TheChek News Flow

Closing Market Summary: S&P 500 Ends Up & Down Session A Tick Lower

Stocks initially tried to move higher on Thursday, then lower, but the S&P 500 ultimately ended the session little changed, losing 0.1%. The Nasdaq Composite and the Russell 2000 also finished lower, losing 0.2% and 0.5%, respectively, while the Dow Jones Industrial Average outperformed, advancing 0.5%.

The S&P 500 was slightly higher through the first hour of trading, sitting just above its 50-day simple moving average, but jumped to new highs following a CNBC interview with Peter Navarro, Director of the White House National Trade Council. Mr. Navarro tried to ease fears that the recently imposed tariffs, and future ones, could lead to a trade war, saying that the U.S. can implement them "in a way that is peaceful and will improve and strengthen the trading system." The upbeat sentiment didn't last long though, as the S&P 500 quickly returned to its previous levels.

From there, the equity market trended sideways into the afternoon and then dropped to new lows following the release of a New York Times report that Special Counsel Robert Mueller subpoenaed the Trump Organization for documents, some of which relate to Russia. Buyers didn't let the S&P 500 drop too far below its 50-day simple moving average though, keeping technical damage to a minimum.

The S&P 500 was down 0.3% at its worst mark of the day and was up 0.5% at its best. The 11 S&P sectors finished mostly lower, with three advancing and eight declining. The industrial sector (+0.3%) was the top performer, while materials (-1.3%), consumer staples (-0.6%), and energy (-0.4%) finished at the bottom of the sector standings.

Monsanto (MON 117.20, -5.95) weighed on the materials space, losing 4.8%, after reports that its pending merger with Bayer will face additional hurdles from antitrust officials. Meanwhile, in the consumer staples group, Walmart (WMT 87.51, -0.16) dropped sharply following reports that a former executive filed a lawsuit against the company, alleging that it issued misleading e-commerce results, but shares were able to bounce back to finish lower by just 0.2%.

News that the Federal Energy Regulatory Commission has revised its policies so that master limited partnerships (MLPs) will no longer be able to recover an income tax allowance for the cost of service weighed on the energy space, with Williams Companies (WMB 26.69, -1.45) losing 5.2%.

In earnings news, Dollar General (DG 93.44, +4.24) rallied 4.8% after reporting an increase of 3.3% in same store sales for the fourth quarter and issuing better-than-expected earnings and revenue guidance for fiscal year 2019.

The Treasury market walked a fairly quiet line on Thursday, with the exception of the 2-yr note, which saw sellers making some noise that drove its yield up three basis points to 2.28%. The benchmark 10-yr yield finished unchanged at 2.82%, leaving the 10-2 spread at 54 basis points, which is its lowest level since late January.

Investors received a large batch of economic data on Thursday that included export and import prices for February, the weekly Initial Claims report, the Empire State Manufacturing Survey for March, the Philadelphia Fed Index for March, and the NAHB Housing Market Index for March:

• Import prices excluding oil rose 0.5% in February after increasing a revised 0.5% in January (from 0.4%). Export prices excluding agriculture increased 0.2% in February after rising a revised 0.8% in January (from 0.9%).
  • The price index for fuel imports was down 0.6% in February, so the key takeaway from the report is that the import price increase was driven by nonfuel prices, which is to be expected somewhat given the weakness in the dollar.
• The latest weekly initial jobless claims count totaled 226,000, as expected. Today's tally was below the revised prior week count of 230,000 (from 231,000). As for continuing claims, they rose to 1.879 million from a revised count of 1.875 million (from 1.870 million).
  • The key takeaway from the report is that the initial claims level will continue to drive expectations for another solid gain in nonfarm payrolls in March.
• The Empire Manufacturing Survey for March rose to 22.5 (consensus 15.0) from the prior month's unrevised reading of 13.1.
• The Philadelphia Fed Survey for March decreased to 22.3 (consensus 23.7) from an unrevised 25.8 in February.
  • The key takeaway from the report is that 64% of firms reported labor shortages while 70% of firms highlighted skills mismatches between requirements and available labor. These responses could be a potential harbinger of wage inflation.
• The NAHB Housing Market Index for March decreased to 70 (consensus 72) from a revised reading of 71 in February (from 72).

On Friday, investors will get another heavy dose of data, including February Housing Starts (consensus 1283K) and Building Permits (consensus 1330K), February Industrial Production (consensus +0.3%) and Capacity Utilization (consensus 77.7%), the Job Openings and Labor Turnover Survey for January, and the preliminary reading of the University of Michigan Consumer Sentiment Index for March (consensus 99.5).

• Nasdaq Composite: +8.4% YTD
• S&P 500: +2.8% YTD
• Dow Jones Industrial Average: +0.6% YTD
• Russell 2000: +2.7% YTD
  

After Hours Summary: AMRS +24%, KODK +8%, ADBE +4%, JBL +3%, OSTK -12%, ULTA -2% following earnings/guidance, QCOM +5% on potential buyout

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: AMRS +23.7%, KEYW +9.7%, KODK +8.1%, QHC +5%, AQMS +5% (light volume), CBAY +4.9%, ADBE +3.7%, JBL +3.2%, AUPH +3%

Companies trading higher in after hours in reaction to news: QCOM 5.7% (higher on reports of potential buyout), CERS 5% (light volume; Chief Scientific Officer disclosed purchase of 150K shares worth ~$773K), FEYE 2.8% (following CEO appearance on MadMoney), ZAGG 2% (initiated with Buy rating at DA Davidson after the close), CRSP 1.9% (rebounding from today's 10% decline; also target raised at Guggenheim), 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), ETP 1% (rebounding after saying it expects no material impact from FERC policy revisions)

Qualcomm (QCOM) takeover speculation is pushing semi / tech names modestly higher in after hours trade: CY +2.1%, INTC +0.7%, MU +0.4%

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: OSTK -12.3%, PRPL -12.1% (also announces that Sam Bernards has stepped down as CEO), XONE -4.5% (ticking lower; also filed for mixed shelf offering), GDEN -4.1%, RMTI -3.5% (light volume), ULTA -2.3%, CARA -2.3%, REDU -1.8%, AVGO -1.2%

Companies trading lower in after hours in reaction to news: BW -4% (received a subpoena from the staff of the SEC in connection with an investigation into the accounting charges), W -3.7% (lower following OSTK results)