Market Review:Markets Flat Across The Board Despite $AAPL ATHs

eOptionDaily Market Report

Equity Market Recap

·      More listless trading action for U.S. stocks, holding near record all-time levels, but failing to move decisively in any one direction. After today’s action, the S&P has now moved less than 20 points in either direction for nine consecutive days, the longest streak since 1964. The lack of volatility (speaking of, the VIX is at its lowest since February 2007, trading below 10 again today – low of 9.70, 24-year lows) has kept markets at all-time highs (NASDAQ and S&P closed new highs last week). News flow has slowed significantly outside of some commentary at the Ira Sohn investor conference where several investors highlighted their investment ideas, though earnings activity picks up again this week. Oil prices moved in a narrow range after having suffered a slide of over 6% last week. Even market friendly news out of Europe, as Macron beat anti-euro candidate Marine Le Pen in Sunday’s French election, receiving 66% of expressed votes failed to move markets. Most European stock gauges declined on Monday as investors had expected the results, sending the euro lower after an initial pop to 6-month highs on the results. Several Dow components AAPL, BA, CSCO, HD, MCD and UTX trade to new 52-week highs as Apple traded above the $800 billion market cap for the first time ever. There remains no fear in the market.

Fed Speakers

·      The Federal Reserve’s benchmark federal funds rate is close to where a famous mathematical rule recommends it should be, said St. Louis Fed President James Bullard on Monday. “The policy rate is approximately at an appropriate setting today,” Bullard said

·      The Federal Reserve must be “very vigilant against falling behind” on needed interest-rate hikes, said Cleveland Federal Reserve President Loretta Mesteron Monday. A gradual upward path of rate hikes “will help prolong the expansion, not curtail it,” she said 


·      Gold prices gained on Monday, marking its first climb in four sessions, albeit modest as strength in the U.S. dollar kept gains in check. June gold rose 20c to settle at $1,227.10 an ounce, only s small recover after falling (-3.3%) last week

·      WTI crude oil futures settle 21c higher, or 0.5%, higher at $46.43 per barrel after traded sub-$46 earlier to low of $45.83 per barrel); crude fell over 6% last week on increasing oversupply fears – despite hopes OPEC will extend its production cuts further when they meet on the 25th of this month; renewed China demand lowing fears also weighing on commodity prices. Helping prices early were reports Saudi Arabia and Russia signal oil-output cuts may be extended into 2018.

Currencies & Bonds

·      The U.S. dollar gained, with the dollar index (DXY) topping the 99 level; the euro weakened after jumping above 1.10 overnight (1.1023 high) against the dollar, as much of the positive French presidential election results were priced into markets (euro fell to lows of 1.0917 before paring losses). Bitcoin traded all-time highs of 1669 , but finished up  5%. The dollar in general was higher on further positive comments by Fed members last week (markets currently pricing in 1 100% chance for fed rate hike in June according to futures data). The Japanese yen (JPY/USD) trades off highs of 113.13 (note 100 day MA resistance 113.16) – highest levels in over a month. Treasury markets slip early on, with the yield on the benchmark 10-year up 3 bps to around 2.38%, while the 30-yr tops 3% again and the shorter term 2-yr up above 1.32%

Sector News Breakdown


  • Retailers; KATE to be bought by COH for $18.50 per share/$2.4B deal; big week of earnings for retail/department stores with KSS, M, JWN, and JCP expected throughout the week; TLRD shares fell as filing showed investor exited stake on May 4th (Eminence Capital)
  • Consumer Staples; couple of earnings in food space as TSN Q1 EPS just missed estimates on slightly better sales, while SYY Q3 EPS also missed by one penny on better sales and slightly better operating income and LNCE Q1 results slightly missed, but shares fared well; shares of Kellogg (K) outperformed early; in consumer products, NWL boosted year EPS to reflect 1Q beat, aided by core growth that exceeded all but one of its consumer products competitors
  • Casino, Lodging & Leisure; gaming stocks weighed down by new ATM rules (Galaxy, Sands China, WYNN, MLCO) as Bloomberg reported Macau’s government is requiring facial recognition and identification card checks at ATMs before Chinese UnionPay cardholders can withdraw cash; MLCO 27.769M share Spot Secondary priced at $21.35


  • Oil prices got a little lift after Saudi oil minister says supply agreement could be extended beyond ’17; oil refiners outperform today – PBF, VLO, TSO, MPC all advanced; in MLPs; MPLX was mentioned positively by Blockhouse Capital’s Jack Franke as sees MPLX at potential $48 by end of next year; PAA and PAGPto report earnings after the close; utilities were little changed on the day despite rising yields; ED was downgraded to sell at Deutsche Bank; overall, little rebound in energy complex after selling pressure last week on lower oil and disappointing earnings


  • Large Cap/regional banks: in research; CUNB upgraded to outperform at Raymond James; Barron’s was positive on shares of KRNY, CSBK and WSBF; also said shares of OCFC are worth considering citing promising profit outlook; TCBI upgraded to outperform at Wedbush and raise tgt to $86 following company visit; ISBC mentioned positively by Blue Harbour at Ira Sohn
  • Insurance; TPRE upgraded at KBW to Outperform and raising target price to $15 from $14; VOYA added to Credit Suisse focus list citing improving EPS and ROE
  • Consumer finance/lending; ASPS said it’s aware OCN/NRZ have each stated there are on-going negotiations to reach agreement that would convert certain of NRZ’s existing rights to mortgage servicing rights (MSRs) to fully-owned MSRs/views efforts to reach agreement as positive; would reduce uncertainty and strengthen NRZ, OCN; FDC rises on in-line Q1 EPS and better revs, especially in GBS revs in N.A.; GPN named new best idea at Guggenheim after earnings; TSS upgraded to buy at Goldman Sachs; ONDK Q1 rev guidance misses views after Q1 beat
  • REITs; HHC jumped after Ackman mention at Ira Sohn conference (JOE moved in sympathy); SBRA and CCP to combine in a $7.4B transaction ; RPT to replace HW in the S&P SmallCap 600 Index; DEI upgraded at Evercore/ISI saying it should benefit from exposure to “some of the best office submarkets in the country; last week, the RMZ decreased (-0.6%), underperforming the S&P 500 and the Russell 2000, as the yield on the 10-year increased 6 bps at 2.35% – Hotel, Apartments and Industrial sectors outperformed last week while Triple Net, Health Care, and Strip Center trailed the group
  • Earnings post-mkt may include: AFH, AFSI, CNXR, CPTA, ELVT, MHLD, NMFC, NNI, PNNT


  • Large Cap Pharma; NVS mentioned positively in Barron’s saying beginning in 2018, it could be set for a “multiyear run” of profit gains driven by new cardiac and psoriasis drugs and a “promising” drug pipeline; ALXN shares slid on Bloomberg report its Brazil offices were raided by law enforcement
  • Specialty pharma/generic; HZNP drops sharply as Q1 EPS/sales both miss consensus and guided year revs to $1.0B-$1.04B, below estimate of $1.26B on lower adjusted Ebitda outlook (weighed on VRX, ENDP); ARRY active on plans to start a combination therapy study with MRK/no financial terms given; MNK rises as Q1 EPS beat by 5c on higher net sales of $810.9M; OCUL said the FDA sets Pdufa date for a decision on the potential approval of Dextenza; DRRX signed $293M pact on Posimir w/Sandoz; AXSM receives FDA fast track designation for AXS 05 for Alzheimer’s
  • Biotech movers as group underperforms; TXMD shares slide after disclosing that it received a complete response letter (CRL) from the FDA for TX-004HR, a treatment of moderate-to-severe vaginal pain related to menopause; PTCT says DMD drug Emflaza to cost $35,000 a year; KITE falls on earnings and discloses CAR-T patient death; overall IBB underperformed
  • Medical equipment, services and devices; VAR was upgraded by two analysts (Citi and BTIG) saying is about to enter the strongest new product cycle period – Halcyon and HyperArc – that the company has had in at least the past seven years; HAE dips on earnings/guidance; PRXL working with investment bankers to explore a sale, WSJ reported

Industrials & Materials

  • Transports; auto rental stocks lower ahead of HTZ earnings report tomorrow morning, as well as cautious analyst commentary on CAR today (Morgan Stanley reiterated underweight and cut tgt to $19 on lowered earnings forecast; overall, transports underperform, with index dropping below 9155 50-day MA today
  • Metals & Mining; no lift in industrial metals today, with steel (NUE, X, AKS), aluminum (AA), iron ore (CLF) and other metals all remained weak on slowing China demand fears (really hit the group last week); gold miners were generally mixed

Technology, Media & Telecom

  • Internet; STMP shares slide as PBI announced a new offering for its cloud-based SendPro mailing and shipping solution; JD posted earnings beat on better net revs; TRIP and GRUB announced an agreement integrating Grubhub’s restaurant network into the TripAdvisor desktop website, mobile web and mobile app experiences; AMZN mentioned positively in Barron’s; PETS rises on earnings beat for Q4; upcoming earnings in Internet space: P reports tonight, PCLN, TRIP and YELP go tomorrow night, and SNAP is Wednesday afternoon
  • Media & Telecom; STRP shares surge after said a revised offer from a multi-national telecom company of $184/share is superior to a previously announced agreement to be acquired by AT&T (T) ; CMCSA and CHTR form wireless alliance to accelerate and enhance each company’s ability to participate in the national wireless marketplace; SBGI confirms deal to acquire TRCO for $43.50 per share/$3.9B; SSP falls more than 7% on lighter than expected guidance; CTL mentioned as a long by Corvex’s Meister at Ira Sohn conference saying LVLT deal is a game changer
  • Semiconductors; MU shares slide as downgraded to neutral at Goldman Sachs on EPS revisions and DRAM concerns; ON a mover on earnings and guidance; XLNX positive mention at Ira Sohn conference by Totem Point’s Nathani
  • Hardware & Comm equipment; GIMO rallied after Elliott Management said it had built a 15.3% stake in the company; IBM remains under pressure after Warren Buffet noted last week he exited a 1/3 of his position
  • Software movers; SNCR fell after the company announced it has rescheduled its 1Q release/call to May 15 from May 9.


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.

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