{"id":12736,"date":"2020-05-21T15:09:28","date_gmt":"2020-05-21T20:09:28","guid":{"rendered":"https:\/\/www.eoption.com\/2020\/05\/21\/market-review-may-21-2020\/"},"modified":"2020-05-21T15:09:28","modified_gmt":"2020-05-21T20:09:28","slug":"market-review-may-21-2020","status":"publish","type":"post","link":"https:\/\/www.eoption.com\/market-review-may-21-2020\/","title":{"rendered":"Market Review: May 21, 2020"},"content":{"rendered":"
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Closing Recap<\/o:p><\/span><\/b><\/p>\n

Thursday, May 21, 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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-101.78<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.41%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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24,474<\/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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-23.10<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.78%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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2,948<\/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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-90.89<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.97%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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9,284<\/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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0.63<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.05%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,347<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n


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

 <\/o:p><\/p>\n

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

\u00b7     <\/span><\/span><\/span>U.S. stocks end lower today after today’s data showed the economy is continuing to contract and President Trump ratchets up tensions with China. Late day U.S. Senators said to offer a new bill sanctioning China over Honk Kong security law in just the latest ramp up of tensions. The headlines followed reports yesterday that the U.S. Senate passed legislation that could ban some Chinese companies from being listed on U.S. stock exchange. The headlines took a little steam out of the recent stock market rally as energy, technology, materials and healthcare lagged. Data this morning disappointed as initial jobless claims dip to 2.4M, bringing total job losses over the past eight weeks to more than 39M, while April leading indicators fell 4.4% but was not as bad as the -5.9% expected. The dollar bounced, sending old futures lower and oil rose a 6th<\/sup> straight trading session. Markets have been buoyed by State reopening\u2019s of their economies, with all 50-states to this point with some measures in place. Retailers dominated earnings today with shares of BJ, LB, SCVL, TJX advancing on results while BOOT, BBY slip (though many retailers very active on the day. Semiconductors were weak (down over 2%) following a tremendous run from March lows, slipping ahead of NVDA results this evening. <\/o:p><\/p>\n

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

\u00b7     <\/span><\/span><\/span>Weekly jobless claims<\/b> reported at 2.438M vs. est. 2.4M (prior week unrevised down to 2.687M from 2.981M) as continuing claims jump to 25.07M vs. est. 24.5M (prior week to 22.54M from 22.83M; 4-wk avg fell to 3,042,000 may 16 week from 3,543,000 prior week (previous 3,616,500) <\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Philly Fed Manufacturing for May<\/b> reported at down (-43.1) vs. est. down (-40) and compared to down (-56.6) prior month; six-month outlook rose to 49.7 vs 43.0<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Markit US Manufacturing PMI<\/b>, May-P flash composite PMI at 36.4 (vs 27.0 in April), May flash services PMI at 36.9 (vs. 26.7 in April); flash composite new orders index for May at 36.1 vs final April 26.4 and flash new orders index for May at 34.2 vs. final April 27.7<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Leading Index for April dropped<\/b> (-4.4%) which was better than the expected decline of (-5.4%), while the prior month was revised to down (-7.4%) from (-6.7%)<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Existing Home Sales for April fell<\/b> -17.8% to 4.33M (after falling -8.5% last month), slightly above the 4.22M estimate while March was unrevised from 5.27M; there was 4.1 months\u2019 supply in April vs. 3.4 in March (housing inventories down -19.7% from year ago); median home price rose 7.4% from last year to $286,800<\/o:p><\/p>\n

 <\/o:p><\/p>\n

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

\u00b7     <\/span><\/span><\/span>Oil prices end higher<\/b> as WTI crude gains 43c or 1.28% to settle at $33.92 per barrel (10-week highs), rising for a 6th<\/sup> straight day (longest streak since 2\/19) supported by lower U.S. crude inventories, OPEC-led supply cuts and recovering demand as governments ease restrictions on people’s movements imposed due to the coronavirus crisis. Prices gained nearly 5% yesterday after crude inventories fell for a second week, and there was a record draw from the storage hub at Cushing, Oklahoma, according to EIA data. <\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Gold prices tumbled<\/b>, falling -$30.20 or 1.7% to settle at $1,721.90 an ounce, its lowest settlement in over a week as rising hopes for a recovery from economic damage inflicted by coronavirus-induced restrictions weighed on the precious metal. Prices had been rallying the last few weeks given monetary and stimulus measures as well as a pullback in the dollar, but the buck bounced off morning lows amid mixed economic data (still dismal, but less bad than feared). Gold prices climbed to their highest since October 2012 at $1,764.55 earlier this week, mainly driven by monetary and fiscal stimulus, recession fears and U.S.-China tensions.<\/o:p><\/p>\n

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Currencies & Treasuries<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>The U.S. dollar<\/b> bounced after falling every day this week vs. major currencies as the Japanese yen slipped as the incoming data was \u201cless-horrible\u201d than expected. As countries break their quarantines and get back to work results will most likely be mixed, as fresh outbreaks remain a fear with investors possibly looking to the safety of the US dollar despite the weak data. The euro slipped midday after briefly topping the 1.10 level (best in 3-weeks). Treasury prices<\/b> were little changed as the 10-year yield held around 0.67% after slipping yesterday and the 30-year yield remained around the 1.40% level. <\/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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0.43<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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33.92<\/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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0.31<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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36.06<\/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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-30.20<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,721.90<\/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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-0.0018<\/o:p><\/span><\/p>\n<\/td>\n

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1.0962<\/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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0.15<\/span><\/o:p><\/span><\/p>\n<\/td>\n

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107.69<\/span><\/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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-0.014<\/o:p><\/span><\/p>\n<\/td>\n

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0.665%<\/o:p><\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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 <\/o:p><\/p>\n

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

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

\u00b7     <\/span><\/span><\/span>Retailers; BBY<\/span><\/b> posted a Q1 EPS beat of 67c (vs. est. 45c) on sales $7.92B, down -6.6% YoY while Q1 comp sales fell (-5.3%) vs. est. (-10.8%)\/U.S. online sales up 155%; UAA<\/span><\/b> said it plans $400 mln convertible debt offering; BJ<\/span><\/b> reports higher-than-expected Q1 profit and revenue, as same-store sales jump 19.9% and rose 27%, excluding the impact of gasoline sales; Macy’s (M)<\/b> said it expects Q1 sales $3.0B-$3.03B, down from $5.50B last year and below the $3.60B estimate while also said it expects an operating loss of $905M-$1.1B; BOOT<\/span><\/b> Q1 EPS and sales miss saying comps turned negative, declining 8% in third week of March and more than 50% last two weeks of qtr; TJX<\/span><\/b> active on earnings while saying is seeing very strong initial sales overall at stores across all states and countries that have been reopened at least a week; LB <\/span><\/b>rises after better Bath & Body Works comps being a standout performer and said was committed to establish Bath, Body Works as pure-play company, as well as plan to close some Victoria Secret stores<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Consumer Staples & Restaurants; KDP <\/span><\/b>40M share Spot Secondary priced at $27.25; HRL<\/span><\/b> attributes strong performance in grocery products during the Covid-19 pandemic to Hormel’s basic staples as consumers faced economic uncertainty\/sales of Spam products, Skippy peanut butter and Hormel Chili all increased at strong double-digit rates in the company’s F2Q; SBUX<\/span><\/b> said over the last week, they have now regained about 60-65% of prior year comparable U.S. store sales while reopening under modified operations and with reduced hours\/in China, comparable store sales have reached about 80% of prior year levels; RUTH<\/span><\/b> 5.438M share Spot Secondary priced at $8.00<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Housing & Building Products; LOW<\/span><\/b> was upgraded to buy with $149 tgt at Stifel after an impressive April quarter, including 20.4% comps in April, which continued into May helped by strong online sales; SKY <\/span><\/b>upgraded at SunTrust after earnings, Q4 adjusted EPS 14c\/$301.1M vs. est. 22c\/$312.39M; said grew Q4 sales orders by 14% through the first eleven weeks of the quarter, even as the geographies we serve were softer<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Casino & Leisure movers; CHDN<\/span><\/b> said plans to reopen Harlow\u2019s Casino Resort & Spa in Greenville and Riverwalk Casino Hotel in Vicksburg in Mississippi today; MGM<\/span><\/b> was downgraded to hold from buy at Jefferies driven by the absence of catalysts for MGM to rerate in the near term; Bank America also downgraded shares of MGM, while upgrading MGP to buy; Credit Suisse with several initiations in the casino, theme parks, cruise line, lodging sector today with outperform ratings on RCL<\/span>, NCLH<\/span>, FUN<\/span>, VAC<\/span>, HGV<\/span>, WYND<\/span><\/b>, LVS <\/span><\/b>and MTN<\/span><\/b> while cautious gaming technology (IGT<\/span>, AGS<\/span>, SGMS<\/span><\/b>); PENN shares up for a 6th straight day and up 13 of last 15 days as casino space has rallied sharply off March lows (recently announced ten casino openings)<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Services; staffing stocks MAN<\/span>, RHI<\/span><\/b> and KFY<\/span><\/b> all upgraded to Neutral from Underperform on valuation at Credit Suisse saying while believe likely mixed estimate revisions path and extreme amount of uncertainty around COVID-19 create an uneven setup in the near-term, we believe investors have largely discounted earnings expectations as evidenced by current valuation.<\/o:p><\/p>\n

 <\/o:p><\/p>\n

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

\u00b7     <\/span><\/span><\/span>Energy stocks slipped as oil prices whipped up and down after pushing higher the last few sessions on bullish inventory data, and lowered production by producing members; NOV<\/span><\/b> suspended its dividend til further notice in effort to preserve the $77M per year of cashflow; in utilities, ETR<\/span><\/b> upgraded to Outperform at BMO Capital as continue to view the industry broadly in favorable terms and believe that valuation has emerged again as a key component in stock selection within our sector. U.S. forecasters expect an above-normal 13-19 named storms during the 2020 Atlantic hurricane season, the National Oceanic and Atmospheric Administration’s (NOAA) Climate Prediction Center said on Thursday. NOAA forecasters estimate 3 to 6 major hurricanes packing winds of at least 111 miles (179 km) per hour may form.<\/o:p><\/p>\n

 <\/o:p><\/p>\n

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

\u00b7     <\/span><\/span><\/span>Bank movers; SCHW<\/span><\/b> was downgraded to Neutral from Buy at Bank America given expectation for ongoing rate headwinds as well as moderating organic growth as unemployment remains elevated and lower tgt to $35 from $40; AINV<\/span><\/b> shares rally after reporting Q4 net investment income per share of 59c and declaring a 45c per-share distribution<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Insurance; ALL<\/span><\/b> announced estimated catastrophe losses for the month of April of $632 million, pre-tax ($499Mm, after-tax)\/catastrophe losses occurring in April comprised six events at an estimated cost of $627Mm, pre-tax ($495Mm, after-tax); SLQT <\/span><\/b>28.5M share IPO priced at $20.00; overall insurance names showing strength again, with CB<\/span>, WRB<\/span>, TRV<\/span>, HIG<\/span><\/b> outperforming over the last week, and doing better than banks<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Consumer finance and lending; SQ<\/span><\/b> was downgraded to sell at UBS and reducing revs, adj. EBITDA and EPS estimates for 2020-21E primarily reflect the volume compression in Square Seller, partially mitigated by stronger performance in Cash App<\/o:p><\/p>\n

 <\/o:p><\/p>\n

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

\u00b7     <\/span><\/span><\/span>Pharma movers; AZN<\/span><\/b> has received more than $1B in U.S. funding to develop a COVID-19 vaccine with the University of Oxford and said it has supply agreements for 400M doses; AKRX<\/span><\/b> filed for voluntary protection under Chapter 11 of the U.S. Bankruptcy Code to execute an in\u2011<\/span>court sale of its business while addressing litigation-related overhangs; in cannabis sector, ACB<\/span><\/b> shares jump after buying U.S.-based Reliva LLC which sells CBD products for $40M in an all-stock deal and make additional payment of up to $45 mln based on future performance<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Biotech movers; SYBX<\/span><\/b> shares fall after announces the termination of its collaboration with ABBV <\/span><\/b>for the development of Synthetic Biotic medicines for the potential treatment of inflammatory bowel disease (IBD); EVLO<\/span><\/b> downgraded at Morgan Stanley and cuts tgt to $8 as removed atopic dermatitis from his model; GILD<\/span><\/b> and GLPG<\/span><\/b> reported topline Phase 3 SELECTION data for filgotinib in ulcerative colitis that came in slightly below fairly high expectations on efficacy; KDMN<\/span><\/b> said updated data showed more patients with chronic graft-versus-host disease responded to treatment with belumosudil (KD025)<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Medical equipment and devices; MDT <\/span><\/b>shares slip after saying delays in elective surgeries due to COVID-19 outbreak hit Q4 profit estimates, while revs fell -26.4% to $6B, below the $6.17B estimates (EPS of 58c missed the 76c est.); ABT<\/span><\/b> received Health Canada authorization under the COVID-19 Interim Order* for the ARCHITECT SARS-CoV-2 IgG test, a laboratory-based serology blood test for the detection of the antibody<\/o:p><\/p>\n

 <\/o:p><\/p>\n

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

\u00b7     <\/span><\/span><\/span>Transports; CAR<\/span><\/b> was upgraded to equal-weight from underweight w\/$15 tgt at Morgan Stanley noting the company has executed important steps (capital raising, cost cutting) to buy time to re-size the fleet\/used car prices are also improving vs. their previous concerns; ZTO<\/span><\/b> posted weaker Q1 results as earnings and revs missed, prompting a downgrade to neutral from buy at Bank America; strength in airlines ALK<\/span>, UAL<\/span>, JBLU<\/span><\/b> while rails giving back some of yesterday gains with 1% declines for NSC<\/span>, KSU<\/span>, CSX<\/span><\/b><\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Industrials, Metals & Materials; defense stocks strong early, led by gains in BA<\/span><\/b> following positive sector initiations at RBC Capital; Dalian iron ore futures rise for a seventh straight session, closing more than 2% to 722 yuan\/ton ($101.67), as concerns about tightening supply from coronavirus-hit Brazil outweighed the bleak outlook for global steel demand (CLF<\/span>, RIO<\/span>, BHP<\/span>, VALE<\/span><\/b>); CLF<\/span><\/b> said AK Steel raising spot market base prices for carbon flat-rolled steel products by minimum of $40\/ton<\/o:p><\/p>\n

 <\/o:p><\/p>\n

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

\u00b7     <\/span><\/span><\/span>Internet; BIDU<\/span><\/b> shares slumped after Reuters reported the Chinese search engine giant is considering delisting from the U.S. Nasdaq and moving to an exchange closer to home to boost its valuation amid rising tension between the U.S. and China \u2013 the move followed news yesterday of the tighter U.S. scrutiny of Chinese companies listed in the country; BILI <\/span><\/b>was upgraded to overweight at JPMorgan; in online travel, EXPE<\/span><\/b> shares bounce after saying demand recovering in May as cancellation rates stabilize, overshadowing a bigger-than-expected quarterly loss in the face of the coronavirus crisis (posted 85% YoY decline for bookings in March)<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Semiconductors; Semis broke above short-term resistance yesterday and into the gap from 2\/24 when they first broke below their 200-DMA \u2013 today however the group was sharply lower following the recent outperformance and better earnings\/news in the sector; NVDA<\/span><\/b> to report earnings after the close tonight<\/o:p><\/p>\n

\u00b7     <\/span><\/span><\/span>Hardware & Software movers; HUYA <\/span><\/b>downgraded to neutral at Credit Suisse post earnings saying the co may need to invest in revenue sharing\/sales and marketing to attract more users in order to compete with Bixin; LOGI<\/span><\/b> was downgraded to Neutral from Overweight at JPMorgan based on valuation, with the stock hitting our price target and sitting at all-time highs; SSYS<\/span><\/b> was upgraded to neutral at JPMorgan saying the stock looks expensive based on near-term revenues, but SSYS is clearly under-earning at present, since the company is investing in new products during the COVID-19 downturn, that should restore growth in 2022; TTWO<\/span><\/b> beats on eps and rev, but slips on lowered FY21 guidance after recent strength during stay-at-home period<\/p>\n<\/div>\n

<\/p>\n