{"id":12774,"date":"2020-06-01T15:07:35","date_gmt":"2020-06-01T20:07:35","guid":{"rendered":"https:\/\/www.eoption.com\/2020\/06\/01\/market-review-june-01-2020\/"},"modified":"2020-06-01T15:07:35","modified_gmt":"2020-06-01T20:07:35","slug":"market-review-june-01-2020","status":"publish","type":"post","link":"https:\/\/www.eoption.com\/market-review-june-01-2020\/","title":{"rendered":"Market Review: June 01, 2020"},"content":{"rendered":"
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Closing Recap<\/o:p><\/span><\/b><\/p>\n

Monday, June 01, 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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91.91<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.36%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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25,475<\/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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11.42<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.38%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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3,055<\/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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62.18<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.66%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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9,552<\/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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11.34<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.81%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,405<\/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

·     <\/span><\/span><\/span>U.S. stocks rise, extending both last week\/monthly gains as the coronavirus lockdown reopening story gains more momentum, with top sector leaders today including travel, leisure, financials, energy and consumer as well as SmallCaps. Investors overlooked the negative factors that could potentially be weighing on the market including China\/US trade tensions being ramped up, the social unrest in the U.S. this weekend with riots\/looting taking place on racial tensions and of course the impact the coronavirus has had on the economy despite economies beginning to slowly open up and restrictions being lifted. This morning, reports indicated that China had told state-owned firms to halt purchases of major U.S. farm products, after Washington said it would eliminate special treatment for Hong Kong. Meanwhile in the United States, National Guard troops were deployed in many states\/Washington, D.C. in an attempt to quell protests over the death of George Floyd, a black man in police custody. The riots have put several states on notice with curfews being instituted and businesses closing in reaction to the unrest. A handful of healthcare and biotech companies active following results\/data at the American Society of Clinical Oncology (ASCO) virtual meeting this weekend. Defensive and safe-haven assets were under pressure given the bounce in global stock markets as gold and Treasury prices dip and the U.S. dollar dips to the lowest levels since mid-March after mixed economic data. Signs that the COVID-19 virus spread is slowing continued as Spain revealed no new deaths today and New York had less than 1,000 new cases, first time below 1K in 11-weeks. <\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>U.S. May Manufacturing PMI<\/b> 39.8 vs Flash Reading 39.8; Index rises to 39.8 from 36.1 in April; Year ago 50.5; Stocks of finished goods fall to 37.1 vs 38.8 in April<\/o:p><\/p>\n

·     <\/span><\/span><\/span>ISM U.S. manufacturing rises<\/b> to 43.1 in May from 41.5 in April and above the 43.8 estimate as the employment index 32.1 in May vs. 27.5 in April, new orders index 31.8 in May vs. 27.1 in April and the prices paid index 40.8 in May vs. 35.3 in April<\/o:p><\/p>\n

·     <\/span><\/span><\/span>April Construction Spending fell<\/b> (-2.9%) vs. est. down (-7.0%) while March revised to unchanged from 0.9%; Private construction fell 3.0% in April, Private residential construction fell 4.5%, Private nonresidential construction fell 1.3% and Public construction fell 2.5% in April<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Oil prices recovered<\/b>, as WTI crude finished down a nickel at $35.44 per barrel, off lows of $34.27 per barrel as prices steady after strong returns in May. The move in oil comes after an 88% rise in May, the biggest one-month increase on record (which followed the biggest monthly decline on record in April). Fresh geopolitical concerns added new sources of downside risk for the market to grapple with, headlined by an increasingly tense US-China relationship and an increasingly tense situation across major US cities<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Gold prices slip<\/b> -$1.40 to settle at $1,750.30 an ounce, off overnight highs of $1,761 but also well off its morning lows of $1,737.60 an ounce. Prices were supported by a weaker dollar, increasing friction between the U.S. and China and protests in the United States over racism. At the same point, investors continue to add to riskier bets such as stocks dulling the appeal for precious metals. The dollar fell to its lowest since mid-March, further supporting bullion prices. <\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>The U.S. dollar slides<\/b> to lowest levels since mid-March, with the buck range bound against the safe-haven Japanese yen, while sliding vs. the euro and Pound. The dollar was also lower against the Aussie, Canadian and New Zealand dollar. While stocks extend gains late afternoon moving to new highs, Treasury markets<\/b> remained in a narrow trading range all day, as the 10-year yield up only 1 bps to 0.667%. Investors not bailing on Treasuries at this point given the weak economic outlook and the ongoing efforts and easing measures the Fed has taken on to keep yields lower. <\/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<\/tr>\n

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

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

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35.44<\/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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0.48<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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38.32<\/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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-1.40<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,750.30<\/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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0.0028<\/span><\/o:p><\/span><\/p>\n<\/td>\n

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1.113<\/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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-0.23<\/o:p><\/span><\/p>\n<\/td>\n

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

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0.667%<\/span><\/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

·     <\/span><\/span><\/span>Retailers; gun-related stocks (RGR<\/span>, SWBC<\/span><\/b>) and sporting goods retailers (SPWH<\/span>, VSTO<\/span><\/b>) that sell them rose after a weekend of protests across the country following the death of George Floyd, a black Minneapolis man who died after a white police officer pressed a knee into his neck for more than eight minutes (shares of ADT<\/span>, DGLY<\/span>, AAXN<\/span><\/b> that make body cameras, as well as home security systems also rise); TGT<\/span><\/b> slipped after closing more than one hundred stores over the weekend on a temporary basis and reducing hours at other locations due to riots\/looting from the George Floyd death on Memorial Day; GPS<\/span><\/b> upgraded to neutral from underweight at JPM as thinks Old Navy stands well-positioned to benefit from disproportionate growth of value retail as a recession-resistant concept; COTY<\/span><\/b> announced an agreement to sell a majority interest in its retail hair business, which includes Wella and Clairol, to KKR & Co. for $4.3 billion; LULU<\/span><\/b> rises ahead of earnings results due next week (6\/11) – shares more than a double now off March lows to fresh all-time highs<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Consumer Staples; SAM<\/span><\/b> tgt raised from $570 to $650 and STZ <\/span><\/b>from $160 to $205 at Cowen in beverages calling them best positioned in the beer category relative to larger competitors given their below-average exposure to the on-premise channel; MNST<\/span><\/b> tgt raised to $78 at Goldman Sachs following the firm’s Memorial Day weekend convenience store retailer survey, which showed that the energy drink category is rebounding; in beauty sector, Piper upgraded shares of EL<\/span><\/b> to buy as think will be durable consumer behaviors on the other side and upped ULTA <\/span><\/b>to buy noting while Q1 results were worse vs. expectations (particularly on gross margins), they see green shoots for the industry; in food, TWNK<\/span><\/b> was upgraded at SunTrust calling it a unique way to play both the reopening of America and the Summer Road Trip 2020 while SYY <\/span><\/b>was upgraded to buy at Piper; BYND<\/span><\/b> active after YUMC<\/span><\/b> will introduce Beyond Meat’s plant-based burgers for a limited period at select KFC, Pizza Hut and Taco Bell outlets in mainland China; KDP<\/span><\/b> was upgraded to outperform and $35 tgt at Evercore ISI<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Restaurants; CMG<\/span><\/b> tgt raised to $1,200 from $870 at Wedbush and increasing Q2 estimates as checks indicate a top line recovery ahead of our and consensus expectations; RRGB<\/span><\/b> posted prelim Q1 total revenue of $306.1M (-25.3% YoY), said Q1 comp restaurant revenue decreased (-20.8%) with +3.7% in first eight weeks and (-43.2%) through last eight weeks; comp restaurant guest counts decreased 20.9%<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Auto’s, Casino & Leisure movers; WYNN<\/span>, LVS<\/span>, MGM<\/span><\/b> shares active after gross gaming revenue in Macau fell 93.2% Y\/Y in May to a 1.76B patacas ($133.95M) amid heightened tensions in Hong Kong between pro-democracy legislators and Beijing (Macau GGR is down 73.7% YTD); in autos, Changan Ford Automobile plans to roll out a hybrid car model with batteries built by a unit of BYD (BYDDF), according to China’s Ministry of Industry and Information Technology; UBER<\/span>, LYFT<\/span><\/b> shares active after CNBC reported they are suspending service to comply with local curfews (Minneapolis, San Fran, Oakland, downtown Los Angeles, among others)<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Energy stocks were higher despite oil prices dipping. The move in oil comes after an 88% rise in May, the biggest one-month increase on record (which followed the biggest monthly decline on record in April). Fresh geopolitical concerns added new sources of downside risk for the market to grapple with, headlined by an increasingly tense US-China relationship and an increasingly tense situation across major US cities. Prices jumped Friday after President Trump refrained from pulling the U.S. out of the phase one trade deal with China. WTI is still 45% below its recent January high of $65.65 per barrel – strength in energy stocks across the board.<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Energy movers on research; HES<\/span><\/b> was upgraded to overweight from neutral at JPMorgan and raises PT by $16 to $53 saying it has unique long-term cash flow growth profile given declining break-even profile in current environment; in the E&P sector, Stifel downgraded shares of CNX<\/span><\/b> from Buy to Hold, and COG<\/span><\/b> and EQT<\/span><\/b> from Hold to Sell on valuation saying while they like all these stocks in terms of acreage quality, management teams, execution, FCF and leverage profile, they struggle to justify the valuation<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Bank movers; IBKR <\/span><\/b>brokerage highlights for the month included: 1,645 thousand Daily Average Revenue Trades (DARTs)1, 84% higher than prior year and 4% lower than prior month\/ending client equity of $190.6 billion, 32% higher than prior year and 6% higher than prior month\/839 thousand client accounts, 31% higher than prior year and 4% higher than prior month and 448 annualized average cleared DARTs per client account; SIVB<\/span><\/b> was downgraded to neutral at Davidson as shares have rallied 64% from the mid-March bottom, and are down just 14% year-to-date, outperforming the regional bank index during both time periods; in mortgage insurance RDN<\/span><\/b> was upgraded to buy from neutral with $20 tgt at FBR, increasing overall exposure <\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Pharma movers; PFE<\/span><\/b> falls after saying based on a futility analysis by the independent Data Monitoring Committee, evaluating Ibrance and adjuvant endocrine therapy in patients with HR+\/HER2- breast cancer is unlikely to achieve the primary endpoint of a statistically significant effect on invasive disease-free survival compared to endocrine therapy alone; TEVA<\/span><\/b> upgraded to buy at SunTrust saying call is not without risk, but timing feels right for contrarian call; LLY<\/span><\/b> starts an early-stage trial for its potential COVID-19 treatment as study will assess safety and tolerability in patients hospitalized with COVID-19; CGEN<\/span><\/b> said the FDA cleared its iNDA application for Phase 1\/2 study evaluating the triple combination of its COM701, an anti-PVRIG antibody, and BMY’s<\/b> Opdivo; AVEO<\/span><\/b> rises after the FDA agreed to review its new drug application for tivozanib in relapsed or refractory renal cell carcinoma<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Cannabis sector; CGC<\/span><\/b> was downgraded by received at least four analysts after the cannabis company reported quarterly results Friday that disappointed the Street\/BMO said they were surprised by the slower-than-expected operational reset and tone towards right-sizing the business; HEXO<\/span><\/b> said its Belleville facility in Canada receives sales license and will act as the main development, processing and distribution facility for the company’s cannabis products<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Biotech movers; GILD<\/span><\/b> slipped as results from a study of remdesivir in moderately ill Covid-19 patients showed odds of improvement in clinical status of Covid-19 patients with the 10-day treatment course of remdesivir versus standard of care did not reach statistical significance while the 5-day treatment regimen did show a benefit; ALT<\/span><\/b> said the U.S. FDA authorizes the company to proceed with early-stage clinical trial of nasal spray T-COVID for treatment of early COVID-19; ITRM<\/span><\/b> plunges after saying its sulopenem didn’t achieve statistical non-inferiority relative to ertapenem in its Sulopenem for Resistant Enterobacteriaceae 2 clinical trial in complicated urinary tract infection; NTLA <\/span><\/b>rises after expanded their 2016 collaboration agreement with REGN<\/span><\/b> to include five additional liver targets (from 10 to 15) and candidates for the treatment of hemophilia A and B<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Medical equipment and devices; ABMD<\/span><\/b> said the FDA issued an emergency use authorization for Impella RP to include patients suffering from covid-19-related right heart failure or decompensation, including pulmonary embolism; ABT<\/span><\/b> was downgraded from Neutral to Sell at Goldman Sachs as believe the stock has overreacted to the COVID testing opportunity, and now see ~10% downside to our target vs +1% average upside for our coverage<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Healthcare services and providers; EVH<\/span><\/b> shares fall after its partner, Passport Health Plan, again wasn’t awarded a Kentucky Managed Care Organization contract delivering a blow to the company\/five managed care organizations will provide services to Medicaid members in the Kentucky state including HUM<\/span>, WCG<\/span>, CVS <\/span><\/b>as well as new entrants UNH<\/span><\/b> and MOH<\/span><\/b><\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Industrial & Machinery; CIR<\/span><\/b> tgt raised to $32 from $17 at Stifel saying the stock offers strong potential returns for investors” now that concerns have eased about liquidity\/leverage and the distributed valve business; GE <\/span><\/b>another cautious comment at JPMorgan saying the company is at higher risk of being downgraded by credit rating agencies, after the maker of aircraft engines and power plants warned of deteriorating free cash flow (FCF) last week<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Transports; airlines outperformed early in the transportation sector after Barron’s positive on LUV<\/span>, DAL<\/span>, SAVE<\/span><\/b> as expects consumers will be more likely to book domestic, short-haul leisure trips in the short term rather than business and international flights; truckers (JBHT<\/span><\/b>) and rails (CSX<\/span>, NSC<\/span><\/b>) were among laggards in the space<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Metals & Materials; Copper rallied after manufacturing data from China pointed to a continuing recovery, and investors weighed the risks of a further deterioration in trade relations between Washington and Beijing<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Semiconductors; the sector lagged broader market gains, though has outperformed over the last few weeks; FORM<\/span><\/b> upgraded to buy from neutral at Davidson based on thesis that FORM is the best positioned company to outperform during an extended COVID-19 driven global recession; global semiconductor sales for April 2020 were 6.1% higher than the year-ago period, but declined 1.2% from March, as per the Semiconductor Industry Assoc today. On a month-to-month basis, sales increased 2.1% in China. <\/o:p><\/p>\n

·     <\/span><\/span><\/span>Software movers; Video game maker ZNGA<\/span><\/b> agreed to acquire Turkish mobile gaming company Peak for $1.8 billion in cash and stock\/Peak is the owner of Toon Blast and Toy Blast, two franchises that rank in the top 10 and top 20 U.S. iPhone grossing games for more than 2-yrs; ZM<\/span><\/b> making new record highs ahead of earnings expected tomorrow night (6\/2); CRWD<\/span><\/b> jumps to highs ahead of earnings tomorrow night as tgt raised to $105 from $92 at Needham today; WORK<\/span><\/b> trades at its best levels in nearly a year ahead of earnings later this week (6\/4); ZS<\/span><\/b> highs up 8.3% as shares extend last week earnings gains and as software space continues to surge<\/p>\n<\/div>\n

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