{"id":12777,"date":"2020-06-02T09:44:31","date_gmt":"2020-06-02T14:44:31","guid":{"rendered":"https:\/\/www.eoption.com\/2020\/06\/02\/mid-morning-look-june-02-2020\/"},"modified":"2020-06-02T09:44:31","modified_gmt":"2020-06-02T14:44:31","slug":"mid-morning-look-june-02-2020","status":"publish","type":"post","link":"https:\/\/www.eoption.com\/mid-morning-look-june-02-2020\/","title":{"rendered":"Mid-Morning Look: June 02, 2020"},"content":{"rendered":"
\n
\n

Mid-Morning Look<\/o:p><\/span><\/b><\/p>\n

Tuesday, June 02, 2020<\/span><\/b><\/o:p><\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n
\n

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

\n

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

\n

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

\n

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

\n

 <\/o:p><\/p>\n<\/td>\n<\/tr>\n

\n

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

\n

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

\n

0.90%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

\n

25,704<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

\n

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

\n

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

\n

0.53%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

\n

3,071<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

\n

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

\n

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

\n

0.18%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

\n

9,568<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

\n

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

\n

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

\n

0.72%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

\n

1,415<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/o:p><\/span><\/p>\n

 <\/o:p><\/p>\n

U.S. stocks are higher in the early going, with the Dow and S<\/span>&P 500 index outperforming while the Nasdaq Composite lags after its recent spike higher (touched its best levels since late February yesterday at 9,571 – less than 3% off its all-time highs) as markets are faced with a protracted economic recovery following the coronavirus lockdowns, as well as tensions with China and outbreaks of violence across American cities. Stocks have been strong recently, shaking off negative headline and negative headline related to trade tensions with China, recent riots in the U.S. amid growing racial tensions (forcing recently opened stores to close again in some cases) and as the COVID-19 pandemic continues to keep people home from work and school. In the U.S., investors continue to focus on the progress of economic re-openings, lifting shares of airlines, leisure companies, retailers, restaurants and cruise line operators. Energy, financials and materials rank among early sector leaders while communication services, healthcare and technology lag. Note the S&P 500 has risen for five out of the past six sessions, boosted by data suggesting the downturn in the U.S. economy has bottomed. However, a US<\/span> budget agency (CBO<\/span>) said today that the U.S. economy could take the better part of a decade to fully recover from the pandemic and related shutdowns. European markets jumped overnight, extending a recent rally fueled by hopes of a rebound in the global economy, led by solid gains in Germany as the DAX index surged over 3% following a public holiday Monday. Treasuries weaker across the curve, the US dollar is firmer vs yen but lagging again vs both euro and sterling. Overall, China markets at 10-week highs, Japan 12-week highs, Europe 10-week highs and the U.S. trading at 12-week highs as investors continue to bet on the economic recovery. <\/o:p><\/p>\n

 <\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>In currency markets,<\/b> the U.S. dollar generally remains out of favor, with the exception of the Japanese yen, falling vs. macro rivals the euro and Pound while high beta currencies such as the Australian and Canadian dollars, are leading higher. Most emerging market currencies are also gaining against the greenback in recent trade as investors abandon the safe haven dollar with stocks and commodity prices (oil jumped 88% in May) having surged. U.S. equities shrugged off the national guard being called into action in nearly a third of US states, and the S&P 500 closed yesterday at nearly three-month highs. <\/o:p><\/p>\n

·     <\/span><\/span><\/span>Treasury market’s steady once again<\/b>, as the 10-year yield remains flat around the 0.66% level, narrow trading over the last week or so (about 8 bps range of 0.72% high and 0.64% low) as markets weigh the good (economies and states slowly reopening, Fed easing measures, stimulus packages) with the bad (trade news with China, riots\/store closures, and weak economic data due to pandemic closures – though has been improving)<\/o:p><\/p>\n

 <\/o:p><\/span><\/p>\n

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

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

\n

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

\n

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

\n

 <\/o:p><\/p>\n<\/td>\n<\/tr>\n

\n

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

\n

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

\n

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

\n

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

\n

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

\n

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

\n

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

\n

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

\n

1,756.20<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

\n

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

\n

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

\n

1.1185<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

\n

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

\n

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

\n

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

\n

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

\n

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

\n

0.664%<\/o:p><\/span><\/p>\n<\/td>\n<\/tr>\n

<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/o:p><\/span><\/p>\n

 <\/o:p><\/span><\/p>\n

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

·     <\/span><\/span><\/span>Software movers; ZM<\/span>, CRWD<\/span><\/b> earnings tonight in software (massive run in shares of each heading into results – both expected to have benefitted from the stay-at-home lockdowns); MSFT <\/span><\/b>tgt as raised to $250 from $205 at Wells Fargo as believe COVID-19 has created a Zeitgeist moment for the cloud as a whole changing CIOs’ cloud strategies forever from which they expect Microsoft Azure to disproportionately benefit as the enterprise cloud; WORK<\/span><\/b> rises again ahead of earnings this week with Cowen initiating coverage with an Outperform and $45 price target saying the shift to remote work has given Slack a major booster shot to its market opportunity that will accelerate adoption and lift the company’s total addressable market; MDB<\/span><\/b> tgt raised to $275 from $145 at Barclay’s and to $253 at Needham ahead of earnings Thursday as believe MDB is leveraged to strategic spend around digital transformations, which are accelerating in some cases<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Consumer finance and lending; Visa (V<\/span>)<\/b> said total U.S. payments volume fell 5% in May from 18 % in April, while QTD payment volume was down by 11%\/May cross-border volume excluding intra-Europe transactions tumbles 45%, while global processed transactions fell 12% (Baird said the Visa update positive read-throughs to MA<\/span><\/b>); PYPL<\/span><\/b> tgt raised to $167 from $120 at UBS and raised to $183 at Deutsche Bank as they expect PYPL to sustain elevated TPV growth rates above its medium term guidance driven by higher eComm user adoption and engagement while expanding adj. operating margins; MGI<\/span><\/b> rises after Bloomberg reported that WU<\/span><\/b> recently made a takeover offer for the rival money transfer company. A deal would bring together two of the largest U.S. providers of money transfer services https:\/\/bit.ly\/3cqijaX<\/a><\/o:p><\/p>\n

·     <\/span><\/span><\/span>Pharma movers; ABBV<\/span><\/b> was upgraded to buy from hold with $115 tgt noting the Allergan acquisition adds strengths in medical aesthetics, neuroscience, eye care, and women’s health; BMY<\/span><\/b> said its treatment Zeposia, which it gained through its $74B buyout of Celgene last year, met the main goals of a late-stage study testing it in patients with an inflammatory bowel disease; TENX<\/span><\/b> reported Phase 2 results for levosimendan for the treatment of patients with pulmonary hypertension and heart failure with preserved ejection fraction<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Retailers; gun stocks, sporting goods retailers SWBI<\/span>, RGR<\/span>, VSTO<\/span>, SPWH <\/span><\/b>rise a second day as NICS background checks jumped to 3,091,455 in May, above last month’s 2,911,128 and well above the 2,349,309 figure the same time last year (NICS<\/span> background checks for firearm purchases increased 75.2% in May following an 69.1% increase in April and 80.3% in March); DKS<\/span><\/b> Q1 sales fell 30.6% in FQ1 and same-store sales were down 29.5% for the period that ended on May 4\/E-commerce sales rose 110% and said its e-commerce penetration rose to 39% of sales vs. 13% a year ago; LULU<\/span><\/b> was downgraded at Wells Fargo following a significant rally since mid-March (LULU<\/span> +125% vs. SPX +28%) with plenty of risk in the consumer environment still ahead; LE<\/span><\/b> prelim Q1 loss widens, revenue skids amid covid-19 pandemic, missing estimates; BBW <\/span><\/b>posted Q1 net retail sales decline (-43.7%) to $46.65M, while margin rate slipped 2800 bps to 17.3%<\/o:p><\/p>\n

 <\/o:p><\/span><\/b><\/p>\n

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

·     <\/span><\/span><\/span>DKS<\/span><\/b> +4%; Q1 sales fell 30.6% in FQ1 and same-store sales were down 29.5% for the period that ended on May 4\/E-commerce sales rose 110% and said its e-commerce penetration rose to 39% of sales vs. 13% a year ago<\/o:p><\/p>\n

·     <\/span><\/span><\/span>HES <\/span><\/b>+3%; receives its second analyst upgrade in as many days, raised to buy and raise at Citigroup today and target price to $60 as believe HES presents less downside risk<\/o:p><\/p>\n

·     <\/span><\/span><\/span>MGI<\/span><\/b> +35%; after Bloomberg reported that WU<\/span><\/b> recently made a takeover offer for the rival money transfer company. A deal would bring together two of the largest U.S. providers of money transfer services https:\/\/bit.ly\/3cqijaX<\/a> ; WU shares also moving higher<\/o:p><\/p>\n

·     <\/span><\/span><\/span>OXY <\/span><\/b>+5%; as oil and energy names rallying along with another bounce in oil prices as investors look to the positive reopening of economics and increased travel as a bounce for oil<\/o:p><\/p>\n

·     <\/span><\/span><\/span>SWBI <\/span><\/b>+12%; NICS background checks for firearm purchases increased 75.2% in May following an 69.1% increase in April and 80.3% in March; tgt raised to $19 from $11.50 at Lakestreet and also upped RGR<\/span><\/b> tgt to $80 as gun stocks rally a second day (VSTO<\/span>, SPWH<\/span><\/b> also rise in sympathy)<\/o:p><\/p>\n

·     <\/span><\/span><\/span>TENX<\/span><\/b> +77%; as reported Phase 2 results for levosimendan for the treatment of patients with pulmonary hypertension and heart failure with preserved ejection fraction<\/o:p><\/p>\n

·     <\/span><\/span><\/span>WORK<\/span><\/b> +2%; Cowen initiates with an Outperform and $45 price target saying the shift to remote work has given Slack a major booster shot to its market opportunity that will accelerate adoption<\/o:p><\/p>\n

 <\/o:p><\/span><\/p>\n

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

·     <\/span><\/span><\/span>BBW<\/span><\/b> -1%; posted Q1 net retail sales decline (-43.7%) to $46.65M, while margin rate slipped 2800 bps to 17.3%<\/o:p><\/p>\n

·     <\/span><\/span><\/span>CBOE <\/span><\/b>-2%; downgraded to neutral at JPMorgan as trading volumes and Open Interest as a leading indicator remain tepid and while the CBOE trading floors are scheduled to reopen next week, they don’t see the floor as a meaningful enough catalyst to drive volumes above current expectations<\/o:p><\/p>\n

·     <\/span><\/span><\/span>LE<\/span><\/b> -11%; prelim Q1 loss widens, revenue skids amid covid-19 pandemic, missing estimates<\/o:p><\/p>\n

·     <\/span><\/span><\/span>LVS<\/span><\/b> -1%; as casino stocks take a breather with weakness in WYNN<\/span>, PENN<\/span><\/b> as group retraces some of its strong rebound over the last month despite weak GGR data yesterday<\/o:p><\/p>\n

·     <\/span><\/span><\/span>RTX<\/span><\/b> -2%; CFO said its Pratt and Collins units will have negative operating profit in Q2 as sees airline finances hurting, some bankruptcies, speaking at UBS conference<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Adaptimmune (ADAP<\/span>) 20M share Secondary priced at $11.00<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Allogene Therapeutics (ALLO<\/span>) 11.7M share Secondary priced at $47.00<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Guardant Health (GH<\/span>) 11.5M share Spot Secondary priced at $84.00<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Invitation Homes (INVH<\/span>) 14.5M share Spot Secondary priced at $27.25<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Kaleido Biosciences (KLDO<\/span>) 4.75M share Spot Secondary priced at $7.50<\/o:p><\/p>\n

·     <\/span><\/span><\/span>QTS Realty Trust (QTS<\/span>) 4.4M share Spot Secondary priced at $64.90<\/p>\n<\/div>\n

<\/p>\n