>>> US Close Dow +0.24% S&P +0.18% Nasdaq +0.03% Russell +0.46%


Closing Stock Market Summary

The S&P 500 increased 0.2% on Wednesday, as the minutes from the Federal Reserve's January meeting came in mostly in-line with expectations. Price action, overall, was kept in check with earnings reports driving the notable movers in the stock market.

The Dow Jones Industrial Average gained 0.2%, and the Russell 2000 gained 0.5%. The Nasdaq Composite, however, finished flat.

The S&P 500 materials (+1.7%), financials (+0.6%), and industrials (+0.5%) sectors outperformed the broader market. Conversely, the real estate (-0.7%), health care (-0.1%), consumer staples (-0.1%), and communication services (-0.1%) sectors finished in the red.

The main takeaway from the FOMC Minutes was that the Fed is going to be patient in raising rates and is likely to stop reducing the assets on its balance sheet later this year. The surprise - or maybe the important revelation - for the market to consider was the implication that the Fed could turn away from a "patient" mindset with raising interest rates if market uncertainty abates.

Separately, there was little news on the current U.S-China trade talks, but investors did get an update on trade negotiations with the EU. President Trump expressed his displeasure with talks, telling reporters that if the U.S. cannot make a deal with EU, the White House will impose auto tariffs. 

The minutes, along with the EU trade update, contributed to some volatility that yielded modest losses for the major averages. Investors regrouped, however, lifting the averages back into the green to extend the stock market's lengthy rally.

Semiconductor stocks outperformed, driven in part by an upbeat earnings report from Analog Devices (ADI 106.82, +2.60, +2.5%). Their outperformance helped keep the Philadelphia Semiconductor Index (+0.9%) rally going and provided some support for the information technology sector (unch).

On the other hand, CVS Health (CVS 64.22, -5.66, -8.1%) and Southwest Airlines (LUV 54.41, -3.26, -5.7%) disappointed investors with some downside guidance. Specifically, CVS guided earnings for Q1 and fiscal 2019 below estimates, and Southwest Airlines cut its first quarter unit revenue guidance to 3-4% growth, year-over-year, from 4-5% growth.

The outsized loss from CVS weighed on the health care sector (-0.1%). Airline stocks also underperformed on concern other carriers could follow suit with unit revenue revisions of their own.

U.S. Treasuries were little changed during Thursday's session. The 2-yr yield and the 10-yr yield finished flat at 2.50% and 2.65%, respectively. The U.S. Dollar Index was unchanged at 96.55. WTI crude rose 1.2% to $57.15/bbl. 

Reviewing Wednesday's economic data, which included the weekly MBA Mortgage Applications Index:

  • The weekly MBA Mortgage Applications Index increased 3.6% following a revised 6.9% decline (from -3.7%) in the prior week.

Looking ahead, investors will receive several economic reports on Thursday: Durable Orders for December, the weekly Initial and Continuing Claims report, the Philadelphia Fed Index for February, Existing Homes Sales for January, and the Conference Board's Leading Economic Indicators Index for January.

  • Russell 2000 +17.3% YTD
  • Nasdaq Composite +12.9% YTD
  • Dow Jones Industrial Average +11.3% YTD
  • S&P 500 +11.1% YTD

>>> US Gapping down


Gapping down
In reaction to disappointing earnings/guidance:

  • OMI -14.4% (also names Edward Pesicka Pres/CEO effective March 4; lowers dividend), WIX -9.3%, HCKT -7.5%, LC -6.1%, CVS -6%, CXO -5.8%, TILE -4.2%, WWW -3.8%, TVTY -3.5%, I -3.2%, VPG -2.5%, TXRH -2.4%, FANG -2.3%, GEL -2.2%, VRSK -1.6%, AJRD -0.9%

Other news:

  • OVID -15.2% (commences offering of its common stock and Series A convertible preferred stock)
  • AI -4.6% (prices 6 mln shares of common stock worth gross proceeds of $50.0 mln)
  • LUV -4% (comments on Q1 operating revenue trends, has continued to experience softness in passenger demand and bookings as a result of the government shutdown; lowers RASM guidance)
  • NRZ -3.1% (prices underwritten public offering of 40,297,096 shares of its common stock)
  • ARR -2.9% (prices underwritten public offering of 7,200,000 shares of common stock at a public offering price of $20.33 per share)
  • CPT -1.3% (announces public offering of 3,375,000 common shares)
  • MRK -1.3% (Merck announces pivotal Phase 3 KEYNOTE-240 trial evaluating KEYTRUDA did not meet co-primary endpoints of overall survival and progression-free survival)

Analyst comments:

  • SCHW -2.9% (downgraded to Sell from Neutral at UBS)
  • PSTG -2.7% (downgraded to Mkt Perform from Outperform at Raymond James)
  • TTD -2.4% (downgraded to Hold from Buy at Stifel)
  • CTL -1.5% (downgraded to Sector Perform from Outperform at RBC Capital Mkts)
  • ETFC -1.5% (downgraded to Neutral from Buy at UBS)
  • ALLE -1.3% (downgraded to Neutral from Buy at Goldman)
  • TEVA -1.2% (downgraded to Neutral from Buy at Mizuho)
  • PANW -1% (downgraded to Hold from Buy at Gabelli & Co)
  • ECL -0.7% (downgraded to Neutral from Overweight at JP Morgan)

>>> US Gapping up


Gapping up
In reaction to strong earnings/guidance:

  • OSPN +26.7%, HSTM +18.7%, LNTH +12.2%, NVTA +9%, LMAT +8.6%, CRMT +8.3%, CDNS +8.1%, GRMN +8%, FIVN +7.5%, DVN +6.5% (also to pursue separation of Canadian and Barnett Shale assets, adds to repurchase authorization, boosts dividend), PFGC +6.4%, LYG +5.7%, FMS +4%, AROC +3.4%, TAST +2.7% (Q4 guidance; also to acquire 166 Burger King and 55 Popeyes restaurants from Cambridge Franchise Holdings in 10 Southeastern and Southern states) LZB +2.6%, DK +2.4%, HBM +2.4%, WIRE +1.2%, HLF +1%, OC +1%, VNTR +1%, CXW +0.9%, LAMR +0.9%, SO +0.8%, GCI +0.8%, BHC +0.8%, .

Other news:

  • FCX +2.6% (continued strength)
  • SGMO +2.6% (announces FDA acceptance of Investigational New Drug application for ST-920 in the treatment of Fabry disease)
  • PCG +2% (continued strength)
  • TLRY +1.8% (will acquire all of the issued and outstanding securities of FHF Holdings from Compass Group Diversified Holdings (CODI) for CAD 419 mln in cash and stock)
  • ADI +1.7% (increases dividend 12.5% to $0.54/share; raises annual dividend growth target)
  • UNIT +1.7% (to sell its Uniti Towers' business in Latin America to an entity controlled by Phoenix Tower International for cash consideration of approximately $100 mln)
  • IAG +1.6% (provides 2018 year-end mineral reserve and resource statement)
  • TSLA +0.8% (Tesla slightly higher in after hours trade -- Elon Musk tweeted image of 4K cars being loaded for Europe)

Analyst comments:

  • KOD +7.2% (initiated with a Buy at Chardan Capital Markets)
  • AXL +1.6% (upgraded to Buy from Neutral at BofA/Merrill)
  • RIG +1.5% (upgraded to Overweight from Underweight at Barclays)

>>> US Early premarket gappers


Early premarket gappers

Gapping up:

  • OSPN +26.7%, HSTM +18.7%, LNTH +12.2%, CDNS +8.9%, LMAT +8.6%, CRMT +8.3%, DVN +7.1%, FIVN +6.8%, PFGC +6.4%, NVTA +6%, LYG +5.1%, FMS +3.5%, PCG +3.3%, LZB +2.6%, HBM +2.4%, AROC +2.4%, FCX +1.8%, DK +1.8%, IAG +1.6%, WIRE +1.2%, OC +1.1%, HLF +1%, ADI +0.7%, MX +0.6%, TSLA +0.5%

Gapping down:

  • OMI -18.1%, OVID -10.5%, LC -8.6%, TVTY -7.6%, HCKT -7.5%, TX -6.1%, WIX -4.8%, AI -4.6%, CXO -4.2%, LUV -3.2%, ARR -2.9%, NRZ -2.9%, I -2.9%, SSTI -2.5%, FANG -2.3%, TXRH -2%, VRSK -1.6%, MRK -1.2%, AJRD -0.9%, NTRI -0.7%