>>> Closing Stock Market Summary

Closing Stock Market Summary

The S&P 500 rose 0.8% on Thursday in a broad-based advance that carried the benchmark index past the 3300 level for the first time. The Dow Jones Industrial Average (+0.9%) and Nasdaq Composite (+1.1%) also closed at record highs, while the Russell 2000 outperformed with a 1.4% gain. 

It was a day replete with good news that helped extend the market's bullish momentum and, in turn, bolster risk sentiment. Morgan Stanley (MS 56.44, +3.50, +6.6%) provided strong earnings results, retail sales increased 0.3% in December as expected, weekly jobless claims continued to reverse a modestly rising uptrend, and the USMCA deal was passed in the Senate. 

All 11 S&P 500 sectors started and finished in the green, with the broader market rallying into the close. The information technology sector (+1.4%) provided the leadership amid strength in its top-weighted components and the semiconductor stocks, which got a boost from the positive earnings results from Taiwan Semiconductor (TSM 58.75, +0.36, +0.6%). 

It didn't end there, though. Charles Schwab (SCHW 49.00, +1.88, +4.0%) beat earnings estimates, Signet Jewelers (SIG 30.13, +8.64, +40.2%) provided upbeat holiday sales results and comparable sales guidance, Spirit Airlines (SAVE 42.65, +2.97, +7.5%) provided upside unit revenue guidance, and XPO Logistics (XPO 95.35, +12.53, +15.1%) said it may sell or spin-off some of its business units.

Altogether, it was enough to subdue valuation concerns for at least one more day. Underlying expectations for positive earnings guidance, persistently low Treasury yields, and modest economic growth without Fed intervention were not meaningfully undermined in today's session.

Notable laggards included BNY Mellon (BK 46.72, -3.97, -7.8%), Tesla (TSLA 513.49, -5.01, -1.0%), PPG Industries (PPG 127.41, -3.33, -2.6%). BNY missed revenue estimates, Tesla was downgraded to Underweight from Equal-Weight at Morgan Stanley, and PPG issued disappointing quarterly results and guidance. 

U.S. Treasuries finished on a lower note amid the risk-on mindset in equities. The 2-yr yield increased two basis points to 1.57%, and the 10-yr yield increased two basis points to 1.81%. The U.S. Dollar Index increased 0.1% to 97.30. WTI crude rose 1.1%, or $0.62, to $58.48/bbl.

Reviewing Thursday's economic data, which featured the Retail Sales report for December: 

  • Retail sales increased 0.3% m/m in December following an upwardly revised 0.3% increase (from 0.2%) in November. Retail sales, excluding autos, jumped 0.7% (Briefing.com consensus +0.5%) after a downwardly revised unchanged reading (from 0.1%) in November.
    • The key takeaway from the report is that the December sales increases were broad based, with the exception of motor vehicles and parts dealers (-1.3%) and department stores (-0.8%), breathing life into the notion that the consumer remains a driving force of growth for the U.S. economy.
  • Initial claims for the week ending January 11 dropped by 10,000 to 204,000 (consensus 217,000). Continuing claims for the week ending January 4 decreased by 37,000 to 1.767 million.
    • The key takeaway from the report is that it reflects a tight labor market and has helped squelch a modestly rising uptrend in initial claims.
  • Import prices for December were up 0.3%. Excluding fuel, they were flat. Export prices were down 0.2%. Excluding agricultural products, they were down 0.1%.
    • The key takeaway from the report is that there were no inflation pressures embedded in the data. Nonfuel import prices were down 1.4% yr/yr while nonagricultural export prices were down 0.6%.
  • Total business inventories declined 0.2% month-over-month in November, as expected, following a downwardly revised 0.1% increase (from 0.2%) in October. Total business sales were up 0.7% following a downwardly revised 0.2% decline (from -0.1%) in October.
    • The key takeaway from the report is that the gap between inventory growth on a yr/yr basis (+2.8%) and sales growth (+1.0%) should help keep prices in check.
  • The Philadelphia Fed Index for January jumped to 17.0 (consensus 3.0) from the revised 2.4 reading in December (from 0.3).
  • The NAHB Housing Market Index for January declined to 75 (consensus 74) from 76 in December.

Looking ahead, investors will receive Housing Starts and Building Permits for December, Industrial Production and Capacity Utilization for December, and the preliminary University of Michigan Index of Consumer Sentiment for January on Friday.

  • Nasdaq Composite +4.3% YTD
  • S&P 500 +2.7% YTD
  • Dow Jones Industrial Average +2.7% YTD
  • Russell 2000 +2.2% YTD

>>> US After Hours Summary: GPS trades up on upbeat outlook and decisi

After Hours Summary: GPS trades up on upbeat outlook and decision to cancel Old Navt spin off; PRGS +10% on earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: PRGS +9.8%, GPS +4.2% (provides upbeat guidance; also cancels its previously announced plan to spin-off Old Navy), BEDU +1.4%

Companies trading higher in after hours in reaction to news: LNDC +3.9% (Legion Partners increases holding and discloses 5.15% active stake), FAST +1.3% (increases dividend), SYY +0.7% (launches Plant-Based Meatless Burger Patty in the US), LDOS +0.2% (awarded contract by U.S. Army)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: OZK -5%, CSX -3.4%, PBCT -0.7%, CDE -0.5% (Q4 production and sales)

Companies trading lower in after hours in reaction to news: BYND -1.2% (SYY launches meatless burger patty)

FT : Activist investors are reframing the M&A landscape

Activist investors are reframing the M&A landscape

From first timers to the old hands, more activists than ever opposed company decisions or policies last year and there is no sign that investors will let up.

If anything, some of the most high-profile funds are likely to start 2020 emboldened by evidence in favour of their approach with activist investors’ plays emerging as one of the best performing strategies last year.


“It’s a reflection of this movement of aggressive shareholder behaviour moving into the mainstream,” Jim Rossman, head of shareholder advisory at Lazard told the FT. “It’s totally destigmatised behaviour to wage a campaign.”

Here are the main takeaways from Lazard’s year-end report on the state of shareholder activism: 

A record 147 investors launched new campaigns last year, 43 of whom had no prior activism history.

A record 99 campaigns were related to M&A, accounting for almost half of all activist activity in 2019. 

Japanese corporates were the most targeted outside of the US, with 19 campaigns and $4.5bn in capital deployed in 2019. Meanwhile, activity in Europe decreased to 48 campaigns, down from a record 57 in 2018.

20 per cent of activist board seats went to female directors, compared to a rate of 46 per cent for all new S&P 500 director appointees.

Elliott Management and Starboard Value remain the biggest players in the field. Together, they accounted for 10 per cent of all global campaign activity. 


Elliott has been a trailblazer in historically hostile environments like Japan, France and Germany. Overall, 40 per cent of activist campaigns last year were waged overseas. 

That doesn’t mean US companies can breathe easy. It’s no longer just the usual crowd they have to look out for as shareholders who tend to stay behind the scenes have now started speaking out. 

Wellington Management last year publicly opposed Bristol-Myers Squibb’s acquisition of Celgene in an unusual move that had a lot of companies calling up their lawyers. 

If it’s any consolation, the total number of companies targeted was 187 last year, 17 per cent less compared with 2018. The amount of money invested to win governance and strategy changes at companies also declined from $66.4bn to $42.2bn in the same period. 

Public companies should build a moat, get their ducks in a row and keep their guard up because boardroom raiders aren’t going anywhere. They’re proliferating.