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US stocks drift lower as Fed minutes dim hopes for rate cut, volume 10-20% below average on US exchanges today

May 22, 2019

 

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US Market Snapshot

Stocks Trending in the News

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Global Consumer Stocks Trending in the News

  • Advanced Auto Parts (AAP) reported first quarter adjusted EPS that beat consensus.  Advanced Auto Parts reported first quarter adjusted EPS of $2.46 beating consensus of $2.37.  First quarter revenue came in line at $2.95 billion.  Advanced Auto Parts saw same store sales growth of 2.7% in the first quarter, trailing consensus of 2.9% growth.  Advanced Auto Parts gave full year revenue guidance of $9.65 billion to $9.8 billion.  Advanced Auto Parts is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Avon Products (AVP) is close to a sale to Brazil’s Natura (NATU3), WSJ is reporting.  The boards of both companies have approved the deal that has been prepared over the past months.  The deal would mark the end of Avon’s independence, one of America’s best known companies over the past decades.  Avon has seen sales suffering and the deal is its best survival option.  Avon Products is not rated in our Global Top Stock Ideas.  Natura is rated “Attractive” in our Brazil All-Cap Global Top Stock Ideas.
  • Ford (F) hopes to be testing delivery robots being deployed from self-driving cars within the next year.  Ford is partnering with robotic start-up Agility Robots developing walking robots that can deliver packages to homes.  The companies will run a test program with Agilent’s robots and Ford vans.  The program is part of Ford’s push into autonomous vehicles.  Ford is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Harley-Davidson (HOG) is starting to use loans to drive sales, a more aggressive move for Harley.  Harley will introduce about 100 new models by 2027 and will use loans to drive sales to new customers it anticipates will be younger and less well-off than its stable of aging customers.  The risk for Harley is an uptick in delinquencies that could hamper results.  Harley-Davidson is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Lowes (LOW) cut guidance, raising doubts about its turnaround efforts.  Lowes cut full-year EPS guidance to $5.54 to $5.74, down from previous $6.00 to $6.10.  Lowes said, “The consumer is healthy” and that its plan is in its early stages.  Lowes anticipates cutting next years earnings guidance too.  Lowes is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Nike (NKE) has called the recently enacted tariffs on Chinese imports “catastrophic” in an open letter to President Trump.  Tariffs on footwear would be part of the next round of tariffs and Nike with 173 other companies pleaded with the President to not act further.  There is much less production of shoes in China than was the case a few years ago, but the companies argue it would still be terrible if fully implemented.  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.
  • Nordstrom Inc. (JWN) shares fell to their lowest level since 2010 after the retailer cut its FY2019 outlook, citing declining sales that resulted from changes to its loyalty program and merchandising misses. The guidance slash invoked a series of price target cuts on Nortdstrom shares.  Tesley Advisory Group told clients, however, that it believes Nordstrom’s well-earned reputation for service will help the company to overcome short-term setbacks. Nordstrom is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Target (TGT) reported first quarter same store sales, revenue and earnings that beat consensus.   Target reported first quarter same store sales growth of 4.8%, topping consensus of 4.3%.  First quarter revenue of $17.63 billion beat $17.43 billion consensus.  First quarter adjusted EPS of $1.53 beat consensus of $1.43.  Target provided second quarter EPS guidance of $1.52 to $1.72.  Target sees second quarter same store sales growth in the low- to mid-single digits.  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.   
  • Tesla (TSLA) senior managers and directors (excluding CEO Elon Musk) are on pace sell more insider Tesla shares than ever before, according to a report from Bloomberg. Five insiders have raked in $52.2 million from selling Tesla shares this year, which appears on pace to eclipse the 2013 peak when $111.2 million worth of shares were sold. Tesla is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global top Stock Ideas.

Global Information Technology Stocks Trending in the News

  • Facebook (FB) should hire a new CEO and get rid of stock compensation, according to its ex-chief security officer, Alex Stamos.  Facebook has too much power, he argues, and the company should be broken into pieces to limit its power.  Stamos adds that a breakup would not fix Facebook’s broken culture which he sees at the root cause of most of its problems.  Facebook is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas
  • NetApp (NTAP) reported fiscal fourth quarter adjusted EPS that trailed consensus.  NetApp reported fiscal fourth quarter EPS of $1.22, trailing consensus of $1.26.  NetApp reported fourth quarter revenue of $1.59 billion, also trailing consensus of $1.64 billion.  NetApp hiked its quarterly dividend 20% to 48 cents per share.  NetApp is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas
  • Qualcomm (QCOM) violated anti-trust law with its business practices, a federal judge has ruled.  Qualcomm used its dominant market position to charge excessive licensing fees.  “Qualcomm’s practices have strangled competition,” the judge wrote in a ruling that agreed with FTC findings.  Qualcomm charges a percentage of the sale price of the phone, a practice the judge found excessive.  Qualcomm is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas
  • Sprint (S) and T-Mobile US Inc. (TMUS) shares both slid today following a report from Reuters that the US Justice Department staff is recommends suing in order to block the merger of the two telecommunications giants. The report follows the approval of the acquisition by the Federal Communications Commission (FCC) earlier this week. Many speculated that the US Justice Department would approve the deal because the regulator has never diverged from the initial recommendation of the FCC. Sprint is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas. T-Mobile is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.

Global Industrials Stocks Trending in the News

  • Boeing’s (BA) 737 Max crash involving Ethiopian Airlines was likely caused by a bird strike to a suspected sensor, WSJ reports.  The sensor in the Boeing 737 Max in question, part of the MCAS system, does not have a back-up source of information in the event there is a problem with it.  The addition of a back-up is part of the modifications Boeing is testing.  Boeing is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.  

Global Financials Stocks Trending in the News

  • Canadian Imperial Bank of Commerce (TSX: CM) shares fell the most in nearly three months following fiscal second quarter financials that missed the average analyst estimate. CIBC generated adjusted earnings of CAD$2.97/share that fell 2.4% y/y and trailed consensus of CAD$2.99. RBC Capital Markets analyst Darko Mihelic wrote to clients following the financials, “Overall, we have a mildly negative to neutral view,” on the results. CIBC is rated “Unattractive” in our Canada All-Cap Global Top Stock Ideas.
  • China CITIC Bank (SEHK:998) and Baidu (BIDU) are seeking up to 7 billion yuan in private funding in its first round of funding for its digital bank, aiBank.  China CITIC and Baidu launched the online bank in 2015 and are seeking funding to drive growth.  aiBank provides personal loans of up to 300,000 yuan with no collateral.   China CITIC Bank is rated “Neutral” in our China All-Cap Global Top Stock Ideas.
  • Commerzbank’s (DB:CBK) CEO indicated the bank may be open to a merger with another bank after its attempts at a tie-up with Deutsche Bank (DB:DBK) collapsed.  Commerzbank will unveil a new plan for strategy plan in the fall but its CEO made clear one option is a merger with another German or European bank.   A number of other European bank have shown interest so that option exists if management thinks it makes sense.  Commerzbank is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.  Deutsche Bank is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.

Global Health Care Stocks Trending in the News

  • Thermo Fisher (TMO) shares edged higher after the company reaffirmed its guidance for FY2019. Thermo Fisher also told investors that it expects to generate revenue between $29 billion and $30.4 billion in FY2022 with operating income of between $7.3 billion and $7.7 billion in the same fiscal year. Thermo Fisher is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas.

 

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US Treasuries

  • US 2-Year Treasury Notes are higher with yields down -2.28 basis points to 2.23%
  • US 5-Year Treasury Bonds are higher with yields down -4.2 basis points to 2.18%
  • US 10-Year Treasury Bonds are higher with yields down -4.08 basis points to 2.38%
  • The US Treasury 2s-5s Spread has narrowed 1.92 basis points to -0.05%
  • The US Treasury 2s-10s Spread has narrowed 1.8 basis points to 0.15%
  • US Treasury 5s-10s Spread has widened 0.12 basis points to 0.2%

Currencies

  • EUR€ is little changed 0.054% against the USD$ in after hours to 1.1155
  • GBP£ is down 0.346% against the USD$ in after hours to 1.2662
  • CHF is up 0.152% against the USD$ in after hours to 0.9905
  • JPY¥ is little changed 0.145% against the USD$ in after hours to 110.34

Commodities

  • WTI Crude is down -2.81% to USD$61.22/bbl with the Brent-WTI spread up USD$1.1 to USD$9.58/bbl
  • Gold is little changed -0.08% to USD$1273.67/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
Target Corp Consumer Discretionary 68.2 7.81%            2,750,607
Regeneron Pharmaceuticals Inc Health Care 405 3.27%                418,854
Advance Auto Parts Inc Consumer Discretionary 160 3.09%                457,865
Twitter Inc Communication Services 33 2.99%            3,381,562
PG&E Corp Utilities 6.95 2.98%                728,517
 
Underperformers Sector Price 1D % Chg Volume
Lowe's Cos Inc Consumer Discretionary 94.9 -11.81%            2,616,236
QUALCOMM Inc Information Technology 55.8 -10.86%          16,244,764
Nordstrom Inc Consumer Discretionary 47.3 -9.27%            2,140,025
Devon Energy Corp Energy 26.4 -5.82%            1,165,282
L Brands Inc Consumer Discretionary 26.6 -5.20%            1,173,776

 

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