After Hours Summary: CALM +4.6% higher on strong earnings; SGH -0.2% basically flat on earnings; NEO -4.8% falls on offeringAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: CALM +4.6%, ACMR +3.3%, PROF +0.9%
Companies trading higher in after hours in reaction to news: GRBK +2.3% (closes on purchase of 2,400 homesites), WFC +0.2% (Office of the Comptroller of the Currency terminates AML-Related Consent Order), HMC +0.2% (provides December sales data), MYGN +0.1% (to pursue strategic alternatives for autoimmune unit, realigns international operations), PLAN +0.1% (names Bill Schuh as Chief Revenue Officer), FIX +0.1% (to acquire Tennessee Electric Co), CLNC +0.1% (new CFO), CWK +0.1% (new CFO), ASB +0.1% (to sell wealth management unit), KAMN +0.1% (gets certification for sale of its K-MAX helicopter in Brazil)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: SGH -0.2%
Companies trading lower in after hours in reaction to news: TMDI -15.4% (announces "bought deal" offering at $1.55 per unit), NEO -4.8% (stock offering and convertible notes offering), CHL -2.8% (NYSE said to weigh reverting to original decision to delist CHL, CHA, CHU, according to Bloomberg), CHU -2.4% (NYSE said to weigh reverting to original decision to delist CHL, CHA, CHU, according to Bloomberg), RGNX -2% (provides update on RGX-314 ; announces new gene therapy program for DMD), CHA -1.6% (NYSE said to weigh reverting to original decision to delist CHL, CHA, CHU, according to Bloomberg), NKTR -1% (Chief Medical Officer to step down), WLL -0.3% (announces 2021 capital, operating costs and production guidance), MGLN -0.2% (S&P 'BB+' ratings remain on CreditWatch Positive after acquisition announcement), Y -0.1% (divests from Stranded Oil Resources investment), PRMW -0.1% (Florida site achieves certification), GPS -0.1% (Athleta segment introduces first-ever sleep collection)
Closing Stock Market SummaryThe S&P 500 advanced 0.7% on Tuesday in a relatively broad-based advance led by energy sector (+4.5%). The Russell 2000 (+1.7%) outperformed, followed by the Nasdaq Composite (+1.0%) and Dow Jones Industrial Average (+0.6%).
The price action today signaled a continuation of the buy-the-dip mindset from yesterday afternoon, as investors latched onto the so-called recovery theme that benefits small-caps, cyclical sectors, and commodities (at the expense of the dollar). The better-than-expected ISM Manufacturing Index for December was cited as a positive catalyst.
Briefly, the manufacturing index rose to 60.7% in December (Briefing.com consensus 56.4%) from 57.5% in November for its seventh straight expansionary reading (50.0% or greater).
Energy stocks followed oil prices higher ($49.91/bbl, +2.32, +4.9%), which settled close to $50 per barrel. Most of the oil gains were notched before an OPEC+ decision to keep production levels steady in February, although Saudi Arabia later said it will cut an additional 1 million barrels/day in February and March.
The materials (+2.3%) and industrials (+1.0%) sectors were other cyclical outperformers, while the utilities (-0.1%) sector was the lone holdout.
Individual standouts included Apple (AAPL 131.01, +1.60, +1.2%), which had its price target raised to $150 from $145 at Canaccord Genuity, and Micron (MU 77.26, +3.21, +4.3%), which was upgraded to Buy from Sell at Citigroup.
Separately, broader conviction might have been restrained by a preference to wait for the outcome of the two Senate election runoffs in Georgia today, which will determine which party has majority control of the Senate. There was hope the results would be known by tomorrow morning.
Longer-dated Treasury yields rose amid increased selling interest as part of the recovery-minded trade today. The 2-yr yield finished flat at 0.12%, while the 10-yr yield increased four basis points to 0.96%. The U.S. Dollar Index decreased 0.4% to 89.51.
Reviewing Tuesday's economic data:
- The ISM Manufacturing Index rose to 60.7% in December (consensus 56.4%) from 57.5% in November. The dividing line between expansion and contraction is 50.0%, so the December reading reflects an acceleration in manufacturing activity.
- The key takeaway from the report is that the December increase puts the overall series just ten basis points below its high from 2018 (60.8%). The Employment Index (51.5%) returned into expansion after falling below 50.0% in October.
Looking ahead, investors will receive the ADP Employment Change Report for December, Factory Orders for November, the IHS Markit Services PMI for December, and the weekly MBA Mortgage Applications Index on Wednesday.
- Russell 2000 +0.2% YTD
- Nasdaq Composite -0.5% YTD
- Dow Jones Industrial Average -0.7% YTD
- S&P 500 -0.8% YTD