{"id":12842,"date":"2020-06-16T09:38:55","date_gmt":"2020-06-16T14:38:55","guid":{"rendered":"https:\/\/www.eoption.com\/2020\/06\/16\/mid-morning-look-june-16-2020\/"},"modified":"2020-06-16T09:38:55","modified_gmt":"2020-06-16T14:38:55","slug":"mid-morning-look-june-16-2020","status":"publish","type":"post","link":"https:\/\/www.eoption.com\/mid-morning-look-june-16-2020\/","title":{"rendered":"Mid-Morning Look: June 16, 2020"},"content":{"rendered":"
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Mid-Morning Look<\/o:p><\/span><\/b><\/p>\n

Tuesday, June 16, 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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799.29<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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3.10%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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26,562<\/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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84.89<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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2.77%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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3,151<\/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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226.40<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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2.33%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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9,955<\/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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49.30<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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3.47%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,468<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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U.S. equities surging higher for a second straight session, making investors regret selling last week on rising coronavirus\/second wave concerns with several factors boosting markets today including: 1) follow-through strength from the Federal Reserve comments yesterday saying 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, 2) reports overnight the White House is considering a $1 trillion infrastructure spending proposal (bridges and roads), 3) the BBC overnight reporting that a cheap and widely available drug called dexamethasone can help save the lives of patients who are seriously ill with coronavirus, and 4) the monthly (May) retail sales report MoM jumped 17.7%, easily topping the 8.4% estimate while the prior month was upwardly revised to (-14.7%) from (-16.4%). The rally again broad based, led by massive gains in transports (airlines), retailers and leisure names (cruise lines, theme parks) which were among the hardest hit sectors last week. Back to the drug news, the BBC report was from a study led by a team from Oxford University, which included 2,000 hospital patients who were given the steroid and were compared with more than 4,000 who didn’t get the drug. The report indicated that for “patients on ventilators it cut death risk from 40% to 28%,” and for “patients needing oxygen it cut death risk from 25% to 20%.” In his semiannual monetary policy report to congress, Federal Reserve Chair Jerome Powell said this morning that, “recently, some indicators have pointed to a stabilization, and in some areas a modest rebound, in economic activity. As of now, stocks in rally mode, following European and Asian markets overnight as well<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Retail sales MoM for May surged<\/b> 17.7%, easily topping the 8.4% estimate while the prior month was upwardly revised to (-14.7%) from (-16.4%) – data follows three straight months of negative readings. Retail sales ex-autos for May MoM jumped 12.4% vs. est. 5.5% and prior month revised to down (-15.2%) from prior (-17.2%) decline<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Industrial Production for May rose<\/b> +1.4%, below the 2.9% estimate vs. April -12.5% as manufacturing output rose +3.8% vs. est. 4.6% and vs. April (-15.5%); Capacity utilization for May was at 64.8% vs. 64% last month but below the 66.9% estimate by economists<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Business inventories for April fell<\/b> (-1.3%) vs. est. decline (-0.8%) while April inventory\/sales ratio 1.67 months’ worth vs. March 1.45 months; April business sales declined (-14.4) vs. March (-5.2%)<\/o:p><\/p>\n

·     <\/span><\/span><\/span>The NAHB U.S. Home Builders’ Confidence index in June rises<\/b> to 58 vs 37 last month; the present single family sales rises to 63 vs 42 last month, future single family sales gauge rises to 68 vs 46 last month and prospective buyers traffic measure rises to 43 vs 21 last 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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1.78<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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38.90<\/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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1.81<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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41.53<\/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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-0.80<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,726.40<\/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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-0.0066<\/o:p><\/span><\/p>\n<\/td>\n

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1.1255<\/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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107.57<\/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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0.056<\/o:p><\/span><\/p>\n<\/td>\n

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0.777%<\/o:p><\/span><\/p>\n<\/td>\n<\/tr>\n

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

·     <\/span><\/span><\/span>Housing & Building Products; building products and construction material stocks (USCR<\/span>, MAS<\/span>, GVA<\/span>, MLM<\/span>, MTZ<\/span>, DY<\/span><\/b>) were among the biggest winners after reports the White House is considering a $1 trillion infrastructure spending proposal (bridges and roads); in housing, LEN<\/span><\/b> Q2 revenue and profit exceed analysts’ expectations and also forecasts full-year home deliveries above Street estimates as home-buying trends rebound; MAS boosted its Q2 sales outlook, citing a better-than-anticipated rebound as now expects sales to fall about 8% from a year ago, vs. previous expectations of a decline of 15% to 20%; Bank America raised tgts in the housing and build products sector given positive consumer trends and the stock market’s continued march higher, as believe it is prudent to recognize the possibility that federal stimulus and low interest rates could at least temporarily cushion the economic blow<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Metals stocks rebound (X<\/span>, NUE<\/span>, FCX<\/span>, STLD<\/span><\/b>) rebound on reports of infrastructure\/stimulus in the amount of $1 trillion out of Washington; hopes GLNCY <\/span><\/b>will sell cobalt to TSLA<\/span><\/b> for use in vehicles being produced at new car plants in China and Germany, Financial Times reports\/the deal could involve Glencore supplying as much as 6K tons\/year of the metal a year for use in lithium-ion batteries; AA<\/span><\/b> downgraded to hold from buy at Deutsche Bank amid limited FCF and Aluminum market remaining oversupplied, 2Q20E EBITDA below consensus; SCCO<\/span><\/b> was downgraded from Buy to Neutral at Goldman Sachs as expect volumes to remain broadly flat in the next 3-4 years and potential Greenfield projects could be delayed given community opposition<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Retailers; shares of retailers surged following the stronger than expected May retail sales report (Retail sales MoM for May surged 17.7%, easily topping the 8.4% estimate while the prior month was upwardly revised to (-14.7%) from (-16.4%)) – lifting shares across the board (M<\/span>, KSS<\/span>, JWN<\/span>, URBN<\/span>, TGT<\/span>, ANF<\/span>, LULU<\/span>, NK<\/span><\/b>E); HEAR<\/span><\/b> guides Q2 sales up 75% to $74M-$77M vs. est. $43.8M; expects higher rev to drive higher adjusted ebitda for qtr and year; JILL<\/span><\/b> rises after entered into two Forbearance Agreements with the lenders under its ABL and term loan credit facilities for not exercising any rights and remedies until July 16, 2020<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Healthcare services and providers; SEM<\/span><\/b> was downgraded to underperform at Bank America and cutting ests and tgt as we see little upside into 2021 given that a little over half of SEM’s EBITDA is from businesses (outpatient rehab and Concentra) with above average exposure to COVID-19 and a recession; in managed car, HUM<\/span><\/b> was downgraded to market perform at Cowen solely on valuation while upgraded MOH<\/span><\/b> to outperform saying its competitive positioning is significantly enhanced by the Kentucky Medicaid win and Magellan deal, and we believe there is likely upside to current consensus 2020 and 2021 estimates<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>HEAR <\/span><\/b>+25%; guides Q2 sales up 75% to $74M-$77M vs. est. $43.8M; expects higher rev to drive higher adjusted ebitda for qtr and year; expects to enter July with channel inventories still needing significant replenishment<\/o:p><\/p>\n

·     <\/span><\/span><\/span>IDYA <\/span><\/b>+39%; after entering into a broad partnership with GSK <\/span><\/b>for synthetic lethality, an emerging field in precision medicine oncology where the co is set to get $100M in upfront cash and $20M equity in IDYA via a direct private placement<\/o:p><\/p>\n

·     <\/span><\/span><\/span>IQ<\/span><\/b> +23%; after Tencent (TCEHY<\/span><\/b>) aims to become the biggest shareholder in the video streaming rival to lower costs and counter competition said Reuters. Tencent has approached iQIYI’s 56.2% owner BIDU<\/span><\/b> to buy a stake of as-yet undetermined size, as per Reuters https:\/\/reut.rs\/37zIWcx<\/a> <\/o:p><\/p>\n

·     <\/span><\/span><\/span>JWN <\/span><\/b>+14%; retailers broadly higher given the monthly May retail sales report surging more than 17% MoM, helping boost retailers<\/o:p><\/p>\n

·     <\/span><\/span><\/span>MAS<\/span><\/b> +2%; boosted its Q2 sales outlook, citing a better-than-anticipated rebound as now expects sales to fall about 8% from a year ago, vs. previous expectations of a decline of 15% to 20%.<\/o:p><\/p>\n

·     <\/span><\/span><\/span>WW<\/span><\/b> +19%; after saying subscriptions rose 7% to 4.9 million in Q2, consisting of 3.8 million digital subscribers, and 1.1 million studio and digital subscribers<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>MRNA<\/span><\/b> -4%; following the positive BBC report overnight that a cheap and widely available drug called dexamethasone can help save the lives of patients who are seriously ill with coronavirus<\/o:p><\/p>\n

·     <\/span><\/span><\/span>NEM<\/span><\/b> -1%; as gold miners slip given the “risk-on” trading and out of defensive gold miners<\/o:p><\/p>\n

·     <\/span><\/span><\/span>NVDA<\/span><\/b> -1%; downgraded along with INTC at Morgan Stanley citing less room for upside<\/o:p><\/p>\n

·     <\/span><\/span><\/span>TMUS<\/span><\/b> -2%; “The T-Mobile network outage is unacceptable,” FCC Chairman Ajit Pai said on Twitter. “The FCC is launching an investigation<\/p>\n<\/div>\n

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