{"id":12654,"date":"2020-05-06T09:57:35","date_gmt":"2020-05-06T14:57:35","guid":{"rendered":"https:\/\/www.eoption.com\/2020\/05\/06\/mid-morning-look-may-06-2020\/"},"modified":"2020-05-06T09:57:35","modified_gmt":"2020-05-06T14:57:35","slug":"mid-morning-look-may-06-2020","status":"publish","type":"post","link":"https:\/\/www.eoption.com\/mid-morning-look-may-06-2020\/","title":{"rendered":"Mid-Morning Look: May 06, 2020"},"content":{"rendered":"
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Mid-Morning Look<\/o:p><\/span><\/b><\/p>\n

Wednesday, May 06, 2020<\/span><\/b><\/o:p><\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n
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Index<\/o:p><\/span><\/p>\n<\/td>\n

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Up\/Down<\/o:p><\/span><\/p>\n<\/td>\n

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%<\/o:p><\/span><\/p>\n<\/td>\n

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Last<\/o:p><\/span><\/p>\n<\/td>\n

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DJ Industrials<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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82.53<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.35%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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23,965<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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S&P 500<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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13.04<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.45%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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2,881<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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Nasdaq<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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107.89<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1.23%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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8,917<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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Russell 2000<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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2.99<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.23%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,276<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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U.S. equities looked like they were on pace for a third day of strong gains, as the ongoing optimism\/hope spreads that the economy is starting to reopen…but stocks quickly reversed, turning lower led by financials and transportation stocks. Employment at U.S. companies plummeted in April by the most on record dating to 2002 as private payrolls dropped by -20.2 million from a month earlier, according to ADP<\/span> Research (in-line with the expected -20.5M jobs lost figure – ahead of the nonfarm payroll report Friday). President Trump overnight stressed the importance of people getting back to work last night. Earnings taking center stage this morning with names like GM<\/span> rising on earnings while Dow component DIS<\/span> results disappointed. Treasury prices are pulling back as the 10-year yield hits its highest levels in about three-weeks as the U.S. Treasury increased the amount of debt to auction to a record $96B. Oil prices pull back from early gains after rising a 6th<\/sup> straight session yesterday. Early losses in financials and transportation stocks dragging down major averages off highs. Note today marks the 10-year anniversary of the “flash crash”. Markets continue to reflect caution about the prospects for the global economy and the potential for more fatalities from coronavirus as some countries experiment with easing restrictions on business and social activity. Treasury market’s fall as the 10-year yield breaks out of its 2-week trading range (0.55%-0.67%) with the 10-yr up 6 bps to 0.725% while the 30-yr yield jumps 7 bps to top 1.4% (first time above that level since April 15th).<\/o:p><\/p>\n

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Economic Data<\/o:p><\/p>\n

·     <\/span><\/span><\/span>The U.S. ADP private payroll data for April<\/b>, a gauge of private-sector employment, registered a slightly smaller drop in payrolls than expected but was still startling showing over -20M people lost jobs. The government’s April employment disclosure comes on Friday, and economists forecast the jobs report will show that employers shed 22 million nonfarm payroll jobs.<\/o:p><\/p>\n

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Macro<\/o:p><\/span><\/p>\n<\/td>\n

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Up\/Down<\/o:p><\/span><\/p>\n<\/td>\n

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Last<\/o:p><\/span><\/p>\n<\/td>\n

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WTI Crude<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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-0.80<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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23.76<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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Brent<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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-1.00<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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29.97<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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Gold<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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-17.70<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,692.90<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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EUR\/USD<\/o:p><\/span><\/b><\/p>\n<\/td>\n

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-0.0047<\/o:p><\/span><\/p>\n<\/td>\n

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1.0793<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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JPY\/USD<\/o:p><\/span><\/b><\/p>\n<\/td>\n

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-0.47<\/o:p><\/span><\/p>\n<\/td>\n

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106.10<\/o:p><\/span><\/p>\n<\/td>\n<\/tr>\n

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10-Year Note<\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.066<\/o:p><\/span><\/p>\n<\/td>\n

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0.728%<\/o:p><\/span><\/p>\n<\/td>\n<\/tr>\n

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Sector Movers Today<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Internet; PINS<\/span><\/b> shares tumble after the company beat revenue and user-growth expectations, but said that costs tend to follow user growth rather than revenue, which contributes to margin pressure in the current environment; SNAP<\/span><\/b> downgraded to sell from neutral at Citigroup with $14 tgt as believe investor expectations for 2020-21 revenues are too high; SHOP<\/span><\/b> posted Q1 EPS and rev beat lifting shares sharply while MELI <\/span><\/b>rises on its results; CARS<\/span><\/b> shares jump after Q1 results topped expectations due to a substantial reduction of expenses<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Media & Telecom movers; DIS<\/span><\/b> took a $1.4B hit to profit, mostly due to its shuttered theme parks amid coronavirus-led lockdowns while said it would reopen Shanghai Disneyland to a reduced number of visitors next week but it is unclear when its other parks would reopen (EPS<\/span> was 60c vs. est. 86c on slightly better Q1 revenue while Disney+ subs rose to 54.5M from 50M a month ago; the NYT<\/span><\/b> adds 587,000 digital subscribers in quarter, most ever while noting advertising to fall as much as 55% in second quarter<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Chemicals; DOW <\/span><\/b>was downgraded to neutral from buy at UBS and revise estimates lower for DOW<\/span>, EMN<\/span>, HUN<\/span>, KRA<\/span>, LYB<\/span><\/b>, and WLK <\/span><\/b>and alter our price targets as many companies noted both volume and margin impacts; PPG<\/span><\/b> was upgraded to overweight at JPMorgan as think PPG’s combination of cyclical recovery and good free cash flow generation is likely to lead to outperformance at lower risk; VNTR <\/span><\/b>jumps after posting surprise Q1 EPS profit vs. est. loss on slight rev beat while estimates Q2 TiO2 segment volume to decline 15% to 20% QoQ<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Casino & Leisure movers; NCLH<\/span><\/b> 36.364M share Secondary priced at $11.00 saying now expects to have approximately $3.5 billion of liquidity after the completion of transactions; in gaming at SunTrust, AGS <\/span><\/b>downgraded to hold from buy and cut tgt to $4 from $14 as concerned over higher relative exposure to a challenged North America gaming market while the company is still recovering from strategic missteps; downgraded IGT<\/span><\/b> to hold and tgt cut to $8 from $16 as see a shrinking FCF generation window\/increasing government budgets heighten Italy tax risks and cuts SGMS<\/span><\/b> tgt to $15 from $32; gym PLNT<\/span><\/b> Adj. EPS of $0.16 was down 54% y\/y and well short of consensus of $0.34 and total revenue fell 15% y\/y to $127M, also below consensus of $154M following forced gym closures in March<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Autos; GM<\/span><\/b> shares rise after 1Q adj EPS $0.62 vs. est. $0.30 on net sales $32.71B vs. est. $31.74B, adj EBIT $1.2B, ended qtr with $33.4B automotive liquidity, says extended $3.6B under 3-yr revolver\/reports adjusted EBIT of $1.25B vs. $1.41B consensus for Q1; NIO<\/span><\/b> delivered 3,155 vehicles in April 2020, +105.8% sequentially and +180.7% Y\/Y; UBER<\/span><\/b> said that it plans to lay off 3,700 full-time employees in customer-support and recruiting roles as the company deals with a steep drop off in rides volume due to COVID-19; DLPH <\/span><\/b>rises after amended terms of M&A deal with BWA <\/span><\/b>to acquire them and the transaction is on track to close in the second half of 2020<\/o:p><\/p>\n

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Stock GAINERS<\/o:p><\/span><\/p>\n

·     <\/span><\/span><\/span>ATVI <\/span><\/b>+5%; reports Q1 above views and raises FY20 revenue and profit forecast as games such as “Call of Duty” get boost from people stuck indoors<\/o:p><\/p>\n

·     <\/span><\/span><\/span>BYND <\/span><\/b>+16%; after earnings and sales beat ($97M vs. est. $88M) on better gross margins as UBS noted Q1 gross margin of 38.8% (vs.~31% est.) flexed greater leverage than expected<\/o:p><\/p>\n

·     <\/span><\/span><\/span>CLVS<\/span><\/b> +16%; reported a 3rd straight quarter of solid Rubraca growth, driven by growing US revenues(reported 1Q20 Rubraca sales of $42.6M (+8.3% Q\/Q) vs consensus of $41.3M)<\/o:p><\/p>\n

·     <\/span><\/span><\/span>DLPH<\/span><\/b> +13%; rises after amended terms of M&A deal with BWA to acquire them and the transaction is on track to close in the second half of 2020<\/o:p><\/p>\n

·     <\/span><\/span><\/span>GM<\/span><\/b> +6%; after 1Q adj EPS $0.62 vs. est. $0.30 on net sales $32.71B vs. est. $31.74B, adj EBIT $1.2B, ended qtr with $33.4B automotive liquidity, says extended $3.6B under 3-yr revolver<\/o:p><\/p>\n

·     <\/span><\/span><\/span>NTNX <\/span><\/b>+15%; as expects Q3 revenue between $312M-$317M, up 8% to 10% Y\/Y, compared to consensus of $308.4M as growth rate reflects the top line compression resulting from ongoing transition to a subscription business model and away from selling hardware<\/o:p><\/p>\n

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Stock LAGGARDS<\/o:p><\/span><\/p>\n

·     <\/span><\/span><\/span>EA <\/span><\/b>-5%; reported March qtr. results ahead of consensus driven by Apex Legends and Sims 4 with EPS of $1.08 on rev of $1.21B vs Street at $0.97 on $1.18B but initial FY21 EPS outlook of $4.90 is below consensus at $4.96<\/o:p><\/p>\n

·     <\/span><\/span><\/span>MAT <\/span><\/b>-10%; after posting a worse-than-expected sales decline, which was in contrast to the 51% sales growth reported by rival HAS prior<\/o:p><\/p>\n

·     <\/span><\/span><\/span>MYGN<\/span><\/b> -9%; shares fall after reported 3Q20 revenue of $164.0M (Street: $167.4M), and adj. EPS of ($0.08) (Street: $0.01) as the COVID-19 pandemic has negatively impacted all aspects of Myriad’s business<\/o:p><\/p>\n

·     <\/span><\/span><\/span>PINS<\/span><\/b> -13%; after the company beat revenue and user-growth expectations, but said that costs tend to follow user growth rather than revenue, which contributes to margin pressure in the current environment<\/o:p><\/p>\n

·     <\/span><\/span><\/span>VNO <\/span><\/b>-5%; downgraded to sell at Stifel following earnings citing too many challenges ahead<\/p>\n<\/div>\n

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