{"id":12813,"date":"2020-06-09T15:06:26","date_gmt":"2020-06-09T20:06:26","guid":{"rendered":"https:\/\/www.eoption.com\/2020\/06\/09\/market-review-june-09-2020\/"},"modified":"2020-06-09T15:06:26","modified_gmt":"2020-06-09T20:06:26","slug":"market-review-june-09-2020","status":"publish","type":"post","link":"https:\/\/www.eoption.com\/market-review-june-09-2020\/","title":{"rendered":"Market Review: June 09, 2020"},"content":{"rendered":"
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Closing Recap<\/o:p><\/span><\/b><\/p>\n

Tuesday, June 09, 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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-300.14<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1.09%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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27,272<\/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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-25.21<\/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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3,207<\/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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29.01<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.29%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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9,953<\/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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-29.84<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1.94%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,507<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n


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

·     <\/span><\/span><\/span>U.S. stock markets finished mixed, with the Nasdaq Composite touching a record high for a 3rd<\/sup> straight day, getting a boost from tech giant Apple (AAPL) which also traded to a new all-time high, rising more than 3% as investors poured money into large cap tech names (FB, AMZN, NFLX as well) and took profits in some of the recent momentum sectors. The Nasdaq Comp topped the 10,000 level for the first time ever as strength in tech shares offset concern over stretched valuations and economic prospects. Sectors that have surged over the last 2-weeks, airlines, cruise lines, energy, restaurants, retailers, leisure names – the hardest hit during the March COVID-19 lockdown downturn – were better for sale for the first time in about a week. Treasuries jumped amid the mixed reaction in stocks today, sending yields lower as markets prepare for results of the two-day FOMC policy meeting tomorrow afternoon, followed by a press conference from Fed Chairman Powell who will be asked about the jobs report, additional stimulus measures, among other items. The small-cap Russell 2000 index slumped following a 10% advance the last six-sessions. Sentiment toward U.S. equities have swung to extreme confidence from equally extreme fear in less than three months as noted by this tweet earlier today noting “40% of S&P 500 members have RSIs above 70 – that is the highest level in the history of the data.” Dow component Boeing (BA) pulls back after having added 580 Dow points in June alone coming into today, amid rising demand hopes for air travel). The aggressive move up for stocks over the last 50-days has been in a surprising “V” shaped recovery has not been based on fundamentals (as earnings for the upcoming quarter is expected to by abysmal given the impact of the COVID-19 related shutdown of businesses), but more a focus on the stimulus measures from the government and hopes the impact will be short lived, betting on a quick recovery. <\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>U.S. April wholesale inventories <\/b>revised to +0.3% from +0.4% (and est. 0.4%); April wholesale sales -16.9% worse than the -4.0% estimate and vs. March -5.1%<\/o:p><\/p>\n

·     <\/span><\/span><\/span>U.S. job openings plummeted in April<\/b> to the lowest since 2014 and separations remained elevated as the pandemic ripped through the labor market with devastating speed. The number of available positions dropped to 5.05M from a revised 6.01M in March as per JOLTs data<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Oil prices a nice afternoon reversal<\/b> as WTI crude rose 75c or 1.96% to settle at $38.94 per barrel ahead of weekly inventory data (private API report tonight and weekly government EIA report tomorrow morning). Prices recovered off earlier lows as much of the recent market drivers and positive news may have been baked into prices that touched 3-month highs Friday. Over the weekend, OPEC+ delivered an expected extension of production cuts for another month while prices have risen on the economic reopen hopes and improving demand. The U.S. Energy Information Administration cut its 2020 world oil demand growth forecast by 210,000 barrels per day to 8.34 million bpd. In its monthly forecast, the agency raised its oil demand growth estimate for 2021 by 190,000 bpd to 7.18 million bpd.<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Gold prices advanced<\/b> 1% or $16.80 to settle at $1,721.90 an ounce, getting a boost on a slumping dollar and as risk appetite took a back seat ahead of the FOMC policy meeting results tomorrow and as stocks finished the day mixed (though technology soared). The expectations of further Fed stimulus has been supporting gold over the last couple of days. Other precious metals saw selling pressure with palladium sliding, now down over 30% from its record late February.<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>No lift in the U.S. dollar<\/b>, extending its near 2-week decline to over 300bps in the dollar index (DXY) from highs end of May around 99.50 to below 96.30 today as investors sold the greenback amid expectations of further stimulus and weaker economic data (though the last week or so has shown improving data including the blowout jobs report Friday). The euro touched highs above 1.136 while the buck slid again vs. the Japanese yen.<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Treasury prices jumped as yields slipped<\/b> after the 10-year touched its best level since mid-March on Friday (at 0.95%) before sliding to 0.8% today as stocks end the day mixed and investors position themselves ahead of the FOMC policy meeting tomorrow. The benchmark 10-year yield dropped over 8 bps today, paring last week gains after prices declined in the wake of a better-than-expected May unemployment report. The 30-year yield fell over 6 bps to 1.57%. IN a weak auction, the U.S. Treasury sold $29B of 10-year notes at a yield of 0.832% vs. 0.819% when-issued prior with a bid-to-cover (demand) at 2.26 and indirect bidders awarded 56.7%.<\/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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0.75<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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38.94<\/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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0.38<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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41.18<\/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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16.80<\/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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0.0054<\/span><\/o:p><\/span><\/p>\n<\/td>\n

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1.1348<\/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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-0.72<\/o:p><\/span><\/p>\n<\/td>\n

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107.71<\/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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-0.053<\/o:p><\/span><\/p>\n<\/td>\n

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0.822%<\/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; Macy’s (M)<\/b> shares rose initially after saying it raised a total of $4.5B, including $3.15B in borrowings against real estate assets and expects to have sufficient liquidity to fund operations, purchase new inventory while also issued prelim earnings update in-line with co’s estimates; TIF<\/span><\/b> reports comparable sales fell 43% in FQ1 on a constant-currency basis, even with e-commerce sales up 43% during the quarter and gross margin fell to 55.6% of sales vs. 61.7% a year ago; SFIX <\/span><\/b>shares slip after printing a miss for FQ3, with revenue 11% below the Street and Gross Margins also missing views and did not provide guidance; SIG<\/span><\/b> reports comparable sales fell -38.9% in FQ1 vs. -35.4% consensus while comp sales were down -39.0% in North America and were off -37.5% at international locations and gross margin fell to 23.9% of sales vs. 34.9% a year ago; NKE <\/span><\/b>tgt raised ahead of earnings later this month at Guggenheim to $115 from $100; other movers on earnings included GCO<\/span>, CASY<\/span>, CONN<\/span><\/b> which slipped along with broader pullback in retail; DKS <\/span><\/b>was upgraded to outperform at Oppenheimer with $52 tgt<\/o:p><\/a><\/p>\n

·     <\/span><\/span><\/span>Restaurants; EAT<\/span><\/b> said comp sales growth for the 873 Chili’s open as of the week ending June 3 was -11%. Chili’s has retained more than 70% of off-premise sales after dining rooms have reopened\/comp sales were down 25.6% at company-owned locations for the week ending June 3 as sales have steadily improved from the -45.9% mark for the week ending April 29; WEN <\/span><\/b>provided an update on recent sales trends through the first two months of 2Q20. For the month of May, global same-store sales declined 3.3%, including a 1.9% decline in the U.S. and a 15.7% decline in international markets.<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Housing & Building Products; LOVE<\/span><\/b> shares jump after Q1 revs rise 33% to $54.4M driven by an increase in internet sales while Q1 comparable sales increase 50% and posts a smaller net loss of $8.3M, smaller than last year’s $9.1M loss; KBH<\/span><\/b> was downgrade at RBC Capital to sector perform (up tgt to $34) as believe risk\/reward is now more balanced with the stock at 1.5x TBV (1.3x YE’20E TBV) following a +207% rally off its March lows; HDS<\/span><\/b> reports mixed FQ1 results that missed on EPS but beat on revenues\/operating income was $121M (-28.8% YoY).<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Energy stocks slump after strong gains the last few weeks as oil prices recover. CHK<\/span><\/b> shares dropped shares slipped after the close after a Bloomberg report said the nat gas provider is prepping for Chapter 11 bankruptcy filing that could give lenders control of company; in research, Bank America upgraded OXY<\/span><\/b> to buy, while downgraded CVX<\/span><\/b> and CXO<\/span><\/b> to neutral; in E&P space, MKM Partners downgraded MTDR<\/span><\/b> and CLR<\/span><\/b> downgraded saying we are now looking at the space reflecting just under our long dated view and stocks are stretched<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Utilities & Solar; Mizuho downgraded PPL <\/span><\/b>to sell from neutral, upgraded VST<\/span><\/b> to buy, continue to like AES<\/span>, NRG<\/span><\/b> saying despite a risk-on trade dominating financial markets over the last couple of weeks, utilities\/XLU outperformed the S&P 500 since our launch on May 20 through June 8 by 70 bps. We were particularly surprised by the underperformance of ETR<\/span><\/b>, as the name seems universally liked even despite a SERI-related overhang, and the strength in PPL <\/span><\/b>and AGR<\/span><\/b> though a short squeeze ahead of regulatory catalysts could have been to blame. In other news, WEC<\/span><\/b> reaffirms annual guidance of $3.71-$3.75 per share and raises Q2 guidance<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Bank movers; CMA<\/span><\/b> issued quarterly update with solid Q1 execution contributed to a $7M revenue beat and $1M full-year raise, despite CV-19 headwinds in March that began to ease in April; in mortgage sector; NMIH<\/span>, ESNT<\/span>, RDN<\/span><\/b>, and MTG<\/span><\/b> all downgraded to Market Perform from Outperform at Keefe Bruyette, cutting the mortgage insurance sector on valuation noting while the sector is still down for the year, all four names have more than doubled from their April lows<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Consumer finance and lending; TRU<\/span><\/b> said it sees qtr revenue declines in line with upside outlook; MA<\/span><\/b> said switched volume continues to improve since the week ended May 7 with volume transactions down -7% in the week ended May 28 vs. a 12% decline for the week ended May 7 and the 20% drop for the full month of April; MGI<\/span><\/b> says 100% YoY digital transaction growth in May, significant growth from Q1 of 2020 and MoneyGram online delivered 107% year-over-year transaction growth in May<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Services; EFX<\/span><\/b> was downgraded to hold at SunTrust as assert EFX’s powerful YTD run (28% vs SPX 0%) reflects what we learned last night: counter-cyclical unemployment claims and Mortgage rev drove strong 2Q20 upside (Bank America also reiterated its underperform saying with mortgage comps becoming much tougher in Q3 they see revenue declining Y\/Y in H2\/20 and H1\/21.<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Biotech movers; BIIB <\/span><\/b>was downgraded at Bernstein to market perform citing two major controversies for the stock related to the potential approval for its experimental medicine as a treatment for Alzheimer’s disease, and patent challenges related to its blockbuster Tecfidera after reviewing post-trial arguments; REPL<\/span><\/b> 2.826M share Spot Secondary priced at $23.00; RTRX<\/span><\/b> 6.5M share Spot Secondary priced at $15.50<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Medical equipment and devices; SWAV<\/span><\/b> shares rise after CMS issued new codes for peripheral IVL procedures taking place in the hospital outpatient and in-patient settings; QTNT<\/span><\/b> announces recent developments, including rapid development of COVID-19 antibody test based on its innovative MosaiQ platform and several commercial MosaiQ contracts; Raymond James said they remain constructive on the diabetes space (ABT<\/span>, DXCM<\/span>, TNDM<\/span><\/b>) as they continue to view it as one of the most attractive themes in MedTech as new pump\/CGM technology cannibalizes old syringe\/finger-stick testing; DXCM<\/span><\/b> tgt raised to $430 from $360 at Cowen; HOLX<\/span><\/b> provided an update on its expectations for its F3Q results, with Diagnostics revenue growth of 20%-25% aided by COVID-19 testing volumes, and better performance than internal estimates in its Breast and Skeletal business (-30% to -35%); DGX <\/span><\/b>was upgraded to overweight at Wells Fargo<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Healthcare services and providers; PHR <\/span><\/b>reported revenue growth of 18% in the current environment, which was well ahead of consensus expectations while refrained from giving guidance for FY21 amidst the uncertainty from the pandemic; ANTM<\/span><\/b> reaffirmed its FY2020 adjusted EPS guidance of greater than $22.30. The company also noted that it expects to generate approximately 70% of its adjusted EPS in the first half of the year<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Industrial & Machinery; GE<\/span><\/b> said it reopened parts of existing debt offerings for the company and GE Capital for total proceeds of $3B in an effort to enhance and extend its liquidity; in aerospace, BA <\/span><\/b>shares take a breather after 160% move off March lows – logs a fifth straight month where cancellations\/adjustments mean a smaller backlog of orders. May: Negative 86 planes. Year-to-date: Negative 602 planes. Backlog drops to 4,744 planes, the lowest since 2013<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Transports; for airlines, the IATA forecasts $15B net loss for industry in 2021; UNP<\/span><\/b> warns Q2 to date volumes down closer to 20% in rail sector; airlines overall took a breather after massive run off lows (AAL<\/span>, DAL<\/span>, LUV<\/span>, UAL<\/span><\/b>) as the Dow Transports were down over 2% most of the day<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Metals movers; AA<\/span><\/b> said it expects aluminum demand to pick up in this year’s H2 as China’s economy rallies following the coronavirus downturn, although overcapacity will continue to pose challenges to the industry, according to its CFO; CLF<\/span><\/b> said it is resuming construction of its hot-briquetted iron plant in Toledo, Ohio, and accelerating the restart of its Tilden mining operations in Michigan; CMC<\/span><\/b> downgraded to neutral from buy as the stock is up ~50% since March and we now view as fair value considering rebar spreads maybe peaking<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Materials; SMG<\/span><\/b> raises year sales view to up 16%-18% from prior view up 6%-8%; boosts year EPS view to $5.65-$5.85 from prior $4.95-$5.15 mainly to stronger growth in the U.S. Consumer segment; OI <\/span><\/b>said Q2 had temporarily lower shipments and output cuts; says volume trends gradually improved over the past few weeks<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Internet; EBAY<\/span><\/b> upgraded at Wells Fargo saying the review of omnichannel retailer commentary and EBAY’s upward 2Q guidance revision last week indicate to us continued strength, if not acceleration, in digital commerce from March into April and May; WIX<\/span><\/b> upgraded to overweight with $250 tgt at KeyBanc saying surging online content and commerce initiatives likely improve the adoption and reach of the Wix platform; REAL <\/span><\/b>reported gross merchandise value declined about 44% year over year from mid-March through mid-April and said GMV declined approximately 33% Y\/y, and May GMV declined approximately 19% Y\/Y; VRM <\/span><\/b>shares opened above 440 per share after its IPO priced at $22 per share<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Semiconductors; INTC <\/span><\/b>shares slipped after earlier reports that AAPL<\/span><\/b> is set to announce its move to internally made chips, a shift away from Intel before new Macs launch in 2021; chip makers leveraged to gaming saw outperformance today as AMD<\/span><\/b> and NVDA<\/span><\/b> led the gains; also earlier reports that AAPL looks set to begin production of iPhone 12 in July, following a report that it’s nearing the end of a key testing stage.<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Hardware & Software movers; COUP<\/span><\/b> shares slipped despite another beat and raise quarter, which showed impressive execution in a challenging macro backdrop while one analyst noted implied guidance for Q2 organic billings growth of 14% y\/y, or 23% ex the Q1 pull forward, is consistent with Q1 billings guidance; CDW<\/span><\/b> downgraded at JPMorgan to underweight on valuation; SONO<\/span><\/b> shares rally after positive mention by Citron Research calling it a forgotten beneficiary of the COVID-19 lockdown; CLDR<\/span><\/b> shares spiked early afternoon after Bloomberg reported the company said to explore sale after receiving takeover interest<\/p>\n<\/div>\n

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