Equity Market Recap
- Stock fall as investors lock in some profits just a day after the Dow Industrials, S&P 500, Nasdaq Comp, Russell 2000 and Dow Transports all traded to new record closing highs on Trump policy hopes and stronger economic data. Today marked the first day in nearly a month that stocks opened lower and continued to fall throughout the session without a meaningful bounce. Economic data was positive again (jobless claims), Trump spoke positively about military spending, retailers with meaningful bounce, another FOMC member was “hawkish” on interest rate hikes (Brainard), the dollar spiked and commodities fell. Brainard said that the U.S. was getting close to full employment, inflation was moving toward targeted levels, and overseas growth had improved. Attention turned to tech, with the biggest IPO in over 2-years debuting today, as SNAP priced its 200M share IPO at $17, trading massive volume while other Internet related names declined. Defensive sectors benefit from broader stock mkt pullback – Utility index (UTY) at highs, rising over 1% as major averages at or near lows.
- Commodity prices were generally lower, led by big declines in energy and precious metals as the dollar advanced, Bloomberg Industrial Metals index sinks 2% (which includes aluminum, copper, nickel and zinc). Gold futures mark lowest settlement since mid-February, falling -$17.10, or 1.4%, to settle at $1,232.90 an ounce as the dollar index touched 2-month highs.
- Energy prices traded lower, as WTI crude fell -$1.22, or 2.27% to settle at $52.61 per barrel as record-high U.S. crude stockpiles were seen jeopardizing OPEC’s efforts to drain a global surplus. Natural gas prices ended higher by 0.2% to settle at $2.804 mln btu – reversed earlier declines on bearish inventory data
- The U.S. dollar jumped again, as the dollar index (DXY) touched a 2-month high (102.24), extending its recent march higher, after the Fed’s Lael Brainard’s said the U.S. economy appears to be in transition to a more stable growth path and gradual interest-rate hikes are likely to be appropriate “soon”. The euro dropped under 1.05 (lowest since Feb 22) before paring losses, while rises to 114.50 vs. yen following the comments. Stronger weekly jobless claims also helped propel the dollar as sentiment about the U.S. economy continues to improve. The USD/Canadian loonie touched 1.34, highest level since early January
- Treasury yields jump as bonds slide (bonds dropped yesterday on rotation out of defensive and into riskier assets) as yields look to break out of recent range; the 2-year yield up around 4 bps at 1.32% while the 10-yr rises over 3 bps, topping 2.50% (first time since Feb 15th), before paring gains. Bonds weakened amid stronger jobless claims data and comments about rising rates by Fed dove Brainard earlier.
- Weekly Jobless Claims fell 19K to 223K, well below the 245K estimate, while the prior week claims revised down to 242K from 244K; continuing claims rose 3K to 2.066M in the latest week; the four-week claims average falls 6,250 to 234,250; claims at lowest level since March 1973
- Retailers; decent strength in beaten up retailers on the day for the most part; ANF Q4 EPS missed by 3c on in-line sales $1.04B and comps fell (-5%)/said sees year comp sales improving, but challenging for 1H; AEO was downgraded at Bank America after earnings miss; BKS Q3 comp sales fell (-8.3%) after EPS missed by 17c on slightly better sales; SSI Q4 EPS missed view on weaker year sales outlook and comp sales fell (-8.5%); BURL Q4 beat; BBY recovers after falling yesterday on earnings (lower cross border tax chances hopes)
- Monthly comp sales out for: LB Feb comp sales dell (-13%) vs. est. (-15.8%), while Victoria’s Secret comp sales down (-16%) vs. est. (-20.1%) and Bath & Body Works comps down (-4%); CATO Feb comp sales fell (-25%) vs. est. (-9%); COST reports earnings/comps tonight
- Consumer Staples; grocer KR better Q4 results as EPS beat by 1c on revs of $27.6B and comp sales up 0.6% vs. est. 0.8%/guidance in-line; in beverages, MNST strong 4Q16 and January ’17 sales growth (delivered 16.5% organic sales growth vs. 10.3% consensus)/announced $500M stock buyback; BUD 2016 profits miss estimates on Brazil weakness; EL upgraded at Piper
- Restaurants; SHAK Q4 EPS was in-line on better sales, though comps disappoint (1.6% vs. est. 2.9%) and guides year revs below views; NDLS Q4 slight beat on weaker sales guidance for year
- Leisure movers; PLNT slipped early on quarterly results; camper maker CWH downgraded at KeyBanc on valuation; casino stocks pare recent gains (WYNN) after surging yesterday on strong Macau monthly data
- Energy movers; XOM was upgraded to neutral from underperform at Credit Suisse and raise tgt to $83 on positive valuation (held analyst day yesterday); in drilling, RIG files to delay form 10-K; in E&P, APA was downgraded to underperform at Barclay’s saying investors will likely be disappointed that Alpine High will drive strong gas growth and disappointing oil volumes ; not much movement in the MLP sector; utilities trade higher as broader markets slide
- Frac sad sector; Jefferies said they remain bullish on frac sand despite recent concerns around capacity adds. Also believe there is enough demand for the providers to retail pricing, since demand growth will continue, leaving the industry tight to sold out (top pick HCLP)
- Banks lead major averages lower after leading markets higher yesterday; among biggest decliners in the Dow were AXP, V, while banks in general slide on profit taking; rate expectations still climbing after better economic data/hawkish Fed comments and yields climbing as well; Hilliard Lyons downgraded PNC and FITB after run higher in shares
- Online brokers; in the news again as ETFC matches latest move by SCHW and Fidelity, as they announced a significant reduction to its trade commissions to $6.95, down from $9.99. Further, the Company is introducing an active trading program and pricing tier for its most engaged customers who execute 30+ trades per quarter
- Exchanges/Asset managers/advisors; ARCC priced 7.5M units at $20.00; CME said February average daily volume (ADV) was 18.4M contracts, down 1% YoY; OZM said March 1 AUM $33.7B, up $0.1b MoM; ENV shares fall after filing to delay its 10-K saying it identified “control deficiencies” that represent “material weaknesses”
- Large Cap Pharma; AUPH said its drug to treat kidney inflammation met the 48-week study goals of partial and complete remission in its mid-stage study, sending shares higher; ANIP declines after earnings results; AKAO rises after gave an update on its pipeline at an R&D day yesterday
- Biotech movers; PBYI shares slide after Roche’s breast cancer medicine Perjeta succeeded in drugmakers most highly-anticipated patient study; SRPT was upgraded to outperform and $47 tgt at Leerink saying the stock now reflects reasonable expectations for the Exondys launch; PTCT falls after a second Phase III study of Translarna (ataluren), “ACT CF,” missed primary endpoint and secondary endpoints in nonsense-mutation cystic fibrosis; NKTR rises on earnings
- CAR-T sector; KITE was downgraded to neutral at Citigroup saying this week’s rally on the strong data price a lot of value into the shares (but upped tgt to $87 from $62), while KITE separately priced 4.75M share Spot Secondary at $75.00; JUNO posted earnings and said it, along with partner CELG, was discontinuing development of its lead CAR-T blood cancer treatment program, JCAR015, after toxicity issues led to five patient deaths
- Suppliers, Equipment and Devices; EXAS said that study with Mayo Clinic shows promise of new blood-based lung cancer test; four novel biomarkers show sensitivity and specificity of at least 90%; GKOS Q4 EPS in-line, beats on revenue; OPK shares fall on sales miss for Q4; ADPT shares drop as needs long-term financing and warns on ‘going concern’
Industrials & Materials
- Industrial & Machinery; Dow component CAT shares fell after reports Federal officials executed a search warrant at three Caterpillar, Inc. facilities in the Tri-County Area — including the corporate headquarters https://goo.gl/DE4oz2 ; PH resumed overweight at Morgan Stanley and $180 tgt saying it continues to present the most favorable risk reward skew in space; heavy duty truckers under pressure (PCAR, CMI) ahead of monthly class 8 truck data
- Transports; Transports underperform, down over 1% after surging 1.85% yesterday to record highs; losses today broad based, but led by airlines (after group led gains Wednesday)
- Metals & Mining; after paring losses yesterday on initial weakness, gold miners down sharply today, with broad declines on a drop in prices (ABX, AEM, GG, NEM); metals in general broadly weaker today likely on profit taking
Technology, Media, & Telecom
- Internet; SNAP IPO opened at $24 per share after pricing 200M shares at $17.00; JD said Q4 revenue jumped 47% from a year earlier driven by strong sales in their core e-commerce businesses; weakness in Internet space in general today (YELP, FB, NFLX, AMZN) perhaps on rotation into the new SNAP issue today
- Semiconductors; AVGO new all-time high after Q4 results/Q1 guidance top consensus as better wireless seasonality drives strong Q2 guidance; outside of AVGO earnings, group quiet; MU little jump midday after Q2 guidance in 8K showing Q1 non-GAAP results are expected to be at or above high end of guidance; AMD shares fell after reviews of the company’s new Ryzen processor criticized its performance for gaming.
- Software & Hardware movers; BOX posted positive free cash flow for the first time ever in Q4, and the company provided a healthy initial revenue outlook for FY18, though Q1 EPS loss and revs come in slightly below consensus views; PSTG slides as Q1 revs miss views; ADSK to report earnings tonight in software sector
Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P. Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.