Mid-Morning Look: June 18, 2020

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Mid-Morning Look

Thursday, June 18, 2020






DJ Industrials




S&P 500








Russell 2000






U.S. equities are mixed as technology remains a pocket of strength with the Nasdaq Composite higher for a 5th straight day and up for the 9th time in the last 10 sessions. The Dow and S&P fell as investors weighed the latest reports about fresh outbreaks of the coronavirus in China and America. Economic data was mixed as initial jobless claims for regular state programs totaled 1.51M in the latest week, down slightly from an upwardly revised 1.57M but above estimates for around 1.3M. On the flip side, the Philadelphia Fed index for June bounced back to +27.5, crushing expectations of -23 (and after a -43.1 reading the month prior). Oil prices are edging higher, with the dollar getting a lift following the better Philly Fed reading and Treasury yields falling (10-yr below 0.7%). Stocks had trended higher in recent sessions amid optimism about the economic recovery, but recent COVID-19 case flare ups in some parts of the U.S. (and recently reported China as well) as caused some trepidation in markets – Florida this morning said Covid-19 cases rise 3.9% vs. previous 7-day avg. 3%.


Economic Data

·     Weekly jobless claims fell to 1.508M which was higher than the est of 1.3M filing for first time unemployment benefits and was down slightly from the prior week of 1.566M; the 4-week moving averages fell to 1.773M from 2.008M prior week; US insured unemployment rate unchanged at 14.1% in latest week; continued claims fell to 20.544M vs. est. 19.8M

·     The Philly Fed Business outlook rises 27.5 vs. est. decline of -21.4; June prices paid rose to 11.1 vs 3.2 while New orders a big jump as rises to 16.7 vs -25.7; employment rose to -4.3 vs -15.3, shipments rose to 25.3 vs -30.3 and the 6-month outlook rose to 66.3 vs 49.7

·     Leading Index for May rises 2.8% vs. est. 2.4% and was better than the prior month of a downwardly revised -6.1% from -4.4%)







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10-Year Note





Sector Movers Today

·     Transports; The Baltic exchange’s main sea freight index rises 23% to 1,527 points; tankers DHT and TNP were both downgraded to hold from buy at Stifel saying tankers are still earnings better than breakeven levels thanks in large part to the continued need for floating storage. However, the market has softened, and, it will likely soften further as ships used from storage come back into the market while consumption and OPEC+ production is still below normalized levels

·     Metals & Materials; busy news in the steel sector after NUE guides Q2 EPS in range 10c-15c vs. est. 1c in steel sector (above views); U.S. Steel (X) shares slide after 50M share Spot Secondary priced at $8.58; CMC said its Q3 profit and sales fell as the Covid-19 pandemic weighed on its overall business (sales down to $1.34B from $1.61B YoY as it faced lower shipments and decreasing average selling prices, hurting its recycling segment

·     Software movers; ZS and NET both upgraded to Equal-weight from Underweight at Morgan Stanley in security software saying more distributed users and ramping Cloud use accelerate the shift to a modern Zero Trust approach to security, as the center of gravity moves to Public Cloud, away from the corp network (says sees OKTA, ZS and NET as notable beneficiaries, while PANW is better positioned than many investors believe); PCTY was upgraded to outperform at RBC and raise tgt to $155 from $120 as believe F4Q will be the trough, with acceleration back above 20% over a year, and see upside to estimates

·     Insurance; ALL said announced estimated catastrophe losses for month of May is $350M as catastrophe losses comprised eight events at estimated cost of $273M, after-tax, plus unfavorable prior period reserve re-estimates; Goldman Sach’s said it expects more differentiated returns after a bad run for life insurance stocks, which were all hit during the pandemic by low interest rates and credit concerns, as upgraded CNO and cut BHF, PFG; ATH buys a minority stake in insurer Prudential Plc’s (PUK) U.S. business, Jackson National Life Insurance Co, for $500M

·     Casino & Leisure movers; the cruise industry gets second piece of bad news in as many days as CCL reported disappointing Q2 results with a larger EPS loss and weaker revs amid the negative effects of the COVID-19 pandemic; Bank America notes that State Gaming data supports the pent-up demand narrative, with over 70% of all casinos now open. Company comments suggest meaningfully higher margins in post-reopening months, while Sports Betting and iGaming trends continue to build momentum, with May GGR in NJ and PA coming in at +7% (m/m), and +30% respectively (shares of PENN, DKNG, BYD, GAN among movers



·     ABM +12%; reports Q2 revenue decrease of 6.3% Y/Y to $1.49B, reflecting ongoing impact of COVID-19 operating environment, but was above consensus while earnings handily beat

·     ALPN +101%; after enters into an exclusive global option and license agreement with ABBV for lead candidate ALPN-101

·     ELOX +17%; said enrollment in its Phase 2 clinical trial for ELX-02 in cystic fibrosis has resumed in Israel and Europe after being temporarily paused in response to the coronavirus pandemic

·     PYPL +1%; rises to record high as its tgt was raised at Citi (to $186) and Susquehanna ($190) citing recent payments data and new functionality

·     SPOT +9%; after company lands exclusive deal for podcasts featuring DC universe characters/under the multi-year deal, SPOT and Warner Brothers will produce and distribute original and scripted podcasts based on the DC universe

·     TMUS +1%; raised its forecast for customer additions, pointing to a quicker recovery in its retail business than expected as now says it expects postpaid net additions for Q2 of 800,000-900,000, up from previous guidance for 0-150,000

·     TSLA +2%; after Jefferies upped tgt to $1,200 saying see Covid-19 as an accelerator of the transition to EVs and renewables, from consumers and public policy. N-T, EV friendly incentives in the EU and lower priced Model 3 support H2 volume, making Tesla more resilient than peers



·     ADMS -6% after stopping development of its drug, ADS-5102, to treat walking impairment in patients with multiple sclerosis (MS) as research shows limited commercial opportunity

·     BIIB -5%; shares tumble after losing a patent dispute over Tecfidera against MYL, as shares of the generic drugmaker advanced on the news

·     CCL ; reported disappointing Q2 results with a larger EPS loss and weaker revs amid the negative effects of the COVID-19 pandemic (stocks recovers off earlier losses)

·     KR -3%; despite Q1 EPS of $1.22 topped the $1.09 est and sales were $42B vs. est. $40.7B; says Q1 identical sales, without fuel, up 19% and Q1 digital sales up 92%

·     PSA -2%; general weakness in REITs on the morning with declines in EXR, SPG, IRM in the S&P 500


·     Catalyst Biosciences (CBIO) 4.6M share Spot Secondary priced at $6.50

·     Fox Factory (FOXF) 2.4M share Secondary priced at $76.00

·     Ideaya Biosciences (IDYA) 6.677M share Secondary priced at $15.00

·     IMAC (IMAC) 1.764M share Secondary priced at $1.50

·     Iveric bio (ISEE) 24.536M share Secondary priced at $4.09

·     OrthoPediatrics (KIDS) 1.6M share Spot Secondary priced at $47.00

·     Provention Bio (PRVB) 6.6M share Secondary priced at $14.50

·     QuickLogic (QUIK) 2.5M share Secondary priced at $3.50

·     U.S. Steel (X) 50M share Spot Secondary priced at $8.58

·     W.P. Carey (WPC) 4.75M share Spot Secondary priced at $70.00


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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