TheChek News Flow

Closing Stock Market Summary

The S&P 500 fell 0.5% on Wednesday, pressured by growth concerns, profit-taking activity, and a flush of selling interest into the close. Microsoft (MSFT 323.17, +13.06, +4.2%) and Alphabet (GOOG 2928.55, +135.11, +4.8%) mitigated the decline with strong gains following their earnings reports.

The Nasdaq Composite (unch) was relatively unchanged, while the Dow Jones Industrial Average (-0.7%) and Russell 2000 (-1.9%) closed lower. 

For a more accurate representation of the market, the Invesco S&P 500 Equal Weight ETF (RSP 156.45, -2.11) fell 1.3%, nine of the 11 S&P 500 sectors closed lower with energy (-2.9%) being the weakest link, and declining issues outpaced advancing issues by more than a 2:1 margin at the NYSE and Nasdaq. 

The communication services (+1.0%) and consumer discretionary (+0.2%) sectors closed higher, largely due to Alphabet, Amazon.com (AMZN 3392.49, +16.42, +0.5%), and Tesla (TSLA 1037.86, +19.43, +1.9%).

While the S&P 500 traded flat for most of the day, growth concerns were burgeoning in the Treasury market in the form of startling curve-flattening activity. The 2-yr yield increased three basis points to 0.48% while the 10-yr yield dropped nine basis points to 1.53%.  The U.S. Dollar Index declined 0.1% to 93.89.

The increase in the 2-yr yield suggested that investors continued to increase bets that the Fed would hike rates sooner than expected due to inflation. In turn, fears that the economy could be adversely affected by a policy mistake likely contributed to the price action in longer-dated yields, further exacerbated by short-covering activity. 

This narrative wasn't kind to the cyclical stocks, especially bank stocks with the compression in yields. The SPDR S&P Bank ETF (KBE 54.79, -1.85) fell 3.3%, versus the 1.7% decline in the S&P 500 financials sector. Oil prices ($82.68, -1.97, -2.3%) were further pressured by bearish inventory data.

Aside from the two mega-caps, Dow components Visa (V 215.78, -16.04, -6.9%), Coca-Cola (KO 55.52, +1.05, +1.9%), McDonald's (MCD 242.73, +6.31, +2.7%), and Boeing (BA 206.61, -3.20, -1.5%) also reported earnings. V and BA closed lower, while KO and MCD closed higher.  

Separately, lawmakers continued to disagree on the contents of a spending package while an FDA Advisory panel recommended the Pfizer (PFE 42.97, -0.59, -1.4%)-BioNTech (BNTX 278.77, -13.62, -4.7%) COVID-19 vaccine for children 5-11 years old. 

Reviewing Wednesday's economic data:

• Total durable goods orders declined 0.4% month-over-month in September (consensus -0.8%) and orders, excluding transportation, rose 0.4% (Briefing.com consensus +0.5%). On a year-over-year basis, total durable goods orders were up 23.4%. Excluding transportation, they were up 17.3%.
  • The key takeaway from the report is embedded in the line for nondefense capital goods orders, excluding aircraft, which is a proxy for business spending. That line showed a 0.8% increase on top of a 0.5% increase in August, underscoring that there was a pickup in business spending activity in September.
• The Advance report for International Trade in Goods for August showed a deficit of $96.3 billion, versus a revised $88.2 billion (from $87.6 billion) in August. The Advance report for Retail Inventories for September decreased 0.2%, while the Advance report for Wholesale Inventories for September increased 1.1%.
• Weekly crude oil inventories increased by 4.27 mln barrels after decreasing by 431,000 barrels during the previous week.

Looking ahead, investors will receive the advance estimate for Q3 GDP, weekly Initial and Continuing Claims, and Pending Home Sales for September on Thursday.

• S&P 500 +21.2% YTD
• Nasdaq Composite +18.2% YTD
• Dow Jones Industrial Average +16.0% YTD
• Russell 2000 +14.1% YTD

After Hours Summary: LC +28.1%, F +9%, SNBR +7.8%, ALGN +7.7%, ETD +7.1%, KLAC +3.6% higher on earnings; TWLO -12.7%, NTGR -7.6%, UPWK -6.4%, EBAY -5.5%, NOW -4.3% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: LC +28.1%, WOLF +14.5%, F +9% (also co will reinstate dividend starting in Q4), SNBR +7.8%, ALGN +7.7% (also announces new study that validates benefits of iTero 5D), CYH +7.6%, ETD +7.1%, MC +6.7%, MXL +6.3%, MTH +6.2%, PI +6.1%, SU +5.8% (also increases dividend and share buyback authorization), CCS +5.6%, UCTT +5.2%, SCI +5%, CONE +4.4%, KLAC +3.6%, SIMO +2.4%, URI +2.2%, CG +2.1%, SAVE +1.7%, XLNX +1.7%, BOOT +1.6% (also names new CFO), MOH +1.6%, MKSI +1.4%, STC +1.4%, INVH +1.3%, WH +1.2%, LPG +1.2%, CTSH +1%, PDM +0.9%, PPD +0.8%, OII +0.7%, NLY +0.5%, BMRN +0.4%, PGRE +0.4%, CINF +0.3%, NDLS +0.3%, EXR +0.2%, AXS +0.1%, ORLY +0.1%, RE +0.1%, THG +0.1%, WFG +0.1%

Companies trading higher in after hours in reaction to news: MIME +7.5% (mulling options including potential sale, according to WSJ), DDD +4.3% (acquires Volumetric Biotech for up to $400 mln;also expands bioprinting program with UTHR), INSE +3.5% (signs contract with MLB Players Alumni Assn), CRVS +3.5% (announces partner Angel Pharma received IND approval for Phase 1/1b trial of CPI-818 in China), SESN +2.6% (provides FDA warning letter clarity), HLBZ +2.1% (stock offering), TDAC +1.8% (expects $63 mln in cash proceeds from combination with Lottery.com), QS +1.3% (announces release of third-party test results for solid-state lithium-metal battery cells), TECK +1% (receives approval from TSX for normal course issuer bid), ASM +0.5% (to acquire La Preciosa project from CDE), CNP +0.3% (receives approval for 400MW of renewable energy serving Indiana), ALNY +0.2% (reports top-line results from HELIOS-A Phase 3 study of vutrisiran), SGMS +0.2% (BAM nearing deal to buy SGMS's global lotteries business for $6 bln, according Bloomberg), SBUX +0.1% (announces significant wage increase)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: BCOV -14.2%, TWLO -12.7% (also COO to resign, names new COO), NTGR -7.6% (also authorizes repurchase of up to an incremental 10% of shares), FLEX -7.5%, RBBN -7.2%, UPWK -6.4%, FORM -6%, FLS -5.6%, EBAY -5.5%, AXTI -4.9%, CLB -4.6%, PPC -4.6%, NOW -4.3%, TDOC -4.3%, PLXS -4.1%, NOVA -4.1%, EW -3.7%, PEGA -3.7%, JBT -3.5%, IRBT -2.8%, MYRG -2.3%, AZPN -2.1%, FARO -2.1%, NGVT -2%, AFL -1.9%, CDE -1.8% (also also selling its La Preciosa project to ASM), VICI -1.5%, AR -1.4%, YUMC -1%, EVTC -0.9% (also selected as the issuer processor of a new payment product for Caja Popular), AEM -0.8%, AGI -0.8%, EQT -0.7%, TROX -0.7%, ALGT -0.6%, FWRD -0.5%, AM -0.4%, MSA -0.4%, CACI -0.2%, FIX -0.2% (also increases dividend), RJF -0.2%, AVB -0.1%, BHE -0.1%, CNO -0.1%, EHC -0.1%, KN -0.1%, MAA -0.1%, SRI -0.1%

Companies trading lower in after hours in reaction to news: RPTX -4.2% (stock offering), KREF -3.9% (stock offering), OSMT -2.7% (stock offering), FDP -0.1% (raising prices on bananas, pineapples and fresh-cut fruit), OEC -0.1% (CFO departs)

Gapping down
In reaction to earnings/guidance:

• DRVN -13.4%, LBRT -10.1%, HOOD -9%, FBC -6.7%, RRC -6.3%, DB -5.9%, TXN -4.8%, ALKS -4.5%, AGYS -4.4%, NYCB -4.4%, NCR -4.2%, EQNR -3.9%, NBR -3.5%, UMBF -3.4%, NOV -3.1%, CSGP -3%, QS -2.9%, VBTX -2.9%, V -2.4% (also increases dividend), DT -2.2%, HA -1.9%, WAB -1.9%, BSX -1.6%, DTE -1.1%, FISV -1%, ROL -0.9%, WSBC -0.8%, CME -0.8%, IP -0.7%, AMD -0.6%

Other news:

• CRTX -68% (reports data from Phase 2/3 GAIN trial; co-primary endpoints were not met in overall population)
• ANGN -52.2% (Angion Biomedica and Viror Pharma report phase-III trial of ANG-3777 did not meet primary endpoint)
• DBVT -22.2% (provides regulatory updates from the FDA and EMA for Viaskin Peanut)
• VALN -9.1% (stock offering)
• FDMT -5% (stock offering)
• PHAT -1.5% (stock offering)
• CLAR -1.2% (prices offering of 2.75 mln shares of common stock for gross proceeds of $74.25 mln)

Analyst comments:

• NET -3.5% (downgraded to Hold from Buy at Jefferies)
• ECL -1.1% (downgraded to Underweight from Neutral at JP Morgan)

Gapping up
In reaction to earnings/guidance:

• ENPH +14.8%, WIRE +12.3%, SLAB +6.6%, FBHS +4.2%, FFIV +3.9%, UMC +3.9%, BCO +3.6%, GRMN +3.5%, SPOT +3.3%, MCD +3.2%, TER +2.9%, CAMT +2.9%, KO +2.9%, TWTR +2.8%, TENB +2.8%, EVR +2.7%, HOG +2.5%, ZWS +2.4%, GM +2.4%, GSK +2.3%, PFG +2% (also increases dividend), AJRD +1.9%, VRT +1.9%, TMO +1.8%, RES +1.7%, JNPR +1.6%, MSFT +1.5%, TECK +1.3%, CSTM +1.3%, KHC +1.3%, MANH +1.2%, TDY +1%, AMP +0.9%, CB +0.9%, MAS +0.9%, ACCO +0.8% (also increases dividend), BA +0.8%, IEX +0.7%, LFUS +0.6%

Other news:

• NRIX +9.9% (initial data from Phase 1a dose escalation trial of NX-2127)
• NOVA +6.2% (NOVA partners with CHPT to offer Sunnova customers EV charging solutions)
• EVGO +5.7% (announces the opening of a new EV charging station)
• OCGN +5.7% (submitted an Investigational New Drug application with the FDA to evaluate the COVID-19 vaccine candidate)
• CVNA +3.4% (Carvana and Hertz (HTZZ) announce partnership to boost online sales)
• TSLA +1.6% (Ron Baron is still bullish on TSLA despite $1 trln valuation - CNBC interview)
• AEP +0.8% (to sell Kentucky operations to Liberty for $2.846 bln enterprise value)
• GTY +0.7% (increases dividend)

Analyst comments:

• ABT +1.1% (upgraded to Overweight from Neutral at Atlantic Equities)