Closing Recap

Friday, November 27, 2020

Equity Market Recap

·     As expected, trading volumes were thin and news quiet as major averages closed out an abbreviated week with solid gains. The Russell 2000 outperformed with a more than 3% advance for the week, while the Dow, S&P 500, and Nasdaq Composite were all up over 2% (each touching record highs on the week at some point – the Nasdaq hitting its 45^th record high). Today’s gains were paced by mega caps as TSLA traded to record highs with modest profit taking in cyclicals. Markets have been buoyant this week despite rising coronavirus infection levels across the U.S. and economic data pointing to a halting recovery as the focus remains next year, betting that recent Covid-19 vaccine break-throughs will allow activity to return to normal. President Trump said Thursday that he would leave the White House if the electoral college backs Joe Biden, further helping alleviate concerns about investors about political uncertainty in coming weeks. The president’s campaign has lost several legal challenges that allege election fraud.

·     Black Friday kicks off the traditional start of the holiday shopping season in the U.S. as Adobe (ADBE) said Thanksgiving Day hit a new record with consumers spending $5.1 bln, up 21.5% according to Adobe analytics data – said retailers that offer curbside pickup benefited from 31% higher conversion rate of traffic to sites on thanksgiving day – Expecting Black Friday to come in between $8.9 bln (20% growth) and $10.6 bln (42% growth) – Reaffirming forecast that full holiday shopping season will amount to $189 bln (up 33%) in online spend

·     Major averages on pace for massive November gains, with the Nasdaq up over 12% (up over 34% YTD), the S&P 500 over 11% (up over 12% YTD), the Dow nearing 13% (up over 4% YTD) and the Smallcap Russell 2000 index up a whopping 20% in November (up over 10% YTD) as investors pour money into cyclical and value plays

·     Gold prices tumbled as much as 1.75% to lows below $1,773 an ounce before paring losses. The U.S. dollar drops to its lowest levels in 3-months, now down over 2% this month as the euro trades as high as 1.195 (12-week highs as well) while the British pound dipped vs. the buck. Treasury yields slip to lows of day and week as stocks dip into the close, bond prices rise.

Top stock news

·     Retailers active ahead of the busiest shopping weekend of the year as the National Retail Federation said online holiday retail sales are seen rising 20%-30% and Black Friday sales forecast to rise 3.6% to 5.2% YoY

·     TSLA trades to new record highs as the euphoria in electric vehicle names continue

·     AZN slips as the co is facing tricky questions about its success rate that some experts say could hinder its chances of getting speedy U.S. and EU regulatory approval. The company told Bloomberg it’s likely to run an additional vaccine trial after acknowledging a manufacturing error that raised questions about preliminary results of its late-stage study

·     DIS will lay off 32,000 workers – primarily at its theme parks business – marking an increase from the 28,000 it announced in September

·     FGEN and Astellas’ Roxadustat approved in Japan for renal anemia triggers a milestone payment of $15 million by Astellas to FibroGen

·     INVVY shares fell after Indivior says consumer goods giant Reckitt Benckiser has submitted a 1.07 bln pound ($1.43 bln) claim to Commercial Court in London earlier this month, relating to their demerger agreement

·     IQ falls after Reuters reported BABA and TCEHY each have held separate talks with BIDU to acquire a controlling stake in video streaming service IQ, but discussions have stalled with little hope of resuming soon as BABA and Tencent balk at a valuation https://bit.ly/3mcLt2J

·     LCA rises after saying after the close Wednesday it got regulatory approval from the New Jersey Casino Control Commission to acquire Golden Nugget Online Gaming

·     PLX slides in Pharma after announces 3-month extension of PDUFA date for pegunigalsidase alfa for the proposed treatment of Fabry disease (new PDUFA 04/27/21)

·     QS surges over 50% as the electrical vehicle craze continues: QuantumScape Corp., an electric-vehicle battery startup backed by Germany’s Volkswagen AG, began trading today following its combination with blank-check company Kensington Capital Acquisition Corp

·     RYTM rises in biotech, the FDA has approved its Imcivree (setmelanotide) for chronic weight management in adult and pediatric patients 6 years of age and older with obesity – w/ approval, Imcivree becomes the first-ever FDA approved therapy for these rare genetic diseases of obesity

·     SAGE to receive $1.525b in cash comprised of upfront payment of $875m and $650m equity investment, potential milestone payments, profit sharing and royalties from BIIB as they enter into a collaboration agreement to jointly develop and commercialize zuranolone 9shares of Sage rose initially but Stifel noted the deal takes some potential upside off the table

·     SRNE rises in biotech space as Defense Advanced Research Projects Agency (DARPA) co-funded by the Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense awarded SmartPharm Therapeutics, wholly-owned subsidiary of Sorrento Therapeutics, a contract for developing a rapid countermeasure to COVID-19

·     YJ falls on lower revs and wider loss; posted Q3 revenue of 1.06 mln yuan vs 2.7 mln yuan a year earlier as fall in revenue is primarily due to a decrease in sales of merchandise; reports Q3 adj net loss 36,392 yuan vs a loss of 24,899 yuan a year earlier

·     S&P index changes: CNXC, which is being spun off from SNX will replace AMCX in the S&P MidCap 400 before trading begins on Dec. 1. AMCX will take RRD’s spot in the S&P SmallCap 600 before trading begins on Dec. 2.