Market Review: June 30, 2020

Auto PostDaily Market Report

Closing Recap

Tuesday, June 30, 2020





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     U.S. stocks surged into the close as major averages closed out Q2 with its best quarterly return in over two-decades, rallying more than 40% from the March lows after the COVID-19 virus brought global economies to a near stands-till. Several factors have helped boost market sentiment including nearly $2 trillion in a relief package for Americans and help for small businesses in the form of a PPP loan, helping some of the hardest hit sectors during the downtrend in March (airlines, casinos, restaurants, retails, hotels, leisure). When it was all said and done, the S&P 500 advanced roughly 19% for the quarter, while the Dow Jones Industrial Average was up 17% – cutting the indexes’ losses for the year to 4.7% and 10%, respectively. The Nasdaq Composite is up nearly 30% in the past three months and 11% for this year. Tech led again behind strength in semiconductors after strong earnings and guidance from Micron as well as raised revenue guidance from Xilinx, while the Dow Jones lagged behind weakness in Boeing (BA) after Norwegian Air cancels orders for 97 Boeing aircraft. Oil prices end lower, while gold prices top $1,800 an ounce for the first time since 2011 as the dollar retreats.

·     Technology names pared gains briefly after the FCC designated Chinese manufacturers Huawei Technologies Co. and ZTE Corp. as national security threats, as money from federal subsidies used by many small rural carriers may no longer be used to buy or maintain equipment produced by the companies, but that pullback was short lived. Coronavirus continues to dominate the headlines with the focus on more states pausing their reopening plans as well as testing capacity issues. U.S. consumer confidence rose more than expected in June, following upbeat real estate data on Monday while manufacturing data in the Chicago region fell well short of consensus estimates. China official manufacturing and services PMIs surprised to the upside which helped spur strength in materials and metals

·     Coronavirus update: Florida covid-19 cases at long-term care facilities reach 1,868, a new record high, while covid-19 cases rise 4.2% vs. previous 7-day avg. 5.6%. New York covid-19 cases rise 0.1% vs. 7-day avg. 0.2%. Arizona virus cases increase 6.3% in two-day total. California covid-19 cases rise 2.9% vs 2.8% 7-day average. South Carolina coronavirus cases rise by 1,755 Tuesday, the state’s highest single-day increase since the pandemic started

Economic Data

·     Consumer Confidence for June reported at 98.1 vs. estimate for 91.5 reading (prior month was 86.6); consumer inflation rate expectations 6.7% in June vs. May revised 6.4%; expectations index 106.0 in June vs. May revised 97.6 and present situation index 86.2 in June vs. May revised 68.4. Chicago PMI for June reported at 36.6 below the 45 estimate and compared to 32.3 prior.



·     Oil prices slipped with WTI crude down 43c or 1.08% to settle at $39.27 per barrel as concerns remain that rising COVID-19 cases, prompting several states to nix their planned economic reopen, will hurt demand while supply could rise with a potential resurgence of Libyan oil production. U.S. crude has risen 12.4% in the past month, up about 90% in the quarter (though still down over 30% YTD), reflecting its recovery from late March, with energy demand recovering from the worst weeks of the outbreak. Markets seek signs of demand recovery in weekly inventory data due on Tuesday from the American Petroleum Institute industry group and from the U.S. government on Wednesday. Nat gas prices rise 2.5% to 3-week highs of $1.75 mln btus.

·     Gold prices settled above the $1,800 an ounce level for the first time since 2011, rising $19.30 or 1.1% to settle at $1,800.50 an ounce, closing out Q2 with roughly a 13% advance, buoyed by a weaker dollar, improving economic data, and increased demand as a hedge against stock market volatility amid the coronavirus pandemic impact on global economies. Prices also rise with markets bracing for a longer-term rise in inflation with governments and central banks flooding the world with money over the last few years.


Currencies & Treasuries

·     Treasury yields recovered off 1-month lows as the 10-yr yield rose over 3 bps to 0.66% as Fed Reserve Chairman Powell and Treasury Secretary Mnuchin testified to Congress on the coronavirus government related stimulus plans. Prices have rallied this week as yields have slumped with rising COVID-19 cases in parts of the country raising concerns the US economic reopening would be slowed. The U.S. dollar was mostly lower on the day following mixed economic data in the U.S. A decline in yields due to central bank stimulus has diminished the attractiveness of many emerging currencies, reducing their allure as carry targets, according to one sell-side strategist. The dollar/yen climbs to 3-wk high of 107.98 as U.S. 10-yr yields rise.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; LULU announced that it has entered into a definitive agreement to acquire MIRROR, a leading in-home fitness company that created an interactive workout platform that features live and on-demand classes, for a purchase price of $500 million (PTON shares active on news)

·     Consumer Staples; in food, CAG reported a beat on the top and bottom line for Q4 as organic sales surge 21.5%, helped by at-home consumption amid COVID-19 lockdowns while the company said it expects it to rise 10%-13% in current qtr; CLX extends gains, trading to new all-time highs as Covid related play

·     Restaurants; SHAK and licensee Maxim’s Caterers plan to open a minimum of 15 restaurants in South China by 2030, including in Shenzhen and Guangzhou; PZZA said preliminary system-wide comparable sales rose 28% in Q2 for North America and prelim sales were up 24.4% for the five weeks that ended this past Sunday

·     Housing & Building Products; AWI 2020 estimates raised at SunTrust given signs of a resurgence of residential demand for the latter and expectations of better commercial demand in 2H20 on both names from delayed projects

·     Auto sector; UBER shares active following reports has made a bid to take over rival food-delivery company Postmates, the New York Times reported Monday night. Talks were reported to be ongoing, but a deal could come within hours ; Mizuho lowered JunQ estimates for ALV and VNE though say they see SepQ/2H positioned better with recovery in the U.S. and China; AZO was removed from best ideas list at Wedbush as believe that the near-term strength the company is experiencing is likely to fade as car sales recover and stimulus/benefits run out (or get downsized); TSLA is set to report deliveries and production in early July, while Opco says it appears both are moving along at a healthy rate with TSLA’s re-ramp proceeding relatively efficiently and alongside solid vehicle sell-through; WKHS and BLNK shares continue upside momentum (both leveraged to battery-electric vehicles/charging stations)



·     Energy stocks slipped along with oil prices (though pared losses midday); in stock news, RDSA said it is writing down between $15B-$22B of assets in the second quarter saying the pandemic has hurt several parts of its business including oil production, fuel sales and shipments of everything from LNG to petrochemicals; ERII shares fell after saying it was exiting a licensing agreement with SLB a drag in the S&P and refining sector after being downgraded from Market Perform to underperform and cut tgt $26 to $22 at Cowen saying they are increasingly cautious as crude differential HFC is most levered to will be a headwind in the intermediate term, and the renewables diesel business it is investing heavily in will have sub-par returns.



·     Bank movers; last night, the CCAR banks published planned capital actions and their new stress capital buffer (SCB); WFC said based on the Federal Reserve Board’s instructions regarding capital distributions through the end of 3Q 2020 it expects it will reduce its dividend from the current level of $0.51c per share; expects 2Q results will include increase in allowance for credit losses substantially higher than increase in 1Q; DFS and ALLY both stated they will maintain their current dividend in Q3, similar to most of the large banks; COF announced their SCB but made no mention of the dividend; CFG outperforms after announcing it does not expect Fed dividend caps to impact its proposed quarterly dividend, FITB said plans to maintain its dividend

·     Insurance; GNW shares fall after extends merger agreement with Chinese conglomerate Oceanwide to September 30 from the previous deadline of June 30 and said it plans to include a debt offering in the near-term to address liabilities

·     Consumer finance; Fitch says credit card delinquency rates to rise in H2 2020 as forbearance periods expire and the impact of federal stimulus wanes. The ratings agency anticipates credit card industry charge-offs to rise "meaningfully" due to the sharp rise in unemployment (shares of ADS, COF, AXP , among names leveraged to data)



·     Pharma movers; ZYNE shares tumble after its pivotal trial of Zygel (CBD gel) in Fragile X Syndrome failed to reach its primary or key secondary targets; OCX shares drop after saying a DetermaDx clinical validation study didn’t achieve a pre-defined endpoint of improvement over routinely used clinical factors for managing patients with radiologically identified lung nodules; VRCA shares tumble after announcement working with FDA to resolve issues related to vp-102 new drug application

·     Biotech movers; SGEN price tgt raised by analysts after the company and GMAB announce positive topline results from the Phase II study "innovaTV 204" evaluating Tisotumab vedotin (TV) in recurrent or metastatic cervical cancer as it achieved 24% ORR and 8.3 months mDOR; INO said its COVID-19 vaccine candidate was considered safe and well-tolerated in all 40 of the participants in a Phase 1 clinical trial but did not disclose data about the participants’ antibody response (did say 94% of 36 trial participants showed overall immunological response rates based on preliminary data); RVNC announces positive results in two phase 2a studies of daxibotulinumtoxinA for injection for the treatment of forehead lines and crow’s feet, respectively; LQDA 9.375M share Spot Secondary priced at $8.00; CRSP announced a $325M common stock offering

·     Medical equipment and devices; HOLX was upgraded Market Perform to Outperform at Cowen and raised tgt from $55 to $64 noting COVID testing is driving a material uptick in Panther placements whose longer term consumables stream should lift HOLX sustainable top line growth rate 150bps; LMNX submits an Emergency Use Authorization (EUA) request to the FDA for its xMAP SARS-CoV-2 Multi-Antigen IgG blood test; shares of RMD, TMO, HOLX 52-week highs; TNDM shares jumped after it was disclosed that TNDM will be covered on an in-network basis by UNH starting July 1

·     Healthcare services and providers; CNC’s Illinois subsidiary, Meridian Health Plan of Illinois has entered into a Member Transfer Agreement with NextLevel Health Partners (NLHP), a health plan serving Medicaid members in Cook County, Illinois


Industrials & Materials

·     Aerospace & Defense; BA gives back a small portion of yesterday gains after Norwegian Air cancels orders for 97 Boeing aircraft, consisting of 92 737 MAX and five 787 Dreamliners while also files legal claim seeking return of pre-delivery payments related to the aircraft and compensation for its losses related to the grounding of 737 MAX and 787 engine issues; HII said its shipbuilding division has been awarded a $936M contract for the construction of an additional Arleigh Burke-class Flight III destroyer for the U.S. Navy; EADSY said commercial aircraft business fell by nearly 40% in recent months and traffic not seen back to pre-Covid levels before 2023

·     Transports; Dow Transports rise ahead of FDX earnings after the close tonight, with shares up among the top gainers in the index; airlines pulled back after shares jumped on Monday while truckers and logistics names (CHRW, EXPD, LSTR) outperformed

·     Metals & Materials; AYI posted beat as Q3 adj EPS $1.94 on sales $776.2M topped the est. $1.37 and $755.7M while says sees pricing pressure, tariff costs in Q4; FCX shares strong initially on copper strength while better China PMI data helping metals in general; NEM pushes above its 50-day MA of $60.50, as gold miners benefit from gold prices topping $1,800 an ounce


Technology, Media & Telecom

·     Internet; JCOM shares slide after being mentioned as a new short call at Hindenburg Research alleging related party transactions, lack of governance and a legacy business in decline; the weakness in social media space late last week forgotten as tech in general surges across the board; EBAY shares trade to 52-week highs; GOOGL said its YouTube is raising TV prices to $65 per month from $49.99 per month

·     Semiconductors; strength in the sector today given MU and XLNX earnings/guidance; MU reported MayQ results in-line with pre-announcement, and guided to a much stronger AugQ revenue of $6.0B (vs. est. of $5.5B) with strength from Data center and 5G handset ramp while XLNX raises mid-point of rev guidance as sees Q1 revs $720M-$734M (est. $690.2M) saying stronger-than-expected rev in wired & wireless, data center group offset weaker-than-expected rev in consumer-oriented end markets in qtr (tgt raised by many analysts); IIVI shares fall initially after announces stock offering –shares of equipment names (LRCX) as well as other semis rally – though pared gains after the FCC issued final order designating Huawei and ZTE as National Security threats

·     Hardware and Software movers; OKTA was downgraded to neutral from buy at BTIG saying they believe it is very well positioned in multiple growth markets longer term, but checks lead them to believe that customer identity deals have temporarily slowed; AAPL shares active after Digitimes sources said that shipping estimates for Apple’s mmWave-enabled 5G iPhones could only reach 15-20M this year, down from the previous supply chain estimates of 30-40M; CDNS trades 52-week highs


Market commentary provided by Catena Media Financials US, LLC, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

Live Trading

Open an Account

Paper Trading