After Hours Summary: LLNW +12%, ADBE +9%, URI / KMI +2% higher and EBAY -6%, AA / HCA -1% lower following earnings/guidanceAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: LLNW +11.6%, ADBE +8.8%, URI +1.9%, (also will resume its pre-existing $1 billion program to repurchase shares of its common stock), KMI +1.8%
Companies trading higher in after hours in reaction to news: CEI +26.9% (low cap / thinly traded name higher after company discloses Interim CEO, Richard Azar, has released a letter to shareholders), CNAT +6.8% (EMA granted orphan designation to Conatus' drug candidate IDN-7314 for the treatment of primary sclerosing cholangitis which can lead to cirrhosis and liver failure), JUNO +3.9% (higher following Kite CAR T news), GILD +3.2% (Gilead Sciences' Kite confirms Yescarta FDA approval as first CAR T therapy for the treatment of adult patients with relapsed or refractory large B-Cell lymphoma after two or more lines of systemic therapy), WGO +1.8% (ahead of earnings), BMRN +1.6% (rebounding from today's weakness on development portfolio update/reaffirmed guidance), W +0.9% (initiated with Buy and $85 tgt at MKM Partners)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: EBAY -6.1%, STLD -2.9% (ticking lower), HXL -1.6% (light volume), OIS -1.3% (revises guidance due to the impacts of Hurricane Harvey), AA -1.2%, HCA -1.2%, YRCW -1%, AXP -0.5% (also appointed Stephen J. Squeri CEO and elected him Chairman of the Board, each effective February 1, 2018)
Companies trading lower in after hours in reaction to news: OPTT -25% (to offer shares of common stock), ESTE -6.5% (provided Q3 update and revised 2017 capital expenditures downward; commences underwritten public offering of 4.5 mln shares of Class A common stock), PEGI -3.6% (ommences 8 mln common stock offering), RXDX -3.4% (files mixed securities shelf offering; commences $125 mln common stock offering), THC -2.1% and CYH -1.3% (on HCA guidance), APRN -0.6% (implements company-wide realignment, reducung headcount by ~6%)
Closing Market Summary: Financial and Technology Stocks Power Another Record FinishThe stock market notched another record high on Wednesday, with financials and technology stocks pacing the advance. The Dow added 0.7% and finished comfortably ahead of both the S&P 500 (+0.1%) and the Nasdaq (unch), thanks in large part to IBM (IBM 159.53, +12.99), which climbed 8.9% in reaction to its better-than-expected earnings report. The small-cap Russell 2000 (+0.5%) showed relative strength, but, unlike the other indices, it did not finish at a new record high.
Trading ranges were narrow on Wednesday, with the S&P 500 sporting a gain between 0.01% and 0.19% from start to finish.
Goldman Sachs (GS 242.03, +5.94) retraced just about all of its Tuesday decline in the midweek session, surging higher by 2.5% and helping the S&P 500's financial sector (+0.6%) finish at the top of the sector standings. As a reminder, Goldman reported above-consensus earnings and revenues on Tuesday morning, but plunged to a fresh October low nonetheless. Morgan Stanley (MS 50.15, +1.03) also had a belated earnings rally, jumping 2.1%.
The top-weighted technology sector (+0.3%) started Wednesday's session little changed, but strengthened over the course of the day, eventually settling near the top of the leaderboard. Within the group, IBM was by far the top performer after exceeding profit and sales expectations. However, the sector's top component by market cap--Apple (AAPL 159.76, -0.71)--held gains in check, losing 0.4%.
Only two other sectors finished in positive territory--health care (+0.2%) and industrials (+0.1%). Transports helped the industrial space, evidenced by the 0.8% increase in the Dow Jones Transportation Average, while health care leaned on names like AbbVie (ABBV 96.04, +3.87) and Anthem (ANTM 191.79, +4.53), which added 4.2% and 2.4%, respectively. Anthem announced that it plans to partner with CVS Health (CVS 74.10, +1.47) to launch its own pharmacy benefit manager after its current contract with Express Scripts (ESRX 57.77, +0.56) ends it 2020.
On the flip side, the telecom services (-0.6%) and energy (-0.7%) sectors fell amid broad weakness, finishing at the very bottom of the sector standings. Within the energy group, Chevron (CVX 118.15, -2.07) exhibited particular weakness after both Societe Generale and BMO Capital Markets downgraded the Dow component on Wednesday morning. CVX shares lost 1.7%.
WTI crude futures climbed 0.3% to $52.04 per barrel after the Energy Information Administration reported that U.S. crude stockpiles declined by 5.7 million barrels last week; the consensus estimate called for a draw of 3.3 million barrels. However, gasoline inventories increased by 0.9 million barrels, possibly signaling a downtick in demand.
U.S. Treasuries ended the midweek session on a lower note with longer-dated issues pacing the decline. The benchmark 10-yr yield, which moves inversely to the price of the 10-yr Treasury note, climbed four basis points to 2.34%. Meanwhile, the 2-yr yield jumped two basis points to 1.56%.
Reviewing Wednesday's economic data, which included September Housing Starts, the Fed's Beige Book for October, and the weekly MBA Mortgage Applications Index:
- Housing starts decreased to a seasonally adjusted annualized rate of 1.127 million units in September (consensus 1.160 million), down from a revised 1.183 million units in August (from 1.180 million). Building permits decreased to a seasonally adjusted 1.215 million in September (consensus 1.225 million) from a revised 1.272 million in August (from 1.300 million).
- The key takeaway from the report is that the weakness in starts and permits was concentrated in the South region, which suffered the biggest hit from the hurricanes, so one could reasonably assume that the October report will show better results.
- The Fed's Beige Book for October showed that economic activity increased at a modest to moderate pace in all 12 of the Federal Reserve Districts in September through early October. The Richmond, Atlanta, and Dallas Districts reported major disruptions related to Hurricanes Harvey and Irma. Many Districts noted that employers were having difficulty finding qualified workers, but the shortage in labor had little effect on wages.
- The weekly MBA Mortgage Applications Index increased 3.6% to follow last week's 2.1% decline.
On Thursday, investors will receive both the weekly Initial Claims Report (consensus 236K) and the Philadelphia Fed Index for October (consensus 20) at 8:30 ET. The third and last economic report--the Conference Board Leading Economic Index for September (consensus 0.1%)--will be released at 10:00 ET.
As for earnings, Verizon (VZ 48.65, +0.25), Philip Morris (PM 112.51, -0.14), and Travelers (TRV 130.02, +1.37) are scheduled to report on Thursday morning.
- Nasdaq Composite +23.1% YTD
- Dow Jones Industrial Average +17.2% YTD
- S&P 500 +14.4% YTD
- Russell 2000 +10.9% YTD
Russian state-controlled oil producer Rosneft has signed production sharing agreements for five oil blocks in Kurdistan, the autonomous region of Iraq whose recent independence referendum sparked armed conflict with Baghdad.
Rosneft said on Wednesday that it would pay as much as $400m for an 80 per cent stake in the five production blocks, of which $200m could be offset by oil production.
The company, which has emerged as the most active foreign oil major in the region, said that experimental production could begin next year, with full scale production possible in 2021. The total recoverable oil reserves at the five blocks may be about 670m barrels, it said.
Iraqi forces on Wednesday retook Kurdish-controlled areas near Mosul, even as Washington urged Baghdad to rein in its offensive in northern Iraq.
Rosneft’s push into Kurdistan has come as Moscow increases its clout in the Middle East, through its decisive role in the Syrian war, its new-found friendship with Saudi Arabia, and gas and nuclear power deals with Turkey.
Commodity trading giant Glencore will convert its shareholding in Russian aluminium company Rusal into shares of parent company EN+, as part of the group’s initial public offering.
Glencore owns 8.75 per cent of Rusal, controlled by Russian metals tycoon Oleg Deripaska. Glencore’s shareholding in EN+ will be calculated after the IPO, and based on EN+’s listing value and Rusal’s share price.
EN+ this month announced it would sell $1.5bn worth of shares as part of an IPO on the Moscow and London markets. CEFC China Energy will buy $500m of that as part of the listing.
Ivan Glasenberg, Glencore’s chief executive, will be entitled to a seat on the EN+ board, the company said in a statement.
Upon completion of the conversion, En+’s shareholding in Rusal would increase to 56.88 per cent from 48.13 per cent. En+’s primary business is selling electricity produced in its hydropower plants to aluminium smelters run by Rusal.
Maxim Sokov, EN+ chief executive, said:
Glencore’s proposed conversion of its stake in Rusal into En+ Group is an acknowledgement of our compelling investment case and strong business fundamentals. We are delighted at the prospect of gaining the long-term support of such a well-renowned partner in the global commodities sector. We look forward to working with Glencore and leveraging its unrivalled expertise to drive the ongoing growth of our business.
Cryptocurrency hedge funds top 100 for first time
LONDON, Oct 18 (Reuters) - Hedge funds that trade cryptocurrencies reached over 100 for the first time, according to new data from fintech research house Autonomous NEXT, of which more than three-quarters launched in 2017.
A rise from 55 funds at Aug. 29 to 110 funds at Oct. 18 comes as investors pile into the high-performing cryptocurrency market, which has seen a tenfold increase in its value so far this year. A booming Bitcoin rallied to record highs above $5,000 in recent days.
Of the 110 funds, 84 were launched in 2017, 11 in 2016 and the remainder previously, according to the data.
Assets across the 110 funds rose to $2.2 billion.
Stade Rennais' owner in talks with Chinese investors
Francois-Henri Pinault, owner of the French football club Stade Rennais, is said to be in talks with unidentified Chinese investors to sell the club, daily Le Figaro reported.
The report cited a rumour from TV channel Canal+ that Pinault had met with Olivier Letang, former managing director of football club Paris Saint-Germain, and British businessperson Kia Joorabchian, the owner of Sports Invest UK, to seek their support, as intermediaries, in the search of an investor.
Francois-Henri Pinault, the CEO of French luxury goods company Kering [EPA:KER], has owned Stade Rennais with his father Francois since 1998. The club has a budget of EUR 50m this year.