TheChek News Flow

Closing Stock Market Summary

The large-cap indices advanced more than 1.0% on Tuesday, predominately due to the influence of Apple (AAPL 127.88, +6.10, +5.0%) and renewed stimulus optimism. The Russell 2000 closed at a record high with a 2.4% gain, followed by the S&P 500 (+1.3%), Nasdaq Composite (+1.3%), and Dow Jones Industrial Average (+1.1%).

Early in the session, Apple was the main driver of things after the Nikkei reported that the company plans to increase iPhone production by 30% yr/yr in the first half of 2021. With a $2.17 trillion market capitalization, the stock's 5% appreciation was an undeniable force for the major indices. 

From a more macro-related perspective on today's action, the recovery narrative creeped back into the market on word of a stimulus meeting involving Congressional leadership at 4:00 p.m. ET. Hopes for a deal guided the cyclical and value stocks to leadership roles and nudged Treasury yields higher.

The energy (+1.9%), materials (+1.9%), and financials (+1.7%) sectors were among the biggest gainers in the S&P 500, which happened to snap a benign four-session losing streak today. The consumer staples sector (+0.2%) increased the least. 

Investors didn't get too carried away, though, considering the potential to be upset by the outcome of today's stimulus meeting while others preferred to wait for the conclusion of the FOMC policy meeting tomorrow.  

In the health care space, Eli Lilly (LLY 167.34, +9.43, +6.0%) stood out with an impressive 6% gain. The company issued upside guidance for FY20 and FY21, increased its quarterly dividend by 15%, and agreed to acquire Prevail Therapeutics (PRVL 22.75, +10.25, +82.0%) for $22.50 per share, or about $1 billion, in cash.

U.S. Treasuries finished on a lower note, particularly longer-dated maturities since shorter-dated maturities remained anchored by the Fed. The 2-yr yield increased one basis point to 0.12%, and the 10-yr yield increased three basis points to 0.92%. The U.S. Dollar Index declined 0.3% to 90.45. WTI crude futures rose 1.3%, or $0.59, to $47.59/bbl.

Reviewing Wednesday's economic data:

• Industrial production increased 0.4% m/m in November (consensus 0.3%) following a downwardly revised 0.9% increase (from 1.1%) in October. The capacity utilization rate jumped to 73.3% (consensus 73.0%) from an upwardly revised 73.0% (from 72.8%) in October.
  • The key takeaway from the report was the robust growth seen in the production of motor vehicles and parts, which increased 5.3% and helped account for 0.4 percentage points of the 0.8% increase in manufacturing output.
• Import prices increased 0.1% in November; and prices excluding oil decreased 0.3%. Export prices increased 0.6% in November; and prices excluding agriculture increased 0.3%.

Looking ahead to Thursday, investors will receive Retail Sales for November, the preliminary IHS Markit Manufacturing and Services PMIs for December, the NAHB Housing Market Index for December, Business Inventories for October, the weekly MBA Mortgage Applications Index, and the FOMC Rate Decision.

• Nasdaq Composite +40.4% YTD
• Russell 2000 +17.5% YTD
• S&P 500 +14.4% YTD
• Dow Jones Industrial Average +5.8% YTD

After Hours Summary: TLRY +21.6% and APHA +13.7% moving higher on Bloomberg report of possible deal; AOUT +9.2% up big on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: AOUT +9.2%

Companies trading higher in after hours in reaction to news: SIOX +45.4% (positive clinical data), TLRY +21.6% (TLRY and APHA in advanced talks to combine, according to Bloomberg), APHA +13.7% (TLRY and APHA in advanced talks to combine, according to Bloomberg), TWTR +0.9% (to discontinue Periscope broadcasting mobile app), KNOP +0.7% (to acquire Tove Knutsen), OLLI +0.5% (increases share buyback authorization by $100 mln), AZO +0.5% (authorizes $1.5 bln stock repurchase), CBOE +0.3% (announces licensing agreement with CoinRoutes), BEN +0.2% (increases dividend), RNG +0.1% (launches free smart video meetings), GDDY +0.1% (to acquire Poynt for $320 mln), NFG +0.1% (new COO)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: NDSN -2.4%

Companies trading lower in after hours in reaction to news: MRAM -29.3% (CEO to resign, reduces higher end of Q4 rev guidance range), IQ -10.8% (commences convertible notes offering and 40 mln ADSs; also files for mixed securities shelf offering), NFE -8.1% (stock offering), GLSI -7.6% (stock offering), PEN -7.3% (voluntarily recalls all configurations of JET 7 Reperfusion Catheter with Xtra Flex technology), SHSP -7.1% (stock offering), DISH -5% ($2 bln convertible notes offering), CTK -2.3% (files for $100 mln mixed securities shelf offering), CWH -2.1% (CWH and RIDE announce collaboration on service locations and electric motorhome development), UIHC -1.9% (announces estimated Q4 catastrophe losses), RIDE -1.8% (CWH and RIDE announce collaboration on service locations and electric motorhome development), MTD -0.1% (new CEO)

Gapping down
In reaction to earnings/guidance:

• EZPW -1.4%

M&A news:

• CATM -1.2% (to be acquired for $35.00 per share by funds affiliated with Apollo Global Management (APO) and Hudson Executive Capital (halted)) 

Other news:

• MIRM -16.3% (prices 3.75 mln shares of common stock at $20.00 per share)
• MESO -5.3% (reported top-line results for Phase 3 trial of rexlemestrocel-L in advanced chronic heart failure)
• EAF -5.2% (upsizes offering by 1.5 mln shares and prices offering 8.5 mln shares of common stock; details undisclosed)
• OCUL -3% (announced $75.0 mln public offering of common stock)
• GLSI -2.8% (announces option agreement for pre-clinical coronavirus vaccine candid)
• ZIOP -1.3% (CFO announced intention to depart, effective December 31)
• MTN -1.1% (announced convertible notes offering)

Analyst comments:

• IIVI -3.2% (downgraded to Equal-Weight from Overweight at Morgan Stanley)
• IPHA -1.8% (downgraded to Mkt Perform from Outperform at SVB Leerink)
• URI -1.2% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
• BVN -1.1% (downgraded to Neutral from Buy at Goldman)

Gapping up

M&A news:

• PRVL +83.6% (Lilly (LLY) to acquire Prevail Therapeutics for $22.50 per share in cash); LLY +2.4%
• THBR +9.4% (Thunder Bridge Acquisition II, Ltd: indie Semiconductor enters definitive merger agreement with Thunder Bridge Acquisition II, Ltd)

Other news:

• OCX +58.5% (enters licensing agreement with Burning Rock (BNR) to test for early stage lung-cancer patients in China)
• AVXL +40.3% (announces its Phase 2 trial of ANAVEX2-73 in adult female patients with Rett syndrome met primary and secondary endpoints)
• IMRN +15.6% (Immuron SARS-CoV-2 research agreement with Monash University)
• VTVT +14.8% (entered into a licensing agreement with Anteris Bio for worldwide rights to vTv's novel clinical-stage Nrf2 activator compound, HPP971)
• PQG +9.4% (completed sale of Performance Materials business for $650 mln; declared $1.80/share special cash dividend)
• ATNX +7.2% (Athenex: Almirall announces FDA approval of Klisyri, a new innovative topical treatment for actinic keratosis)
• RIDE +5.8% (CWH CEO tweets that CWH and RIDE will make special announcement at joint press conference tomorrow)
• TGTX +5.1% (prices 6.23 mln shares of common stock at $43.50 per share)
• ALLO +4.8% (Allogene and Overland Pharmaceuticals form joint venture in Greater China to develop and commercialize AlloCAR T cell therapies)
• BIDU +3.9% (mulling making its own electric cars according to Reuters)
• CWH +3.6% (CWH CEO tweets that CWH and RIDE will make special announcement at joint press conference tomorrow)
• ESPR +3.5% (appoints Sheldon Koenig as COO effective today)
• IVAC +3.1% (received $5 mln EVA digital night-vision sensor contract),
• VSTM +2.6% (announced the initiation of a Phase 2 registration-directed clinical trial of VS-6766; to seek FDA accelerated approval, pending trial outcome)
• ZNGA +2.4% (prices $762 mln of 0% convertible senior notes due 2026 in a private placement; estimates net proceeds from the offering will be ~$746.3 mln)
• MDT +2.3% (procedure shows significant, swift pain relief and sustained improvement for cancer patients)
• ARVN +2.2% (continued strength; announced $250.0 mln common stock offering)
• RC +2.2% (raised dividend)
• CNC +2.1% (announced it has signed a definitive agreement to acquire PANTHERx)
• IIPR +2% (raised dividend)

Analyst comments:

• MT +5% (upgraded to Buy from Hold at Societe Generale)
• CNHI +3.6% (upgraded to Buy from Hold at Deutsche Bank)
• FLS +3.3% (upgraded to Buy from Hold at Stifel)
• ZNGA +3.1% (upgraded to Overweight from Equal Weight at Wells Fargo)
• EMR +2.6% (upgraded to Buy from Hold at Deutsche Bank)
• SID +2.4% (upgraded to Buy from Neutral at Goldman)
• LITE +2.4% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
• MDT +2.4% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
• AGCO +2.2% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
• BMY +2.2% (added to Conviction Buy List at Goldman)
• DE +1.9% (initiated with an Outperform at Oppenheimer)
• MPW +1.6% (upgraded to Buy from Hold at Deutsche Bank)
• REVG +1.6% (upgraded to Equal-Weight from Underweight at Morgan Stanley)
• OXY +1.5% (upgraded to Equal Weight from Underweight at Wells Fargo)
• IONS +1.4% (upgraded to Outperform from Market Perform at Cowen)
• AY +1.2% (upgraded to Buy from Neutral at Seaport Global Securities)
• XOM +1.1% (upgraded to Overweight from Equal Weight at Wells Fargo)

Early premarket gappers

• Gapping up:
  • OCX +99.1%, PRVL +86.4%, IMRN +15%, PQG +9.4%, RIDE +5.8%, ALLO +4.6%, CWH +3.6%, IVAC +3.1%, TGTX +2.8%, CLNE +2.6%, ZNGA +2.5%, LLY +2.3%, ARVN +2.2%, RC +2.2%, CS +2.1%, IIPR +2%, JKS +1.3%, BSX +1.1%, AZN +0.9%, JPM +0.8%, WPP +0.7%, GLSI +0.5%
• Gapping down:
  • MIRM -14%, MESO -5.3%, EAF -5.2%, OCUL -3%, ZIOP -1.3%, MTN -1.1%