Closing Market Summary: Upbeat Finish to Disappointing WeekWall Street wrapped up a disappointing week on a positive note on Friday, in what was a quiet and fairly range-bound session. The S&P 500 advanced 0.2%, breaking a four-session losing streak, while the Dow and the small-cap Russell 2000 added 0.3% and 0.6%, respectively. The tech-heavy Nasdaq underperformed, closing a tick higher.
Gains were modest, but broad, with nine of eleven S&P sectors closing in the green. The energy group (+1.0%) was the top performer, benefiting from a jump in the price of crude oil; WTI crude futures rallied 2.0% to $62.35 per barrel. Conversely, the top-weighted technology sector (-0.1%) finished at the bottom of the leaderboard.
The technology group struggled for much of the session, keeping the broader market's gain in check, with Broadcom (AVGO 254.87, -12.89) showing particular weakness; the chipmaker dropped 4.8% even though it beat quarterly profit estimates. Tech-giant Alphabet (GOOGL 1134.42, -16.19) also struggled, losing 1.4%, but Adobe Systems (ADBE 225.55, +6.68) bucked the trend, rallying 3.1% after beating both earnings and revenue estimates for its fiscal first quarter.
Overseas, equity indices in the Asia-Pacific region ended Friday broadly lower, with Japan's Nikkei losing 0.6%, while the major bourses in Europe finished with gains of around 0.3% apiece. The U.S. dollar climbed 0.2% against the euro to 1.2287, but dropped 0.2% against the yen to 106.08.
In the bond market, U.S. Treasuries closed the week on a lower note, sending yields higher across the curve. The benchmark 10-yr yield climbed two basis points to 2.84%, while the 2-yr yield ticked up one basis point to 2.29%, which is its highest level since September 2008.
The relative weakness in the 10-yr note steepened the yield curve a bit, pushing the 10-2 spread to 55 basis points. This steepening helped underpin the financial sector (+0.2%) on Friday, but a decline in shares of Wells Fargo (WFC 55.90, -0.93) weighed on the group, leaving it roughly in line with the broader market. WFC shares lost 1.6% following a Wall Street Journal report that a federal investigation into the bank's sales practices now includes its wealth-management unit.
Investors received several pieces of economic data on Friday, including February Housing Starts and Building Permits, February Industrial Production and Capacity Utilization, the preliminary reading of the University of Michigan Consumer Sentiment Index for March, and the Job Openings and Labor Turnover Survey for January:
- Housing starts decreased to a seasonally adjusted annualized rate of 1.236 million units in February (consensus 1.283 million), down from a revised 1.329 million units in January (from 1.326 million). Building permits decreased to a seasonally adjusted 1.298 million in February (consensus 1.330 million) from a revised 1.377 million in January (from 1.396 million).
- Starts and permits were weaker than expected, yet the key takeaway is that there was some underlying detail in the report that helped offset the headline misses, namely the increase in single-family starts and the uptick in the number of units under construction.
- Industrial Production increased 1.1% in February (consensus +0.3%), while the January reading was revised to -0.3% (from -0.1%). Meanwhile, Capacity Utilization ticked up to 78.1% (consensus 77.7%) from a revised reading of 77.4% in January (from 77.5%).
- The key takeaway from the report is twofold: (1) manufacturing output was a core driver of the increase in industrial production and (2) capacity utilization hit its highest rate since January 2015, which will keep inflation expectations alive in the market narrative.
- The preliminary reading of the University of Michigan Consumer Sentiment Index for March rose to 102.0 (consensus 99.5) from 99.7 in February.
- The key takeaway from the report is that the gain in the Sentiment Index was driven entirely by households with incomes in the bottom third. Another notable takeaway is that near-term inflation expectations increased to their highest level in several years.
- The January Job Openings and Labor Turnover Survey showed that job openings increased to 6.312 million from a revised 5.667 million (from 5.811 million) in December.
On Monday, investors will not receive any economic data.
- Nasdaq Composite: +8.4% YTD
- S&P 500: +2.9% YTD
- Dow Jones Industrial Average: +0.9% YTD
- Russell 2000: +3.3% YTD
Phony Westchester hedge fund manager Michael Scronic may soon be trading in his high-flying lifestyle for a cell in the big house.
In seven-plus years of running the scam, Scronic posted only one positive quarter, court papers reveal.
This is despite Scronic’s claims of annual returns as high as 13 percent.
“His fund was wholly unsuccessful, resulting in millions of dollars in losses,” Manhattan US Attorney Geoffrey Berman said in a statement.
As late as June 30, Scronic claimed to manage $21.7 million even though his brokerage and bank accounts showed only $102,376.
Investment losses totaled $15.7 million.
“What wasn’t lost in the market, Scronic used for his own personal expenses,” Berman said.
And those expenses were lavish, averaging $500,000 a year — including $12,275 a month in rent to his home in the wealthy enclave of Pound Ridge and $30,000 to Stratton Mountain Club in July as well as fees for other beach and country clubs.
Scronic will be sentenced on July 9 and faces a maximum sentence of 20 years.
The ax has fallen at John Paulson’s hedge fund.
Several employees of the once mammoth Paulson & Co. were let go Thursday amid years of poor performance, The Post has learned. Cuts were across the board but also included key veterans who have been with the fund for more than 10 years.
Among the senior level hedgies being shown the door were: Keith Hannan, head of trading; Brad Rosenberg, head credit trader; and partners Victor Flores and Allen Puwalski.
“We are right-sizing the firm to focus on our core expertise on areas that are growing,” a firm spokesman told The Post, declining to comment on specific individuals affected.
Paulson’s fund, which once managed as much as $38 billion in 2011 due in part to well-timed bets against the housing market in the lead-up to the financial crisis has struggled to replicate prior successes.
The hedge fund now manages $9 billion — with roughly 70 percent of that being Paulson’s own money, according to sources.
Performance has been hit by the fund’s outsized bets in the healthcare market over the last three years — especially the specialty pharma sector — most notably Valeant Pharmaceuticals, which has been a performance killer for many hedge funds.
Gapping down
In reaction to strong earnings/guidance:
In reaction to strong earnings/guidance:
- PRPL -15.8%, (also announces that Sam Bernards has stepped down as CEO), OSTK-12.6%, TIF -6.3%, RMTI -6.1%, GDEN -4.1%, PERY -3.8%, KNDI -2.9%, CARA -2.7%,VIVE -2.2%, AVID -1.9%, REDU -1.8%, ULTA -1.6%, AVGO -1.4%
Other news:
- BW -4% (received a subpoena from the staff of the SEC in connection with an investigation into the accounting charges)
- W -3.4% (lower following OSTK results)
Analyst comments:
- RPM -1.8% (downgraded to Underweight from Neutral at JP Morgan)
- VVV -1.3% (downgraded to Underweight from Neutral at JP Morgan)
- D -0.7% (downgraded to Neutral from Buy at UBS and from Overweight at JP Morgan)
Gapping up
In reaction to disappointing earnings/guidance:
In reaction to disappointing earnings/guidance:
- AMRS +23.7%, KODK +14.1%, KEYW +9.7%, BKE +8.8%, EXXI +8.1%, BTX +7.1%, VHI+7%, AUPH +6.5%, AGRO +6.4%, REI +5.6%, QHC +5%, OPGN +4.8%, CBAY +4.7%,PFSW +4.3%, ADBE +3.8%, AQMS +3.8%, JBL +3.2%, OVAS +3.1%, XONE +1%, (ticking lower; also filed for mixed shelf offering), HIBB +0.9%, PF +0.8%, KIRK+0.7%
M&A news:
- QCOM +2.7% (higher on reports of potential buyout)
Select semiconductor stocks trading higher:
- CY +2.4%, MU +2.3%, INTC +0.6%, CRUS +0.6%, SOXX +0.5%
Other news:
- CERS +5% (Chief Scientific Officer disclosed purchase of 150K shares worth ~$773K)
- ETP +2.3% (expects no material impact from FERC policy revisions)
- CVEO +2.2% (amends share purchase agreement with Noralta Lodge)
- KR +1.1% (Kroger approves incremental $1 bln share repurchase program (approximately $76 mln remaining under current plan); declares unchanged qtrly dividend of $0.125/share -expects to increase dividend over time)
- FEYE +0.9% (following CEO appearance on MadMoney)
Analyst comments:
- ZAGG +4.8% (initiated with Buy rating at DA Davidson)
- WDC +2% (upgraded to Outperform from Neutral at Robert W. Baird)
- WEN +1.5% (initiated with a Buy at Mizuho)
- WCG +1% (upgraded to Buy from Neutral at BofA/Merrill)
- TS +0.9% (upgraded to Neutral from Sell at UBS)
- CBS +0.7% (initiated with a Buy at Loop Capital)