TheChek News Flow

Closing Stock Market Summary

The S&P 500 gained 0.8% on Thursday in a broad-based advance led by the value stocks. The Russell 2000 (+1.1%) outperformed once again, while the Nasdaq Composite (+0.5%) and Dow Jones Industrial Average (+0.4%) posted more modest gains.  

Today felt like one of those lackluster days in a bull market in which nothing spectacular happened, but the net sum of developments helped preserve sentiment and trading momentum. News that House Speaker Pelosi will not support a standalone bill for airlines unless the White House commits to a larger stimulus package had the potential to rattle markets, but it didn't. 

Airline stocks did decline from prior highs, but still closed higher like every sector in the S&P 500. Leadership was transferred to the value-oriented energy (+3.8%), utilities (+1.8%), real estate (+1.6%), and financials (+1.4%) sectors. The information technology sector (+0.5%) was an influential laggard. 

IBM (IBM 131.49, +7.42, +6.0%) and the semiconductor stocks kept the tech sector afloat. IBM rose 6% after announcing plans to spin off its IT infrastructure unit, so it could focus on its hybrid cloud growth strategy. Taiwan Semiconductor (TSM 87.80, +0.88, +1.0%) sparked buying interest in the chip space after reporting strong revenue growth in September.

The Philadelphia Semiconductor Index rose 1.2% and got an added boost from On Semiconductor (ON 26.04, +2.69, +11.5%) after Starboard Value added the stock to its portfolio.

In other positive developments, crude prices ($41.18/bbl, +$1.22, +3.1%) rose 3%, Regeneron (REGN 599.88, +8.19, +1.4%) requested emergency use authorization for its COVID-19 antibody therapy, and Boeing (BA 168.00, +3.39, +2.1%) was reported to be in talks with Alaska Airlines (ALK 38.63, +1.61, +4.4%) for a potential 737 Max order.

Separately, Morgan Stanley (MS 49.00, +0.29, +0.6%) said it will acquire Eaton Vance (EV 60.65, +19.71, +48.1%) for approximately $7 billion, or $56.50 per share, in cash and stock.

U.S. Treasuries edged higher in a steady advance despite the gains in equities, which meant yields moved lower. The 2-yr yield decline two basis points to 0.13%, and the 10-yr yield declined two basis points to 0.77%. The U.S. Dollar Index finished little changed at 93.59.  

Thursday's economic data featured the weekly initial claims report, which didn't produce any headline surprises:

• Initial claims for the week ending October 3 decreased by 9,000 to 840,000 (consensus 830,000) from an upwardly revised 849,000 (from 837,000) in the prior week. Continuing claims for the week ending September 26 decreased by 1.003 million to 10.976 million from an upwardly revised 11.979 million (from 11.767 million) in the prior week.
  • The key takeaway from the report is that it isn't a complete picture since California is working through backlogged claims, but setting that point aside, the number of initial claims at this juncture is still exceedingly high and indicative of the ongoing demand challenges faced by U.S. businesses.

Looking ahead, investors will receive Wholesale Inventories for August on Friday.

• Nasdaq Composite +27.3% YTD
• S&P 500 +6.7% YTD
• Dow Jones Industrial Average -0.4% YTD
• Russell 2000 -2.4% YTD

After Hours Summary: HCA +7% and NXPI +5.6% jump on bullish guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: EXTR +17.5% (raises Q1 EPS and revenue guidance above consensus), GNMK +9.1% (guides Q3 revs above consensus; also announces it has received EUA from the FDA for ePlex), HCA +7% (guides Q3 revs above consensus; will return or repay early $6 bln of govt assistance from CARES Act), NXPI +5.6% (raises Q3 rev guidance above consensus), MODN +1.1% (guides above consensus for SepQ; also new CFO), MATX +0.2% (issues upside Q3 EPS guidance)

Companies trading higher in after hours in reaction to news: SELB +18.1% (enters into a research agreement with IGAN Biosciences), ON +1.7% (in sympathy with strong NXPI guidance), ADI +1.4% (shareholders vote to approve ADI/MXIM merger; also in sympathy with strong NXPI guidance), MCHP +1.3% (in sympathy with strong NXPI guidance), KBH +1.2% (increases dividend), ET +1.2% (names new co-CEOs), HL +1.1% (reports Q3 production; reaffirms increased annual silver and gold production guidance), CCL +0.8% (CEO on CNBC: Says a vaccine would be helpful, but just one tool in the toolbox), MXIM +0.7% (shareholders vote to approve ADI/MXIM merger; also in sympathy with strong NXPI guidance), ICE +0.6% (Citadel Securities is acquiring IMC's DMM business), GPS +0.4% (names Nancy Green as CEO of Old Navy), GILD +0.4% (final results of NIAID ACTT-1 trial published in NEJM), VERI +0.3% (new CFO), AAPL +0.2% (to extend Apple TV+ free trials for three months, according to CNBC), SAVE +0.2% (issues warrant to US Treasury), FB +0.2% (removes accounts showing inauthentic behavior), RDFN +0.2% (issues report saying that US home prices are up 15%,), FIS +0.1% (new COO), SWKS +0.1% (in sympathy with strong NXPI guidance)

After Hours Losers

Companies trading lower in after hours in reaction to news: SRNE -1.4% (stock offering), STLD -1.4% (Fitch affirms Steel Dynamics' IDR at 'BBB'; outlook stable)

Early premarket gappers

• Gapping up:
  • ATEC +26%, CDNA +13.9%, UMC +7.1%, COTY +6.3%, IBM +5.4%, FUBO +5.3%, REGN +4.9%, SAR +4.4%, BV +4.3%, HELE +4.1%, AUY +3.1%, GWRE +2.6%, TSM +1.8%, GILD +1.6%, TBIO +1%
• Gapping down:
  • RGP -6.4%, LAND -5.2%, GLYC -4.9%, ASX -2.6%, NCNO -2.2%, NSTG -2%, ANGI -1.9%