Friday 6/14/19=DJIA -17 NASDAQ -40
- Stocks rose after two days of declines, as energy shares staged a strong rebound alongside oil prices following attacks on two tankers in the Gulf of Oman.
- U.S. crude prices settled 2.2% higher at $52.22/bbl, a day after the price plunged 4% to its lowest level in five months amid continued increases in U.S. crude stockpiles and concerns about weaker demand growth.
- Despite the gains, some money managers say the attacks add another major geopolitical concern for investors to consider on top of U.S.-China trade tensions and fears of slowing economic growth.
- Energy (+1.3%) topped today's S&P sector leaderboard, but communication services (+1.1%) also came in strong, helped by Disney as the company's stock price target was raised to $160 from $125 at Morgan Stanley.
- The defensive-oriented sectors - health care (-0.1%), consumer staples (+0.1%), real estate (+0.1%) and utilities (+0.2%) - lagged after outperforming the broader market yesterday.
- Demand for U.S. Treasurys remained high, pushing the two-year yield 7 bps lower to 1.82% and the 10-year yield down by 4 bps to 2.09%.
Broadcom’s news hurt the tech sector on Friday. I did see some buying come into the stock as the day progressed, however.
- Broadcom (NASDAQ:AVGO): Q2 Non-GAAP EPS of $5.21 beats by $0.03; GAAP EPS of $1.64 beats by $0.07.
- Revenue of $5.52B (+10.0% Y/Y) misses by $180M.
- Shares +0.31%.
- Broadcom (NASDAQ:AVGO) has dipped 7.3% after hours after it yet again beat profit estimates, but fell short of revenue consensus despite a double-digit gain, and updated guidance as it expected a "broad-based slowdown in the demand environment."
- Revenues grew 10% overall as infrastructure software revenues that tripled more than made up for a decline in its core chip solutions business.
- Gross margin rose by 540 basis points to 72%, and net income ticked up to $2.33B from $2.24B.
- Geopolitical uncertainties and export restrictions on a large customer are tamping down demand, CEO Hock Tan says. "As a result, our customers are actively reducing their inventory levels, and we are taking a conservative stance for the rest of the year."
- Net revenue by segment: Semiconductor solutions, $4.09B (down 10%); Infrastructure software, $1.4B (up 216%); Intellectual property licensing, $16M (down 47%).
- For fiscal 2019 (ending Nov. 3), it's now guiding to net revenue of $22.5B (light of consensus for $24.33B), and a non-GAAP operating margin of 52.5%. Capex is seen at about $500M.
- Cash from operations was $2.67B; it used $1.33B on share repurchases and
This news also hurt the market on Friday.
- Japan +0.39%.
- Hong Kong -0.65%.
- China -0.99%.
- India -0.10%.
- London -0.86%.
- Paris -0.16%.
- Frankfurt -0.37%.
- Following yesterday's bearish report from OPEC that trimmed its forecast for world oil demand, the IEA has also slashed its estimates for the second straight month.
- "Until recently, the focus has been on the supply side with the familiar list of uncertainties - Iran, Venezuela, Libya, and the Vienna Agreement," the agency wrote in its latest monthly report. "Now, the main focus is on oil demand as economic sentiment weakens."
- Revising down its estimate by 100K barrels, the IEA now expects oil demand growth to reach 1.2M bpd this year, before rebounding to 1.4M bpd in 2020.
- Crude futures -0.8% to $51.84/bbl.
Latest IPO news.
- 2019 has seen the hottest IPO activity in years as investors bet on extremely fast growth and large markets opportunities.
- Adding on to the 100%-400% gains seen by Beyond Meat, Zoom, PagerDuty and CrowdStrike following their listings, Fiverr closed its first day up 90% on Thursday, while pet e-tailer Chewy upsized its IPO ahead of today's debut.
- There have been some disappointments as well, like ride-hailing giants Uber and Lyft, but the Renaissance Capital IPO ETF (NYSEARCA:IPO), a basket of the 60 or so most recent large IPOs, is up 34% this year, more than twice the performance of the S&P 500.
- Fiverr (NYSE:FVRR) close the first day of trading up a whopping 90% to $39.90.
- Shares are up another 4% after the close to $41.49.
- Pet retailer and PetSmart offshoot Chewy (CHWY) has priced an upsized initial public offering above its marketed range, IPO Boutique says.
- The company priced 46.5M shares at $22, above a marketed range of $17-$19/share.
- The offering might value the entire company up to $4.75B.
Gold is catching a bid.
- Set for its fourth weekly gain, gold overnight jumped as much as 1.2% to $1,359.50, surpassing the key $1,350 level for the first time since April 2018.
- "When the markets start waxing bearish economic data, it's the global recession they are concerned about, triggered by escalation of trade war," said Stephen Innes of SPI Asset Management. "With geopolitical risk premium ratcheting higher on the back of Middle East tensions and autonomy protest in Hong Kong, gold represents dependable insurance against those mounting geopolitical risks."