Market Review: August 08, 2019

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Closing Recap

Thursday, August 08, 2019





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     U.S. stocks opened to the upside only to push higher as major averages reclaimed key technical levels that had been breached on the Monday and Wednesday market declines, as the Nasdaq Composite Index rallied above the psychologically significant level at 8,000 midday erasing earlier week losses. The S&P 500 and Dow marked their biggest intraday comebacks in about 7 months yesterday after stocks dropped amid growing fears about weak global growth and an ever increasing trade and currency battle between the U.S. and China. Growth concerns took a back seat today after better China export data overnight and no midday market tweets from Trump. Treasury yields erased gains following results of the 30-year auction mid-afternoon (the 10-year yield fell off highs above 1.78% back to session lows 1.70% late day). Also effecting global yields and currencies were headlines Italy’s deputy prime minister seemed ready to force elections, the Associated Press reported. U.S. stocks were led by tech, discretionary and materials, though most sectors closed higher. German bond yield spiked higher Thursday, pulling global government bonds along with them and boosting U.S. equity markets, following a report that suggested the government is mulling a spending package that could ignite growth in Europe’s biggest economy. Also helping markets, JPM Strategist Kolanovic said after a short period of stabilization, markets will likely regain previous highs, and hence we see this sell-off as a medium-term buying opportunity." Also said “2Q earnings have been better than feared with an earnings surprise of 5.5% so far." They are also the second consecutive quarter that is down Y/Y. Tonight marks the last truly heavy dose of earnings results for Q2, with next week slowing down.



·     The U.S. dollar was little changed overall, looking to snap its 4-day losing streak, given the spike in U.S. equites, while the buck slipped against the euro. The U.S. dollar fell against the Canadian dollar, down as much as 0.4% under 1.3260 for its biggest one day move since mid-July as oil prices rebounded. The British Pound remained around 2-year lows vs. the dollar down at 1.214. The dollar fell to session lows against the Japanese yen late day as Treasury yields slipped.


·     Treasury market’s slipped early as yields recovered after its recent meltdown over the last week that saw the 10-year yield at 2.07% last Tuesday to lows of 1.60% yesterday morning and the 2-year at highs of 1.96% last Wednesday to lows of 1.50% yesterday. Prices were volatile again today, as yields erased earlier gains to turn negative late day (10-yr fell from highs of 1.78% to back below 1.73%). U.S. Treasury yields dropped even after a $19B auction of 30-year paper saw slightly less demand than initially expected. The U.S. Treasury sold $19B in 30-year notes at a yield of 2.335% vs. 2.323% when issued pre-sales with a bid-to-cover at 2.24 vs. 2.13 prior auction and indirect bidders awarded 61.3% of the auction and directs 12.5%. Trade impact fears between China and the U.S., central banks around the globe lowering interest rates and rising expectations the Fed will aggressively cut at the September meeting have boosted bonds.



·     Gold prices fall -$10.10 or 0.7% to settle at $1,509.50 an ounce, snapping its 4-day win streak and falling from 6-year highs. It appeared a bout of profit taking after prices surged over the last month on lower interest rate expectations and as investors looked to hide out in defensive stocks with macro trade uncertainty pressuring stocks. Oil prices rebounded as WTI crude rises $1.45 or 2.8% to settle at $52.54 per barrel, bouncing off 7-month lows and snapped its 3-day losing streak in a reversal of the risk aversion trade this week (better China data overnight also helped). Natural gas prices rose 2.1% to settle at $2.13 mln btu amid hot weather and storage data


Economic Data

·     Weekly jobless claims fell 8K to 209K, below the 215K estimate while the 4-wk avg rose to 212,250 from 212,000 prior week (previous 211,500); US continued claims fell to 1.684M in latest week vs. est. 1.690M from 1.699M prior week

·     Wholesale Inventories flat vs. est. 0.2% and wholesale sales fall (-0.3%) vs. est. up +0.2%






WTI Crude















10-Year Note





Sector News Breakdown


·     Auto sector; in the ride hailing sector, LYFT shares jumped overnight after posting a smaller quarterly loss on better revs and raised its 2019 revenue view to $3.47B-$3.5B from prior view $3.275B-$3.3B, but shares slipped after its 8K revealed 257M shares available for sale on August 19th (shares of UBER which reports tonight after the close rose in sympathy); CVNA shares jumped on better Q2 revs of $986.2M and Q2 retail units sold of 44,000, up 95% from last year; HZN shares dropped over 20% after Q2 results fell short

·     Retailers; ADDYY Q2 where EPS of €2.33 came in ahead of the €2.30 consensus estimate on sales of +4% CC (+5% reported), while gross margins were once again a highlight–up 120 bps Y/Y (beating estimates by 70 bps) said Piper; AGS shares fell, downgraded by two analysts after posting a disappointing Q2 report, with adjusted EBITDA falling slightly to $35.75M on top of sales and profit misses; ELF reported Q1 last night and results beat expectations across the board on sales/EBITDA/margins and raises year sales view to $246M-$256M from $235M-$245M and better EPS; VSI to be acquired by Liberty Tax for $6.50 per share in cash in deal valued at $208M; COST July comp sales of +5.6% vs Consensus +6.3%, with core at +5.1% vs Consensus +5.4%; FOSL shares rose after earning; FL was upgraded at Morgan Stanley; VSTO weak earnings weighed on other sporting goods stores while also cut its year outlook

·     Consumer Staples; KHC profit falls in 1H saying it took a $744M goodwill impairment charge in H1 related to certain reporting units including U.S. Refrigerated and expects to record a non-cash impairment loss of $474M in Q2 related to six brands; KDP reported better-than-expected profits for Q2, but sales fell shy of Wall Street’s estimates ($2.81B vs. est. $2.86B) and said it still expects to post full-year adjusted earnings of $1.20 to $1.22 a share, with net sales growth of about 2%; MNST missed across the board on 2Q results, delivered 2Q EPS of 53c (2c miss) as US sales growth of ~5-6% (missed 7.3% est.) and Int’l sales growth of +16.8% (missed 21.7% est.) on a -110 bps decline in gross margins (59.9% vs. cons 60.9%); other earnings results from TWNK, FLO, NOMD in the food related sector

·     Restaurants; JACK rises after stronger than expected Q3 comp store sales of +2.7% vs. consensus of +1.6%) citing the improvement primarily to a stronger bundled value offering, more successful menu innovation and a less value-oriented competitive environment; FRGI shares jump despite Q2 EPS missing estimates as well as revenue; TAST Q2 miss was due primarily to pressure from a slightly softer SSS growth, higher COGS/Labor, and corporate expenses

·     Casino & Leisure movers; RV sector weak following CWH weaker earnings results as EBITDA for the quarter and FY coming in well below estimates (EPS missed by 20c) prompting a downgrade at JPMorgan (shares of LCII, THO, PATK, WGO were volatile); in cruise line, NCLH Q2 EPS and sales top consensus with higher costs and in-line yields at 5.8%, but lowers guidance



·     E&P sector; CRZO posted Q2 adjusted EPS beat by 4c; MRO beat on the top and bottom line while oil production rose 17% YoY; MUR mixed Q2 earnings with an 82% Y/Y gain in revenue to $709M/said Q2 production jumped 29.5% Y/Y to 158.5K boe/day; PDCE headline beat on both production and EBITDA as production beat looks driven by natural gas; ET Headline beat on EBITDA and increased 2019 EBITDA guidance by $100MM

·     Utilities & Solar; in solar, RUN posted 2Q deployments of 103MW, in the middle of its guidance range, continuing to reflect consistent execution/but 3Q guidance came light at 107-110MW, representing ~9% y/y growth; even defensive sectors rallying, with the utilities (UTY) higher with AEE, PNW, XEL, FE, NEE rising while CNP down over 1% after earnings missed



·     Consumer finance and lending; GDOT shares were pummeled overnight, falling over 35% after reported Q2 earnings above expectations but lowered its guidance for the year (cuts FY19 operating revenues view to $1.06B-$1.08B versus its previous guidance of $1.114B-$1.134B)

·     Insurance; AIG posted a nearly 18% increase in second-quarter net income as EPS of $1.43 topped the $1.16 estimate as General Insurance achieved its second consecutive quarter of underwriting profitability; PGR Q2 EPS topped views while revs of $9.45B, falls short of the $9.71B consensus estimate



·     Specialty pharma; AERI reported 2Q net revenue of $15.8M for its glaucoma franchise and lowered 2019 guidance to $70-80M from $110-120M; PRGO posted Q2 EPS/rev beat and reiterated its year outlook but shares sunk after its call; HEB positive data from early-stage study saying University of Pittsburgh Medical Center (UPMC) issued report supporting the safety of using co’s drug Ampligen in combination therapy for the treatment of recurrent ovarian cancer

·     Biotech movers; CLVS shares dropped after filing to offer $225M of convertible senior notes; DBVT rises after the company resubmitted its marketing application for its peanut allergy treatment with U.S. FDA (Viaskin Peanut) for the treatment in children ages 4-11 years; SRPT shares dropped to lows below 10% midday after the FDA’s Adverse Events Reporting System (FAERS) showed that one patient receiving the company’s SRP-9001 had a serious adverse event.

·     Healthcare services and suppliers; GKOS said it would acquire AVDR in an all-stock transaction valuing AVDR at about $26.68 per share in $456.5M deal ; CAH Q4 EPS of $1.11 easily topped the 93c estimate on better revs $37.35B vs. $36.82B estimate while guides 2020 adj. EPS of between $4.85 to $5.10 vs. est. $5.10; QHC plunges after Q2 results and lowered guidance for same-facility revs while Ebitda remained guidance unchanged; HNGR jumps on beat

·     Medical equipment and devices; WMGI shares decline after posted Q2 revenue below estimates and lowered 2019 forecast for sales citing unexpected weakness in U.S. lower extremities business, which was linked to significant reduction in sales of Cartiva (lowered year sales to $925M-$930M from $954M-$966M) – downgraded by RBC Capital; ICUI shares plunge on miss and lower outlook as Q2 revs, adjusted EBITDA and adjusted EPS were below expectations while cuts year EPS to $7.55-$8.15 from $9.00-$9.90; CVRS jumps after agreed to be acquired by Siemens Healthineers AG subsidiary Siemens Medical Solutions for $4.28 per share in cash


Industrials & Materials

·     Transports; overall transport index rose above 10,300 early afternoon in broad market rally as rails, airlines and truckers bounced; MATX Q2 EPS missed by 20c on weaker revs and said 2019 Ocean Transportation operating income to be approximately 20% lower than the $131.1M achieved in 2018

·     Chemicals; HUN announced a definitive agreement to sell a collection of upstream assets to Indorama Ventures for $2.0B in cash plus $76MM in net underfunded pension and OPEB liabilities; lithium stocks active after ALB said it will delay some lithium hydroxide capacity expansions, which would have added about 125k metric tons of capacity in the market (shares of LTHM, SQM other comps)


Technology, Media & Telecom

·     Internet; STMP shares a nice recovery after last quarter’s plunge, as Q2 results easily topped views and boosted the low end of its year profit outlook to $3.60-$4.85 from $3.35-$4.85 (est. $3.96); in online travel, two different outcomes as BKNG shares rise on Q2 EPS/revenue beat and said Q2 gross travel bookings were $25.0B up 5% YoY with better guidance (Q3 adjusted EPS $43.60-$44.60 vs. est. $43.97), while TRIP shares rebound from 4% decline overnight on its quarterly miss to trade higher; EB shares slipped as Q3 revs were guided below estimates ($74M-$78M vs. est. $77M); ZG shares tanked as net loss widened to $71.98M from a year-ago loss of $3.09M and said guidance for its Premier Agent business was changed based on the company moving to a deferred revenue model for that business

·     Semis; SWKS posted a slight Q3 EPS beat but its outlook sent shares lower after guiding 4Q revenue $815M-$835M below the $842.2M and 3Q adjusted gross margin 50.4% vs. 50.9% YoY; AMD formally launched its 7nm 2nd generation EPYC server processor family (Rome)/follows the launch of 7nm Ryzen 3 desktop processors and 7nm Navi GPUs last month (analysts very bullish on AMD chip with Rosenblatt saying it’s a “game changer” and INTC can’t match

·     Software; CRM said it acquired ClickSoftware Technologies Ltd., for an amount expected to be approximately $1.35B ; in another deal, SYMC shares jumped overnight after the WSJ reported AVGO was nearing a deal to buy Symantec’s enterprise-security unit, mostly made up of the former Blue Coat Systems Inc. which is valued around $10B ; TLND outperformed after Q2 revenue of $60.5M topped views and boosted its year EPS view (though cut its year revenue outlook); QTWO reported strong F2Q19 results (record revs) and subsequently raised FY19 revenue guidance; other movers on earnings/guidance included AZPN (higher), UPLD (higher); FSCT C3Q rev guide a hair below street, but rallied back as results included a much faster shift to subscription

·     Hardware; ROKU shares, which were up around 250% YTD before last night earnings, got another boost as its EPS loss was smaller than expected on better revs and reported active accounts of 30.5M, a net addition of 1.4M from last quarter; INFN upgraded at Raymond James after co posts smaller-than-expected Q2 loss and also said expects to return to adjusted profitability and positive cash flow in Q4; FFIV was upgraded at Morgan Stanley; DDD down seventh straight session after Q2 revenue falls short of estimates, impacted by ordering patterns of large enterprise customer, delay in shipping factory metals systems

·     Media & Telecom movers; CTL Q2 revenue misses estimates citing an impact from contract rerates/CTL also reiterates full-year 2019 forecast for adj. EBITDA and free cash flow – also downgraded at JPM, but upgraded at Raymond James; CBS and T reach new content carriage agreement/terms not disclosed; AMC Q2 revenue, profit beat estimates, driven by record attendance in both U.S. (up 3.1%) and international markets (up 16.6%); GTT shares fall as Q2 adjusted Ebitda $112M vs. est. $125M and said hires advisor to explore some asset sales/posts larger EPS loss; SWCH reported solid C2Q results with stronger revenue growth of 9.2% yoy and OIBDA growth of 16% YoY; VIAB rises after topping consensus with Q3 earnings even as investors keep one eye on hopeful CBS deal/company showed a turnaround in domestic advertising after years of declines; DIS upgraded to outperform at Credit Suisse after shares fell Thursday post EPS; other earnings from FOXA, IAC, LSXMA, ANGI in the media space


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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