TheChek News Flow

After Hours Summary: IRBT / PSDO +13%, CMG / MTCH +10% are notably higher, while VVV / FEYE -8%, SONO / CCK -5% are lower following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance/SSS: LCI +13.7%, IRBT +12.8%, PSDO +13.3%, CMG +9.8%, MTCH +9.6%, SRCI +5.6%, NOV +4.6%, ZNGA +4.2%, ORLY +3.5%, FTNT +3.4%, GPRO +1.9%

Companies trading higher in after hours in reaction to news: IAC +5.5% (following MTCH results), ARRY +5.3% (after seeing notable option activity in late trade - coinciding with strength in the underlying stock), IOVA +3.8% (initiated with Outperform at Robert W Baird), GRUB +3.6% / ICE +1.8% (ahead of earnings tomorrow before the open), AAP +3% (following ORLY results), NOK +2.5% / ERIC +2.3% (positive mention on MadMoney), CNC +1.5% (rebounding after CEO appearance on CNBC), PRTK +1.4% (ticking higher after announcing publication of results from OPTIC and OASIS-1 Phase 3 studies of NUZYRA), YELP +1% (activist SQN Investors files proxy statement, intends to solicit proxies for the election of its slate of director nominees at the 2019 annual meeting of stockholders, repeats that it 'knows of multiple buyers who would be interested' in buying Yelp), CTSH +0.7% ( upgraded to Outperform from Market Perform at BMO Capital Markets)

Restaurant/QSR names are higher following Chipotle (CMG) upside earnings/guidance: TACO +5.7%, YUM +2%, DNKN +1.7%, SHAK +0.8%

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance/SSS: OSUR -14.5%, VVV -8.2%, FEYE -8%, SONO -5.4%, CCK -4.6%, TTMI -4.5%, MRVL -3.9%, TWO -3.7%, ICHR -3.1%, TRMB -3.1%, FLT -2.7% (light volume), CDAY -2.3%, MET -1.5%, PRU -1.5%, PSEC -1.5%

Companies trading lower in after hours in reaction to news: USAT -22.1% (to restate select financials), RMBL -7.1% (to offer and sell shares of its Class B Common Stock in an underwritten public offering), PSTI -4.8% (entered into $50 mln Open Market Sales Agreement with Jefferies dated February 6, 2019), BIIB -2.9% (attributed to Tecfidera patent developments disclosed in its annual filing), PCG -2.2% (lower in extended trading in response to San Francisco gas explosion; also the co submitted 2019 Wildfire Safety Plan with additional safety precautions and expanded public safety power shutoff program), IDTI -1.2% (Integrated Device updates on Renesas merger in 10Q filing -- CFIUS informed the parties that its national security review has been extended and this additional phase of the review will conclude no later than March 22)

Closing Stock Market Summary

The S&P 500 lost 0.2% on Wednesday in a lackluster trading session. The benchmark index traded with modest losses nearly the entire day with price action dictated by the underperformance of the entertainment software stocks, the outperformance of the semiconductor stocks, and an underlying sense that the market was due for a breather.

The Dow Jones Industrial Average lost 0.1%, the Nasdaq Composite lost 0.4%, and the Russell 2000 lost 0.2%.  For the second day in a row, the S&P 500 stalled just in front of its 200-day moving average (2742), topping out at 2738.08.

The S&P 500 communication services (-1.5%), real estate (-0.8%), energy (-0.8%), and materials (-0.7%) sectors underperformed the broader market.

Entertainment software stocks dragged on the communication services sector following earnings reports from Electronic Arts (EA 80.21, -12.31, -13.3%) and Take-Two Interactive (TTWO 92.53, -14.76, -13.8%). The two companies disappointed investors with quarterly guidance that was lower than expected, which reportedly fueled competition concerns.

Dow component Walt Disney (DIS 111.41, -1.25) for its part lost 1.1% despite beating earnings expectations.

Conversely, the health care (+0.4%), information technology (+0.2%), and consumer staples (+0.1%) sectors were the lone groups to finish with gains.

The heavily-weighted tech sector derived its relative strength from the outperformance of chip stocks. The Philadelphia Semiconductor Index rose 2.6%.

Certainly, it wasn't the downside guidance for the March quarter from Microchip (MCHP 89.31, +6.07, +7.3%) and Skyworks Solutions (SWKS 84.69, +8.73, +11.5%) that pleased investors. Instead, it was Microchip's contention that the March quarter should be a "bottom" for revenues that presumably fueled broad-based buying interest.

Separately, Snap (SNAP 8.59, +1.55) was a story stock, surging 22.0% after the company provided a better-than-feared indication of its daily active users in its quarterly report. Specifically, the number of daily active users was sequentially flat at 186 million in the fourth quarter.  Snap added that it doesn't expect to see a sequential decline in the first quarter.

U.S. Treasuries ended the day near their unchanged marks. The 2-yr yield decreased one basis point to 2.53%, and the 10-yr yield remained unchanged at 2.70%. The U.S. Dollar Index increased 0.3% to 96.38. WTI crude rose 0.4% to $53.99/bbl.

Reviewing Wednesday's economic data, which included the November Trade Balance report and the weekly MBA Mortgage Applications Index:

• The trade deficit narrowed to $49.3 billion in November ( consensus -$55.5) from a revised $55.7 billion (from -$55.5 billion) in November.
  • The trade deficit narrowed, because imports fell more than exports, yet the key takeaway from the report is that both exports and imports were down in November from the prior month, which fits with a slower growth narrative.
• The weekly MBA Mortgage Applications Index decreased 2.5% following a 3.0% decline in the prior week.

Looking ahead, investors will receive the weekly Initial and Continuing Claims report and the Consumer Credit report for December on Thursday

• Russell 2000 +12.6% YTD
• Nasdaq Composite 11.2% YTD
• S&P 500 +9.0% YTD
• Dow Jones Industrial Average +8.8% YTD