{"id":12838,"date":"2020-06-15T15:09:25","date_gmt":"2020-06-15T20:09:25","guid":{"rendered":"https:\/\/www.eoption.com\/2020\/06\/15\/market-review-june-15-2020\/"},"modified":"2020-06-15T15:09:25","modified_gmt":"2020-06-15T20:09:25","slug":"market-review-june-15-2020","status":"publish","type":"post","link":"https:\/\/www.eoption.com\/market-review-june-15-2020\/","title":{"rendered":"Market Review: June 15, 2020"},"content":{"rendered":"
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Closing Recap<\/o:p><\/span><\/b><\/p>\n

Monday, June 15, 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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157.62<\/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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25,763<\/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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25.28<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.83%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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3,066<\/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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137.21<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1.43%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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9,726<\/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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31.92<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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2.30%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,419<\/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. stocks with a resounding bounce off overnight losses, getting a turbo-charged boost late afternoon as the Federal Reserve said that it will begin buying individual corporate bonds under its Secondary Market Corporate Credit Facility, an emergency lending program that to date has purchased only ETFs. The central bank also added to its buying strategy, saying it would follow a diversified market index of U.S. corporate bonds created expressly for the facility. Those headlines took stocks up to new highs late afternoon (markets had already been recovering prior from morning losses), with the Dow rising over 250 points (after being down as much as 762 points at its lows – a 1,000 point swing), the Nasdaq Comp rose more than 350-points off its lows above the 9,750 level and the S&P futures with more than 100-point recovery off overnight lows. However, stocks pared their losses late day, pulling back off those earlier highs. The end of day results was a far cry from stock futures sharply lower overnight, initially extending last week’s losses (and worst week since mid-March) after a pickup in coronavirus cases rattled investors and threatened to hinder efforts to reopen economies. Technology and biotech helped pace the gains as the Nasdaq Comp surged behind software winners. Similar to Thursday’s steep selloff, investors sold stocks Monday on reports of an uptick in cases in the U.S. and other parts of the world. Overnight, Chinese authorities shut down parts of Beijing, after the capital recorded a record number of new coronavirus infections tied to a meat and vegetable market. China reported 49 new confirmed coronavirus cases, its highest daily total of coronavirus cases in two months. Meanwhile, in the U.S., several states including Arizona, Florida and Texas have reported increased numbers of cases in the past week. NY Governor Cuomo also threatened to reverse the reopening in parts of the state that are not enforcing or following virus safety rules, while NJ reopened outdoor dining today. Stocks are also dealing with lingering concerns over economic growth after the FOMC’s glum outlook last week<\/a>. <\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Empire Manufacturing for June strong<\/b> as reported at down (-0.2) vs. est. (-29.6) and last month was down (-48.5) – Empire State new orders index -0.6 in June vs -42.4 in May, prices paid index +16.9 in June vs. +4.1 in May, employment index at -3.5 in June vs. -6.1 in May and the six-month business conditions index +56.5 in June vs. +29.1 in May<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Oil prices surged<\/b> mid-afternoon along with the recovery in U.S. stocks, with WTI crude rising 86c or 2.37% to settle at $37.12 per barrel (well off morning lows of $34.26 per barrel) helped by signs of continued declines in global production, despite fears of a potential resurgence in global cases of COVID-19 boosting concerns over energy demand. Natural gas prices slipped 3.6% to $1.67 mln btus, 1-month lows.<\/o:p><\/p>\n

·     <\/span><\/span><\/span>August gold prices fall<\/b> -$10.10 or 0.6% to settle at $1,727.20 an ounce, but finished well off its earlier lows of $1,706.20 an ounce, getting a boost mid-afternoon buoyed by fears of a second wave of coronavirus infections. Gold prices have been stable given the macro fears and news again last week that the Fed will do whatever it takes to maintain low rates and accommodative measures to help keep the economy humming, in turn pressuring the dollar. <\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>The U.S. dollar slipped<\/b> as the dollar index (DXY) drops back below the 96.75 level down over -0.4% after a brief bounce late last week as stocks slumped and investors rotated back into safe haven assets. The euro edged higher, but still remains down nearly 200 bps off its highs over a week ago while the Japanese yen extended gains. Overall quiet day with only one piece of economic data in the U.S. as manufacturing in the U.S. for May was way better than expected. U.S. Treasury prices were little changed<\/b>, as yields recovered midday off earlier lows (10-year yield ends around 0.70% from 0.65% lows), with stocks rebounding throughout the day and investors pared back on safe-have related assets (2-yr yield little changed at 0.19%).<\/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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0.86<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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37.12<\/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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0.99<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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39.72<\/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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-10.10<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,727.20<\/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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0.0064<\/span><\/o:p><\/span><\/p>\n<\/td>\n

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1.132<\/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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-0.04<\/o:p><\/span><\/p>\n<\/td>\n

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107.34<\/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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-0.00<\/o:p><\/span><\/p>\n<\/td>\n

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0.703%<\/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; retailers lagged given the rising coronavirus count in several US states, threatening the possibility of further economic reopenings; IRBT <\/span><\/b>boosted its Q2 revenue forecast to $260M-$270M from as had previously expected it to be down modestly from 1Q’s $193M aided to a lesser extent by better-than-planned gross margin and diligent expense management; DDS<\/span><\/b> shares slip as it will be removed from the S&P MidCap 400 index next week<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Restaurants; TAST<\/span><\/b> said as of June 12, had $421.8M outstanding borrowings under term loan B facility pursuant to credit dated as of April 30, 2019\/comp restaurant sales for Burger king restaurants up 2.5% for week ended June 7; CHUY<\/span><\/b> said the company’s comparable restaurant sales decreased -42.3% in Q2 through June 14, from the same period last year, while comparable sales in the week ended June 14 fell -21.5%; for CBRL<\/span><\/b>, Bank America said expect CBRL to see tailwinds from a consumer shift to domestic vacations and away from flying to more automobile travel as 83% of units are located along interstate highways<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Housing & Building Products; Citigroup raised target prices & estimates for the Homebuilders following positive May\/June trends. As their updated targets imply +34% avg. upside for Buy-rated builders (DHI<\/span>, LEN<\/span><\/b>, and PHM<\/span><\/b>) noting several leading indicators show activity is reaccelerating at various stages of the home buying process, from online searches to real estate showings to mortgage applications; RH<\/span><\/b> was upgraded to buy from hold at Loop Capital; homebuilder LEN<\/span><\/b> expected to report earnings after the close<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Casino & Leisure movers; U.S. listed Macau casinos fall as Covid cases spike in Beijing with shares of MGM<\/span>, WYNN<\/span>, LVS<\/span>, BYD<\/span>, PENN<\/span><\/b> among early decliners; SIX<\/span><\/b> was upgraded to buy and $31 tgt (up from $28) at B Riley\/FBR; shares of movie-theater stocks (AMC<\/span>, CNK<\/span>, IMAX<\/span><\/b>) fell after the releases of both “Tenet” and “Wonder Woman 1984” were delayed; shares of betting stocks (DKNG<\/span><\/b>) rallied as more sports are beginning to announce plans and timelines to reopen, raising expectations of increased gambling<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Energy stocks weak initially as oil prices fall on fears that new coronavirus cases could threaten fuel demand recovery outlook. WTI crude futures slid below $35 a barrel following a fresh coronavirus outbreak in China and increased cases elsewhere which spurred concerns that a second wave of the virus will derail a nascent economic recovery; BP<\/span><\/b> said it will take an estimated $13B-$17.5B in impairments and write-downs in the second quarter after revising its long-term price assumptions; APA<\/span><\/b> was upgraded to Buy and raise target price to $18 at Citigroup which reflects a ~5.8x multiple on our 2021 DACF, a slight premium to our group coverage average, but well below HES<\/span><\/b> ~10x; XOG<\/span><\/b> files for Chapter 11 bankruptcy protection <\/o:p><\/p>\n

·     <\/span><\/span><\/span>Utilities; ruling against environmentalists, the U.S. Supreme Court on Monday decided that the federal government has the authority to allow a proposed $7.5 billion natural gas pipeline to cross under the popular Appalachian Trail in rural Virginia. The 7-2 ruling was a victory for Dominion Energy (D)<\/b> and President Donald Trump’s administration, both of which appealed a lower court ruling that halted construction of the 600-mile (965-km) Atlantic Coast Pipeline, which would run from West Virginia to North Carolina. In solar, JKS shares fell after Q1 earnings came in well short of expectations as well as forecasts Q2 solar module shipments of 4.2-4.5 GW<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Consumer finance and lending; SYF<\/span><\/b> May net charge-off rate 4.17% vs. 4.61% last month and reports May 30-plus day delinquencies 2.20% vs. 2.47% last month; COF <\/span><\/b>May net charge-offs 4.49% vs. 4.93% last month and reports May 30-plus day performing delinquencies 3.15% vs. 3.58% last month; ADS<\/span><\/b> May net charge offs 8.0% vs. 7.3% last month and reports May delinquency ratio 4.8% vs. 5.6% last month; JPM<\/span><\/b> May net charge-offs 2.34% vs. 2.46% YoY and May delinquencies 1.2% vs. 1.14% YoY; BAC credit card charge-off rate was 2.46% in May vs 2.72% in April and credit card delinquency rate was 1.46% at May end vs 1.55% at April end; AXP<\/span><\/b> reported charge-offs for May of 3% vs. 1.40% YoY and delinquencies 1.6% vs. 2.50% YoY<\/o:p><\/p>\n

·     <\/span><\/span><\/span>REIT sector; shares of EXR<\/span>, PSA<\/span>, WELL<\/span><\/b> were all upgraded and KIM<\/span>, MAC<\/span>, VTR<\/span><\/b> downgraded in REIT space at Evercore ISI; shares of REITs in general slipped (SLG<\/span>, SPG<\/span><\/b>) along with more broadening concerns of rising coronavirus cases in parts of the U.S. and its potential impact to slow the pace of reopenings for retailers and businesses going forward<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Pharma movers; AZN <\/span><\/b>has reached an agreement with Europe’s Inclusive Vaccines Alliance, or IVA, spearheaded by Germany, France, Italy and the Netherlands, to supply up to 400M doses of the University of Oxford’s COVID-19 vaccine, with deliveries starting by the end of 2020; LLY <\/span><\/b>said enrollment is underway in a Phase 3 clinical trial, COV-BARRIER, evaluating its Olumiant (baricitinib), an oral JAK1\/JAK2 inhibitor licensed from INCY<\/span><\/b>, in hospitalized COVID-19 patients; BYSI<\/span><\/b> announces positive topline interim results from protective-2 (study 106) phase 3 trial evaluating superiority of Plinabulin in combination with Neulasta for chemotherapy-induced neutropenia prevention as met primary and secondary endpoints<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Biotech movers; RDY<\/span><\/b> entered into a non-exclusive licensing agreement with GILD<\/span><\/b> giving it the right to register, manufacture and sell Remdesivir, which is being developed as a potential treatment for Covid-19; SRPT<\/span><\/b> announces positive safety and efficacy data from the srp-9001 micro-dystrophin gene therapy trial published in JAMA neurology<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Medical equipment and devices; MDT<\/span><\/b> announces a $337M investment from funds managed by Blackstone Life Sciences (and other co-investors) aimed at supporting R&D programs in its Diabetes Group; in the diabetes sector, several analysts with comments following the American Diabetes Association as Wells Fargo said saw positive data at ADA on the use of DXCM <\/span><\/b>and ABT <\/span><\/b>CGM devices in patients with Type 2 diabetes (including those who are not on intensive insulin) and positive data on DXCM’s CGM in the hospital setting; FLDM<\/span><\/b> rises after the company said it filed for Emergency Use Authorization from the U.S. Food and Drug Administration for an extraction-free saliva-based test to detect the SARS-CoV-2 virus<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Healthcare services and providers; ABC<\/span><\/b> was upgraded to Overweight and raise tgt to $112 from $94 at Morgan Stanley with the backdrop of improving fundamentals and lower risk for near-term branded inflation regulatory action (bull case is $169 and our bear case is $56); CTLT <\/span><\/b>shares rise early after signing a deal with AZN <\/span><\/b>to provide vial filling and packaging capacity at its manufacturing facility in Italy as prepares for supplying hundreds of millions of doses for COVID; Guggenheim lower our PT for CHNG<\/span><\/b> to $17 from $20 and reiterate our Buy rating while raising our PT for HQY<\/span><\/b> to $67 from $56 and reiterate our Buy rating<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Hospitals; (THC<\/span>, UHS<\/span>, CYH<\/span>, HCA<\/span><\/b>), U.S. hospitals are predicted to lose more than $200 billion in revenue by June 30, according to a report by the American Hospital Association. The industry group estimates the total revenue hit from the pandemic at about $50 billion a month among health-care facilities since March as many states over the last two months ordered all non-essential surgeries postponed<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Metals, Industrial & Machinery; MMM<\/span><\/b> reports total sales for May declined 20% to $2.2B, said organic local-currency sales declined 21%, while acquisitions, net of divestitures, increased sales by 2%; DE<\/span><\/b> filed mixed securities shelf; GE <\/span><\/b>says President and Vice Chair David Joyce will retire after 40 years at the company and names John Slattery, ERJ’s<\/b> president and CEO of Commercial Aviation, as president- and CEO-elect of GE Aviation<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Transports; in airlines, UAL<\/span><\/b> said it lined up a $5B loan backed by the carrier’s loyalty program and expects to have total available liquidity of approximately $17B at the end of Q3\/also entered an equity distribution agreement for up to 28M shares with Citi, BofA and JPMorgan; in trucking, WERN<\/span><\/b> was upgraded to buy from neutral at UBS saying it has shown strong execution and it provides exposure to the anticipated up cycle in TL pricing in 2021; the Baltic dry index, which tracks rates for ships ferrying dry bulk commodities and reflects rates for capesize, panamax and supramax vessels, rose 50 points, or about 5.4%, to 973, its highest since Jan. 2, as the Baltic capesize index jumped 125 points, or about 8.2% to 1,648, its highest since Dec. 24 (shares of SALT<\/span>, GOOGL<\/span>, SB<\/span>, SBLK<\/span>, DSX<\/span><\/b> among names leveraged to the data)<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Internet; SHOP <\/span><\/b>said is joining forces with WMT<\/span><\/b> to open Walmart Marketplace to SHOP’s sellers, integrating new sellers and expects to add 1,200 SHOP sellers this year (shares were also upgraded to overweight and tgt raised to $843 from $733 at Piper and raising estimates based on data-driven insights that point to accelerating trends in April and May coupled with increasing conviction that digital commerce penetration rates at 15% today could double or even triple in a post CV-19 world by 2030; the DoJ charged six ex-EBAY<\/span><\/b> employees with cyberstalking campaign; WUBA<\/span><\/b> shares jump after Warburg Pincus and General Atlantic take 58.com Inc. private for $8.7B billion, offering $56 per ADS share <\/o:p><\/p>\n

·     <\/span><\/span><\/span>Semiconductors; INTC<\/span><\/b> upgraded to Overweight from Sector Weight at KeyBanc and raising estimates moderately to reflect better PC, 5G, and datacenter dynamics relative to our expectations in April saying Intel’s 10nm manufacturing has now hit its stride, with products launching throughout the year; FORM<\/span><\/b> was upgraded to a Buy from Hold and raising our price target to $33 from $24 at Stifel saying they believe FormFactor is making inroads, and we naturally gravitate to recurring revenue, cash-rich models in a less certain demand environment<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Software movers; DOCU<\/span><\/b> will be replacing UAL<\/span><\/b> in NASDAQ-100 Index, NASDAQ-100 Equal Weighted Index beginning June 22; TWLO<\/span><\/b> upgraded to Overweight with $225 tgt at Piper as new data-driven insights using application downloads as a proxy for digital adoption suggests accelerating digital tailwinds in April and May could more than offset volume declines in travel; EA<\/span>, ATVI<\/span>, TTWO<\/span><\/b> shares among top gainers in the S&P as video games seen as beneficiaries of stay at home trade while also, prospect of AT<\/span><\/b> getting out of the videogame business – via a potential $4B sale of its Warner Bros. Interactive Entertainment unit as reported last Friday, may have also helped boost shares<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Hardware & Component news; CDNS<\/span><\/b> tgt raised to $101 and SNPS<\/span><\/b> tgt raised to $210 at RBC Capital saying they overall think the EDA sector will continue to benefit from the ongoing acceleration of technology. Specifically, we think Systems players (Amazon, Google, Facebook, Apple, Tesla and more) will continue to invest in new chip technology while the semiconductor industry simultaneously pushes to higher complexity chips<\/p>\n<\/div>\n

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