Monday 7/15/19=DJIA +7 NASDAQ +12
It was a fairly quiet day in the market today. The market is waiting for earnings season, which gets underway with 59 S&P 500 stocks reporting earnings this week. A lot of Best Stocks Now had a very good day once again. My biggest percentage winners were FNKO, CYBR, SHOP, AMD, and VCYT. CYBR had a really good day! I own it in my Ultra Growth Portfolios.
I sent out tweets on the following stocks that caught my eye this week: OLED, V, LPSN, GLPG, EADSY, AZUL, AMD, and AAN.
I had a brand-new article about one of my favorite dividend and growth stocks published on Seeking Alpha today.
I begin the week with 565 B+ or better ranked stocks. This is still a very strong market.
Here is how we finished last week.
- Stocks closed out a strong week with the S&P 500, Dow and Nasdaq all at record highs, as Fed Chairman Powell signal of likely lower rates later this month outweighed growing worries about the state of the global economy.
- But the start of quarterly reports next week could test bullish sentiment, as consensus numbers suggest an overall decline in corporate earnings ahead.
- For the week, the Dow jumped 1.5%, S&P 500 pierced 3,000 for the first time en route to an 0.8% gain and the Nasdaq ended the week up 1%.
- Eight out of 11 S&P sectors posted gains on Friday, with the cyclical industrials (+1.8%) and consumer discretionary (+1.1%) groups topping the leaderboard to end the week with respective gains of 1.2% and 2.1%.
- On the downside, the health care sector (-1.2%) lagged well behind, with drugmakers pressured after Illumina issued weaker than expected guidance for Q2 and lowered its outlook for the fiscal year.
- U.S. Treasury prices slowly rose into the green by the end of the day, with both the two-year and 10-year yields ending a basis point lower at 2.11% and 1.84%, respectively.
- Crude oil posted strong weekly gains, but U.S. WTI crude added just a penny today to settle at $60.21/bbl.
Don’t look now, but here comes earnings season.
- Big banks start reporting second-quarter earnings today and investors will be closely watching for signs of how much the Fed’s change in rate policy could hurt the banking business.
- The rate curve also been flattening, making it harder for lenders to drive profit through the difference between long- and short-term interest rates.
- Ahead of the Q2 results, U.S. stock index futures are pausing for breath following a record-setting performance on Wall Street last week.
- Along with the banks, several major tech names like Netflix and Microsoft will deliver quarterly results over the next few days, setting the tone for the rest of Q2 earnings season.
- Consensus analysts expect an about 1% year-over-year decline in aggregate earnings per share for the second quarter, amid deteriorating economic indicators.
- It's good to note that Wall Street analysts were similarly despondent heading into the Q1 earnings season, but companies ultimately outperformed.
Will this motivate China to make a deal with us?
- Weakened by trade tensions with the U.S., China's economic growth decelerated to its slowest pace since 1992, growing by 6.2% in the second quarter and prompting expectations of more stimulus.
- The data was weighed down by an impasse in negotiations that shattered hopes for a trade deal in late May, though President Trump and Xi Jinping got discussions back on track in the waning days of June.
- Separate economic figures handily topped forecasts as the country’s industrial output grew 6.3% in June from a year earlier, while retail sales surged 9.8%.
Some progress being made…
- The U.S. may approve licenses for companies to re-start new sales to Huawei in as little as two weeks, according to Commerce Secretary Wilbur Ross.
- It's a sign President Trump's recent effort to ease restrictions on the Chinese telecom equipment supplier could move forward quickly amid chip industry lobbying, coupled with Chinese political pressure.
- Out of $70B that Huawei spent buying components in 2018, some $11B went to U.S. firms including Qualcomm (NASDAQ:QCOM), Intel (NASDAQ:INTC
Another provocation, however.
- Chinese companies will cut business ties with U.S. firms selling arms to Taiwan, according to China's Foreign Ministry, declining to give details of the sanctions in a move likely to worsen ties with Washington.
- Last week, the U.S. State Department approved the sale of the weapons requested by Taiwan, including 108 General Dynamics (NYSE:GD) M1A2T Abrams tanks and 250 Stinger missiles, which are manufactured by Raytheon (NYSE:RTN).
- The job cuts are expected to affect workers at Huawei’s U.S.-based research and development subsidiary, Futurewei Technologies, WSJ reports.
- The unit employs about 850 people in research labs across the country, including in Texas, California and Washington state.
A deal in the oil patch.
- Callon Petroleum (NYSE:CPE) agrees to acquire Carrizo Oil & Gas (NASDAQ:CRZO) in all-stock deal valued at $3.2B, saying the combination will create "a premier Texas operator with an extensive inventory of core Permian and Eagle Ford locations that compete for capital on a full-cycle basis."
- Under the deal terms, CRZO shareholders will receive 2.05 CPE shares for each share owned, representing $13.12 per CRZO share based on last Friday's closing stock price and an 18% premium to Carrizo's trailing 60-day volume weighted average price.
- CPE says the combined company will have a ~200K net acre footprint in the Permian Basin and Eagle Ford Shale on a pro forma basis, including 90K-plus net acres in the Delaware Basin, and 2,500 total gross horizontal drilling locations; the companies produced a combined 102K boe/day in Q1 2019 (71% oil).
- CRZO +6.8%, CPE -12.5% pre-market.
- Symantec (NASDAQ:SYMC) gains 1.7% pre-market after the DealReporter says Broadcom (NASDAQ:AVGO) has secured $23B in financing.
- Last week, CNBC sources said Broadcom's acquisition of SYMC could be announced today.
- The DealReporter report came out late Friday.
- The $23B would reportedly include $21B for the purchase price and $2B for SYMC's convertible notes and other outstanding debt. The rest of Symantec's debt would be rolled over.
- Post updated with more details from the report.
The DEAL IS OFF, however.
- CNBC sources say Broadcom (NASDAQ:AVGO) and Symantec (NASDAQ:SYMC) have ended deal talks because SYMC wouldn't accept less than $28/share.
- Symantec shares plunge 17.1% pre-market to $21.20. AVGO gains 2.7% to $293.
I still see plenty of Roundup on the shelves at Home Depot and Lowe’s.
- A U.S. District Judge has rejected Bayer's (OTCPK:BAYRY) request for a new trial in the case of a California man who was awarded $80M by a jury after it found exposure to the company's Roundup weedkiller caused his cancer.
- Judge Chhabria, who is expected to issue a second ruling Monday on whether to reduce the damages in the case, ruled the plaintiff presented "sufficient admissible evidence" to the jury that exposure to Roundup caused his cancer.
- The judge is handling the collection of hundreds of federal lawsuits involving Roundup.
It seems to me that Facebook got of light.
- Facebook (FB +0.9%) is rising to session highs after WSJ reports the Federal Trade Commission has approved a settlement of about $5B over privacy probes.
- That's in line with the amount Facebook had set aside in its last earnings report for such a settlement.
- The commission voted 3-2 along party lines, with the GOP majority supporting the deal.
- The settlement is expected to include other government restrictions on Facebook's approach to user privacy.
Ready, set, go!
- Shoppers will be clicking away over the next 48 hours as Amazon (NASDAQ:AMZN) extends Prime Day to a two-day event, while Target (NYSE:TGT), Walmart (NYSE:WMT) and eBay (NASDAQ:EBAY) capitalize on the online traffic with sales of their own.
- Amazon, which sold over 100M products over Prime Day 2018, did not give sales totals in dollars and likely won’t this year, though IgnitionOne estimates the retail giant will generate sales of $6.1B (a $2B improvement over last year).
- That's one reason for Amazon's surging share price, which climbed over 460% in the last five years by outpacing retail rivals.
- As Prime Day kicks off, other big winners on Wall Street could include major delivery carriers FedEx (NYSE:FDX) and UPS (NYSE:UPS).
Earnings season is now underway. 59 S&P 500 companies will report this week.
- Citigroup (NYSE:C): Q2 Non-GAAP EPS of $1.83 beats by $0.03; GAAP EPS of $1.94 beats by $0.13.
- Revenue of $18.76B (+1.6% Y/Y) beats by $270M.
- Shares +1.1% PM.
- Cannabis producers continue their downward path. Most are down substantially this year as investors continue to sober up with their valuations.
- Selected tickers: Tilray (TLRY -2.9%), Aurora Cannabis (ACB -4.3%), Cronos Group (CRON -6.1%), Canopy Growth (CGC -7%)
Interesting small-cap stock.
- NanoString Technologies (NASDAQ:NSTG) has collaborated with the MODEL-AD consortium for the development of two nCounter gene expression panels for use in Alzheimer’s disease (AD) research, one for use in mouse studies and another for use in human studies.
- These panels measure the expression of 770 genes covering 30 modules discovered in a recent study of human brain tissue.
- The collaborators have used the Mouse AD Panel to characterize five IU/JAX MODEL-AD mouse models to date.
Breakout of the day.
- Galapagos NV (NASDAQ:GLPG) is up 16% premarket on average volume in response to the news that Gilead Sciences will up its stake in the company to 22% coupled with a 10-year R&D agreement.
Charter Comm. (CHTR) was my featured stock of the day on my radio show today.
- Disney (NYSE:DIS) is set to renew its multiyear carriage agreement with Charter (NASDAQ:CHTR), the second-largest U.S. pay TV provider, at the beginning of August, sources told CNBC, but this particular deal has widespread implications for how future TV carriage deals will be crafted.
- That's because Disney is about to transition to a new era of direct-to-consumer streaming. WarnerMedia and NBC Universal, the next largest media companies, will follow in its footsteps in early 2020.
- The outcome could lead to more contentious battles between TV providers and content creators, and perhaps stem the tide of rising cable TV bills.