{"id":12691,"date":"2020-05-12T15:09:15","date_gmt":"2020-05-12T20:09:15","guid":{"rendered":"https:\/\/www.eoption.com\/2020\/05\/12\/market-review-may-12-2020\/"},"modified":"2020-05-12T15:09:15","modified_gmt":"2020-05-12T20:09:15","slug":"market-review-may-12-2020","status":"publish","type":"post","link":"https:\/\/www.eoption.com\/market-review-may-12-2020\/","title":{"rendered":"Market Review: May 12, 2020"},"content":{"rendered":"
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Closing Recap<\/o:p><\/span><\/b><\/p>\n

Tuesday, May 12, 2020<\/span><\/b><\/o:p><\/span><\/b><\/p>\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<\/tr>\n

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

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-457.21<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1.89%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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23,764<\/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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-60.20<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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2.05%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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2,870<\/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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-189.79<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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2.06%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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9,002<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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

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-45.70<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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3.46%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,275<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n


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 <\/o:p><\/p>\n

Equity Market Recap<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>U.S. stocks ran out of gas, sliding to lows of the day into the close and snapping the 6-day win streak for the tech heavy NASDAQ, while all major averages declined over 1% after U.S. top infectious disease official Anthony Fauci reiterated his warning against reopening the economy too soon amid the coronavirus pandemic. Stocks turned south shortly after and Treasury prices resumed higher after Fauci stated reopening too quickly could risk triggering \u201can outbreak that you might not be able to control\u201d and \u201ceven set you back on the road to economy recovery.\u201d The news stood out in an overall quiet day as earnings reports begin to slow and economic data was once again weak. Data today showed tame inflation with consumer prices falling (-0.8%) and core prices (ex food & energy) falling the most on record by (-0.4%). Stocks drifted lower in the afternoon, led by declines in retailers and REITs after Fauci\u2019s warning on risks of new outbreaks of coronavirus and possibly a broad resurgence if states and cities reopen too quickly (comments coming on the heels of two of the largest mall operators SPG\/MAC saying they would open some malls next week). In merger news, shares of GRUB soared after Bloomberg first reported midday that UBER made an offer to acquire the food delivery service, later picked up by the WSJ as well. Airlines took a hit after Boeing CEO David Calhoun provided a dire outlook for the industry saying he believed airline traffic levels won\u2019t be back to even 25% in September, and \u201cmaybe\u201d only approach 50% by the end of the year. The news offset data showing traveler throughput at Transportation Security Administration checkpoints was 215,645 yesterday, a week-over-week improvement from last Monday when 163,692 people went through TSA checkpoints showing that more people are beginning to fly\/travel, which has helped boost oil prices over the last 2-weeks. Oil prices ended at 5-week highs, rising nearly 7% on hopes for rising demand. On the COVID-19 front, hard hit NY and NJ continued to improve as NJ sees the fewest new cases in more than 6-weeks while NY cases rise only 0.4% vs. prior week 7-day average of 0.8%. <\/o:p><\/a><\/p>\n

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

\u00b7     <\/span><\/span><\/span>Consumer Prices for April fell<\/b> (-0.8%), in line with estimates while core prices (ex food & energy) fell (-0.4%) – the biggest drop on record – vs. est. (-0.2%); CPI YoY for April rose 0.3% vs. est. 0.4% and core prices rose 1.4% vs. est. 1.7%. <\/o:p><\/p>\n

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Commodities<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Oil prices ended the day higher<\/b> with WTI crude jumping $1.64 or 6.8% to settle at $25.78 per barrel, continuing its push to best levels in weeks amid expectations that production cuts will help alleviate a glut of crude supplies from the pandemic-related drop in global demand. Saudi Arabia, Kuwait and the United Arab Emirates have pledged output cuts beyond their share of the OPEC+ agreement just yesterday. Gold prices rise<\/b> $8.80 or 0.5% to settle at $1,706.80 an ounce after posting declines the prior two-sessions, as commodity prices got a boost from a weaker U.S. dollar, as well as concerns over a slow economic recovery from shutdowns related to COVID-19. <\/o:p><\/p>\n

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

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

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

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25.78<\/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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0.35<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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29.98<\/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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8.80<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,706.80<\/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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0.0046<\/o:p><\/span><\/p>\n<\/td>\n

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1.0853<\/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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-0.46<\/o:p><\/span><\/p>\n<\/td>\n

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107.20<\/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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-0.04<\/o:p><\/span><\/p>\n<\/td>\n

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0.669%<\/o:p><\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Sector News Breakdown<\/o:p><\/span><\/p>\n

Consumer<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Retailers; PTON <\/span><\/b>shares rose after saying the company surpassed 1.0M aggregate connected fitness subscribers; WWW<\/span><\/b> announces new incremental term loans and notes offerings to be used primarily to repay borrowings under its revolving credit facility and shore up liquidity; CSPR<\/span><\/b> shares dropped after April sales growth fell short of expectations following strong trends from peers like PRPL<\/span><\/b> and Wayfair<\/o:p><\/a><\/p>\n

\u00b7     <\/span><\/span><\/span>Consumer Staples; food prices were 1.5% higher month-to-month in April and 3.5% higher compared to a year ago, as per the CPI data \u2013 Some of the categories showing price increases from March were crackers\/bread (+4.0%), ground beef (+4.8%), frankfurters (+5.7%), chicken (+5.8%), oranges (+5.6%), carbonated drinks (+4.5%), apples (+4.9%) and eggs (+16.1%) – (food stocks include: CPB<\/span>, GIS<\/span>, K<\/span>, CAG<\/span>, CALM<\/span>, POST<\/span><\/b>); IPAR<\/span><\/b> reports Q1 sales declined 17.8% on constant currency basis while sales by European based operations declined 20.6% to $114.1M and U.S. based operations declined 10.9% to $30.7M\/gross margin rate down 10 bps to 61.5%; BYND<\/span><\/b> shares rise after USDA forecasts a decline in pork production for the first time in 6 years<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Restaurants; QSR <\/span><\/b>said it is reopening its dining rooms with extra sanitation and social-distancing measures after mainly operating through drive-thru, delivery and mobile options amid the Covid-19 pandemic; CHEF<\/span><\/b> 5.6M share Spot Secondary priced at $13.25<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Housing & Building Products; ZG<\/span><\/b> announced plans to raise $1 billion through stock and convertible debt offerings\/plans include a $500 million offering of Class C common stock and $500 million in convertible senior notes due 2025; SWK<\/span><\/b> downgraded to neutral from buy at Bank America<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Auto\u2019s, Casino & Leisure movers; PENN<\/span><\/b> 16.667M share Secondary priced at $18.00; LYFT<\/span><\/b> announced offering privately $650M 5-yr convertible senior notes; HTZ<\/span><\/b> reported Q1 EBITDA of negative $243M, worse than estimates while ended the quarter with $1.0Bof gross liquidity which compares with CAR <\/span><\/b>at ~$1.625B at quarter end<\/o:p><\/p>\n

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Energy<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Energy stocks get an early bounce after prices were lifted by an unexpected commitment from Saudi Arabia to deepen production cuts in June; stock movers; CVX<\/span><\/b> was downgraded to neutral from buy at UBS as reflects the share reaching near their price target and reflecting our 2021 scenario of an oil price recovery to $47.50\/bbl; CRC<\/span><\/b> shares drop after withdrawing all of its guidance for periods after March 31 due to the high level of economic uncertainty\/says if it isn’t successful in restructuring, there is substantial doubt about its ability to continue as a going concern; WMB <\/span><\/b>was downgraded to Neutral from Outperform at Credit Suisse following recent outperformance (+24%) vs. midstream peers. <\/o:p><\/p>\n

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Financials<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Asset managers; BLK’s <\/b>largest shareholder is cashing out as PNC<\/span><\/b> will sell its $17B holding in a secondary offering, with BlackRock buying back $1.1B directly; in monthly assets under mgmt (AUM) data: 1) AB <\/span><\/b>said preliminary assets under management increased to $576 billion during April 2020 from $542 billion at the end of March; 2) BEN<\/span><\/b> preliminary month-end assets under management of $599.4 billion at April 30, 2020, compared to $580.3 billion at March 31, 2020; 3) IVZ<\/span><\/b> reported preliminary month-end assets under management (AUM) of $1,118.6 billion, an increase of 6.2% versus previous month-end; 4) LM<\/span><\/b> preliminary assets under management (AUM) of $763.1 billion as of Apr 30, 2020. This month’s AUM included long-term net outflows of $1.4 billion, driven by fixed income net outflows of $2.5 billion, partially offset by equity net inflows of $0.9 billion and alternative net inflows of $0.2 billion; 5) TROW<\/span><\/b> reported preliminary month-end assets under management of $1.13 trillion as of April 30, 2020. Client transfers from mutual funds to other portfolios, including trusts and separate accounts, were $1.4 billion in April 2020<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Services & Insurance; BHF <\/span><\/b>posted a Q1 profit beat while revenue also exceeds expectations, boosted by strength in annuities segment, which was partly driven by higher net investment income\/also temporarily suspends share repurchases ; GDOT<\/span><\/b> shares rise after reported Q4 adj EPS $0.14, beating estimates of $0.11, on better revenue of $249.3M vs. estimate of $238.5M with upbeat year EPS and Ebitda guidance<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>REITs; SPG<\/span><\/b> shares rise 8% after the biggest U.S. mall operator said it would reopen about half of its over 200 retail properties in the country by next week while smaller rival MAC<\/span><\/b> plans to reopen 35 U.S. properties by the end of May and expects to open vast majority of properties by mid-June\/SPG said it will still declare a Q2 dividend and expects to pay out 100% of its taxable income in 2020 in cash; EQIX <\/span><\/b>2.25M share Secondary priced at $665.00; LXP<\/span><\/b> 15M share Spot Secondary priced at $9.60; REXR<\/span><\/b> 6.25M share Spot Secondary priced at $39.85<\/o:p><\/p>\n

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Healthcare<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Pharma movers; ALXN<\/span><\/b> shares active after shareholder\/activist Elliott Advisors urges the company to put itself up for sale while also questions strategy to acquire PTLA<\/span><\/b> (says believes Alexion is trading at 40%-50% discount to fair value); NVAX<\/span><\/b> rises after better Q1 results and said the Coalition for Epidemic Preparedness Innovations will invest up to $384 million in the development of NVX-CoV2373, its vaccine candidate for SARS-CoV-2; AKBA<\/span><\/b> 11M share Spot Secondary priced at $12.00; MGNX<\/span><\/b> shares rise ahead of key clinical updates at American Society of Clinical Oncology (ASCO) expected later this week; DRRX<\/span><\/b> working with the FDA on the design of a double-blind, placebo-controlled, multi-center, proof-of-concept Phase 2 study to evaluate DUR-928 in approximately 80 COVID-19 patients with acute liver or kidney injury<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Biotech movers; CBAY <\/span><\/b>shares surge after saying that an independent expert panel unanimously concluded there is no evidence of liver injury induced by co’s experimental drug in a mid-stage NASH study\/CBAY to reach out to FDA as the panel recommended restarting clinical development of the drug, seladelpar (upgraded by at least four analysts); GMDA<\/span><\/b> rises after announcing positive topline results from its Phase 3 study evaluating the safety and efficacy of omidubicel, an investigational advanced cell therapy as a potential life-saving treatment option for patients in need of bone marrow transplant; ICPT<\/span><\/b> downgraded at Citigroup citing lower likelihood of success of co’s liver disease drug; GNFT <\/span><\/b>shares plunge after a Phase 3 clinical trial, RESOLVE-IT, evaluating its elafibranor in adults with nonalcoholic steatohepatitis (NASH) failed to achieve the primary endpoint; did not sufficiently separate from placebo as measured by the proportion of patients achieving NASH resolution<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Medical equipment and devices; TNDM<\/span><\/b> announced earlier offering of $250M in convertible notes; ATRC<\/span><\/b> 3.98M share Secondary priced at $44.00; QDEL<\/span><\/b> downgraded from Neutral to Underweight at JPMorgan saying competitive positioning or addressable market opportunity, which remains significant, appears priced in<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Healthcare services and providers; LH<\/span><\/b> announced that its COVID-19 at-home collection test kit is now being offered to individuals nationwide who have symptoms consistent with COVID-19 infection and individuals without symptoms who may have been exposed to the virus; WBA <\/span><\/b>is conducting a creative and media review of its global advertising account, encompassing all of the company\u2019s brands including Alliance Healthcare, Boots and Duane Reade, according to reports<\/o:p><\/p>\n

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Industrials & Materials<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Transports; BA CEO Calhoun said in an interview that "air traffic levels will not be back to 100% by September\u2026they won’t even be back to 25%\u201d\u2026"maybe by the end of the year we approach 50%" (AAL<\/span>, DAL<\/span>, UAL<\/span>, LUV<\/span>, JBLU<\/span><\/b> remain under pressure); in trucking, YRCW <\/span><\/b>shares jumped after Q1 results handily topped consensus, posting a surprise Q1 profit helped as operating expenses fell 7%<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Metals & Materials; in the steel sector, ThyssenKrupp<\/b> shares fell after it reported a widening and worse-than-forecast loss for its Q2 as sales from continuing operations fell 6% and orders dropped 10% and said a Q3 operating loss of "\u20ac1 billion cannot be ruled out; MT <\/span><\/b>80.9M share Secondary priced at $9.27; in chemical movers; ALB <\/span><\/b>was downgraded to neutral at Goldman Sachs while upgraded shares of AXTA<\/span><\/b> to buy<\/o:p><\/p>\n

 <\/o:p><\/p>\n

Technology, Media & Telecom<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Internet; GRUB<\/span><\/b> shares surged late morning after Bloomberg reported that UBER <\/span><\/b>had been said to approach the company with a takeover offer, with the report saying they could reach a deal as soon as this month https:\/\/on.wsj.com\/2Lp82Ri<\/a> <\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Semiconductors; IIVI <\/span><\/b>shares surge after delivered strong results and guidance with record orders and backlog level, highlighted by demand in transceivers being 40% above its original expectations<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Media & Telecom movers; TME<\/span><\/b> tgt cut to $14 from $16 at Morgan Stanley saying revenue growth should reaccelerate from 2Q onwards as Covid-19 subsides, but the firm expects a slower recovery in social entertainment; EB <\/span><\/b>falls following its larger than expected quarterly loss, while secures $225M term financing<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Software, Hardware & Component news; DDOG<\/span><\/b> reported a very good 1Q, with revenue and EPS coming in significantly above estimates and meaningfully raised full-year guidance, reflective of the co.’s relatively strong positioning even amid COVID-19<\/p>\n<\/div>\n

<\/p>\n