{"id":12853,"date":"2020-06-17T15:09:59","date_gmt":"2020-06-17T20:09:59","guid":{"rendered":"https:\/\/www.eoption.com\/2020\/06\/17\/market-review-june-17-2020\/"},"modified":"2020-06-17T15:09:59","modified_gmt":"2020-06-17T20:09:59","slug":"market-review-june-17-2020","status":"publish","type":"post","link":"https:\/\/www.eoption.com\/market-review-june-17-2020\/","title":{"rendered":"Market Review: June 17, 2020"},"content":{"rendered":"
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Closing Recap<\/o:p><\/span><\/b><\/p>\n

Wednesday, June 17, 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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-170.85<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.65%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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26,119<\/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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-11.33<\/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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3,113<\/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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14.66<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.15%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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9,910<\/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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-25.73<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1.77%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,426<\/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 finished the day mixed with the tech heavy Nasdaq Comp outperforming as stocks continue to push higher on economic recovery hopes, though the S&P and Dow Industrials rolled late day. Headlines of rising coronavirus cases and the potential impact it may have on future phase reopenings on a state-by-state wide case hit some sectors early as Florida reported its second-highest new daily increase of coronavirus cases with 2,610 announced. California COVID-19 cases rise by 3,455, third-biggest daily jump as cases rise 2.2% vs. 7-day average of 2%. Texas virus hospitalizations surge 11% in 24 hours. Stocks had rallied in recent days on economic and vaccine recovery hopes, getting another boost today on better housing data (followed strong retail sales data this week). U.S. Treasury yields and crude prices fell on concerns over the fresh outbreaks, but also drew some support from stimulus measures. Federal Reserve Chair Jay Powell testified for a second day before Congress saying again the Fed will use its "full range of tools" to cushion households and businesses, Powell told lawmakers, echoing remarks he made on Tuesday. Stocks pared gains late Wednesday after the NY Times reported John Bolton said Trump asked China’s Xi for reelection help, in excerpt of published book. <\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Oil prices ended lower,<\/b> but off its worst levels of the day following mixed weekly inventory data, as WTI crude dipped 42c or just over 1% to settle at $37.96 per barrel. The EIA said weekly crude stockpiles rose 1.215M barrels vs. estimate build of 130K barrels, while gasoline stockpiles fell a greater -1.666M barrels vs. est. draw of -750K barrels. A monthly report on the state of the global oil market from OPEC forecasts that oil demand will decrease in the second half of the year but at a much slower rate than the first half that was marked by lockdowns of businesses intended to limit the spread of COVID-19. The report estimates that the global market in the coming six months of 2020 will see a decline in crude demand of 6.4 million barrels per day, compared with a decline of 11.9 mmb\/d in the first half of the year. <\/o:p><\/p>\n

·     <\/span><\/span><\/span>Gold prices slipped<\/b> -$0.90 to $1,735.90 an ounce, recovering off earlier lows below $1,720 an ounce, getting a bounce midday as a hedge against concerns over a second coronavirus wave. Comments from Fed Chairman Powell in day two of congressional testimony about the economy and monetary policy helped demand as he again expressed caution and the need for additional stimulus measures and will maintain low interest rates for the near-term future. <\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Treasury yield slipped<\/b> following a well-received 20-year Treasury auction, as the 10, 20 and 30-year yields dipped around midday. Prior to the auction, yields were little changed with the 10-year around the 0.75% level following better housing data and as investors poured more money into stocks for a third day. The U.S. Treasury sold $17B in 20-yr notes at a yield of 1.314% vs. 1.329% when issued prior, as the bid-to-cover (demand) stood at 2.63 and indirect bidders were awarded 61.6% of the auction, with directs 16.5% and primary dealers 21.9%. The U.S. dollar<\/b> edged higher vs. most rival currencies following another positive economic data point this morning (housing starts), and as it recovers after two-weeks of selling pressure following dovish Fed commentary and actions. The euro is now down over 200 bps from its highs a week ago. <\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Housing Starts for May rise<\/b> 4.3% at 974K unit rate below the est. to rise 23.5% to 1.095M while April revised to 934K units from 89K; single-family starts rise +0.1% to 675K and multifamily up 15%; Building Permits for May rise 14.4% to 1.22M vs. est. up 16.8% to 1.245M (prior month revised to 1.066M unit rate<\/o:p><\/p>\n

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 <\/o:p><\/span><\/p>\n\n\n\n\n\n\n\n\n\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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-0.42<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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37.96<\/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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-0.25<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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40.71<\/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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-0.90<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,735.60<\/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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-0.0032<\/o:p><\/span><\/p>\n<\/td>\n

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1.1232<\/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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-0.12<\/o:p><\/span><\/p>\n<\/td>\n

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107.20<\/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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-0.011<\/o:p><\/span><\/p>\n<\/td>\n

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0.741%<\/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; group taking a breather after strong gains on the week following the better May advance retail sales data that showed a jump of over 17% for the latest month; TPX<\/span><\/b> said QTD orders have significantly improved from prior expectations and the Company now estimates Q2 net sales to be down only 15% (vs -30% prior) due to a strong May and June<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Consumer Staples & Restaurants; CPB<\/span><\/b> said June pantry sales are unusually high (+20% first week of June), despite reopening economy as per CNBC; BYND<\/span><\/b> says it will start selling a value pack of 10 plant-based burgers at most WMT <\/span><\/b>and TGT <\/span><\/b>stores, and select retailers across the U.S. available through mid-August with suggested retail price of $15.99, or $1.60 per patty; STZ <\/span><\/b>was added to JPMorgan focus list and upped its tgt to $200 as expects share gains for its Modelo and Corona brand families to accelerate as Mexico beer production normalizes; YUMC<\/span><\/b> shares active as the Financial Times reported the company is seeking banks for a potential HK secondary offering which could be worth up to $2b<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Housing & Building Products; FND<\/span><\/b> tgt raised to $65 from $48 at UBS in flooring space saying checks with multiple Pros\/contractors and other data points suggest that there is upside to the consensus 2Q SSS estimate; housing stocks in general seeing recent strength following better housing data and rates remaining low (TOL<\/span>, PHM<\/span>, MTH<\/span><\/b>), while home improvement names (LOW<\/span>, HD<\/span><\/b>) advanced early; Oppenheimer said in a note they are incrementally upbeat toward the shares of W<\/span>, WSM<\/span><\/b> and LOW<\/span><\/b> following mgmt meetings during their Consumer Conference yesterday saying Wayfair mgmt suggest that sales growth has remained elevated, while WSM sales momentum has strengthened further into Q2, both online and at re-opened stores.<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Casino & Leisure movers; DKNG<\/span><\/b> shares slip after files 33M share offering (19M for holders) through Goldman Sachs and Credit Suisse; cruise line stocks weak initially after NCLH<\/span><\/b> said that its cruises will not return until at least October\/the cruise line had previously cancelled departures through July due to the COVID-19 pandemic; ERI <\/span><\/b>18M share Secondary priced at $39.00 and VICI<\/span><\/b> 26M share Secondary priced at $22.15<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Auto sector; TSLA<\/span><\/b> shares active as California registrations of newly purchased Tesla vehicles plunged 37% over April and May, WSJ reports, citing research firm Dominion Enterprises; April registrations fell 16% y-o-y to 6,260 new vehicles in California, according to the report – Reuters; GM <\/span><\/b>files for potential 2-part, senior notes offering; size not disclosed, as per SEC filing; CNBC reported that HTZ <\/span><\/b>was told by the SEC that it has issues with its plan to sell stock – HTZ later filed an 8K as it suspends plans to sell $500M shares on SEC review<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Energy stocks dropped, led by weakness in refiners (VLO<\/span>, PSX<\/span>, HFC<\/span><\/b>) after VLO<\/span><\/b> was downgraded to neutral at Goldman Sachs today citing the recent run in shares; MUR<\/span><\/b> said capital expenditures were reduced by an additional $40m following 1Q results to ~700m, capex was down 50% from the initial 2020 forecast, general expenses probably will drop 40% to $130m to $140m y\/y after staff cut and a reduction in board compensation. <\/o:p><\/p>\n

·     <\/span><\/span><\/span>Inventory data showed: the EIA said weekly crude stockpiles rose 1.215M barrels vs. estimate build of 130K barrels, while gasoline stockpiles fell a greater -1.666M barrels vs. est. draw of -750K barrels and distillate inventories fell an unexpected -1.358M barrels vs. est. build of 3.-M barrels. Overnight the API reported that crude inventories rose 3.86M barrels last week, and gasoline inventories rose 4.27M barrels, distillate inventories show a build of 919K barrels, and Cushing inventories show a draw of 3.29M barrels.<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Bank movers; lenders nearly quadrupled the amount set aside for anticipated losses in Q1, according to the FDIC’s latest Quarterly Banking Profile, which showed U.S. banking industry profits tumbling nearly 70% to $18.5B amid the coronavirus pandemic. Over half of all banks reported a profit decline, and 7.3% of lenders were unprofitable. The amount of non-current loans rose 7.3% from the previous quarter, the biggest increase since 2010; in research, Raymond James upgraded shares of HWC<\/span>, OZK<\/span>, RF<\/span>, PNFP<\/span>, TFC<\/span>, BKL<\/span>, WSBC<\/span><\/b>, an LBAI<\/span><\/b> to Outperform from Market Perform EBSB raised to Strong Buy and downgraded ALRS<\/span>, HBCP<\/span><\/b> and ISTR<\/span><\/b>; in services, HRB<\/span><\/b> shares fell after earnings and MSCO said Q4 results reinforced expectations that 2020 will be a "lost tax season" due to the accelerated shift away from assisted filings<\/o:p><\/p>\n

·     <\/span><\/span><\/span>REITs; CXW<\/span><\/b> said the board has decided to look at "capital allocation alternatives" and that the group also has chosen to suspend the company’s quarterly dividend and said potential opportunities to recycle capital invested in certain leased assets will be analyzed (shares of rival GEO<\/span><\/b> also slipped on the headlines); one of the U.S. largest shopping malls, the Mall of America missed another payment on a $1.4 billion mortgage, putting the borrower more than 60 days delinquent<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Consumer finance and lending; MGI <\/span><\/b>said based on the improving trends, now expects Q2 revenue of ~$275M on CC basis (estimate $249.4M) and Q2 Adj. EBITDA of ~$55M on a CC basis; Citigroup raised its price tgts on MA<\/span><\/b> to $344 from $317 and Visa (V<\/b>) to $223 from $205 saying payments trends have been recovering with a significant improvement in the United States in May, driven by economic stimulus and gradual easing of lockdown measures<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Pharma movers; ACRS<\/span><\/b> shares jumped as the company receives FDA approval to start clinical study for experimental drug ATI-450 in hospitalized patients with COVID-19 and will provide funding and clinical drug supply to the University of Kansas Medical Center; TGTX<\/span><\/b> said it has completed the rolling submission of a New Drug Application to the U.S. FDA requesting accelerated approval of umbralisib, an investigational treatment for patients with previously treated marginal zone lymphoma and follicular lymphoma; AVEO<\/span><\/b> 8.5M share Secondary priced at $5.25; AMRN<\/span><\/b> settled its patent infringement dispute with Apotex over its marketing application seeking approval to sell a generic version of Vascepa (icosapent ethyl) in the U.S. Under the terms of the settlement agreement, Apotex may not sell its generic product until August 9, 2029<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Biotech movers; IFRX<\/span><\/b> said it is evaluating continuation into a placebo-controlled Phase III part of its trial of a monoclonal anti-human complement factor C5a antibody following encouraging topline results from its study of IFX-1 in Covid-19.<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Healthcare services, medical equipment and devices; CEMI<\/span><\/b> shares fall after the FDA revoked the emergency use authorization of its DPP COVID-19 IgM\/IgG System, its SARS-CoV-2 antibody test, citing concerns with accuracy; SWAV <\/span><\/b>1.7M share Secondary priced at $45.75; FLGT<\/span><\/b> announced that it has launched an at-home testing solution for the Coronavirus Disease (COVID-19)\/received Emergency Use Authorization (EUA) from the FDA for use in the United States<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Industrial & Machinery; EMR<\/span><\/b> said May total orders down 15%-20% range and trailing three-month underlying orders -15% and trailing three-month orders down 17%; IR<\/span><\/b> 12.1M share Spot Secondary priced at $30.70; WATT<\/span><\/b> rises following a deal with China-based Grepow Battery to develop wirelessly charged batteries for use in electronic devices with industrial and medical applications\/batteries will use its WattUp radio frequency based charging technology; Osram<\/b> cuts FY 2020 guidance, sees slight recovery in 3q and now sees adj Ebitda margin of 3%-6% down from prior view of 9%-11% (in the lighting sector); X<\/span><\/b> guides Q2 EPS loss to about ($3.06) vs. est. loss ($1.56) and sees 2q adj ebitda loss about $315M vs. est. loss $86.5M<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Transports; UPS<\/span>, WERN<\/span>, XPO<\/span><\/b> named new catalyst call buys at Deutsche Bank saying for UPS, see potential for an over 20% EPS beat in 2Q for UPS as believe market participants are overly (albeit understandably) negative on the profit impact from higher B2C mix in 2Q – Deutsche also says expects sizable beat from WERN<\/span><\/b> in Q2; KeyBanc was cautious on FDX<\/span><\/b> ahead of earnings as lower ests to reflect the full impact of European\/ U.S. shutdowns, negative mix from B2C growth, and elevated safety costs; in airlines, LUV <\/span><\/b>raised outlook for June revenue and capacity, citing continued improvement in passenger demand and bookings as now expects June revenue to be down 70% to 75% from a year ago, vs. prior for a decline of 80% to 85% – the outlook for June capacity has improved to a decrease in the 40%-to-50% range from 45% to 55%, while the expectation for load factor has increased to 40% to 50% from 35% to 45%.<\/o:p><\/p>\n

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

·     <\/span><\/span><\/span>Internet; AMZN <\/span><\/b>rises early after Needham initiated buy and $3,200 – but said calculate could be worth between $4,500-$5,000 long term; GRPN<\/span><\/b> posted a smaller than expected quarterly loss on slightly better revs while Q1 global units sold down 20% at 29.8M (several analysts called the report less worse than feared)<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Semiconductors; KLAC <\/span><\/b>was downgraded to in-line at Evercore\/ISI on valuation (though firm tgt of $210 above where stock trading); QCOM<\/span><\/b> unveiled its next 5G chipset, the Snapdragon 690, marking the first product in its 6-series chips to get support for the next-generation networking standard; the Philly semi index (SOX) was higher, led by gains in equipment stocks (ASML<\/span>, LRCX<\/span>, MTSI<\/span><\/b>, and AMAT<\/span><\/b>); NVDA<\/span><\/b> tgt was raised to $415 at Jefferies saying data center business is seeing positive trends in the near term, while gaming also strengthens<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Software movers; ORCL <\/span><\/b>Q4 results missed consensus expectations on revenue ($10.44B vs cons $10.64B), it beat expectations on EPS ($1.20 vs $1.15) and posted a strong PF operating margin (49.2% vs cons 47.3%) while provided incremental information regarding the revenue shift of the business stating that revenue now falls firmly into three camps: growing, stable, and declining; INWK<\/span><\/b> reports Q1 adj. EBITDA of $12.9M compared with $7.4M a year earlier saying selling, general and administrative expenses fell 7% to $51.9M, with further cost reductions planned; ADBE<\/span>, PYPL<\/span>, EA<\/span>, AAPL<\/span>, ADSK<\/span>, NOW<\/span><\/b> among 52-week highs in the tech space in the S&P 500 index<\/p>\n<\/div>\n

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