Mid-Morning Look: August 24, 2020

Darwin SarazaDaily Market Report

Mid-Morning Look

Monday, August 24, 2020

Index

Up/Down

%

Last

 

DJ Industrials

247.76

0.89%

28,178

S&P 500

28.59

0.84%

3,425

Nasdaq

94.80

0.87%

11,409

Russell 2000

8.93

0.57%

1,561

 

 

Monday brings more gains for global stock markets, as the Dow Jones Industrial Average opens within 5% of its record high, while the Nasdaq Composite and S&P 500 each set new intraday records as well following positive coronavirus treatment candidate news. Stocks getting a boost after President Trump’s announcement that the U.S. FDA issued emergency use authorization for convalescent plasma to treat COVID-19. Also, the U.S. has seen a significant decline in the number of daily new Covid-19 infections as a total of 34,567 new cases were reported across the country on Sunday, according to data compiled by Johns Hopkins University…the lowest daily count since June 22. A little steam coming out of the recent big winners as TSLA shares tumble as much as 5% (before recovering) after touching a new record high of $2,129 ahead of its soon to be 5 for 1 stock split, while AAPL and AMZN also each touch record highs early. Some of the big winners during the COVID-19 pandemic seeing weakness today with NVAX, MRNA, INO, APT among decliners, while pandemic losers/recovery trade names such as airlines, cruise lines, gaming and restaurants rebound on the plasma news. A quiet start to the week, though stock upward momentum continues with strong gains in Europe and Asia overnight.

 

Economic Data

·     The Chicago Fed’s national activity index fell to 1.18 in July from a revised record-high of 5.33 in June. The index’s three-month moving average, which tries to smooth out volatility, rose into positive territory – moving up to 3.59 from negative 2.78 in the prior month

 

 

Macro

Up/Down

Last

 

WTI Crude

0.16

42.50

Brent

0.38

44.73

Gold

-0.40

1,946.60

EUR/USD

0.0027

1.1823

JPY/USD

-0.01

105.79

10-Year Note

-0.006

0.621%

 

 

Sector Movers Today

·     Leisure and Gaming; CHDN active as the Kentucky Derby will take place without fans; had worked on a plan to have a limited number of spectators, but dropped it because of “significant increases in COVID-19 cases in Louisville as well as across the region”; SGMS accelerates digital expansion with sports betting launch for National Lottery in Netherlands; in lodging, Barron’s said WH is well positioned for a run-up given its focus on budget hotels and leisure customers and notes they’re primarily located in domestic drive-to locations, not urban ones

·     Retailers; TGT, NKE, TJX, and WMT back to school positive mentions in Barron’s this weekend as all are employing different strategies to win shoppers in the covid-19 era/meanwhile, specialty stores and mall stalwarts will fall even further behind; Wayfair (W) to repurchase up to $700M in common stock; big week of discount retailer earnings with DG, DLTR, BIG expected; Susquehanna raises price target on LULU to $426 from $360 and maintains Positive rating; BNED said it has decided to go it alone and execute its current business plan following a strategic review of its business

·     Utilities & Solar; ES was downgraded at Guggenheim given valuation but may look for a re-entry point, in time, given our view on ES’ strong attributes including a top-tier regulatory construct; for EXC Gov. Pritzker laid out a vision for comprehensive energy reform titled “Putting Consumers & Climate First.” Key elements include (1) a path to 100% clean energy by 2050, (2) a market-based solution to reduce carbon emissions from power plants and (3) the implementation of measures to ensure greater ICC oversight of the state’s regulated utilities – Wells Fargo views the plan as a positive development for EXC and largely neutral for AEE

·     Internet; PINS downgraded to neutral from buy at Citigroup but raise tgt from $25 to $35 while maintain neutral on TWTR and sell on SNAP while FB is only Buy rated social media stock; SPOT says it has partnered with Tencent backed Riot Games, developer of multiplayer online battle arena game League of Legends, to launch several new esports-related podcasts about the game; BABA tgt raised to street high $350 at Susquehanna after strong Q1 results; AMZN touches record highs

 

Stock GAINERS

·     AAL +5%; as pandemic hard-hit sectors such as airlines, gaming, cruise, rally on plasma news

·     AAPL +1%; trades above $500 for the first time to new record highs

·     AZN +3%; after reports President Donald Trump is considering fast-tracking its coronavirus vaccine candidate, in a bid to make it available to Americans before the November election

·     BWAY +38%; says it has received U.S. FDA clearance for its brain stimulation tech, H4 Deep Transcranial Magnetic Stimulation, to treat cigarette smokers who seek to quit (Full Story)

·     HFC +5%; energy stocks rally with all eyes on tropical storms as Tropical Storm Laura and Tropical Storm Marco are both expected to impact the Gulf of Mexico in the next few days, with the latter storm tracking closer to oil platforms

·     NNBR +23%; announces sale of Life Sciences Division for $825M; strengthens balance sheet by accelerating its ability to de-lever and provides the Company with enhanced financial flexibility to deliver long-term shareholder value through its Power Solutions and Mobile Solutions businesses

·     WRK +6% and IP $5%; as paper related stocks outperform in the S&P 500 early

 

Stock LAGGARDS

·     AMT -1%; weakness early in dividend paying sectors such as towers, REITs

·     NVAX -11%; as COVID -19 drug, service winner’s pullback (GILD, MRNA)

·     ONTX -70%; as IV rigosertib did not meet primary endpoint of significantly improved survival versus best supportive care in higher-risk myelodysplastic syndromes (HR-MDS)

·     ODT -32%; says that the CONTESSA (Phase 3) trial evaluating lead candidate tesetaxel in metastatic breast cancer (MBC) patients met the primary endpoint, but under pressure on safety profile of lead drug tesetaxel

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Market commentary provided by Catena Media Financials US, LLC, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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