Mid-Morning Look: May 13, 2020

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Mid-Morning Look

Wednesday, May 13, 2020






DJ Industrials




S&P 500








Russell 2000






U.S. equities plunge on the open, erasing overnight gains after Federal Reserve Chairman Powell said Congress and the White House will need to spend more money to make sure policy makers’ quick initial response to the coronavirus-induced economic contraction isn’t wasted. Stocks have since recovered, with the Nasdaq Comp now making fresh highs up 0.75%. Powell noted “the scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II,” and that “additional fiscal support could be costly but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery.” Powell pushed back against the prospect the central bank would deploy negative interest rates in the U.S., but did not fully rule it out, which lifted Treasury prices and sent yields lower. Crude oil prices reversed losses and turned positive after inventory data and as Saudi Arabia and Russia said in a statement that they are committed to oil market stability and see signs of improving oil demand. In economic data, producer prices posted its largest decrease on record for April as the new coronavirus curtailed business activity. Stocks remain volatile after yesterday’s late day plunge after top Fed officials on Tuesday warned that the U.S. economic recovery following the coronavirus pandemic is likely to be uneven, with some sectors such as services and hospitality struggling to rebound. Comments by infectious disease expert Fauci also rattled sentiment as he warned of the risks of reopening the economy too soon. Tensions between the U.S. and China also add to the nerves among investors. Corporate news relatively quiet as earnings season slows down. 


Treasuries, Currencies and Commodities

·     In currency markets, the dollar wavering between gains and losses following another round of weak economic data (PPI), while commodity prices mixed as gold inches higher and oil prices slip despite Saudi Arabia and Russia said in a statement that they are committed to oil market stability and see signs of improving oil demand/while OPEC once again slashed its forecast for global oil demand this year citing the impact of the coronavirus on demand. Treasury prices rally behind Powell comments, sending yields lower.


Economic Data

·     Producer price index (PPI) for April showed a greater decline of (-1.3%) vs. an expected decline of (-0.5%) for headline PPI and core prices (ex: food & energy) dropped (-0.3%) vs. est. (-0.1%) decline; YoY total prices dropped (-1.2%) vs. est. fall (-0.4%) and core prices unexpectedly dropped (-0.3%) vs. expected to rise +0.6%







WTI Crude















10-Year Note





Sector Movers Today

·     Restaurants; PBPB falls after Q1 results as comp sales fell (-10.1%) and posted an earnings shortfall; ARCO warns systemwide Q1 comparable sales fell 4.5% in Q1, with a 10.9% increase for the first two months and a 33.5% drop in March and warns for Q2; CAKE was resumed with an underperform rating at Stephens noting the chain’s mall-centric footprint is a risk; restaurants in general weaker following Fauci warning yesterday of opening up too soon and Fed Chairman Powell comber comments as well today

·     Casino & Leisure movers; SIX said it’s launching a new guest reservation system that will allow parks to manage daily attendance levels and avoid overcrowding in accordance with CDC social distancing recommendations; in cruise lines, NCLH was downgraded to equal weight, tgt $14, liquidity is sufficient, but path out remains choppy at Wells Fargo; LVS ended its plans to open an integrated resort (IR) casino in Japan amid the coronavirus crisis; RCL launched a private offering of $3.3 billion in senior secured notes due 2023 and 2025; UBER announces proposed $750 million senior notes offering; LYFT priced its $650M 1.5% 5-yr convertible notes offering

·     Pharma movers; BLUE and partner BMY announced they received a Refusal to File letter from the FDA regarding the BLA for idecabtagene vicleucel for patients with heavily pre-treated relapsed and refractory multiple myeloma, which was submitted in March 2020; MYL shares rally after saying Tuesday it struck a deal to license GILD’s remdesivir, a therapy that may treat patients with Covid-19/under terms of the agreement, Mylan has the right to manufacture and distribute remdesivir in 127 low- and middle-income countries; ALC reported 1Q20 results that surpassed adjusted expectations across product segments as revenue of $1.822B beat the $1.689B estimate; VNDA reports pact with the FDA on resubmission of the application for HETLIOZ® for treatment of patients with Smith-Magenis Syndrome.

·     Metals & Materials; KeyBanc downgraded steel producers STLD and RS to equal-weight on valuation saying post recent analysis, they reduce EPS estimates on the carbon steel sector via materially weaker near-term U.S. demand. While the group has ample liquidity, MT’s recent equity raise casts a shadow over the group; KeyBanc noted Pulp and Paper Products Council (PPPC) released preliminary N.A. printing & writing paper statistics for April/uncoated freesheet shipments fell a substantial 33%, such that shipments are down 12% YTD (IP, PKG, UFS among names leveraged to this data)



·     ALGT +7%; posts lower-than-expected Q1 revenue, but says will reduce 2020 cash outflow by $375M and was also upgraded to outperform at Raymond James

·     BLK +4%; 28.753M share Secondary priced at $420

·     NVDA +2%; tgt raised to $340 from $311 at Wedbush as await formal guidance from NVDA around the MLNX acquisition to shift our model

·     SNX +11%; CFO says increased liquidity without raising additional capital; said believe that our strong balance sheet will enhance our ability to successfully navigate through this challenging market backdrop; guides Q2 EPS $0-$1.00 vs. est. ($3.94)

·     UNFI +32%; after preannounced meaningfully better than expected Q3 results (Q3 Ebitda $222M topped the $166M est.) and put the company well on track to exceed prior guidance of 2020 adj. EBITDA in the $520-$560 million range (prompting an upgrade at Wells Fargo after results)

·     VERU +15%; posts Q2 loss of 1 cent/share less than the est of 4 cents/share; rev of $9.9 mln misses est of $11 mln – on Tuesday, VERU received FDA nod to initiate a mid-stage clinical trial to assess the efficacy of its oral drug VERU-111 to combat COVID-19



·     APA -6%; as energy related stocks pressured early, among top decliners in the S&P 500

·     BLUE -1%; company and BMY announced they received a Refusal to File letter from the FDA regarding the BLA for idecabtagene vicleucel for patients with heavily pre-treated relapsed and refractory multiple myeloma

·     CYBR -4%; beat Wall Street’s earnings expectations but Q2 revs ($95M-$105M vs. est. $109.7M) and profit disappoint while withdrew its full-year guidance

·     INFN -18%; as qtly sales beat but margins collapsed – Citi noted gross margin of 28.3% was meaningfully below consensus of 32.3% citing an early pull-in of a large subsea contract that spanned 19 countries

·     KIM -5%; along with weakness in other mall and office REITs (SLG) following the recent warnings from health officials (Fauci yesterday) of reopening the economies too soon

·     PBPB -11%; after Q1 results as comp sales fell (-10.1%) and posted an earnings shortfall


·     BlackRock (BLK) 28.753M share Secondary priced at $420

·     Insulet (PODD) 2.37M share Spot Secondary priced at $211

·     MGE Energy (MGEE) 1.3M share Spot Secondary priced at $56.00

·     MyoKardia (MYOK) 5.25M share spot secondary prices at $105.00

·     Q2 Holdings (QTWO) 4.118M share Spot Secondary priced at $76.50

·     Zillow (Z) 8M share Secondary priced at $48.00


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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