{"id":12752,"date":"2020-05-27T09:50:08","date_gmt":"2020-05-27T14:50:08","guid":{"rendered":"https:\/\/www.eoption.com\/2020\/05\/27\/mid-morning-look-may-27-2020\/"},"modified":"2020-05-27T09:50:08","modified_gmt":"2020-05-27T14:50:08","slug":"mid-morning-look-may-27-2020","status":"publish","type":"post","link":"https:\/\/www.eoption.com\/mid-morning-look-may-27-2020\/","title":{"rendered":"Mid-Morning Look: May 27, 2020"},"content":{"rendered":"
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Mid-Morning Look<\/o:p><\/span><\/b><\/p>\n

Wednesday, May 27, 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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153.84<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.62%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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25,148<\/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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-6.33<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.21%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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2,985<\/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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-144.90<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1.55%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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9,193<\/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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11.88<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.85%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,404<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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U.S. equities are mixed as strength in the financials (GS<\/span>, JPM<\/span>, AXP<\/span>) helped lead the Dow Jones Industrial Average higher, further past the 25,000 level, while the tech heavy Nasdaq Composite underperforms for a second day as it appears investors are buying YTD<\/span> losers (retail, financials, airlines) and selling winners YTD<\/span> (large cap tech, software, Medtech and biotech) for a second day. Optimism has been growing that economic activity is gathering steam while expectations are rising that govt’ authorities may offer more stimulus as soon as June to bolster the recovery from the coronavirus impact. Reports indicated that the Trump administration is examining proposals to provide cash incentives to encourage unemployed Americans to return to work. For the time being, the trade tensions that dominated headlines last week between the U.S. and China have taken a back seat as markets churn higher. WTI<\/span> crude prices edge lower after rising for seven of the past eight sessions. Weekly Investor Intelligence poll shows that newsletter writers considered bullish rises for the eighth time in the last nine weeks to 50.5% from 49.0%. Bulls remain below their February 19 high of 54.7%. Bearish sentiment falls for a 9th week (longest losing streak since 10 in a row in 1998) to 23.8% versus 24.1% last week and those expecting a correction view slips to 25.7% from 26.9% (generally considered a contra-indicator).<\/o:p><\/p>\n

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Treasuries, Currencies and Commodities<\/o:p><\/p>\n

·     <\/span><\/span><\/span>In currency markets, the U.S. dollar attempting to rebound after recent losses as investors have pulled out of safe haven assets given the extended rotation into riskier stocks. The bounce in the buck coupled with profit taking has commodity prices lower with gold and oil slipping after recent strength. Treasury market’s rally as yields pare recent gains as the 10-year yield falls back below 0.7% (but has been in a fairly narrow range. Lone piece of economic data today was “less bad” which has been the common theme over the last few weeks.<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Richmond Fed’s May manufacturing index<\/b> survey at -27 vs -53 last month and better than the forecast for a drop to -40; Shipments rose to -26 after -70 the prior month; new order volume increased to -35 after -61 the prior month; order backlogs rose to -33 after -42 the prior month<\/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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-1.41<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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32.94<\/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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-01.46<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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34.71<\/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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-20.30<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,707.90<\/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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0.0008<\/o:p><\/span><\/p>\n<\/td>\n

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1.099<\/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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0.24<\/o:p><\/span><\/p>\n<\/td>\n

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107.78<\/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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-0.017<\/o:p><\/span><\/p>\n<\/td>\n

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0.678%<\/o:p><\/span><\/p>\n<\/td>\n<\/tr>\n

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

·     <\/span><\/span><\/span>Restaurants; JACK <\/span><\/b>upgraded to Neutral from Sell at Goldman Sachs and raised the price target to $66, up from $42 as they see evidence that SSS momentum and improving franchisee economics have the potential to re-accelerate unit growth; pizza chains active as DPZ<\/span><\/b> said store sales for the first 8 weeks of Q2 from U.S. stores rose 14% while PZZA’s<\/b> comparable sales up 33.5% in North America from April 27 to May 24; WING<\/span><\/b> was removed from Best Ideas, remain Outperform at Wedbush saying near term, they believe comp sales growth expectations have been appropriately reset post Q2 to-date commentary<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Housing & Building Products; after strong New Home Sales data yesterday helped the homebuilder sector (TOL<\/span>, PHM<\/span>, KBH<\/span>, MTH<\/span>, LEN<\/span><\/b>) , data today showed that U.S. applications for home mortgages jumped last week, in a sixth straight weekly increase. The Mortgage Bankers Association (MBA<\/span>) said on Wednesday its seasonally adjusted Purchase Index increased 8.6% from a week earlier. On an unadjusted basis, the index rose 7.4% from the prior week and was 9% higher compared to the same week a year ago. It was the sixth consecutive weekly gain and a 54% surge since early April; in building products, FBHS<\/span>, BLD<\/span>, OC<\/span>, MHK<\/span>, IBP<\/span><\/b> tgts raised at Nomura saying construction activity fell -20% YoY, but May could mark the bottom<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Software movers; earnings expected tonight for ADSK<\/span><\/b> in software, CRM<\/span>, ZS<\/span>, VEEV<\/span>, VMW<\/span>, WDAY<\/span><\/b> and OKTA<\/span><\/b> tomorrow night (5\/28); BILI <\/span><\/b>upgraded to Overweight at Morgan Stanley and raise PT to $40 from $27 as accelerated MAU growth in 1Q and expanding TAM could drive revenue estimate beats from 2Q onwards, and sustain the fastest growth among peers for longer; OOMA<\/span><\/b> posted a Q1 top\/bottom line beat and delivered 54% year-over-year subscription revenue growth for Ooma Business with guidance coming in above consensus as well<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Hardware & Component news; ST <\/span><\/b>upgraded to equal-weight at Morgan Stanley saying while a path to a recovery is uncertain, weak fundamentals now appear better reflected in estimates that have been reset harder than peers and a stock that has meaningfully underperformed; HPE <\/span><\/b>downgraded to hold from buy at Argus after posted a poor fiscal 2Q20 and announced another significant restructuring program; KEYS shares slipped early after its Q2 results fell short of consensus views (Q2 EPS 78c vs. est. $1.13 and revenue $895M vs. est. $1.01B); earnings tonight for HPQ<\/span>, NTNX<\/span>, BOX<\/span><\/b> and NTAP<\/span><\/b> tonight in hardware\/storage sector<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Internet; TWTR <\/span><\/b>and FB <\/span><\/b>shares focus after President Trump tweeted that “Republicans feel that Social Media Platforms totally silence conservative’s voices. We will strongly regulate, or close them down, before we can ever allow this to happen”; AMZN<\/span><\/b> is in advanced talks to acquire Zoox Inc. in a move that would expand the company’s reach in autonomous vehicle technology, WSJ reported overnight; VIPS<\/span><\/b> said Q1 revenue fell 12% to 18.79 billion Chinese yuan ($2.63 billion) but exceeds VIPS’ forecast of a decline of 15% to 20%\/expects Q2 revenue growth rate between 0% and 5%; PINS<\/span><\/b> was downgraded to hold from buy following 1Q20 results at Argus noting Pinterest reported slowing user growth during 1Q20<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>KSS <\/span><\/b>+6%; as retailers pacing early gains for the S&P with JWN<\/span>, PVH<\/span>, GPS<\/span><\/b> all sharply higher<\/o:p><\/p>\n

·     <\/span><\/span><\/span>MRSN<\/span><\/b> +34%; as reported interim data from its Phase 1 study of XMT-1536 in patients with ovarian cancer and non-small-cell lung adenocarcinoma<\/o:p><\/p>\n

·     <\/span><\/span><\/span>RL <\/span><\/b>+3%; reported wider-than-expected Q4 losses (adj EPS loss 68c vs. est. loss 26c) while revs fell to $1.27B from $1.51B last year but just ahead of the $1.26B estimate<\/o:p><\/p>\n

·     <\/span><\/span><\/span>SDC<\/span><\/b> +6%; after joining Anthem Blue Cross and Blue Shield’s Ortho@Home, its teledentistry orthodontia program\/SDC is offering remote dental care and clear aligner therapy to members of Anthem Dental Prime and Complete networks<\/o:p><\/p>\n

·     <\/span><\/span><\/span>STNE <\/span><\/b>+23%; after posting $37.6B total payment volume in Q1 despite COVID-19, up 42.1% in 2019 and Q11 revenue stands at $716.8M, a 33.8% increase year-over-year while warns it expects greatest impact from COVID-19 in Q2<\/o:p><\/p>\n

·     <\/span><\/span><\/span>TSCO<\/span><\/b> +5%; after the company said it expects “record-breaking sales and earnings” for Q2, including comparable sales growth of 20%-25% and guides Q2 EPS $2.45-$2.65 vs. est. $1.77<\/o:p><\/p>\n

·     <\/span><\/span><\/span>VIPS<\/span><\/b> +2%; Revenues came in ahead of consensus and guidance at CNY18.79B vs. cons CNY17.96B and guidance of CNY17.1-18.1B. GMV for the quarter came in at CNY28.9B vs. year-ago CNY33.8B. VIPS guided Q2 revenues to CNY22.7-23.8B, above consensus<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>IRWD<\/span><\/b> -9%; said it and partner ABBV <\/span><\/b>would stop working on developing a therapy aimed at patients experiencing pain tied to irritable-bowel syndrome as data from a Phase II trial evaluating a therapy called MD-7246 didn’t meet its primary or secondary endpoints<\/o:p><\/p>\n

·     <\/span><\/span><\/span>KEYS<\/span><\/b> -5%; after its Q2 results fell short of consensus views (Q2 EPS 78c vs. est. $1.13 and revenue $895M vs. est. $1.01B)<\/o:p><\/p>\n

·     <\/span><\/span><\/span>LJPC<\/span><\/b> -25%; after privately held Amivas LLC receives U.S. FDA approval for IV artesunate product for treatment of severe malaria, the only drug approved for this indication in U.S.\/FDA will not approve another sponsor’s marketing application for same drug for same use or indication within 7 years of initial approval, co says, citing FDA regulations<\/o:p><\/p>\n

·     <\/span><\/span><\/span>MRNA<\/span><\/b> -11%; after as STATNews reports that top five executives sold more than $89 million of stock so far this year, without saying how it obtained the information<\/o:p><\/p>\n

·     <\/span><\/span><\/span>RCUS<\/span><\/b> -9%; and GILD<\/span><\/b> entered into a 10-year partnership to co-develop and co-commercialize RCUS’s pipeline\/GILD’s $200M equity investment offers $33.54 per Arcus share (shares of RCUS fell as market had hopes of potential straight deal)<\/o:p><\/p>\n

·     <\/span><\/span><\/span>REGN<\/span><\/b> -2%; 11.83M share Secondary priced at $515.00<\/o:p><\/p>\n

·     <\/span><\/span><\/span>TWTR<\/span><\/b> -4%; and FB <\/span><\/b>shares focus after President Trump tweeted that “Republicans feel that Social Media Platforms totally silence conservative’s voices. We will strongly regulate, or close them down, before we can ever allow this to happen”;<\/p>\n<\/div>\n

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