Mid-Morning Look: June 26, 2020

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Mid-Morning Look

Friday, June 26, 2020






DJ Industrials




S&P 500








Russell 2000






U.S. equities fall sharply on the open, erasing much of the rally seen in the last hour of trading yesterday (which came on no specific news), as major averages remain on track for declines this week. Financials and banks among the top decliners (WFC, COF, GS, JPM as well as regionals HBAN, CMA, FITB) as the Federal Reserve said after their stress tests last night that banks can’t increase dividends or resume buybacks through at least Q3 as the coronavirus pandemic weighs. Also still a main factor for markets, a record 39,972 confirmed covid-19 cases were reported on Thursday, Johns Hopkins said as new daily covid-19 case count tops previous peak of 36,291 in April. The weakness in financials, rising coronavirus cases, some states now walking back some reopenings (Texas Governor today rolling back reopening as positivity rate rises above 10% – focuses on bars and taverns) and mixed economic data all leading to a sharp decline on the final day of trading this week. Broad based in commodities as well as oil sinks and on track for only their second decline in the past nine weeks, as worries of a coronavirus resurgence spoils a rally, while gold prices tumble as the dollar recovers in a rotation into defensive assets. Energy stocks also among the top S&P decliners, erasing yesterday’s advance.


Economic Data

·     Personal income for May fell (-4.2%) vs. est. down (-6.0%) after April rose 10.8%, while Personal Spending jumped 8.2% vs. est. 9% and well above the April reading of down (-12.6%); personal saving rate for May at 23.2% vs. April 32.2%; real consumer spending up +8.1% vs. April -12.2%

·     Overall PCE price index for May rose +0.1% (in-line) vs. April -0.5% and the core PCE price index rose +0.1% vs. April -0.4%; May YoY PCE price index +0.5% vs. April +0.6%

·     University of Michigan surveys of consumers sentiment final June 78.1 vs. est. 79.0 and compared to preliminary June 78.9 and final May 72.3; the current conditions index final June 87.1 vs prelim June 87.8 and expectations index final June 72.3 vs prelim June 73.1







WTI Crude















10-Year Note





Sector Movers Today

·     Bank movers; large cap banks (WFC, JPM, GS) fall after the Federal Reserve said after stress tests that banks can’t increase dividends or resume buybacks through at least Q3 as uncertainty over the Covid-19 pandemic weighs on lenders. The Fed found that the country’s largest lenders have struggled to model the unprecedented downturn and ensuing rescue programs. Analysts were cautious on COF, WFC saying they may need to cut dividend, while MS and C fared better; regional banks getting clobbered this morning (HBAN, FITB, CMA)

·     Internet; EBAY was upgraded to buy from hold and raise tgt to $57 from $42 at Deutsche Bank saying they believe there is scope for further appreciation over the mid-term saying survey suggests new buyers on the eBay platform have had a positive experience, with over 40% stating they are very likely to make a purchase over the next six months; SunTrust rolled out FY21 PTs for AMZN to $3,400 vs. $2,700, EBAY to $54 from $50, ETSY to $112 from $88 and W to $208 from 163; companies continue to pull advertising from FB and the company is working with advertisers to limit further damage (VZ latest to pull); AMZN is going to announce the purchase of self-driving car developer Zoox, according to reports in The Information and the Financial Times with a price tag at $1.2 billion. The deal will pit Amazon against Waymo, which is backed by Alphabet (GOOGL) https://on.mktw.net/2Vma0ah



·     BIG +17%; expects Q2 comparable sales % growth to be in mid-to-high twenties and guides Q2 adj profit between $2.50-$2.75 well above consensus saying it is in a strong liquidity position, given positive business trends, recent closure of sale/leaseback transactions

·     CLGX +22%; after the analytics company received a buyout offer of $65 per share, in deal valued at $7B from investment firm Cannae Holdings (CNNE) and Senator Investment Group LP https://on.mktw.net/2ZbF2mj

·     GPS +36%; after expanding its relationship with Kanye West who will design adult and kids’ clothing that will be sold at Gap next year/Yeezy footwear, made with sneaker company Adidas, won’t be sold at Gap

·     IBIO +49%; as is set to be added to the Russell 2000 and Russell 3000 indexes/index inclusion will be effective after the market opens on June 29th

·     NTAP +2%; upgraded to buy ($55 tgt) at Bank America as see current consensus as too pessimistic and view current valuation as reflecting most of the worries around competitive share loss and macro headwinds

·     SNX +11%; after reported a quarterly beat and guided above and announced timeline for Concentrix spinout

·     VXRT +62%; surges a second day after signing an MoU with Attwill Medical Solutions Sterilflow to use AMS’ resources for lyophilization development and large-scale manufacturing including tableting and enteric coating for Vaxart’s oral COVID-19 vaccine



·     DBVT -14%; says it’s yet to receive an update from the U.S. FDA about the marketing application for its peanut allergy patch Viaskin Peanut/the FDA in March canceled a planned meeting of independent experts to discuss Viaskin Peanut, citing questions related to the marketing app

·     FB -5%; companies continue to pull advertising from FB and the company is working with advertisers to limit further damage (VZ latest to pull)

·     LK -50%; on news that it will be delisted from the NASDAQ/had received two notices from the Nasdaq about its failure to adhere to listing rules

·     NKE -4%; reported a big miss on the top and bottom line as well as lower margins (EPS loss (51c) on revs $6.31B vs. est. 10c and $7.38B; Q4 gross margins 37.3% vs. est. 43.5%) – but analysts positive as they focus on the Consumer Direct Acceleration Strategy

·     WFC -5%; along with weakness in other large cap banks (GS, JPM) as the Federal Reserve said after stress tests that banks can’t increase dividends or resume buybacks through at least Q3

·     ZGNX -9%; as the FDA approves Fintepla (fenfluramine) for the treatment of seizures associated with Dravet syndrome in patients age 2 and older/this is a broader patient population than the Phase 3 trial, which consisted of subjects age 2-18 (approval included a black box warning)


·     Agora (API) 17.5M share IPO priced at $20.00

·     Akouos (AKUS) 12.5M share IPO priced at $17.00

·     Albertsons (ACI) 50M share IPO priced at $16.00

·     CrowdStrike (CRWD) 7.5M share Block Trade priced at $104.00

·     Ebang (EBON) 19.324M share IPO priced at $5.23

·     Franchise Group (FRG) 4.2M share Spot Secondary priced at $23.25

·     Fusion Pharma (FUSN) 12.5M share IPO priced at $17.00

·     PG&E (PCG) 423.4M share Secondary priced at $9.50

·     PolyPid (PYPD) 3.75M share IPO priced at $16.00

·     Tela Bio (TELA) 3M share Secondary priced at $16.00

·     Translate Bio (TBIO) 12.507M share Secondary priced at $22.00

·     Xeris Pharma (XERS) 7.4M share secondary priced at $2.72


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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