TheChek News Flow

Closing Stock Market Summary

The Nasdaq Composite (+0.6%) and S&P 500 (+0.03%) closed at new record highs on Thursday, largely due to continued strength in several mega-cap stocks that disproportionately benefited the Nasdaq. The Dow Jones Industrial Average (-0.04%) finished on the negative side of its flat line, and the Russell 2000 declined 0.9%. 

Apple (AAPL 136.87, +4.84, +3.7%) was the most influential mover today with a 3.7% gain, which was aided by a price-target increase to $152 from $144 at Morgan Stanley. Amazon (AMZN 3306.99, +43.61, +1.3%) and Facebook (FB 272.87, +5.39, +2.0%) joined Apple as mega-cap leaders and extended their weekly gains to between 6-8%. 

These household names propped up the S&P 500 information technology (+1.3%), consumer discretionary (+0.6%), and communication services (+0.3%) sectors. Semiconductor, homebuilding, and retail stocks also contributed to their positive performances. 

These were the only S&P sectors that closed higher, though. The energy sector (-3.4%) succumbed to profit-taking interest that trimmed its monthly gain to 11.5%. The materials (-1.5%), financials (-1.1%), and industrials (-0.8%) sectors also finished as laggards.

Providing more color on the homebuilding and semiconductor stocks, these spaces drew support from a better-than-expected housing starts and building permits report for December and a strong earnings report from Intel (INTC 62.46, +3.79, +6.5%), which was released early.

The iShares US Home Construction ETF (ITB 61.38, +0.90, +1.5%) and Philadelphia Semiconductor Index (+1.5%) closed at record highs.

In other developments, weekly initial claims remained elevated at 900,000 (Briefing.com consensus 845,000); Travelers (TRV 148.72, +3.70, +2.6%) beat EPS estimates on below-consensus revenue; and President Biden signed many executive orders, including one to invoke the Defense Production Act to help increase the supply of PPE to curb the spread of the coronavirus. 

Longer-dated U.S. Treasuries finished on a lower note. The 2-yr yield was flat at 0.12%, and the 10-yr yield increased two basis points to 1.11%. The U.S. Dollar Index declined 0.4% to 90.08. WTI crude futures declined 0.3%, or $0.16, to $53.12/bbl.

Reviewing Thursday's economic data:

• Initial claims for the week ending January 16 declined by 26,000 to 900,000 (consensus 845,000). Continuing claims for the week ending January 9 decreased by 127,000 to 5.054 million.
  • The key takeaway from the report should speak for itself. The level of initial claims is still terribly high and indicative of why calls for more jobless assistance are being made.
• Housing starts increased 5.8% m/m in December to a seasonally adjusted annual rate of 1.669 million (consensus 1.560 million). That was the strongest pace of starts since September 2006. Building permits rose 4.5% m/m to 1.709 million (consensus 1.600 million), which was the strongest pace since August 2006.
  • The key takeaway from the report is that the growth was driven entirely by single-unit dwellings. The growth there was strong, too, which is a good indicator for the homebuilding stocks.
• The Philadelphia Fed Index jumped to 26.5 in January (consensus 12.0) from an upwardly revised 9.1 in December (from 8.5).

Looking ahead, investors will receive Existing Home Sales for December and the flash IHS Markit Manufacturing and Services PMIs for January on Friday.

• Russell 2000 +8.4% YTD
• Nasdaq Composite +5.0% YTD
• S&P 500 +2.6% YTD
• Dow Jones Industrial Average +1.9% YTD

After Hours Summary: Main headline is weak earnings for several large tech names: IBM -7%, STX -5%, INTC -4.7%; SWIR +12.8% rises on bullish guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: SWIR +12.8% (also CEO to retire), SIVB +5.4%, WAL +2.6%, OZK +2.4%, FOR +1.1%, ASB +0.1% (also CEO to retire)

Companies trading higher in after hours in reaction to news: ADMP +68.5% (announces availability of SYMJEPI products through Walgreens program), FLDM +24.2% ( receives CE-IVD mark for saliva-based Advanta Dx SARS-CoV-2 RT-PCR Assay), XGN +17.8% (says that all AVISE test offerings are now a contracted in-network service with Tufts Medical Center), AMRN +4.4% (announces inclusion of icosapent ethyl in China's updated Guidelines), TTEK +3.9% (awarded $25 mln contract from US Agency for Intl Development), AMD +2.4% (in sympathy with INTC earnings), VRRM +1.9% (to acquire 100% of the issued share capital of Redflex), MMP +1.4% (MMP and EPD to jointly develop a futures contract based on Houston oil), INCY +1.3% (FDA accepts BLA for retifanlimab), ACGL +0.4% (announces estimated catastrophe losses for Q4), GSK +0.1% (ViiV Healthcare announces FDA approval of Cabenuva; aslo discontinues trial for ulcerative colitis), NOC +0.1% (awarded $3.6 bln Air Force contract)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: IBM -7%, STX -5%, INTC -4.7%, PPG -2.7%, ISRG -1.3%, CSX -0.6%, NBHC -0.3% (also raises dividend slightly), ED -0.1% (guides to low end of prior guidance; raises dividend slightly)

Companies trading lower in after hours in reaction to news: PGEN -8.2% (stock offering), GSL -6.9% (stock offering), IMMP -5.7% (says its licensing partner GSK has discontinued trial for ulcerative colitis), ACB -5.5% (announces US$125 mln bought deal financing agreement), WDC -3.1% (in sympathy with STX earnings), ACAM -2.4% (closes business combination with CarLotz), CARG -2.3% (names new CEO and CFO), GLP -1.7% (files for $500 mln mixed securities shelf offering), SENS -0.8% (announces $50 mln bought deal offering of common stock), F -0.7% (will replace Takata airbag inflators in 2.7 mln US vehicles; also provides update on pension/OPEB), ARKO -0.5% (stock offering), EPD -0.1% (MMP and EPD to jointly develop a futures contract based on Houston oil)

Gapping down
In reaction to earnings/guidance:

• FCEL -6.7%, UAL -2.1%, AA -1.8%, TAL -1.8%, NTRS -1.4%, DCBO -1.2% (guides Q4 revs slightly above consensus; also announces stock offering), STL -0.7%, DFS -0.6%, SBNY -0.5%

Other news:

• CYRX -8% (prices offering of 3,787,878 newly issued shares of common stock at $66.00 per share)
• AWH -7.9% (files for $100 mln mixed securities shelf offering)
• INO -6% (prices offering of $17.7 mln shares of common stock at $8.50 per share)
• FTOC -5.2% (in talks to merge with online payments firm Payoneer, according to Bloomberg)
• CTMX -4.8% (prices offering of 14,285,714 shares of its common stock at $7.00 per share)
• ONCS -4.5% (stock offering)
• VNET -4.3% (convertible notes offering)
• ORC -4.2% (prices offering of 7.6 mln shares of common stock worth $40.3 mln)
• SI -3.7% (stock offering)
• NVTA -2.3% (stock offering)
• AQB -1.1% (files for $200 mln mixed securities shelf offering)

Analyst comments:

• MAXR -4.6% (downgraded to Neutral from Overweight at JP Morgan)
• U -2% (downgraded to Underperform from Neutral at BofA Securities)
• TGI -1.4% (downgraded to Neutral from Outperform at Credit Suisse)
• DD -1.2% (downgraded to Neutral from Buy at BofA Securities)
• BJRI -0.9% (downgraded to Hold from Buy at Deutsche Bank)
• HE -0.8% (downgraded to Sell from Neutral at Guggenheim)
• HXL -0.8% (downgraded to Underperform from Neutral at Credit Suisse)
• VMW -0.5% (downgraded to Sector Weight from Overweight at KeyBanc Capital Markets)

Gapping up
In reaction to earnings/guidance:

• KMI +3.1%, BANC +2.9%, PLXS +2.6%, TRV +2.1%, KEY +2%, WNS +1.7%, WTFC +1.4%, HWC +1.3%, TFC +0.9%, WBS +0.9%, FBC +0.8%, UMPQ +0.7%, BKU +0.6%, SASR +0.5%, BKR +0.5%

Other news:

• GENE +82.8% (provides update on further development on the COVID-19 serious disease risk Polygenic Risk Score Test)
• OCX +11.7% (announces registered direct offering of $25 mln)
• OSUR +10.9% (Oragene Dx saliva collection kit included in industry's first FDA authorization for a whole exome sequencing platform)
• EXPC +10.5% (Cathie Wood's ARK Autonomous Technology & Robotics ETF discloses purchase of 195.4K shares)
• LCTX +9% (CFO resigns)
• BLD +4.4% (acquires LCR Contractors)
• GLPG +4.2% (receives NICE recommendation for Jyseleca for rheumatoid arthritis)
• APT +3.8% (President Biden signs mask mandate on federal property, as expected)
• CMRX +1.9% (prices offering of 11.765 mln shares of common stock at $8.50 per share)
• FBC +0.8% (increases dividend)
• BSX +0.7% (announces agreement to acquire Preventice Solutions)

Analyst comments:

• TELL +10.8% (upgraded to Outperform from Peer Perform at Wolfe Research)
• DBD +7.3% (upgraded to Overweight from Neutral at JP Morgan)
• FSLY +3.9% (upgraded to Outperform from Perform at Oppenheimer)
• CIEN +3.7% (upgraded to Buy from Neutral at BofA Securities)
• UAA +3.2% (upgraded to Buy from Hold at Deutsche Bank)
• SYNA +3% (upgraded to Neutral from Underweight at JP Morgan)
• CPRI +2.1% (upgraded to Buy from Hold at Deutsche Bank)
• FRPT +1.8% (upgraded to Outperform from Perform at Oppenheimer)
• VFC +1.6% (upgraded to Buy from Hold at Deutsche Bank)
• PYPL +1.2% (upgraded to Buy from Neutral at BTIG Research)
• SPR +1.2% (upgraded to Outperform from Neutral at Credit Suisse)