TheChek News Flow

Closing Stock Market Summary

The S&P 500 gained 1.5% on Monday, as investors showed optimism in reopening efforts indicated by more states and countries. The Dow Jones Industrial Average (+1.5%) and Nasdaq Composite (+1.1%) also advanced more than 1.0%, while the Russell 2000 outperformed with a 4.0% gain. 

At least nine U.S. states had their economies partially reopened as of Monday, according to The New York Times, while other states like New York, Texas, and Ohio announced plans to gradually reopen in the coming weeks. The prospective increase in economic activity, even without a confirmed COVID-19 treatment, had investors piling into previously-neglected cyclical sectors. 

For instance, all 11 S&P 500 sectors ended the day higher, but strength was found in the S&P 500 financials (+3.6%) and materials (+2.6%) sectors, the Dow Jones Transportation Average (+2.8%), and the SPDR S&P Retail ETF (XRT 36.36, +1.82, +5.3%). The consumer staples sector (+0.3%) underperformed. 

Even the energy sector (+2.1%) showed relative strength despite the 24% plunge in oil prices ($12.97, -4.05, -23.8%) and news of Diamond Offshore (DO), a small-cap company, filing for Chapter 11 bankruptcy protection. The bullish price action in the face of bad news suggested for investors that the sector may have already bottomed. 

Likewise, Caterpillar (CAT 115.20, +1.16, +1.0%) overcame an analyst downgrade at Morgan Stanley, and General Motors (GM 22.45, +0.50, +2.3%) overcame a dividend suspension update. 

Perhaps most noteworthy about today's action was that the market's most recognizable, and widely-held, mega-cap technology stocks did not participate in the broader advance. Instead, small-caps, as represented by the Russell 2000, welcomed renewed buying interest. 

Overseas, Italy, France, Spain initiated steps to reopen their economies, but some attention should also be given to the Bank of Japan. The central bank lifted the cap on its JGB bond purchases, which some attributed to the initial gains in stocks, and said it will be increasing its purchases of corporate bonds and commercial paper.

U.S. Treasuries finally showed some weakness amid the bullish price action in equities. The 2-yr yield increased three basis points to 0.23%, and the 10-yr yield increased six basis points to 0.66%. The U.S. Dollar Index declined 0.3% to 100.07. 

Investors did not receive economic data on Monday. Looking ahead to Tuesday, investors will receive the Conference Board's Consumer Confidence Index for April, the S&P Case-Shiller Home Price Index for February, and the Advance March reports for International Trade in Goods, Retail Inventories, and Wholesale Inventories.

• Nasdaq Composite -2.7% YTD
• S&P 500 -10.9% YTD
• Dow Jones Industrial Average -15.4% YTD
• Russell 2000 -23.2% YTD

Gapping down
In reaction to disappointing earnings/guidance:

• CNXM -31.5%, CPA -1.3%

Other news:

• DO -61.2% (confirms voluntary Chapter 11 proceedings to restructure and strengthen balance sheet)
• VSTM -27.4% (reports preliminary data from investigator-initiated study highlighting clinical activity of RAF/MEK and FAK combination)
• ERJ -11% (Boeing terminates agreement to establish joint ventures with Embraer)
• VXX -2.5% (pulling back with US futures up 1%)

Analyst comments:

• CLVS -5.3% (downgraded to Underperform from Mkt Perform at SVB Leerink)
• W -2.1% (downgraded to Hold from Buy at Stifel)
• CAT -1.8% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
• URI -1.8% (downgraded to Equal-Weight from Overweight at Morgan Stanley)
• FLR -0.9% (downgraded to Neutral from Buy at Citigroup)
• AHH -0.6% (downgraded to Neutral from Buy at BofA/Merrill)

Gapping up
In reaction to strong earnings/guidance:

• AUDC +16.4%, DB +10.6%, IHG +4.1% (Trading update) DORM +3.5%, CHKP +1.9%, CNX +1.4%

Select index ETFs showing strength:

• IWM +1.5%, QQQ +1.3%, SPY +1%, DIA +0.9%, . 

Other news:

• AXSM +42.7% (announces AXS-05 achieves primary endpoint in the ADVANCE-1 pivotal phase 2/3 trial in alzheimer's disease agitation)
• AVDL +37.3% (announced positive topline data from its pivotal Phase 3 REST-ON trial of FT218 for the treatment of excessive daytime sleepiness and cataplexy in patients with narcolepsy)
• ARCT +16.1% (announces positive immunogenicity data from its preclinical study for the Company's COVID-19 Vaccine)
• RDHL +11.3% (reports preliminary data in moderate-to-severe COVID-19 patients treated with opaganib show measurable clinical improvement in all six patients analyzed)
• HALO +6.5% (Halozyme Therapeutics announces JNJ's Janssen submits New Drug Application in Japan for daratumumab subcutaneous formulation utilizing Halozyme's ENHANZE)
• FLXN +5.9% (announces new positive preclinical efficacy and pharmacokinetic data for FX301)
• KMDA +4.9% (Kamada and Kedrion Biopharma announce a collaboration for the development, manufacturing and distribution of a human plasma-derived Anti-SARS-CoV-2 (COVID-19) polyclonal immunoglobulin (IgG) product as a potential treatment for coronavirus patients)
• BHVN +3.2% (Biohaven Pharmaceutical and Genpharm Services announce agreement distribute NURTEC ODT (rimegepant) in the Middle East and Gulf countries)
• ATEC +3.1% (Terminates agreement to acquire EOS Imaging)
• NBIX +2.9% (receives FDA approval of once-daily oral ONGENTYS)
• SNY +2.3% (Regeneron Pharma and Sanofi announces preliminary results from U.S. Phase 2/3 adaptive-designed trial in hospitalized COVID-19 patients)
• TSLA +1.8% (asks dozens of people to return to work Wednesday)
• BA +1.4% (modestly rebounding following Friday's slide; also terminates agreement to establish joint ventures with Embraer)
• AZN +1.1% (reports FDA approved a label update in the US for LOKELMA)

Analyst comments:

• LH +4.4% (upgraded to Buy from Neutral at Citigroup)
• FCX +3.2% (upgraded to Sector Outperform from Sector Perform at Scotiabank)
• PAG +2.3% (upgraded to Buy from Neutral at Northcoast)
• AN +2.1% (upgraded to Buy from Neutral at Northcoast)
• EBAY +2.1% (upgraded to Neutral from Underperform at Mizuho)
• TWTR +1.9% (upgraded to Neutral from Underperform at Mizuho)
• ADS +1.5% (upgraded to Buy from Neutral at Compass Point)

Early premarket gappers

• Gapping up:
  • AXSM +50.7%, AUDC +12.1%, DB +10.3%, MAG +7%, HALO +6.7%, CNX +4.2%, ATEC +3.1%, TSLA +1.9%, BA +1.8%, DD +1.5%, IHG +1.5%, IWM +1.3%, QQQ +1.1%, CGEN +1%, DIA +1%, SPY +0.9%, CNXM +0.8%
• Gapping down:
  • DO -61.2%, VSTM -12.8%, ERJ -3.8%, VXX -2.3%, AMED -1.3%, CNP -1.1%, TMUS -1.1%