MGM) reported first quarter revenue that beat consensus but earnings that trailed.  First quarter adjusted EPS of 5 cents trailed consensus of 21 cents.  MGM first quarter revenue of $3.18 billion came ahead of $3.13 billion consensus.  MGM saw revenue drop a touch in Las Vegas while growing 23% in China.  MGM is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas
  • Restaurant Brands (QSR) reported first quarter results that trailed consensus.  Restaurant Brands reported same-store-sales at Tim Horton’s that fell 0.6%, well below the 1.9% growth expected.  Restaurant Brands first quarter earnings of 55 cents per share missed consensus of 58 cents per share.  There was no explanation for the miss at Tim Horton’s, which management said remains a strong franchise.  Burger King saw same-store-sales growth of 2.2%, in line.  Restaurant Brands is rated “Attractive” in our Canada All-Cap Global Top Stock Ideas
  • Starbucks (SBUX) was downgraded at Wells Fargo Securities to market perform from outperform.  Wells cut Starbucks’ price target to $80 from $83.  Starbucks reported solid first quarter results and even upped EPS guidance at the same time.  Wells, though, sees all of Starbucks growth opportunities priced into its present valuation, hence the downgrade.  Starbucks is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas
  • Target (TGT) was upgraded to overweight from equal-weight at Barclays.  Target saw its price target hiked to $115 from $85 as well.  Barclays wrote that Target has the potential to gain market share from rivals, especially its weaker retail competitors.  Barclays also cited Target’s strong traffic trends in its upgrade.  Target is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.

Global Information Technology Stocks Trending in the News

  • Adobe (ADBE) shares edged higher after Morgan Stanley upgraded the stock from equal-weight to overweight, citing the firm’s, “durable” potential for earnings growth. The price target for Adobe shares was also hiked from $282/share to a Street-high $340/share at Morgan Stanley. According to Morgan Stanley, Adobe shares continue to trade at, “a discount to large cap software peers.” Adobe is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Alphabet (GOOGL) reported first quarter 2019 results that trailed consensus.  Alphabet first quarter revenue ex-TAC of $29.48 billion trailed $30.04 billion consensus.  Adjusted EPS of $11.90 beat $10.65 consensus, the adjusted number does not contain the $1.7 billion EU fine.  The trends continue in the same direction for Alphabet’s Google-growing at a somewhat slower pace with earnings per clicking dropping, 19% in the most recent quarter.  Alphabet is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Apple (AAPL) discussed buying Intel’s (INTC) smartphone-chip business, according to a report from the WSJ.  Apple and Intel started conversations last summer and continued until Apple announced its settlement with Qualcomm (QCOM).  Intel is discussions with other parties that have expressed interest, the report goes on to add.  If Intel closes a deal, it could reap the company a few billion dollars, the report notes.  Apple is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  Intel is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  Qualcomm is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas
  • Momo Inc. (MOMO) shares slid after the Chinese social media company’s Tinder-like dating application was the target of a government crackdown. Several Chinese app stores removed Momo’s Tantan dating application at the request of authorities, according to spokespeople from Momo. Analysts hastily pointed out that the temporary suspension of Tantan should do little to affect Momo’s top-line revenue growth in 2019. Momo is rated “Top Buy” in our China All-Cap Global Top Stock Ideas.
  • ON Semiconductor Corporation (ON) shares edged lower after the company’s revenue and gross margin outlook for FY2019 disappointed analyst expectations. In response to the guidance, Morgan Stanley analyst Craig Hettenbach warned clients, “Investors should be reducing positions in ON. We simply can’t endorse a narrative of a 2H snapback considering the excessively high levels of inventory,”. ON Semiconductor is rated “Unattractive” in our US Large-Cap Global Top Stock IDeas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Spotify (SPOT) reported it reached 100 million paid subscribers, close to the high end of expectations.  Spotify reported a loss of 47 million euros in the first quarter, better than the 68 million.  Revenue of 1.51 billion euros came a touch ahead of 1.47 billion expected.  Spotify gave second quarter guidance of 107-111 million paid subscribers with revenue of 1.51 to 1.71 billion euros.  Spotify is not rated in our Global Top Stock Ideas.
  • Universal Display Corp. (OLED) shares were downgraded from positive to neutral at Susquehanna, sending the stock price lower. Susquehanna analyst Mehdi Hosseini maintained the price target for Universal Display Corp. At $180/share, explaining that Susquehanna believes, “the best case earnings scenario (of high single digit $/share) is now dialed into the share price.” Universal Display Corp. is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Information Technology Global Top Stock Ideas.
  • Visa (V) and Mastercard (MA) have completed an agreement with EU regulators to resolve its investigation into credit card fees for non-European visitors in Europe.  Visa and Mastercard will reduce fees charged as part of their settlement with EU regulators.  Interregional fees on debit cards will be lowered to 0.2% from 0.3%, the same as credit cards.  Online transactions will be charged 1.15% for debits cards and 1.5% on credit cards.  Visa is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  Mastercard is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Western Digital (WDC) reported fiscal third quarter earnings that trailed consensus with revenue in line.  Western Digital’s first quarter EPS of 17 cents was well below the 45 cents consensus.  Revenue of $3.67 billion matched $3.68 billion consensus.  Western Digital said it expands a strong demand environment for the rest of 2019.  Western Digital is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.

Global Financial Stocks Trending in the News

  • American Express (AXP) was downgraded to neutral from buy at UBS.  American Express saw its price target raised to $118 from $113 together with the downgrade.  UBS sees a deceleration in growth at American Express and is cited as a key reason for the downgrade.   UBS no longer sees upside to consensus EPS forecasts.  American Express is rated “Attractive” in our US Large-Cap Global Top Stock Ideas
  • DBS Group Holdings (SGX: D05) shares jumped following the company’s first quarter financials release, which contained a surprise beat in profit. DBS Group saw net income growth of 9% while the average analyst expected a decline in earnings. Growth in DBS Group’s lending and trading business helped to offset a decline in the company’s wealth management fees. DBS Group Holdings is not rated in our Global Top Stock Ideas.

Global Industrial Stocks Trending in the News

  • Ingersoll-Rand Plc (IR) shares traded notably higher after the Wall Street Journal reported that Gardner Denver Holdings Inc. (GDI) is close to a merger deal with a division of Ingersoll-Rand. According to the report, the merger would consist of a cash and stocks reimbursement for Ingersoll-Rand shareholders that would value the new entity at a market value of $11.6 billion. Ingersoll-Rand is not rated in our Global Top Stock Ideas. Gardner Denver Holdings is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • Parker Hannifin Corp (PH) agreed to acquire Lord Corp, the privately-held materials-sciences company, in a $3.68 billion deal.  The deal is all cash.  Parker Hannifin said it expects the deal to close within 4 to 6 months.  The deal will allow Parker Hannifin to expand into the materials-sciences products for the aerospace industry.  Parker Hannifin is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas
  • Transocean (RIG) reported first quarter results better than expected.  Transocean’s first quarter loss of 30 cents per share was better than the 32 cents loss expected.  Transocean reported a backlog of $12.1 billion, down from $12.5 billion a year ago.  Contract drilling revenue of $754 missed the $763 million consensus.  First quarter rig utilization of 56% was an improvement from 52% a year ago.  Transocean is not rated in our Global Top Stock Ideas

Global Power & Commodity Stocks Trending in the News

  • Anadarko (APC) prefers the offer from Occidental Petroleum (OXY), valued at $38 billion, over the offer from Chevron (CVX), according to a report in FT.  Anadarko is “preparing to endorse” the offer from Occidental, the report notes.  Anadarko’s board has determined the Occidental offer is superior and should announce so soon.  Anadarko Petroleum is rated “Top Short” in our US Large-Cap Global Top Stock Ideas.  Occidental Petroleum is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.  Chevron is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.

Global Health Care Stocks Trending in the News

  • Eli Lily (LLY) won an appeal court ruling today on the validity of a patent on its Alimta lung-cancer drug.  The US Court of Appeals rejected claims from other manufacturers that wanted to sell lower-cost versions of the drug.  Eli Lily is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Royal Philips NV (ENXTAM: PHIA) shares traded slightly higher after double-digit order growth in some of the company’s products, such as its electric toothbrushes and image-guided therapy, propelled its earnings to meet analyst expectations. Royal Philips generated an adjusted ebit of 364 million euros ($405.6 million) during the first quarter beat analyst expectations of 358.0 million euros. Royal Philips is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.

 

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US Treasuries

  • US 2-Year Treasury Notes are lower with yields up 1.01 basis points to 2.29%
  • US 5-Year Treasury Bonds are lower with yields up 2.17 basis points to 2.30%
  • US 10-Year Treasury Bonds are lower with yields up 2.7 basis points to 2.52%
  • The US Treasury 2s-5s Spread has widened 1.16 basis points to 0.02%
  • The US Treasury 2s-10s Spread has widened 1.69 basis points to 0.23%
  • US Treasury 5s-10s Spread has widened 0.53 basis points to 0.22%

Currencies

  • EUR€ is up 0.296% against the USD$ in after hours to 1.1184
  • GBP£ is little changed 0.116% against the USD$ in after hours to 1.2931
  • CHF is little changed 0.01% against the USD$ in after hours to 0.9808
  • JPY¥ is little changed 0.063% against the USD$ in after hours to 111.65

Commodities

  • WTI Crude is up 0.32% to USD$63.5/bbl with the Brent-WTI spread little changed USD$0.1 to USD$8.15/bbl
  • Gold is down -0.49% to USD$1279.8/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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Get Unbiased Quantitative Investment Research from Advanced AI Machine Learning Technology and Maximize your ReturnsGet Unbiased Quantitative Investment Research from Advanced AI Machine Learning Technology and Maximize your Returns

S&P 500 Movers

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Outperformers Sector Price 1D % Chg Volume
Ingersoll-Rand PLC Industrials 94.2 6.50%                284,509
Archer-Daniels-Midland Co Consumer Staples 43.5 5.77%            1,495,717
Mattel Inc Consumer Discretionary 12.6 3.05%            2,592,108
Twitter Inc Communication Services 33 2.87%            3,528,273
Mohawk Industries Inc Consumer Discretionary 124 2.80%                164,655
 
Underformers Sector Price 1D % Chg Volume
CH Robinson Worldwide Inc Industrials 85.3 -7.58%                497,693
Coty Inc Consumer Staples 7.31 -3.55%          12,416,913
Weyerhaeuser Co Real Estate 24.1 -3.32%                801,505
JB Hunt Transport Services Inc Industrials 97.1 -2.76%                753,340
Kimco Realty Corp Real Estate 16.2 -2.75%                869,359
Morning BriefA quick GLOBAL RECAP TO START YOUR DAY
Morning BriefA quick GLOBAL RECAP TO START YOUR DAY