Market Review: Stocks Ended Higher, Snapping 3-Day Losing Streak For Major Averages

eOptionDaily Market Report

Equity Market Recap

  • Stocks ended higher today, snapping a 3-day losing streak for major averages, rebounding from last week’s declines. Geopolitical fears (Russia/Syria, France elections, North Korea) weighed on market sentiment last week, but attention now turns to earnings as investors prepare for the upcoming onslaught of quarterly earnings, led by NFLX tonight in the Internet sector, then a handful of large cap banks (GS, BAC) and healthcare names (JNJ, UNH) tomorrow morning. The S&P 500 index bounced off 2-month lows, while the volatility index (VIX) declined on the rally in stocks. Gold prices remain well bid, though the dollar did rebound late day and oil prices closed lower. Late day, Treasury Secretary Steven Mnuchin said in an interview with the Financial Times that the Trump administration’s tax reform plans started with an “aggressive timeline” and that “It is fair to say it is probably delayed a bit because of the healthcare” setbacks. The news is nothing new, and markets took it in stride.

Economic Data

  • Empire State manufacturing survey fell to a reading of 5.2 in April, from a two-year high of 16.4 in March, and well below consensus for a 15.0 reading. Prices-paid component rose to 32.8 from 31, while the component on number of employees rose to 12.4 from 8.8.
  • April Home Builders’ Confidence (NAHB) falls to 68 from 71 last month and below estimate of 70; the present single family sales falls to 74 vs 77 last month and future single family sales falls to 75 vs 78 last month while prospective buyers traffic falls to 52 vs 53 last month


  • Gold prices ended higher, rising $3.40 to settle at $1,291.90 an ounce, spending most of the day in positive territory amid the weaker dollar, and remains strong given the uncertain political/geopolitical environment (Russia, Korea, Afghanistan) over the last two weeks. With today’s gains, gold settled near 5-month highs on continued safety trade
  • Energy futures lost ground late day, settling at $52.65 per barrel, down 53c on the day, likely on profit taking after rising over 2% last week. WTI crude traded highs of $53.21 and lows $52.63. News was relatively quiet on the day for the energy sector.


  • The U.S. dollar was broadly lower, extending last week and overnight declines vs. major rivals after weaker economic data points. The dollar hit a fresh five-month low (108.13) against the yen and fell versus other currencies Monday, amid rising political tensions around the globe, but pared losses 9actually turning positive late day around the 109 level). The euro will likely see more volatility ahead of French elections next week, though latest polls showing first-round support for French presidential candidates Far-right’s Marine Le Pen and independent Emmanuel Macron is up half a point to respectively 23% and 24%. The euro was up modestly on day, holding around the 106.50 level, but pared its losses late as well.

Bond Market

  • Bonds erased earlier gains, ending lower, as the yield on the 10-year moved back above 2.26% (after earlier lows around 2.20%), as markets remain in “wait and see” mode. The yields on the 10-yr remains near 2017 lows, and are more than 40 bps off highs about a month ago. The yield on the 10-yr fell about 10 bps last week to 2.24% coming into the day.
Sector News Breakdown


  • Retailers; retail names slide after softer retail sales data last Friday when markets were closed (M, KSS, UA slide); BJ’s Wholesale Club is putting itself on the auction block and AMZN has expressed “modest internal interest,” the New York Post reported ; CHKE filed a 15-day extension for its annual results, due to additional audit work related to its Hi-Tec acquisition; HBI was mentioned favorably in Barron’s over the weekend; JCP late Thursday confirmed it was postponing its liquidation sale/closing store dates; WHR slipped mid-afternoon after data showed monthly AHAM shipments rose 0.3% YoY
  • Consumer Staples; LNCE lower year revs and Ebitda views based on YTD performance, expectations for rest of the year; USFD guided prelim Q1 sales slightly higher but lowered Q1 Ebitda to up 4.9%-6.4%, from prior 5%-8%; in tobacco, PM traded 52-week highs
  • Restaurants; MCD was upgraded to Outperform at Wells Fargo as expect MCD shares to see accelerating multiple expansion into 2018 driven by margin and ROIC improvement and the return of market share gains (raise tgt to $145-150 from $125-130); CMG raised prices by 5% on April 11 at about 440 locations due to labor costs and food inflation, citing spokesperson


  • Not much doing in the energy sector after gaining last week on the 2% jump in crude; energy names one of the few laggards in the Dow Industrials today (CVX/XOM). EIA forecasts monthly rise of 124,000 bbls/day in May U.S. shale oil output
  • MLPs; WPZ said it will sell its interest in Williams Olefins LLC for $2.1 billion in cash to Nova Chemicals/Williams Olefins owns an 88.5% interest in the Geismar, Louisiana olefins plant; MLPs slip as AMZ index down about $2 off earlier highs
  • Blackstone Group LP’s energy-focused private-equity business, Blackstone Energy Partners and Blackstone Capital Partners agreed to buy EagleClaw Midstream Ventures LLC for $2 billion in cash (includes $1.25 billion in debt financing)
  • Alternative power/utilities; solar stocks got a lift, led by gains in CSIQ after an analyst upgrade (shares of FSLR, SPWR also rise early). Utility prices ended mostly higher on the day


  • Large Cap banks; it’s all about earnings over the next 2-weeks, as JPM, WFC, C, PNC reported better results last Thursday, with another handful expected this week: Tuesday AM (BAC, CMA, GS, SCHW), Wednesday AM (AMTD, BLK, HBAN, MS, UBS) and PM (AXP) and Thursday AM (BBT, BK, CFG, KEY, TRV); PACW slides on EPS miss today, MTB rises on results; WFC shares snap 5-day losing streak after CEO discloses share purchases
  • Finance and Lending; Ant Financial increased the offer price to acquire all outstanding shares of MGI from $13.25 per share to $18.00 per share in cash
  • Master Trust credit card monthly data: 1) COF March Credit-Card Net-Charge-Offs 5.44% vs. 5.09% MoM; delinquencies 3.71% vs 4.04% MoM; 2) JPM March Credit Card Net Charge-Offs (NCO) 2.47% vs. 2.28% MoM and March credit-card delinquencies 1.21% vs. 1.23% MoM; 3) DFS March net-charge-offs (NCOs) 2.8% vs. 3.1% MoM and delinquency rate unchanged at 2.1% MoM; 4) SYF March Credit Card Charge-offs 4.71% vs. 5.48% MoM; credit card delinquencies fell to 2.95% vs. 3.14% MoM; 5) ADS March net charge offs 6.3% vs. 6.5% last month  and delinquency rate 4.8% vs. 5.1% last month; 6) AXP NCOs 1.8% and delinquency 1.2% (unchanged); Citi (C) NCO’s 2.88% vs. prior month 2.65% and delinquency 1.63% vs. 1.62% MoM
  • REITs; Canaccord said in a note today that Lodging REITs should post 1Q results that beat estimates and guidance, but they are unlikely to make any meaningful changes full-year outlooks. The RMZ increased 0.9% last week, outperforming the Russell 2000 and the S&P 500 for the second week in a row as the yield on the 10-year decreased 14 bps to end the week at 2.24%.


  • Large Cap Pharma; LLY and INCY shares grab headlines, falling after the FDA issued a complete response letter for the company’s baricitinib drug for moderate-to-severe rheumatoid arthritis. The letter indicates that the FDA is unable to approve the application in its current form…the timing of a resubmission will be based on further discussions with the FDA (shares of ABBV, with competing treatment, rallied early on news). BMY and Nordic Bioscience announce  collaboration agreement to develop biomarker technology for the diagnosis and monitoring of fibrotic diseases including non-alcoholic steatohepatitis (NASH); earnings tomorrow for JNJ, UNH
  • Biotech movers; HTGM shares jumped after entering separate agreements with Daiichi Sankyo and Centre Léon Bérard which utilize the HTG EdgeSeq technology; OMED shares dropped as its lung cancer study (Phase II PINNACLE study) assessing tarextumab, failed to achieve its primary endpoint of progression-free survival or secondary endpoints of overall survival; CBLI rises as the European Medicines Agency (EMA) accepted its pediatric investigation plan (PIP) related to radiation countermeasure entolimod
  • Services & facilities; hospital stocks tumble after HCA pre-announces Q1 results below consensus views (Q1 EPS $1.74/$10.6B vs. est. $1.80/$10.7B), with Q1 same-facility admissions up ½% (shares of UHS, CYH, LPNT, THC active on headlines)
  • Medical devices/equipment; ABT agreed to buy ALR at a lower price than it had previously offered, after raising concerns about the accuracy of various representations, warranties and covenants made by Alere (paying $51 per share, down from $56); BAX faces DoJ criminal investigation into IV saline sales/price fixing; ABMD shares active after the Centers for Medicare and Medicaid Services (CMS) published a draft of the proposed hospital payment levels for its Impella heart pump that will be instituted on October 1

Industrials & Materials

  • Industrials & Machinery; CMI was upgraded to outperform at Wells Fargo as they believe company may modestly beat Q117/raise guidance to imply above current consensus earnings power; MOCO to be acquired by AME for $30 per share cash/$182M deal; CIR rises after Stifel upgraded to buy saying 2H likely to see long-awaited refinery/chemical turnaround
  • Transports; truckers active after JBHT Q1 EPS topped estimates though revs narrowly missed for the quarter saying benefits from volume growth and new customer contracts were more than offset by lower customer rates from competitive pricing (CHRW, EXPD, LSTR, FWRD, ECHO, LSTR, WERN, among those names active); in airlines, UAL to report after the close
  • Aerospace & Defense; ARNC rises after CEO Klaus Kleinfeld to step down after battle with Elliott Management; BA announced it would lay off “hundreds: of engineers planned for June
  • Metals & Mining; not much stock specific news as gold miners mixed, while industrial metals (steel, iron ore, copper) fail to bounce after last week’s sharp declines on lower iron ore pricing as well as pullback from “Trump trades” as policy agenda continues to get pushed out; TMST shares dropped after guiding Q1 Ebitda $17M, below prior view $25M-$35M
  • Chemicals; ASH agreed to acquire Pharmachem Laboratories for $660M.

Technology, Media & Telecom

  • Internet; NFLX set to report earnings after the close – the big highlight in the Intern et space this week; Internet names mostly higher with GOOGL, AMZN, FB rising most of the day
  • Semiconductors; after leading tech lower last week – semis with a nice bounce today as the SOX index up 1%, with nearly all components higher, led by NVDA, AMD, CY, CRUS rising; KLAC rises despite Susquehanna downgrade. Last week, the Philadelphia Semiconductor Index fell nearly 4%, its worst in nearly four months. Bloomberg reported that AAPL is “actively” considering options for helping Toshiba (TOSBF) by investing in its chip unit
  • Telecom & Media; STRP shares rise after Reuters reported late Thursday that VZ is considering making an offer for Straight Path after AT&T’s initial $1.6B offer; DISH shares slide again after falling to Feb lows last Thursday after DISH’s $6.2B purchase in FCC airwave auction appears to make DISH a builder rather than a seller of spectrum, analysts said

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.

Live Trading

Open an Account

Paper Trading