Market Review: March 14, 2019

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Closing Recap

Thursday, March 14, 2019





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     U.S. stocks were mixed to down slightly, snapping the 3-day win streaks for the S&P and Nasdaq Composite while the dollar gained, snapping its current 4-day losing streak as attention turned back to trade today. Stocks slipped early after Bloomberg News reported that a meeting between President Donald Trump and President Xi Jinping to sign an agreement ending trade tensions between U.S. and China was more likely to take place in April at its earliest, instead of this month. President Donald Trump said on Wednesday that he was in “no rush” to pass a deal. Stocks clawed back midday, fluctuating between gains and losses as markets appeared to be running on a treadmill all day (moving but not really going anywhere). Tech shares were dragged down by Internet and software ahead of a big night of earnings for the group (ORCL, ADBE). U.S. economic data was mixed as jobless claims rise slightly and import rises jump, but new home sales declined more than expected. The pound fell following Wednesday’s rally, with U.K. lawmakers defeating an amendment calling for a second referendum. It was a quiet day overall for U.S. stocks with much uncertainty remaining (trade, Brexit).

Economic Data

·     Import Prices for February rose 0.6% MoM, topping the 0.3% estimate and after rising 0.1% in January (prices gain of 0.6% m/m largest monthly increase since May); export prices rose 0.6% after falling 0.5% in January and export prices rose 0.3% y/y in Feb.

·     Weekly Jobless Claims rose 6K to 229K, slightly above the 225K estimate while the prior week claims were unrevised from 223K; the 4-week moving avg. at 223.75k in the week ending March 9; continuing claims rose 18k to 1.776m in the week ending March 2

·     New home sales for January fell 6.9% to 607K annual rate, missing the 622K estimate, while the prior month was upwardly revised to 652K from 621K (previous three months’ new home sales data revised up by 63K); the median new home price fell 3.8% y/y to $317,200; average selling price at $373,100; 16% of new homes sold cost more than $500K, down from 18% prior month



·     Oil prices continue to edge higher, with WTI crude rising 35c or 0.6% to settle at $58.61 per barrel. Prices touch 4-month highs after bullish inventory data this week as well as reports that OPEC oil output fell sharply in February as sanctions hit Venezuela’s production and as Saudi Arabia moved to curb supplies. Gold prices slide, falling -$14.20 or 1.1% to settle at $1,295.10 an ounce as the dollar looks to snap its 4-day losing streak



·     The U.S. dollar rebounded, snapping its 4-day losing streak as the British Pound pulled back from 9-month highs as markets await details of whether the UK will continue ahead with its break of the EU at months end (regardless if Hard-Brexit or deal set in place). Note Sterling also recorded its biggest one-day move in nearly two-years on Wednesday. President Donald Trump, meanwhile, tweeted that the U.S. was looking forward to negotiating a trade deal with the U.K. while reports also surfaced that a meeting between he and the Chinese President may not take place until April. The euro inched back under the 1.13 level vs. the dollar, while the greenback also sported gains against the Canadian loonie, Aussie dollar and Japanese yen.


Bond Market

·     Treasury prices were little changed, trading in a narrow range for a second consecutive session (10-yr highs 2.63 vs. lows 2.61%), after extreme volatility the prior few weeks saw yields touch highs of 2.76% before tumbling down to the levels they are now. A dovish outlook from the Fed after mixed economic data, along with uncertainty in the UK related to Brexit and a recent pullback in stocks have all prompted buying of safe haven Treasuries.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; DG Q4 EPS of $1.84 missed estimates by 4c on in-line sales of $6.65B, while year EPS guidance of $6.30-$6.50 missed the $6.65 estimate, while comps of 4% topped views; GCO Q4 EPS and sales fell short of consensus (comps better up 4% vs. 3%) while year view of $3.35-$3.75 midpoint misses $3.68 est.; TLRD shares slid after warning of a down trend at Men’s Wearhouse and Jos. A. Bank during Q4 and into Q1 of 2019 citing both the macro-environment as well as the need to execute on core growth strategies (guided Q1 EPS 10c-15c below 51c est.)

·     Consumer Staples; GIS was upgraded to buy at Deutsche Bank and raised its tgt saying although the stock has appreciated already ~20% YTD and pressures still exist, the core U.S. base business at General Mills seems to have stabilized and the opportunity with Blue Buffalo remains underappreciated; SFS shares fell after Q4 EPS and Ebitda fell short of consensus on in-line sales while guided year EPS 41c-46c vs. est. 45c and Ebitda midpoint guide also missed; tobacco stocks PM, MO were active after HHS Secretary Azar said was absolutely committed to cutting nicotine

·     Housing & Building Products; MAS tgt raised to Street high $52 at SunTrust citing the recent news that the company was exploring strategic alternatives for its cabinets and windows units; EXP was downgraded to neutral at Longbow as see limited earnings upside. Firm said bullish stance on cement pricing is now offset by incremental concern about wallboard volumes/prices as checks reveal an incrementally more competitive landscape and downward revisions for 2019 pricing expectations (neutral on CBPX and USG); MHK shares slide after Cleveland Research said US flooring demand looks to have softened in 1Q to this point/hearing incremental softness in the carpet category (shares of FND also slipped)

·     Casino & Leisure movers; HLT was upgraded to buy at Argus in the hotel sector saying they think that Hilton’s asset-light business model, in which it franchises rather than owns hotels, provides a competitive advantage; casino names were under pressure on no specific news (WYNN, LVS)

·     Auto’s; TSLA is expected to unveil its hotly anticipated crossover tonight, called the Model Y, during a special event that can be live-streamed starting at 8 p.m. PT; TM said i9t adds about $3B in US investments planned through 2021; TEN shares dropped after 4Q earnings missed analyst estimates. Full-year adj. Ebitda margins and leverage views fell short of expectations; Volkswagen AG may face a U.S. SEC lawsuit over the carmaker’s failure to disclose to investors that its diesel vehicles didn’t comply with emission standards, according to a regulatory filing.



·     Energy names continue outperformance with rise in oil prices; OPEC oil output fell sharply in February as sanctions hit Venezuela’s production and as Saudi Arabia moved to curb supplies. Total production from the group fell by 221,000 barrels a day to 30.5m b/d; in stocks news, SND posted a Q4 beat as revenues increased 21% to $52.2M primarily due to increase in average selling price per ton, offset by lower volumes/overall tons sold were ~610,000, down 14% Y/Y; FET upgraded to buy and NBR downgraded to neutral at Citigroup; in Canadian E&P, Credit Suisse upgraded SU to outperform and IMO to neutral while downgraded HSE to neutral; SMLP was downgraded at Credit Suisse in MLP sector

·     Utilities & Solar; in solar, Goldman Sachs boosted its 2019-2022 demand estimates by an average of 10%-15% as demand trends look to be inflecting more positively than what the bank expected (top picks: FSLR, CSIQ, VSLR, Longi, Tongwei; top sell ideas SEDG, JKS)



·     Bank movers; NTRS was upgraded to buy at Buckingham while raising tgt (to $115) and estimates to reflect the compounding impact of QTD equity market appreciation; SCHW reported net new client assets for the February of $18.3 billion vs. $21.3 billion y/y as February total client assets +6% vs. +15.5% y/y and February new brokerage accounts 115,000 vs. 138,000 y/y; in insurance, AIZ said it plans ~$1.35B of capital return through 2021 at its investor day, along with providing updated guidance; Visa (V) and MA shares advanced after Wedbush raised tgts on both earlier



·     Pharma movers; BMY shares were weak despite news that CELG winning another crucial patent skirmish in its ongoing fight to keep its blockbuster revenue pumping in from Revlimid — a key feature in the $74 billion buyout deal that Bristol-Myers Squibb has been defending; JNJ was ordered to pay $29M to woman over talc-linked for her cancer

·     Biotech movers; CELG rises as the validity of Celgene’s patent 7,968,569 won’t be reviewed by the Patent Trial and Appeal Board, the review board said today; MLNT shares jumped following a strong Q4 EPS beat and higher revs

·     Medical equipment and devices; ALGN was downgraded to mixed from positive at OTR Global; ABT said the FDA approved use of its MitraClip Clip Delivery System for patients with normal mitral valves who develop heart failure symptoms and moderate-to-severe or severe mitral regurgitation; RMTI slipped on earnings; FLDM rated new buy and $15 tgt at BTIG

·     Healthcare services and providers; WAGE shares surged after saying it plans to file a majority of its delayed quarterly and annual reports with the SEC before Tuesday evening; RDNT Q4 revs of $257.2M topped consensus and guided year revs above views


Industrials & Materials

·     Industrial & Machinery; GE reverses earlier losses after guiding year adjusted EPS 50c-60c below the 67c estimate, while looking ahead to 2020 and 2021, GE expects adjusted Industrial free cash flows to be positive in 2020, with the pace of improvement accelerating in 2021; trade related names (ag machinery) slipped on reports Trump may not meet with China on trade until April.

·     Transports; industry has been in a downturn over the last month, falling on global slowing fears, while airlines dropped over the last few on Boeing 737 Max 8 issues; group was little changed on the day with sectors mixed (Transports recently bounced off 50 and 100 day MA’s of 10,078 and 10,076 but still below its 200-day MA of 10,532)


Technology, Media & Telecom

·     Internet; FB shares slid after the NY Times reported federal prosecutors are pursuing a criminal investigation into deals that Facebook struck with global technology companies such as AMZN and SNE, allowing the companies to see personal information; SNAP shares rise after being upgraded to buy with $15 tgt at BTIG and tgt raised to $11 at Jefferies citing acceleration in performance advertising, reduced seediness of content on Discover platform, user stickiness, our testing of Android rebuild and improved employee morale

·     Semiconductors; NXPI tgt raised to $110 at Deutsche Bank as the company continues to expect 2Q to grow q/q albeit at a potentially slower rate than some of its more optimistic semi peers; SMTC shares slipped on a lower Q1 EPS/rev outlook after Q4 results beat as weakness expanded from just smartphones to broader end-markets including data center; strength early on no specific news, with gains in LRCX and KLAC; AVGO to report earnings tonight; CY mentioned positively by several analysts following its first analyst day meeting yesterday in 2-years

·     Software movers; CLDR shares dropped after Q4 results miss revenue and EPS estimates and include downside guidance (guided Q1 EPS loss 25c-22c on revs $187M-$190M below the est. loss of (4c)/$219M and lower FY20 guidance; MDB Q4 results beat on EPS and revenue with 71% Y/Y revenue growth and upside guidance for both Q1 and year; in research, MSFT, CRM and NOW initiated with buy ratings at Mizuho, positive on all; earnings tonight from ORCL, VPVTL, ADBE; TTWO shares dropped after SNE denied speculation that it’s looking at an acquisition of the videogame maker, throwing cold water on a few days’ rally; AAPL shares outperformed following positive analyst comments, leading the Dow Industrial average

·     Media & Telecom movers; media sector remains volatile after AT recently has repackaged its DirecTV Now streaming “skinny” bundles, ending the sale of existing tiers and replacing any channels from AMCX, DISCA, VIAB, and A&E with HBO; WWE had its tgt raised to a Street high $157 from $105 by Wolfe Research


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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