Closing Market Summary: Flat on FridayStocks kept their weekly gains intact ahead of the extended Presidents' day weekend, finishing Friday's session little changed.
The S&P 500 (unch) and the Dow Jones Industrial Average (+0.1%) eked out their sixth consecutive victories, while the Nasdaq Composite underperformed, finishing lower by 0.2%. For the week, the three major stock indices settled with gains between 4.3% and 5.3%.
Equities rose steadily throughout the morning, but reversed course in the early afternoon following news that a federal grand jury has indicted 13 Russian nationals and three Russian entities on accusations of interference in the 2016 presidential election. Some of those defendants allegedly communicated with unwitting individuals associated with the Trump campaign.
Trading was choppy following the headline, which, more than anything, gave investors a convenient excuse to pull back following five straight days of gains.
Six of eleven S&P 500 sectors finished Friday in the green, with the heavily-weighted health care group (+0.7%) being among the top performers. In general, countercyclical sectors outperformed their cyclical peers on Friday after trailing them throughout the week. The consumer discretionary (-0.4%), energy (-0.3%), and technology (-0.2%) sectors were among the worst-performing groups.
Steel and aluminum names rallied after the U.S. Department of Commerce recommended imposing tariffs on steel and aluminum imports. U.S. Steel (X 44.75, +5.76) and AK Steel (AKS 5.96, +0.72) spiked 14.8% and 13.7%, respectively, while Nucor (NUE 68.54, +2.96) and Steel Dynamics (STLD 49.40, +2.26) added around 4.5% apiece.
In earnings news, Coca-Cola (KO 44.98, +0.20) and Deere (DE 169.44, +2.63) added 0.5% and 1.6%, respectively, after reporting their fourth quarter results. Both companies beat earnings estimates, but revenues were mixed; Coca-Cola reported better-than-expected revenues, while Deere's revenues came in below consensus.
Conversely, Kraft Heinz (KHC 70.80, -1.91) lost 2.6% after missing Q4 profit estimates.
In the bond market, U.S. Treasuries ended the week on a flat note. The yield on the benchmark 10-yr Treasury note slipped one basis point to 2.88%, while the 2-yr yield ticked up one basis point to 2.19%. For the week, the 10-yr yield added two basis points, and the 2-yr yield jumped 12 basis points.
Reviewing Friday's batch of economic data, which included Housing Starts and Building Permits for January, Import and Export Prices for January, and the preliminary reading of the University of Michigan Consumer Sentiment Index for February:
- Housing starts increased to a seasonally adjusted annualized rate of 1.326 million units in January (consensus 1.240 million), up from a revised 1.209 million units in December (from 1.192 million). Building permits increased to a seasonally adjusted 1.396 million in January (consensus 1.300 million) from a revised 1.300 million in December (from 1.302 million).
- The key takeaway from the report is that it points to more supply coming to a housing market that is in desperate need of single-family supply. At the same time, this report provides a positive input for Q1 GDP as the number of units under construction in January (1.120 million) was 1.5% above the fourth quarter average.
- Import prices excluding oil rose 0.4% in January after decreasing an unrevised 0.1% in December. Export prices excluding agriculture increased 0.9% in January after rising a revised 0.1% in December from (0.0%).
- The key takeaway from the report is that it will continue to feed into the market's budding inflation expectations.
- The preliminary reading of the University of Michigan Consumer Sentiment Index for February rose to 99.9 (consensus 95.5) from 95.7 in January.
- The key takeaway from the report is that consumer sentiment wasn't dented by the stock market volatility. Rather, the improved sentiment reading was attributed to optimism over government policies, improved financial conditions, and expectations for larger income gains in the year ahead.
Markets will be closed on Monday in observance of Presidents' Day.
- Nasdaq Composite: +4.9% YTD
- S&P 500: +2.2% YTD
- Dow Jones Industrial Average: +2.0% YTD
- Russell 2000: +0.5% YTD
CS
Air France +2-3% FY sales inline but op income light, pricing better
Allianz +1-2% Op profit and net income in line, dividend ahead
Balfour +2-3% Awarded $1.95b design/build/finance/op/maintain contract
Cellnex M/P Revenues 1.6% ahead of cons, EBITDA 0.9% beat
Clariant -1-2% CS DOWNGRADE to UNDERPERFORM (Valuation)
Danone +1-2% FY Total Sales EU24.68b vs cons EU24.72b, div ahead
ENI +1-2% Op profit 2bn euros vs cons 1.93bn, net ahead
Eutelsat M/P Numbers and outlook inline with market expectations
Faurecia +2-3% FY op income beat of +3%, revs 1% beat, div ahead
Miners M/P Copper +0.40%, Brent +1.55%, Iron Ore closed, China closed
Norsk Hydro +1% EBIT 3.6b Cons 3.64b, Guidance vague
Oils +0.5-1% Brent +1.55% to $64.65, WTI +2.25% to $61.65
Renault +3% Op income c11% ahead, FY17 margin of 6.5% (est 6.2%)
Roche M/P To pay $1.9b for software startup Flatiron Health
Schindler +1% FY Orders 1.9% ahead of cons, Q4 margin 12.4% (cons 11.9%)
Segro +1-2% EPRA NAV/shr up 16.3% to 556p, dividend better
TF1 M/P FY Sales EU2.12b vs cons EU2.11b, NI EU136m vs cons EU138m
Vivendi -0.5% Revs -1% vs cons, group income -2% vs cons, no guidance
Vopak +2% FY17 revenues inline, net profit 1.5% ahead
Investec UK & Euro Pre Mkt Indications
UK
* BALFOUR BEATTY-JV wins $1.9b Los Angeles Airport contract.................+1%
* CRODA-Rec. cash offer for PLANT IMPACT(PIM LN,+40%)Value £10m............unch
* CVS-H1.#'s & trading I/L.Placing 6.4m new shares(not less than 1050p)...-3-5%
* SEGR0-FY.NAV 556p(+16.3%)PTP +25.7%.Occupier demand strong +ve o/look.....+1%
Euro
* AIR FRANCE-FY sales and op inc small miss, cautious on bookings beyond Q1..-1%
* ALLIANZ-Q4 op inc meets ests, div top end, on track for 3 yr targets.......+1%
* CELLNEX-FY in line but guidance for 2018 looks 2% below cons...............-2%
* DANONE-Q4 lfl +3.7%(3.3%), WhiteWave integration ahead of plan.............+2%
* DEUTSCHE BANK-HNA lowers stake to 8.8% from 9.9%, plans no further sale....+1%
* EDF-FY ebitda in line, div looks better than exp, confirms targets.........-1%
* ENI-4Q adj net looks v strong vs peers, €975m(est €576.9m), div in line....+2%
* EUTELSAT-H1 rev in line, net beats, cost saving plan ahead of track........+2%
* FAURECIA-FY sales,op inc look top end, sales guidance looks weak...........-2%
* NORSK HYDRO-Q4 rev beat but ebit looks 5% light, missed savings target.....-2%
* RENAULT- FY op inc 5% ahead, div a bit light, CEO stays on(expected).......+2%
* ROCHE-buys Flatiron Health for $1.9bn....................................+0.5%
* SCHINDLER-FY rev in line but net looks touch light, guidance in line.......U/C
* SCOUT24-Hellman & Friedman sell their 8.6% stake at €36.5 (<1% disc).....+0.5%
* VOPAK-FY rev , ebitda look ahead, div in line, o/look slightly downbeat?...U/C
* VIVENDI-FY strong but no plan yet for UMG ipo might disappoint...........+0.5%
* US Co’s reporting (selected) : Coke, Deere, Kraft Heinz, Vulcan
MS
AF FP +3-5% 4Q EBIT MISS BUT OUTLOOK ON PRICING NOW POSITIVE WITH FUEL INFLATION NOT AS HARSH AS EXPECTED - WILL SQUEEZE ON THIS.
ALV GY +3% NO.S BEAT WITH STRONG AM INFLOWS - SOLVENCY GOOD & CONFIDENT ON OUTLOOK
BBY LN +2-3% BALFOUR BEATTY JV GETS $1.95 BN LOS ANGELES AIRPORT CONTRACT
BN FP +2% Q4 LFL BEAT 3.7% v CONS. 3.3%; BEAT ON ALL CATEGORIES EX BABY. STRONG BEAT ON WATERS WITH DAIRY WEAK BUT IMPROVING. MGN BEAT BY 10BPS; DIVI +12%.
CLNX SM UNCH FCF INLINE, NO ANNOUNCEMENT OF STRATEGIC ACQUISITIONS
EDF FP +3% NET INCOME BENEFIT DUE TO LOWER TAX RATE LEADING TO EPS & HIGHER DIVIDEND PAYOUT.
ENI IM +2-3% EBIT AHEAD, NET INCOME BEAT. GUIDES FOR 3% INCREASE IN 2018 FY PRODUCTION
EO FP -2% FAURECIA 2017 OP INCOME EU1.17B VS BLOOMBERG EST EU1.14B,2017 DIV EU1.10/SHR,2018 EPS REITERATED EU5.0 BUT CONS WAS LOOKING FOR MORE
G24 GY UNCH *HELLMAN & FRIEDMAN SELLS 9.25M SHARES IN SCOUT24 @ 36.5 EUROS
NHY NO +3-4% NUMBERS AHEAD, WOULD BE EVEN BETTER WITHOUT HIGHER DEPRECIATION CHG. NET DEBT & DIVI BETTER
RNO FP +2-3% STRONG 2017 EBIT BEAT DRIVEN BY BETTER COSTS, SEES SALES GROWTH IN 2018 ALTHOUGH MARGIN GUIDANCE A TOUCH LIGHT
SCHP SW +1% NUMBERS TOUCH AHEAD, DIVI BETTER. OUTLOOK CONSERVATIVE (AS USUAL)
TF1 FP -1% TF1 FY REV EU2.12B,FY OP PFT EU162M
VIV FP -1-2% FY UMG GROWTH DISAPPOINTING AND NO 2018 GUIDANCE. KEEPS UMG IPO ON THE TABLE.